Which power companies will perform well in 2H2021?

EaKrongrou hydropower plant built by Mien Trung Power Investment and Development JSC.

Vietnam’s power capacity expanded significantly in 2019 and 2020 (14% and 26% YoY) due to the renewable energy boom while demand growth slowed down because of Covid 19 (only 2.9% in 2020 and 7.4% in 1H2021). Hence, total national power volume shared smaller part for electricity plants, both thermal and renewable energy plants are not fully utilized.

Enjoying La Nina since 2H2020, the volume of hydropower plants grew by 41% YoY, accounting for 24% of total volume in 1H2021. Renewable energy plants have raised market share gradually since their first appearance, particularly at the end of 2020 (FiT2 Solar power deadline). Renewable energy volume surged to 15 bn kWh, up 172% YoY, accounting for 11.43% of total national volume in 1H2021. These plants have been running at an average of 93% of capacity in 1H2021, varying between different areas.

Meanwhile, thermal plants were affected by hydropower and renewable energy as the utilization declined, offering room for hydropower and renewable energy. Coal thermal volume held the majority with 52% of total national volume, down 4% YoY in 1H2021. This decrease is lower than that in 1Q2021 (-12.4%) as 2Q2021 was the dry season. Gas thermal plants were the hardest affected group due to a surge in gas prices. Utilization and volume slumped, in which volume declined by 19% YoY. 

The hydrological condition continues supporting hydropower plants. La Nina phenomenon is forecasted to perform in 2H2021, thus hydropower companies will enjoy this favorable condition to have a better performance than that in 1H2021. VDSC said the beneficiaries would be Refrigeration Electrical Engineering Corporation (REE), Power Construction No 1 JSC (PC1), Global Power Equipment Group (GEG), Vinh Son - Song Hinh Hydropower Joint Stock Company (VSH).

Numerous wind power plants will come online from 3Q2021 due to the FiT1 deadline. Year to date, EVN estimates more than 5,656 MW of wind power will be added to the national power network, equivalent to roughly 8% of total national power capacity. So both current and upcoming renewable energy farms will cut volume that will depend on the economic recovery in 4Q2021. According to VDSC, several companies that will add power capacity and trigger earnings are REE, PC1, GEG.

VDSC said the thermal plants would encounter difficulties in the rainy season. Both coal and gas thermal plants could have a low mobilized volume because of hydropower and wind power capacity addition. However, company earnings will depend on contract volume and variable costs.