The power plants to face a risk of fuel shortage and El Nino phenomenon

According to SSI, also due to the coal and gas storage, the market capitalization of power sector in the past year was increased slightly by only 1.5%, lower than the growth rate as 7.7% of VN-Index. The lower growth of the power sector was mainly due to the decrease of a number of leading stocks such as PetroVietnam Power Corporation (POW) with a decrease of 26.6% and Power Generation Corporation No3 (PGV) fell 10.3% while only stocks of these corporations already occupy 39% of the market capitalization.

Another important stock as the stock of  PetroVietnam Power Nhon Trach 2 Joint Stock Company (NT2) also reduced by 12.0% due to concerns about renegotiation of Power Purchase Agreement (PPA) and fuel supply reduction.

In 2019, the gas supply for NT2 decreased to 2.6 million m3/day, compared to the demand of 3.1 million m3/day.

In 2019, the Vung Ang TPP had reduced the generation to 70-80% compared to commitment amount also due to coal supply shortage despite a long-term contract with Vietnam Coal and Mineral Industries Group (Vinacomin).

In general, in 2019, the total domestic coal supply  estimated 47 million tons, decreasing 9 million tons   compared to 2018, while imported coal reached nearly 42 million tons, increasing twice compared to 2018, although that Vinacomin had increased coal price for TPPs by 9% as VND 1.8 million/ton.

Regarding the gas supply, according to the Electricity of Vietnam (EVN), in the Southeast region, due to the gas source decreasing from 20 million m3/day to 16.5 million m3/day, the gas-fired power plants as Nhon Trach 1 (108.11 million kWh) and Nhon Trach 2 (5.87 million kWh) might use DO for power generation in the peak seasons. The Ca Mau gas power plants are also coping with the shortage of gas in the PM3-CAA 7 Cai Nuoc field and increasing gas price from 46% MFO to 90% MFO from October 2019.

Looking at the prospects of the market in 2020, many comments suggest that the power sector must increase importing coal to ensure supply. Currently, coal-fired TPPs have been allowed to import coal themselves and will enjoy benefit from the trend of lower prices (if there is a compatible coal that does not cause additional problems such as the risk of production disruption). However, other problems still exist such as if the import coal price is higher than the domestic coal price provided by Vinacomin and the Northeast Corporation, it will greatly affect the operation of the plant.

As for hydropower plants, the generation of which should likely decline, at least in the first 6 months of 2020. Because of according to the US National Oceanic and Atmospheric Administration (NOAA), there will be the probabilities 30% and 50-65% respectively for El Nino and neutral weather conditions in the next 3-6 months. The low rainfall due to El Nino in 2019 will limit the generation capacity of hydropower plants for at least 6 months of 2020.

Regarding solar power, because in 2019 the power sector witnessed an explosion of investment in solar power, but this field is facing a price policy while waiting for a new pricing mechanism.

PV.