First of all, it must be affirmed that Vietnam is a socialist-oriented market economy. Vietnam is also a highly open economy, deeply integrated with the world, so any changes including the energy/electricity sector in the world will have a strong impact on Vietnam.
Over the past 2 years, due to the impact of the Covid-19 pandemic, supply chain disruptions, and geopolitical conflicts in some regions have continued to develop complicatedly, especially the Russia-Ukraine conflict has caused Energy prices such as coal, oil, and gas increased very high. Many countries around the world have fallen into shortages of electricity and gas; Rising electricity prices have forced governments of many countries to call for economical and efficient use of energy.
These electricity prices in most European countries increased by 40-50% compared to the beginning of the year.
Statistics show that, as of October 2022, the electricity price in Italy is 211.2 Euro/kWh (about 5,714 VND/kWh). Next is France at 178.9 Euro/kWh (about 4,847 VND/kWh); Germany is 157.8 Euro/kWh (about 4,278 VND/kWh); Spain is 127.22 Euro/kWh (about 3,439 VND/kWh) and in the UK it is 136.60 Euro/kWh (about 3,710 VND/kWh).
In Asia, electricity prices in Tokyo (Japan) in October also increased by nearly 27%. In Korea, it is 228.96 Won/kWh (about 4,287 VND/kWh). In Thailand, household electricity prices have increased to 4.72 baht/kWh (about 3,273 VND/kWh) from September 2022.
According to EVN statistics, in 2021, according to Decision No. 648/QD-BCT dated March 20, 2019 of the Ministry of Industry and Trade, the average retail electricity price is 1864.44 VND/kWh (also equivalent to 0.083 USD /kWh), which is equivalent to about 66% of the world’s average electricity price and is also only at a low average level compared to the world’s average electricity price (101/147).
In the ASEAN region, Vietnam is a country with a low average electricity price compared to most countries in the region. Even, Vietnam’s current retail electricity price is only 51% compared to the Philippines – the country with the highest electricity price in the region (0.172 USD/kW).
According to assessments, in ASEAN, Laos is the country with the lowest electricity price in the region, however this country has up to 70% of its electricity produced from hydropower (cheap) and about 25% from coal thermal power.
Factors related to electricity prices
In principle, electricity prices are calculated on the basis of the costs of input parameters including 4 main stages: electricity generation, electricity transmission, electricity distribution – retail, operation – industry management and ancillary services. power system.
However, there are also many related factors that impact electricity prices because to be able to produce and supply electricity requires a large amount of investment capital for the power system and grid, as well as related services.
Overall, Vietnam is still a developing country, with electricity demand increasing higher than GDP growth. In general, commercial electricity increased by over 10%/year. Specifically, in 2009, commercial electricity reached 74.76 billion kWh, in 2019, total commercial electricity reached 209.42 billion kWh.
To meet the electricity needs for the economy and people’s daily life, the total investment in power system construction during this period continuously increased. If in 2009, the total volume of power source and grid investment of the entire Group reached 45,665 billion VND, then in 2019, this number is estimated to reach 100,480 billion VND.
With this strong investment, Vietnam’s total power capacity has increased from about 17,000 MW in 2009 to 54,850 MW in 2019 (an increase of nearly 3 times).
EVN’s report also shows that, by the end of 2021, the total installed power capacity of the entire system reached 76,620 MW. Of which, the total capacity of renewable energy sources (wind power, solar power) is 20,670MW (an increase of 3,420MW compared to 2020) and accounts for 27%. The scale of Vietnam’s power system has risen to the top of the ASEAN region in terms of power capacity.
The 220-500kV transmission grid system was also increased from 11,900 km with transformer capacity of 26,500 MVA to double the number of line km and transformer station capacity of more than 100,000 MVA. Meanwhile, the 110kV power grid and distribution power system have covered over 98% of districts/communes.
In particular, in the period 2009-2019, the electricity industry also invested tens of thousands of billions of VND to bring electricity to rural areas, remote areas, island borders… helping 100% of communes and 99.25% of the population. % of rural households nationwide have access to the national electricity grid.
EVN has also received, managed, operated and sold electricity to 11/12 island districts of the country. And every year we still have to make up for losses of hundreds of billions of dong for selling electricity below cost in island districts.
In 2021, in the structure of Vietnam’s power sources, the cheapest source of hydroelectricity is hydroelectricity, accounting for only 28.5%; Next is coal power source, accounting for over 32.2%, (since 2015 Vietnam has had to import coal); Gas power source is 9.3% and renewable energy is about 27%. In 2022, the price of coal electricity has reached about 4,000 VND/kWh, renewable energy electricity price at FIT price according to Decisions 11 and 13 on incentive mechanisms from 2017 (within a period of 20 years) is about over 2,000 VND/kWh, higher than the current average electricity price.
Due to large investments, increased raw material input sources for electricity production (coal, oil, gas…) and economic fluctuations cause EVN’s production and business costs to increase. Accordingly, electricity prices must also be adjusted to suit the actual situation to ensure energy security in the future.
Source: EVN