Power shortages have become part and parcel with summer heat in Hanoi, but relief could be a long way away with power development bogged down in the same issues that have plagued the sector for years.
Vietnam’s Electricity Corporation Hanoi (ECH) said Tuesday that record electricity demand due to a heatwave currently throttling northern Vietnam has caused power outages across parts of Hanoi, Dan Tri has reported.
The utility said electricity consumption in Hanoi rose 21.62 percent year-on-year between May 20 and May 24 and warned prolonged heat could place further pressure on the grid.
This does not come as a surprise.
Power outages are common in northern Vietnam over the summer, to the extent that in 2023 they were estimated by the World Bank to have cost the economy US$1.5 billion.
But whereas this might have been an impetus for change, that is, to move faster at building out power infrastructure, progress has remained uneven amid several key challenges.
The Ministry of Industry and Trade (MoIT), for example, was maintaining its position on a proposed increase to the minimum contracted output for liquefied natural gas power projects to 75 percent, even though investors have said it needs to be more in the 85–95 percent range to be bankable.
The MoIT’s argument comes from an aversion to the risk that it will be contracted to pay for more than it will use.
Though 75 percent is still an improvement over the current minimum of 65 percent.
Interest in investment in the sector is also waning amid increased policy risk after the government retroactively adjusted feed-in tariffs on some solar power projects.
Impacted investors were threatening legal action back in March over the revisions, though the issue to date still seems to be unresolved.
Moreover, the state power provider Electricity Vietnam (EVN) doesn’t have a lot of cash to spend, with the firm still clawing back losses from 2022 and 2023 when its input costs rose above regulated electricity prices.
The point here is that Hanoi’s power outages are not an anomaly, nor does there seem to be a clear path forward to resolving Vietnam’s power supply challenges more broadly.
Of course, there is that crucial overarching document, the Power Development Plan VIII, that should be guiding the process; however, it was already adjusted once, and may need to be adjusted again, with Deputy Prime Minister Pham Gia Tuc requesting, earlier this week, for projects unlikely to be completed by 2030 to be removed.
Local reporting does not make clear how adjusting the plan might help Vietnam’s power woes.
All of that is to say, not only were these most recent power shortages foreseeable, but it seems likely they will continue during peak power use periods for some time to come, as policymakers remain cautious about taking on additional financial obligations.
The cost of power outages will instead be borne by consumers and businesses in things like lost productivity and spoilage.