Electricity stocks surge
The widespread heat wave is causing the issue of power shortages to be mentioned more often, with many places experiencing continuous power outages.
On the contrary, the high increase in electricity output has caused the stocks of many electricity companies to increase sharply in recent times.
In the trading session of June 5, despite the selling pressure weighing on the market, many electricity stocks still recorded a good increase. The most prominent was PPC of Pha Lai Thermal Power Joint Stock Company.
Closing the stock market session on June 5, PPC increased by VND750/share, equivalent to 4.79% to VND16,400/share. In the first 3 sessions of June, PPC increased by VND900/share, equivalent to 5.8%. Pha Lai Thermal Power's market capitalization added VND294 billion.
HND shares of Hai Phong Thermal Power Joint Stock Company also increased significantly after a series of days of slight decreases or increases. At the end of the session on June 5, HND increased by VND500/share, equivalent to 3.31% to VND15,600/share.
Similar to HND, NT2 shares of Nhon Trach 2 Petroleum Power Joint Stock Company and POW of Vietnam Oil and Gas Power Corporation recorded the first strong increase on June 5 after a long series of sideways days. NT2 increased by VND700/share, equivalent to 2.13% to VND33,600/share, POW increased by VND300/share, equivalent to 2.2% to VND13,950/share.
Hydropower faces difficulties
PSI Securities has made a forecast for the electricity sector, in which not all will benefit from increased consumption.
Specifically, PSI forecasts that electricity consumption growth in 2023 will reach about 7.8 - 8.0% based on the forecast GDP growth rate in 2023 of about 6.0 - 6.5%.
Renewable energy projects are mainly developed in the Central and Southern regions thanks to suitable natural conditions. In contrast, capacity growth in the North is very slow, while electricity consumption here has been on an upward trend in recent years.
“Therefore, we believe that the North may face power shortages in 2023,” PSI forecasts.
Meanwhile, Vietnam Electricity Group (EVN) decided to adjust the average retail electricity price to VND1,920.37/kWh, up 3% compared to the current level.
“We believe that increasing electricity prices could have a more positive impact on EVN's financial situation, ensuring cash flow to pay power plants as well as having room to mobilize from higher-priced electricity sources,” PSI commented.
In terms of each industry, PSI believes that hydropower will face difficulties, gas-fired thermal power will benefit, coal-fired thermal power will be mobilized to the maximum, and renewable energy will maintain output.
PSI said sea surface temperatures in the Pacific Ocean are trending up, with forecast models showing a 60% chance of an El Nino later this year, which could mean a year of lower average rainfall in the region.
In terms of each industry, PSI believes that hydropower will face difficulties, gas-fired thermal power will benefit, coal-fired thermal power will be mobilized to the maximum, and renewable energy will maintain output. Illustrative photo
According to IRI, the La Nina phenomenon will only last until the end of the first quarter of 2023, after which the climate will gradually shift to a neutral state and the El Nino phase will appear from May 2023. Therefore, PSI believes that this will negatively impact the output of hydropower plants due to less water flowing into the lake.
In the coming time, the flow of rivers in the Central and Central Highlands regions is forecast to be 10-60% lower than the same period last year because the rivers are often short and the upstream areas in Laos are suffering negative impacts from El Nino. In contrast, the major rivers in the North originate from the snowy mountains in Yunnan, so the impact of El Nino will be milder.
“Therefore, we believe that hydropower plants in the Central and Central Highlands regions will face more difficulties than other regions,” PSI analyzed.
Meanwhile, gas-fired thermal power has benefited. Positive factors for gas-fired thermal power include the decrease in world oil prices, which has led to a decline in Singapore MFO oil prices; the recovery in the industrial production sector in the southern region in the coming time will help increase load demand here again, etc.
PSI assesses that in the context of renewable energy not being stable due to high seasonality, hydropower is no longer benefiting from the climate change, we believe that gas-fired thermal power will be mobilized a lot in 2023.
In 2023, PSI believes that coal-fired power generation will increase due to a slight increase in electricity demand, while coal-fired thermal power will remain the main source of baseload power due to its low price and high stability. At the same time, hydropower generation will also decrease due to climate change.
Regarding renewable energy, PSI still believes that this area will maintain its mobilized output in the coming time.
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