China exports electricity amid Vietnam’s power crunch
Energy could be a focal point in future bilateral cooperation: expert
Published: Jun 19, 2023 09:03 PM
The Pha Lai thermal power plant in Hai Duong province,Vietnam on June 12,2023 Photo: VCG

The Pha Lai thermal power plant in Hai Duong province,Vietnam on June 12,2023 Photo: VCG

China has resumed cross-border electricity exports to neighboring Vietnam, for the first time after a seven-year hiatus since 2016. It is believed the latest transmission will help alleviate the power crunch in the Southeast Asian country struggling with lower-than-expected rainfall amid a sweltering summer.

Vietnam, which houses large factories run by tech firms Samsung and Foxconn, among others, has witnessed many factories suspend operations due to the electricity crisis.

Outages have been witnessed in some northern provinces including Bac Giang and Bac Ninh, home to some industrial parks. Bac Giang's local government ordered factories to postpone some of their production activities to after 10 pm, while turning off or dimming lighting to 50 percent brightness in public areas, according to the provincial news website. 

A source with the Chinese business community in Vietnam, who asked to remain anonymous, told the Global Times on Monday that the power crunch in the northern part of the country is "very troublesome."

He said a Chinese-invested photovoltaic product firm has lost millions of yuan due to the electricity shortage "because for such a product, once the power is cut off, the equipment will be damaged and the raw materials will be scrapped."

The summer heat wave and reduced water levels in hydropower reservoirs are pushing Vietnam's grid to the limit, plunging homes and offices into rolling blackouts and causing sudden stoppages in factories, local media reported.

Given this, Vietnam is coming up with measures to solve the power outage problem.

The country's trade ministry has asked government agencies to increase coal and gas output as the country grapples with power shortages, the Bloomberg report said, citing remarks by Deputy Minister Do Thang Hai.

The state utility company Vietnam Electricity Group (EVN) has repeatedly reminded consumers to conserve energy by turning off appliances and setting air conditioning at no lower than 26 C.

Meanwhile, it has ramped up its electricity imports from China and Laos since May.

Coal and hydrogen power are the two major sources from which electricity is generated for the national grid. 

A Chinese businessman who has worked for years in the electricity equipment industry in Vietnam told the Global Times on Monday that the lack of rain has severely impacted the output of hydropower as water levels at almost all northern hydropower plants are too low for them to run efficiently. 

"Coal reserves in the country are also relatively low, and coal firms are not ready to churn out more in a very responsive way," said the businessman, who asked to remain anonymous.

Grid from Guangxi

China Southern Power Grid Co inked an electricity sales deal with Vietnam's EVN in May to transfer electric power via 110-kilowatt power lines from Dongxing, South China's Guangxi Zhuang Autonomous Region to Mong Cai in Vietnam, according to the Beijing-based Belt and Road Portal website.

The Guangxi subsidiary of the China Southern Power Grid Co, the major operator of the project, is expected to supply about 30 million kilowatts of electricity monthly using the power lines.

About 68 million kilowatts of electricity will be transmitted and sold to Vietnam in the first phase via the channel in Guangxi and the Chinese side will be responsible for the safe operation of power connectivity facilities, according to the sales agreement.

Both sides also agreed to maintain long-term cooperation and set up long-term electricity trading and coordinating mechanisms.

The Guangxi subsidiary of China Southern Power Grid Co could not be reached as of press time.

"As far as I know, the sales price from Guangxi to Vietnam is just a little above cost," Ge Hongliang, director of the China-ASEAN Maritime Security Research Center at Guangxi University for Nationalities, told the Global Times on Monday.

China and Vietnam started grid connectivity in 2004 via five channels in Guangxi and Southwest China's Yunnan Province. Since then, more than 44.1 billion kilowatts of electricity have been transmitted from China to Vietnam. In March 2016, the channel in Guangxi was suspended but those in Yunnan remain operational.

Vietnam now imports about 2 billion kilowatts of electricity from China annually via the channels in Yunnan to ease its strained domestic power supply, data from the Belt and Road Portal website showed.

Transformation headways

China's resumption of grid exports to Vietnam this summer could help the Southeast Asian country ensure supplies in key facilities like its government agencies' running and the operation of hospitals, but the country needs a long-term plan to address its energy structural problems to come aligned with its rapid economic development, the aforementioned Chinese businessman said.

In stark contrast to the strained grid supply is Vietnam's continuously climbing demand for energy to boost its economy.

The Vietnamese government planned to invest $134.7 billion in power development to ensure sufficient power supply to fuel a projected 7 percent annual economic growth rate during the 2021-2030 period. The Vietnamese government also stressed the retreat of unstainable power sources. For instance, the share of coal-fired electricity in the power mix would drop to 5.3 percent by 2050, according to the Vietnam News.

 "At present, it is difficult for Vietnam to solve the problem of power supply by itself. On the one hand, the foundation of its industrial development is not very good, and it is difficult to solve the problem technically. On the other hand, it is also facing some difficulties in securing funding," Ge said.

From the perspective of new-energy power generation, Vietnam could seek cooperation with other countries, and China's participation could be "a crucial part" by leveraging its advantages in technology accumulation and capital, Ge noted.

"In a broader point of view, the field of energy cooperation between China and ASEAN, its largest trading partner, is a highlight or focal point that could help catalyze bilateral economic ties under the [China-proposed] Belt and Road Initiative," he said.

The power cooperation projects between China and ASEAN members have gradually entered a fast track. At present, they have covered many fields such as hydropower, thermal power, wind power, photovoltaic power generation, and power grid construction, the Xinhua News Agency reported.

 "Especially when the Regional Comprehensive Economic Partnership Agreement (RCEP) agreement takes effect, China-ASEAN ties in the energy sector are set to bring more opportunities for business cooperation and economic development in the region," Ge said.