Vietnam, as an emerging manufacturing market in Southeast Asia, is experiencing continuous growth in electricity demand. According to data from Vietnam Electricity (EVN), the national electricity consumption in 2022 reached 242 billion kWh, a year-on-year increase of 9.5%. The manufacturing sector is the main consumer of electricity, accounting for over 50% of the nation’s total power consumption. Therefore, the stability of power supply directly affects the production efficiency and cost control of manufacturing enterprises.

This article aims to help investors understand the power supply situation in different regions of Vietnam, assess power supply risks, and provide practical investment advice. By analyzing power infrastructure, costs, risks, and response strategies, we aim to assist enterprises in gaining long-term competitive advantages in the Vietnamese market.

1. Overview of Power Supply in Various Regions of Vietnam

1.1 Northern Region

The Northern region, including Hanoi and surrounding provinces, has a high industrial concentration and strong power demand. According to EVN data, the total power supply in the Northern region in 2022 was 95 billion kWh, accounting for 39.2% of the national total. The main power sources include coal and hydroelectric power. Additionally, several solar and wind power projects are under construction around Hanoi, which is expected to further increase the proportion of renewable energy in the future.

1.2 Central Region

The Central region, including Da Nang and Quang Nam, is dominated by manufacturing and tourism industries. In 2022, the power supply in the Central region was 43 billion kWh, accounting for 17.8% of the national total. The region’s power supply mainly relies on hydroelectric and gas-fired power generation. While Da Nang City has a relatively stable power grid, some remote areas face risks of power outages.

1.3 Southern Region

The Southern region is the most economically developed area in Vietnam, including Ho Chi Minh City and surrounding provinces. In 2022, the total power supply was 104 billion kWh, accounting for 43% of the national total. This region primarily relies on thermal power, with wind and solar power gradually increasing their share. Due to frequent economic activities, the Southern region faces significant pressure on power supply, but its infrastructure is relatively well-developed, ensuring higher power supply stability.

2. Assessing Power Infrastructure

Understanding the power infrastructure in each region, including power plants, transmission lines, and distribution networks, is crucial.

Collecting Power Infrastructure Data

Obtain data on power facilities in each region through EVN’s annual reports and local power departments. This includes types of power plants (coal, hydro, gas, renewable energy), installed capacity (in MW), and transmission line coverage.

Field Inspections and Expert Consultations

Arrange team visits to target areas to assess the local power distribution network. Collaborate with local power experts or engineers to understand the load capacity and maintenance status of the distribution network.

Calculating Infrastructure Coverage

Measure the distance between the factory site and power plants or major transmission lines to calculate power coverage and potential voltage drops.

Formula: Power Coverage = (Distance / Load Capacity) × Voltage Drop Coefficient

Assessment Criteria:

• Excellent (Score 5): Within 30km of power plant or main transmission line, load capacity meets design standards
• Good (Score 3): 30-50km distance, load capacity close to design standards
• Average (Score 1): Over 50km distance or insufficient load capacity

3. Assessing Power Supply Reliability

Evaluate the reliability of power supply in the target area, including frequency of outages, duration of power interruptions, and power dispatch capabilities.

Obtaining Outage Data

Collect outage records for the past three years from EVN and local power companies. Compile data on the number of outages, duration, and causes. Calculate the frequency of outages and average power interruption time.

Formula: Average Power Interruption Time = Total Interruption Time / Number of Outages

Assessment Criteria:

• Excellent (Score 5): ≤2 outages per year, single outage duration ≤1 hour
• Good (Score 3): ≤5 outages per year, single outage duration ≤2 hours
• Average (Score 1): ≥5 outages per year, single outage duration >2 hours

Simulating Power Supply Interruption Impact

Use simulation software to analyze the specific impact of power outages on production processes, such as production line downtime and inventory depletion time.

Formula: Production Impact = (Downtime × Daily Production) / Inventory Volume

4. Assessing Backup Power Systems

Determine the configuration level of backup power systems in industrial parks and factories to ensure continuous power supply during main grid failures.

Auditing Backup Power Configuration

Evaluate the backup power configuration in target area industrial parks, including the number, power, and start-up time of backup generators. Review factory backup power configuration files to check if they meet continuous production requirements.

Calculating Backup Power Guarantee Time

Based on the factory’s daily power consumption and backup generator capacity, calculate how long backup power can sustain production during main grid outages.

Formula: Backup Power Guarantee Time = Backup Generator Power × Fuel Reserve / Daily Power Consumption

Assessment Criteria:

• Excellent (Score 5): ≥24 hours
• Good (Score 3): 12-24 hours
• Average (Score 1): <12 hours

5. Comparing Power Costs and Risks

Compare power costs and supply risks across regions to help enterprises choose the most economically beneficial location.

Calculating Power Costs

Collect industrial electricity prices for each region and calculate monthly and annual power costs. Include basic electricity fees, peak fees, and potential additional charges such as environmental taxes.

Formula: Monthly Power Cost = Daily Power Consumption × Daily Operating Hours × Electricity Price

Combining Supply Risk Assessment

Conduct a cost-benefit analysis by combining power costs with supply risks. Consider factors such as production interruptions due to power outages and costs of using backup power.

Formula: Comprehensive Cost = Power Cost + Backup Power Usage Cost + Production Loss Cost due to Outages

Assessment Criteria:

• Excellent (Score 5): Lowest comprehensive cost
• Good (Score 3): Medium comprehensive cost
• Average (Score 1): Highest comprehensive cost

6. Risk Response and Management Strategies

Provide enterprises with practical power supply risk management solutions to ensure production continuity and cost control.

Backup Power Configuration Strategy

Advise enterprises to confirm factory backup power configurations before site selection and purchase high-power generators based on calculations. Ensure backup power can start within 5 minutes of main power interruption and maintain production operations.

• Contact Suppliers: Choose backup power suppliers with local service networks, such as Cummins or Caterpillar, and sign long-term maintenance and emergency response agreements.

Diversified Power Supply Solutions

Recommend enterprises invest in distributed energy systems, such as rooftop solar panels or small wind turbines, to reduce dependence on the public grid.

• Cost Calculation: Calculate the balance point between installation costs and long-term operational savings of distributed energy systems.
• Contact Institution: Vietnam Energy Management Authority for policy support and subsidies on renewable energy projects. Phone: +84 24 6694 8889, Email: [email protected].

Risk Insurance Strategy

Advise enterprises to purchase insurance for production stoppages caused by power supply interruptions to reduce economic losses. Choose insurance products that include “Business Interruption Insurance.”

• Contact Insurance Company: Bảo Việt Insurance for product details. Phone: +84 24 3825 5700, Email: [email protected].

Government Cooperation Strategy

Recommend enterprises communicate with local governments and EVN before site selection to ensure priority power supply and emergency support. Where possible, seek participation in local power infrastructure construction or maintenance projects to secure long-term stable power supply.

• Contact Government Department: Ministry of Planning and Investment for policies and incentives on investing in power infrastructure. Phone: +84 24 3825 4760, Email: [email protected].

7. Conclusion and Investment Recommendations

7.1 Summary of Power Supply Stability in Each Region

The Northern region has lower power costs but slightly inferior supply stability. The Central region faces higher natural disaster risks and unstable power supply. The Southern region, despite higher power costs, offers the best supply stability. Enterprises should weigh their choices based on their specific needs.

7.2 Recommendations for Different Investors

Large, technology-intensive enterprises may choose the Southern region to ensure power supply stability. Enterprises relying on low-cost production might consider the Northern region but should invest more in backup power systems. The Central region is suitable for labor-intensive enterprises, but disaster prevention measures are necessary.

7.3 Long-term Development and Power Demand Planning

When investing in factory setups in Vietnam, enterprises should consider power supply stability as a crucial factor for long-term development. It is recommended that enterprises conduct thorough research before site selection and maintain close communication with local governments and power companies to ensure future power demands are fully met.

Through this article, investors can systematically understand the power supply conditions in various regions of Vietnam and obtain targeted investment advice and response strategies, thereby gaining an advantageous position in the Vietnamese market.