Vietnam, a vibrant hub for export-oriented manufacturing, is grappling with a widening power outage crisis, with rotating blackouts hitting its northern industrial zones. The country’s robust economic growth, driven by exports, has resulted in a staggering surge in electricity demand, surpassing that of other Southeast Asian nations. However, an unusually scorching heatwave this year has intensified the need for air conditioning, triggering power disruptions that now threaten the industrial sector in northern Vietnam. Experts caution that the power shortage problem could exacerbate the country’s economic downturn.
The World Bank’s Export Volume Index reveals that Vietnam has witnessed export growth percentages surpassing major Southeast Asian countries from 2015 to 2020, even outpacing China’s export growth during the same period. The manufacturing industry’s exponential expansion has triggered a surge in electricity demand. Think tank Ember reveals that between 2018 and 2022, Vietnam’s electricity demand surged by over 25%, outpacing the growth rates of the Philippines twofold and surpassing those of Thailand, Indonesia, and Malaysia by more than threefold.
In recent years, Vietnam has made significant strides in boosting its power generation capacity, with a notable increase in green energy sources. Although coal-fired power constitutes over 40% of Vietnam’s electricity generation, last year, clean energy accounted for over half of the country’s power supply, marking the highest proportion in more than two decades. Vietnam plans to further expand its clean energy capacity in the coming years. Ember’s data shows that since 2018, Vietnam’s clean energy capacity has soared by over 140%, with solar power capacity witnessing an astonishing increase of over 18,000% and wind power capacity growing by 1,800%.
Hydropower remains Vietnam’s largest source of clean energy, witnessing a 22% growth from 2018 to 2022. It plays a pivotal role in the country’s power system, offering dispatchable clean energy even in the absence of sunlight and wind. However, the scorching heat and dry weather in 2023 have led to a significant decrease in hydropower output compared to the same period last year. Additionally, delays in coal imports have threatened the operation of thermal power plants.
Despite the substantial increase in Vietnam’s power generation capacity, it struggles to meet the escalating demand
The power shortage poses a graves threat to the industrial zones in the northern part of the country, where major manufacturing facilities require uninterrupted power supply to operate round the clock. Even during non-working hours, Vietnam’s power grid operates near maximum capacity, and the heightened strain caused by increased air conditioning usage during extreme weather conditions increases the risk of power outages.
In recent weeks, industrial parks in Northern provinces in Vietnam has been grappling with consecutive power outages, severely impacting the production facilities of companies such as Samsung Electronics, Foxconn, Canon, and Luxshare Precision. Local media reports highlight that Canon’s Bac Ninh factory experienced a power outage from 8 a.m. on Monday until 5 a.m. on Tuesday. This week alone, at least five industrial parks and several villages have encountered partial or complete power disruptions. These frequent and often unannounced blackouts have prompted the European Chamber of Commerce to urge the Vietnamese government to take swift measures to address this pressing emergency.
In response to the power shortage, the government’s options have been limited. Local authorities have resorted to switching off streetlights in some major cities to conserve power. Authorities have also forewarned that the power supply shortage may persist until late June, potentially interrupting business operations and communication services throughout Vietnam.
Maximiliano Herrera, a climate and historical weather expert, states that this Asian heatwave could be the most severe tropical heatwave in world climate history, taking into consideration its intensity, geographical distribution, and duration. Recently, Prime Minister Pham Minh Chinh cautioned that the record-breaking temperatures—coupled with unprecedented electricity demand—pose the risk of nationwide power outages for the country’s 100 million inhabitants.
Amid a challenging economic climate, with rising costs and subdued demand, Vietnam’s first-quarter economic growth rate has dropped from 5.9% in the previous quarter to 3.3%. Experts are deeply concerned that the power crisis will further compound Vietnam’s economic woes.
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