In a bid to tackle potential power shortages in its northern region, Vietnam is contemplating the import of wind power from neighboring Laos. Vietnam Electricity (EVN), the national energy monopoly, has sought approval for the import at an economically competitive rate of 6.95 cents per kilowatt-hour, which is lower than Vietnam’s domestic wind power rates.
As outlined in a 2016 memorandum between Vietnam and Laos, there is a strategic plan to progressively increase Vietnam’s power purchases, with the ambitious goal of reaching 5,000 megawatts (MW) by 2030. Laos, with a current supply exceeding 4,100 MW, significantly contributes to this shared objective.
However, challenges have arisen in the execution of the energy pact. Some Lao investors have withdrawn their stakes, and delays in power plant completion have led to a shortfall in the expected 2,700 MW of hydropower imports. To counter this, Vietnam is exploring alternative avenues, including the import of wind power from Laos.
Infrastructure and Reliability Concerns
Despite the potential economic benefits, analysts raise concerns about the reliability of wind power, given its dependence on weather conditions. The current Vietnam-Laos transmission line has a capacity of only 300 MW, prompting plans to expand it to 2,500 MW by 2027. Additionally, local renewable energy companies in Vietnam are awaiting a commitment from EVN to purchase their electricity.
This situation carries broader implications beyond the economic realm, delving into the political sphere. The traditionally robust alliance between Vietnam and Laos faces a test with this development. To strengthen energy supplies between the two nations, Vietnam’s Ministry of Industry and Trade has proposed the installation of an additional power transmission line to Laos.