The recently approved national power development plan VIII, covering the period 2021-2030 with a vision to 2050, has brought positive news to the energy industry and caught the attention of stock investors.
Promoting the use of renewable and gas-fired energy while reducing coal-fired power is a key objective of the plan. Specifically, it aims to eliminate 13,220 megawatts of coal-fired power, gradually phasing out this power source. Coal-fired power is projected to grow at a compound annual rate of at least 2% from 2021 to 2030, slowing down to 1% in the 2030-2050 period, accounting for 19% and 4% of total power capacity, respectively.
Gas-fired power is expected to be the backbone of Vietnam’s development plan for 2021-2030, with a compound annual growth rate of 26% and accounting for 27% of total power capacity. In the 2030-2050 period, gas-fired power is projected to experience a slowdown with a growth rate of 4%, representing 15% of the total power capacity by 2050.
Wind power will be a key focus in the short and long terms. Onshore wind power is expected to grow at a compound annual rate of 25% from 2021 to 2030 and 6% from 2030 to 2050, accounting for 14% and 13% of total power capacity in these respective periods. Additionally, Vietnam plans to develop offshore wind farms with a capacity of 6,000 megawatts by 2030, representing 16% of the total power capacity, with an expected growth rate of 15% in the 2030-2050 period.
Although the power development plan VIII highlights the Government’s commitment to transitioning to green energy, it also presents financial challenges due to the promotion of gas-fired power and renewable energy generation.
VNDirect, in its report, has identified several stocks that may benefit from the power development plan VIII. Energy infrastructure companies and gas-fired and renewable energy producers are expected to reap the rewards.
Prominent power infrastructure construction companies such as PC1 Group JSC (HOSE: PC1), Power Engineering Consulting JSC 2 (HOSE: TV2), and Fecon Corporation (HOSE: FCN) may see immediate benefits. PetroVietnam Technical Services Corporation (HNX: PVS), specializing in building offshore wind farms and having projects like Thang Long and La Gan, is also expected to gain in the long run.
Gas-fired power plants, including liquefied natural gas (LNG), are anticipated to experience rapid growth with projects mentioned in the power development plan VIII. These include Nhon Trach 3 and Nhon Trach 4 projects by PetroVietnam Power Corporation (HOSE: POW), LNG Long Son project by Power Generation Joint Stock Corporation 3 (HOSE: PGV) and TV2, O Mon 3 and O Mon 4 power plants by Power Generation Joint Stock Corporation 2 (Stock code: GE2), and LNG terminal warehouse projects by PetroVietnam Gas Joint Stock Corporation (HOSE: GAS).
The plan is also expected to accelerate the progress of long-stalled mammoth gas projects such as Blue Whale and Block B projects in the coming years, ensuring domestic gas supplies and reducing dependence on LNG imports for electricity generation.
Companies with experience in developing renewable energy projects such as Bamboo Capital Group Joint Stock Company (HOSE: BCG), Ha Do Group JSC (HOSE: HDG), Refrigeration Electrical Engineering Corporation (HOSE: REE), and Gia Lai Electricity JSC (HOSE: GEG) are also expected to perform well in the stock market.
Gia Lai Electricity JSC’s transitional renewable energy projects, including the second phase of VPL Ben Tre offshore wind farm with a capacity of 30 megawatts and Duc Hue solar farm with a capacity of 49 megawatts, are ready for operation in 2023-2024. Ha Do Group JSC is actively investing in the energy industry, with a generation capacity of 314 megawatts of hydroelectricity, 50 megawatts of wind power, and 82 megawatts of solar power.
Bamboo Capital has successfully operated renewable energy plants with a total capacity of 592 megawatts, including solar farms BCG Long An 1, BCG Long An 2, BCG Vinh Long, and Phu My 1 Power Plant, along with other rooftop solar power projects. The company is currently implementing the first phase of wind power projects Khai Long Ca Mau and Tra Vinh, with a total capacity of 180 megawatts.
In terms of stock market movements, most utilities, gas, and construction stocks have experienced an increase since mid-May, especially those associated with gas-fired power plants. However, it’s important to note that the current market movement only reflects the initial temporary reaction of investors, while the long-term impact of the power development plan VIII on these stocks is yet to be fully realized.
