Hanoi (VNS/VNA) - Hydropower plants have seen poorbusiness performance in the first quarter of 2019, which could give coal-poweredand gas-powered thermo-electric plants more opportunities to produceelectricity.

To ensure demand is met, the country's largest power group VietnamElectricity (EVN) will need to mobilise more power from these plants and alsofrom some solar projects that are expected to be operational in 2019.

At the end of the first quarter, the profits of most hydropowerbusinesses slumped. Sa San 4A Hydropower JSC saw profit drop by 60 percentto 8.7 billion VND (372,000 USD). The company attributed the low profit tounfavourable weather conditions which made the machines less stable.

Southern Hydropower JSC and Vinh Son-Song Hinh HydropowerJSC also reported profit reductions of more than 50 percent. Gia Lai HydropowerJSC and Song Vang Hydropower JSC saw profits fall by 34 percent and 43 percent,respectively.

Some other units in the hydropower segment recorded modestprofit growth including Nam Mu Hydropower JSC and Hydro Power JSC – PowerNo 3, up 3.3 and 4.4 percent, respectively.

The poor results could be due in part to the return of the ElNiño weather phenomenon to Vietnam at the end of 2018, which causedwidespread drought in the central region.

Over the last 10 years, there have rarely been threeconsecutive years of heavy rainfall. After lots of precipitation in 2017 andmost of 2018, rainfall is likely to be down this year, according to BaoViet Securities Co (BVSC). This would mean less power is generated byhydropower plants.

This provides an opportunity for thermal-power businessesas EVN faces the need to mobilise more power from other sources.

Some thermal power units enjoyed positive businessresults in the first quarter amid the hydropower downturn.

Pha Lai Thermal Power Co Ltd saw net profit increase by27 percent to reach 242.6 billion VND (10.42 million USD) thanks to animproved gross profit margin, up from 14.7 percent to 19.4 percent.

Ninh Binh Thermal Power reported a net profit riseof 21 percent. PetroVietnam Power Corporation, which owns many coal andgas thermal power plants, reported profit of nearly 916 billion VND (39.4million USD), up by 17 percent.

Electricity enterprises have also been focusing on solarpower and other sources of renewable energy.

In the first quarter of the year, Gia Lai ElectricityJSC recorded profit 16.8 percent higher than in Q1 2018. The openingof two solar power plants in the central province of Thua Thien-Hue and theCentral Highlands Province of Gia Lai contributed to the higher profit. Asmuch as 51 percent of the revenue came from solar power while the sharefrom hydropower decreased from 87 percent to 47 percent.

To encourage the development of renewable energy in Vietnam,Prime Minister Nguyen Xuan Phuc issued Decision 11/2017/QD-TTg on April 11,2017 about mechanisms to encourage solar power projects. It tookeffect on June 1, 2017 and will last until June 30, 2019.

For solar power projects connected to the national powergrid before June 30, 2019, Vietnam Electricity (EVN) will buy the entirepower output at 2,086 VND (9.35 US cents) per kWh for 20 years.

This means that if solar projects are not connected to thegrid before the June deadline, the purchasing price of electricity theygenerate could be lower and will not be fixed.

As a result, a series of businesses such as Sao Mai Group,Thanh Thanh Cong and Bamboo Capital have rushed tofinish solar projects to enjoy the preferential rate.-VNS/VNA