October 6, 2026 - The risk of power shortages is expected to increase from 2027, while El Nino could put additional pressure on hydropower generation. As supply comes under strain and electricity demand continues to rise, coal-fired power plants are expected to be dispatched more heavily, improving output and profit prospects for some companies in the sector. 

Power shortage risks rise from 2027

In an urgent report to the prime minister on ensuring power supply for 2026-2030, the Ministry of Industry and Trade forecast electricity generation this year at 354.4 billion kWh, up about 9.7% from last year. The ministry said the power system would basically meet demand in 2026.

However, updated calculations show the risk of shortages rising rapidly from 2027. The national power system is forecast to face a capacity shortfall of about 4,256 MW and an energy shortfall of 2.9 billion kWh next year.

By 2028, the shortages are expected to widen to 8,309 MW and 20.7 billion kWh, respectively, and to 13,348 MW and 50.4 billion kWh in 2029. By 2030, they are projected to reach 13,964 MW and 61.18 billion kWh.

The shortfalls are due to power projects falling behind the national development plan. More than three years after implementation of the eighth National Power Development Plan (PDP VIII), operational projects account for only about 5% of the total capacity of projects reviewed, while projects that have started construction but are not yet operational account for about 9%. Meanwhile, around 45% of the capacity is from projects that have yet to receive investment approval.

The transmission grid is another bottleneck. The industry ministry said the projected shortfall in northern Vietnam was higher than the national figure. In practice, the north cannot fully tap surplus capacity in central and southern Vietnam because transmission capacity is constrained by the 500-kV north-central grid.

According to Vietcap, EVN and related entities are expected to complete 292 transmission projects during 2026-2030 under the adjusted PDP VIII, including 78 projects at 500 kV and 214 at 220 kV. The projects involve around 16,665 km of transmission and distribution lines and a combined transformer capacity of 91,263 MVA. However, the current capacity of these entities is equivalent to only 28.6% of that target.

Supply pressure could increase further if El Nino persists. Vietcap said the probability of El Nino occurring was currently close to 100% for August 2026-January 2027, higher than the 95-97% consensus forecast in May 2026.

El Nino typically brings lower rainfall, affecting hydropower supply. This is significant because hydropower has accounted for around 25-29% of Vietnam's total generation capacity in recent years.

Coal-fired power set to benefit

Against the backdrop of rising power shortage risks and pressure on hydropower output from El Nino, coal-fired power is expected to continue playing an important role in meeting baseload demand. Mirae Asset Securities said coal-fired power plants were likely to be dispatched more heavily to offset lower hydropower generation.

Generation data for the first eight months of the year has already highlighted the role of coal-fired power. According to EVN, total electricity generation and imports reached 235.82 billion kWh in the first eight months, up 9.3% from the same period in 2025. Coal-fired generation rose 12.6% to 119.24 billion kWh, accounting for 50.6% of total output. Hydropower generation, by contrast, fell 6% to 58.62 billion kWh, accounting for 24.9%.

Although high coal prices pose a risk to coal-fired power companies, some of the pressure could be offset by higher electricity prices. The average competitive generation market (CGM) price was VND1,430 (nearly 5.5 U.S. cents) per kWh in the first eight months, up 37% from a year earlier, supported by rising electricity demand and higher input costs such as gas and coal.

Vietcap forecasts the CGM price will rise to VND1,532 ($5.9 U.S cents) per kWh in 2027 due to a prolonged El Nino and supply shortage risks. Higher electricity prices, combined with increased dispatch, could benefit coal-fired power plants with competitive operating costs.

Some coal-fired power companies also have an advantage from having little or no debt, while their plants have been in operation for years and most of their fixed assets have already been depreciated.

At the Quang Ninh Thermal Power in the northern province of Quang Ninh, fixed assets had an original cost of over VND21.07 trillion ($810.4 million), of which nearly VND19.17 trillion had been depreciated.

Hai Phong Thermal Power's fixed assets had an original cost of nearly VND22.24 trillion, with nearly VND19.73 trillion already depreciated. Similarly, Pha Lai Thermal Power reported fixed assets with an original cost of nearly VND13.63 trillion, of which over VND13.45 trillion had been depreciated.

The first-half results of coal-fired power companies also showed positive trends. PPC reported profit of VND166 billion ($6.38 million), up 2.9 times from a year earlier; NBP posted profit of VND19.3 billion ($742,220), up 89%; HND earned VND508 billion ($19.54 million), up 24.5%; while QTP reported profit of VND524 billion, up 44%.

However, positive business prospects do not necessarily mean coal-fired power stocks are entering a strong price-upcycle. On the stock market, the group has generally traded quietly, with low liquidity and limited investor attention.

The investment story for coal-fired power stocks therefore currently hinges more on their ability to sustain generation, cash flow and dividends as electricity demand rises and supply comes under pressure. The group may be more suitable for investors prioritizing cash flow and dividends than those expecting a sharp short-term rally.