Why Vietnam needs to import electricity from Laos

"Buying electricity from Laos has not only economic reasons but also political connotations," energy analyst Ngo Duc Lam said.

National power monopoly Vietnam Electricity (EVN) has recently sought approval to import wind power from Laos at 6.95 cents per kilowatt-hour.

It also wants more transmission lines to be laid to allow more imports amid concerns of shortages in northern Vietnam due to a lack of new power plants.

He said the two countries’ governments signed a memorandum in 2016 for Vietnam to buy at least 1,000 megawatts from Laos in 2020, 3,000 MW by 2025 and 5,000 MW by 2030.

Vietnam has agreed to import 2,700 MW worth of hydropower from Laos, but the actual figure is likely be around 1,300 MW since some Laotian power plant investors have pulled out of the deal while others will only complete their plants by 2025, according to the Ministry of Industry and Trade.

This means Vietnam needs to find other sources such as wind power projects. Wind power plants in Laos are offering to sell over 4,100 MW to Vietnam.

At 6.95 U.S. cents per kilowatt-hour, Laos’s wind power is cheaper than Vietnam’s 8.5-9.8 cents for projects completed by October 2021.

While Vietnam has many renewable power plants, most of them are situated in the central and southern regions, and the country’s main transmission line to the north is already overloaded.

"Transmitting electricity from the central and southern regions to the north is not efficient due to loss of power, especially in border areas."

The north will however see shortages in May and June in the coming years due to declining rainfall which hampers hydropower production.

Analyst Tran Van Binh is however concerned that depending on wind power for imports is not reliable since it depends on the weather.

There is also a surplus of renewable power in Vietnam that has yet to be utilized, he added.

"Importing from Laos for economic reasons is acceptable. But in the long run this is not good for Vietnam’s energy development strategy."

Bui Van Thinh, chairman of the Binh Thuan Wind Power Association, said EVN needs to fulfill its commitments to local renewable companies to buy their electricity.

The Vietnam-Laos transmission line can manage 300 MW, and the figure is set to rise to 2,500 MW by 2027 when new lines are installed.