POW: VDSC Warns of Rising Input Electricity Costs from Q2 2026

Overview

VDSC (Rong Viet Securities) forecasts that the full market electricity price (FMP) will gradually increase from Q2 2026 as low-cost hydropower supply diminishes, putting upward pressure on input electricity purchase costs for power companies. This development is particularly relevant for POW (Petrovietnam Power Corporation), which operates the new Nhon Trach 3 and 4 LNG plants.

Key Facts

• Q1 2026 total electricity consumption reached 77.4 billion kWh, up 6.5% year-on-year.
• Total installed capacity reached 89.3 GW as of end-Q1 2026, up 8.8% year-on-year.
• Hydropower output rose 7.8% to 14.9 billion kWh in Q1 2026, but this effect is expected to fade from Q2 2026.
• FMP averaged VND 1,255/kWh in Q1 2026, flat versus Q1 2025 and down 2% year-on-year.
• Capacity market price (CAN) rose to VND 160/kWh, up 2.2 times year-on-year.
• Nhon Trach 3 and 4 produced 510 million kWh in the first two months of 2026, accounting for 15% of gas-fired output.
• Electricity imports surged 120% year-on-year following completion of high-capacity transmission lines from Laos and China.

What Happened

In a report dated April 19, 2026, VDSC noted that Q1 2026 FMP remained low due to abundant low-cost hydropower and low fuel costs for coal and gas in January and February. However, from Q2 2026, the securities firm expects FMP to rise as the La Nina effect wanes, reducing hydropower availability and forcing greater reliance on higher-cost generation sources.

The report highlights that while the capacity market price (CAN) has already improved significantly, the FMP has not yet reflected this due to the temporary surplus of cheap hydropower. As hydropower declines, the FMP is expected to trend upward, increasing input costs for power purchase agreements.

Market Context

POW shares closed at VND 13 on April 15, 2026, down 0.38% with volume of 9.58 million shares. The stock trades on HOSE. The broader energy sector has been supported by strong electricity demand growth (6.5% in Q1) and new capacity additions, but rising input costs could pressure margins for thermal and gas-fired generators. POW’s new LNG plants (Nhon Trach 3&4) are now operational, contributing 15% of gas-fired output, but their higher fuel costs may become more burdensome if FMP increases are not passed through.

Strategic Significance

For POW, the expected rise in FMP from Q2 2026 represents both a challenge and an opportunity. As a power generator, higher FMP could improve revenue per kWh sold, but if input costs (especially LNG fuel) rise faster than output prices, margins may compress. The company’s reliance on LNG imports exposes it to global gas price volatility. Conversely, the gradual phase-out of cheap hydropower could enhance the competitiveness of baseload gas-fired plants, provided POW can secure favorable fuel supply contracts. The key strategic question is whether POW’s power purchase agreements allow for timely cost pass-through to EVN.

What to Watch

• Q2 2026 FMP data release by EVN/NSMO, expected in July 2026.
• POW’s Q2 2026 earnings report, due in August 2026, to assess margin trends.
• Global LNG spot prices and any long-term supply agreements POW may announce.
• Hydropower output in Q2 2026 versus historical averages.
• Any regulatory changes to the electricity pricing mechanism or cost pass-through rules.