According to the World Bank, a major power deficit in Vietnam caused by an unusually hot season and exceptional dryness in May and June cost the country $1.4 billion.
Northern Vietnam saw rolling blackouts and unexpected power disruptions, disrupting operations at a large number of companies. Some firms were given very little or no notice at all.
Vietnam is a key element of the supply chain for many of the world’s largest corporations, and several of them, including Samsung and Apple supplier Foxconn, operate operations in the north, near Hanoi.
According to the World Bank, with an estimated peak demand supply deficit of 1.8GW, firms in the north reported losses of up to 10% of sales, citing a small industry survey as part of its August economic updates.
“The preliminary estimate of economic costs for the May-June power outages is about US$1.4 billion (or 0.3 percent of GDP),” the World Bank said in its Taking Stock report released Thursday.
Vietnam was hit by a series of heatwaves beginning in early May, with temperatures reaching record highs and rivers and reservoirs at hydroelectric power facilities drying up.
The country relies on hydropower for about half of its energy needs, and electricity demand in the Southeast Asian nation is expanding at a rate of more than 8% per year on average.
The government intends to reduce energy use by 2% each year until 2025, implying that the power crisis would remain.
As part of its attempts to combat climate change, it has also made an ambitious goal to transition away from coal-fired power by 2050.
“Prompt action is needed to mitigate future risks to energy security and economic losses,” the bank urged authorities in the report.
Scientists warn weather extremes have intensified because of global warming.
The situation this year improved in early July following heavy rain.
