In an industrial park, electricity is the product

Bac Ninh, June 2023. At ten past two in the afternoon the control room at our park substation received its third curtailment notice of the day from the state utility. Northern Vietnam had come through the dry season with low reservoirs behind its hydropower dams and thermal plants short of coal, and for several weeks in late May and June supply was rationed across the region, industrial parks included. Our two northern parks were asked to cut demand by as much as 30 per cent at a few hours' notice. Inside them, 104 manufacturers were running production lines planned months before.

I had sat through many board discussions in which electricity appeared as one line in our utilities segment: bought from the grid, distributed through our substations and resold to tenants at a modest margin. During those seven weeks it was the only subject anyone wanted to discuss. Tenants did not ask about the price of land. They asked when their lines would have power.

That experience changed how I describe our business. An industrial park in Vietnam or Indonesia sells land, buildings and services, but what a manufacturer is really buying is the ability to run its lines without interruption, discharge its wastewater lawfully and move its people and goods in and out. Power comes first on that list. A park company that treats it as a pass-through has misunderstood what it sells.

Seven weeks in the summer of 2023

The shortage taught us three things.

The first was that a park's own distribution network is a lever, but only if someone has decided in advance how it will be pulled. Our substations could switch feeders and so choose which tenants lost supply. On the first day the default was to share the cut evenly, because that seemed fair and nobody had agreed anything else. Within a day it was obvious that equal sharing was the most damaging choice open to us. A cable maker with curing ovens lost a batch worth more than a week of an assembly plant's output. A packaging tenant needed most of a shift to bring its cleanrooms back to specification after each interruption.

The second was that resilience is cheap beside its absence, but it lands on the wrong budget. We rented 36 megawatts of diesel generators for seven weeks at a cost of US$4.8 million including fuel, and recharged it to tenants at cost. That was less than one tenant's own estimate of a single month of disrupted output. Yet before 2023 our utilities budget had no line for standby capacity, because standby capacity earns nothing in an ordinary year and is easy to cut.

The third was that tenants judge a park by how it behaves in the bad week. Two of our tenants complained formally about how we allocated supply, and one was right that we had been too slow to explain our reasons. Three others later told us that the summer was why they placed their next plant with us.

Agree the order of curtailment before it is needed

The most useful change we made was also the dullest. Every lease and renewal in our parks now includes a schedule setting out the order in which supply will be reduced if the grid curtails us. Safety and environmental loads are protected first: fire systems, wastewater treatment and ventilation in hazardous areas. Continuous processes that cannot be stopped without damage come next, such as furnaces, curing ovens, cleanrooms and cold stores, each verified by our engineers rather than self-declared. Batch processes that can pause at a defined point follow. Assembly and warehousing are reduced first, and we owe them the longest notice.

Tenants negotiated hard over that schedule. Several argued that their processes were continuous when they were not, and our engineers spent much of 2024 on site visits checking. Some lost the argument and were unhappy about it. But a ranking agreed in a quiet year is a contract, while a ranking invented in a crisis is a dispute.

I would encourage any park operator to write its order of curtailment now, publish it to tenants and rehearse it twice a year with a switching drill. I would encourage directors to ask whether such an order exists, who approved it and when it was last tested.

Rooftop solar is not resilience by itself

After 2023 our board approved a resilience programme for the northern parks. By the end of 2025 we had installed 41 megawatt-peak of rooftop solar on our own ready-built factories and on the roofs of tenants willing to host it, and a 20 megawatt-hour battery at Hai Phong. We are also studying renewable supply under Vietnam's 2024 rules allowing direct power purchase agreements between renewable generators and large consumers.

I support all of it, and the solar has paid its way through lower bills and tenants' own emissions commitments. But I have had to correct a misunderstanding that grew up around it, including in our own boardroom. Most rooftop systems are designed to switch off when the grid they feed goes down, for the safety of people working on the network. Panels on the roof do not, on their own, keep a factory running during a curtailment.

Resilience means firm capacity: storage sized for the critical loads in the curtailment schedule, standby generation that starts in minutes, and a network that can isolate itself safely. The solar reduces what we buy. The battery, the generators and the switching plan decide what we can keep running. A board that hears forty megawatts of solar should ask a different question: how much of the critical load could be carried for four hours without the grid? In our northern parks the answer is now about 31 megawatts, roughly the continuous-process load in our curtailment schedule. In 2023 it was nothing.

The deeper point concerns how park companies describe themselves to investors. We are valued mainly on land leases and rent, and utilities often appear as a low-margin segment that analysts skip. I would rather our reports showed interruption hours per tenant, the share of critical load protected through a grid outage and how old our substation equipment is, beside the land figures. Those are the numbers a manufacturer checks before signing a lease, and they should be the numbers a board checks before approving another phase of land.