A Review over 5-year operation of Vietnam electricity market

Despite many difficulties, the Vietnam electricity market has achieved satisfactory results after 5 years of operation. Reporter from Electricity Magazine conducted an interview with Mr. Nguyen Anh Tuan - Director of the Electricity Regulatory Authority of the Ministry of Industry and Trade (MOIT).

Mr. Nguyen Anh Tuan

Reporter: Could you tell us the results achieved during 5-year operation of the Vietnamese electricity market?

Mr. Nguyen Anh Tuan: After over 5 years of operation, the Vietnam electricity market has achieved basic successes. The electricity system has been continually operated in a safe and really manner, sufficiently supplied power for socio-economic development without incidents arising from the market operation.

The scale of Vietnam competitive generation market has been constantly expanded. In July 2012, only 31 generators directly participated in the market. By the end of 2017, this figure rose to 80. This is the most obvious evidence for operating efficiency, as well as the absolutely appropriate policy on formation and development of the Vietnam electricity market.

Particularly, information on the market operation fully published has contributed to improving transparency, equality in electric power mobilization; developed market of public, equal, healthy competitiveness among participating units; created motivation for power generation plants to take initiative in operation, shorten time for repair and maintenance, reduce operation costs, proactively offer selling prices, contribute to improving production efficiency and reducing electric power generation costs, improving the performance of the whole system.

The market has initially also created positive signals, attracting investment in the power sector. Along with the development of the electricity market, the legal document system for this market has also been improved. Basically, the existing   issues from previous years have definitely handled.

Reporter: What do you think about EVN's role in the safe and efficient operation of the electricity market?

Mr. Nguyen Anh Tuan: EVN has played a major and crucial role right from the stage of Vietnam competitive generation market (VCGM) to piloting Vietnam wholesale electricity market (VWEM).

EVN has actively and proactively cooperated with the Electricity Regulatory Authority in developing the market design, completing legal documents, developed project proposals and circulars related to the market operation. EVN's officials and experts with professional experience in the field of electricity market as well as system operation have effectively assisted in developing appropriate legal documents on the operating conditions of Vietnam’s Power sector, thereby enhancing their feasible application.

As required to implement the direction of the Ministry of Industry and Trade, EVN has also invested and upgraded IT infrastructure systems for the market operation such as: Price offering system, transmission network, market price calculatiing process, payment, etc. All these factors has contributed to stable, safe, uninterrupted operation of the market over the past 5 years.

EVN also actively organized training and dissemination of basic, intensive knowledge as well as legal regulations for affiliated units to timely grasp necessary policies and regulations to serve the operation of the market.

Particularly, as the sole wholesale buyer in the competitive power generation market, EVN has also fulfilled the tasks of signing electricity purchase contracts with generating units, paying electricity bills in compliance with regulations. This contributes to securing the stability of financial flows as well as liquidity in the market.

Reporter: Besides the successes, what are the challenges when operating the Vietnam electricity market, Sir?

Mr. Nguyen Anh Tuan: The operation of electricity market also has met difficulties. The number of power plants directly participating in the electricity market has rapidly increased while that indirectly participating in this market has remained at high rate. Currently, there is about 51% of installed capacity participated in the electricity market indirectly and not participated in the market price dermination. Therefore, the market price has not accurately reflected the marginal cost of the whole electricity system.

In spite of all efforts, EVN’s IT infrastructure has only met basic requirements. Incomplete SCADA system has also made it difficult to regulate and monitor the operation of the market.

Price offering, scheduling of mobilization of hydropower generation units at competitive offering prices while  having to comply with the requirements under the Inter-reservoir regulatory process requires a more flexible and closer offering mechanism to the operating time applicable to hydropower plants.

Reporter: Recently, VCGM has to pause 01 month for objective reasons. Therefore, do the nations in the world regulate on halting the electricity market, sir?

Mr. Nguyen Anh Tuan: All the international electricity markets shall prepare the content of intervention or halting operation in the case of force majeures. For example, the Philippines’ power market regulation allows for the pause of the market in the event of natural disaster, or at the request of the President in the event of a national/international security problem. Similarly, as the regulation of Singapore, Singapore Energy Market Authority (EMA) can stop operating the market in cases national security or natural disasters affect the operation of the electricity system, etc.,.

Reporter: In order for the electricity market of Vietnam to be continually operated in safe and stable manner, secured transparency, what do the MOIT as well as units need to do in the coming years, sir?

Mr. Nguyen Anh Tuan: In order to increase the number of plants participating in the market, the Electricity Regulatory Authority should regularly instruct EVN, the National Load Dispatch Center should actively urge and inspect the new generation units, prepare conditions for participating in the market; study on the mechanism of putting multi-purpose strategic hydropower plants (currently dependent accounting on EVN) into the market. The MOIT also should direct relevant units to continue to upgrade IT infrastructure as planned, complete upgrading and connect substations to SCADA system for monitoring operation of the power system.

In particular, the operation of hydropower plants should be closed to the hydrological situation, the water supply requirements for the downstream areas and the constraints in the inter-reservoir operation process, thereby scheduling the appropriate mobilization of the plants. At the same time, it is necessary to study and develop mechanisms to create favorable conditions for hydropower plants to update their offer on the operation day in order to promptly handle irregular fluctuations in hydrology.

Reporter: Thank for your time Sir!

  • 05/02/2018 12:07
  • evn.com.vn