Temporarily suspending the competitive generation market: Not affecting the power supply

On September 26, 2017, the Ministry of Industry and Trade issued Decision No. 3698 / QD-BCT on temporary suspension of the competitive generation market from October 1, 2017. To better understand this issue, the reporter of Newspaper of Industry and Trade had a conversation with Mr. Nguyen Anh Tuan - Director of the Electricity Regulatory Authority of Vietnam.

Mr. Nguyen Anh Tuan

Reporter: Could you please tell us advantages and disadvantages of running the competitive generation market?

Mr. Nguyen Anh Tuan: After more than 5 years of operation, the competitive generation market (VCGM) has achieved some successes. The power system operates safely and reliably, supplying sufficient electricity for socio - economic development, without any incidents occurred from the operation of electricity market. Information is widely and adequately publicized, contributing to improving the transparency and equity in dispatching power sources. Generators are more active in price offering, operating, shortening the maintenance time, saving operation costs, etc. enabling the improvement of overall effectiveness of the whole system.

However, the operation of VCGM has also encountered some difficulties. First of all, the proportion of power plants directly participating in the electricity market has increased rapidly. But the share of power plants indirectly participating in the electricity market remains high, accounting for about 51% of the total installed capacity and these power plants are not involved in determining the market price. Therefore, the market price does not accurately reflect the marginal cost of the whole power system. Secondly, despite many efforts, the current information technology infrastructure merely meets basic requirements. Inadequate SCADA system has made the load dispatching, the market monitoring and operation difficult. Thirdly, the price offering, mobilization scheduling of hydropower units at competitive offering prices, while meeting the requirements of inter - reservoir regulation procedures, requires a more flexible price offering mechanism, closer to the operation time.

The shortcomings mentioned above require proper solutions and regulations in the coming time. Specifically, in order to increase the number of power plants participating in the electricity market, the Electricity Regulatory Authority (ERAV) has regularly instructed Vietnam Electricity (EVN) and National Load Dispatch Center (NLDC) to actively push and work with new power generators who are preparing for entry into the market; at the same time, considering mechanisms to motivate multi - purpose hydropower plants (currently financially dependent on EVN) to participate in the electricity market. Further investments are made in completing the infrastructure for operation of power system and electricity market such as information technology system, connecting substations to SCADA system for monitoring and operating as planned.

Regarding hydropower plant operation: Organizations should follow closely the hydrological situation, water supply requirements of downstream areas and constraints in inter - reservoir operation procedures to schedule the dispatching schedule. New mechanisms should be established to allow hydropower plants to update their price offers on the operation day, to promptly deal with hydrological irregularities.

Reporter: What reasons are behind the decision to suspend the competitive generation market, sir?

Mr. Nguyen Anh Tuan: Reasons for the suspension comes from both the supply side and the demand side.

On the demand side, in the first eight months of 2017, the power load grew by only 8.5%, or 3% lower than the target set in the beginning of the year. Such a low load growth is mainly caused by the weather in 2017 with many abnormal occurrences. The dry season in the South was very short and there were no long -lasting heat waves, leading to a low growth of residential loads (just over 3%).

On the supply side, hydropower plants have been mobilized to the maximum due to a high volume of water inflows to reservoirs. Many reservoirs had to discharge water to ensure dam safety, especially from July to October 2017. According to statistics, 21 hydropower plants discharged water in July 2017; 55 plants discharged water in August 2017; 54 plants in September 2017 and the same number of hydropower plants discharged water early October 2017. By prioritizing water regulation, flood prevention and control to secure safety for the downstream over power generation, it is necessary to have regular and continuous interventions in the operation of hydropower plants.

In the context of demand and supply as presented above, together with the need to exploit more gas fired power plants to fully utilize the gas production and alleviate the overload of 500 kV transmission lines, the Ministry of Industry and Trade has decided to suspend operation of the VCGM.

Reporter: Could you please tell us, when suspending the competitive generation market, how will power plants be dispatched?

Mr. Nguyen Anh Tuan:

During this suspension duration, the dispatching of power plants will keep to be implemented on the principle of economic dispatching, priority is given to hydropower plants that are discharging water or likely to discharge water; maximizing the use of gas fired thermal power sources; coal fired thermal power plants are dispatched in the order from low to high contracted prices, taking into account technical constraints of equipment and the power system. It can be said that the suspension does not affect the supply of electricity for all activities of the socio-economy.

Reporter: Whether the suspension will have any impacts on the electricity market development roadmap in Vietnam?

Mr. Nguyen Anh Tuan: The Ministry of Industry and Trade has been and will continue establishing and developing the competitive electricity markets at all levels (generation, wholesale and retail) in accordance with the roadmap approved by the Prime Minister.

The VCGM has been creating a positive competitive environment for power plants by optimizing their economic operations based on price offers from generators. However, the operation of electricity market must not affect the safe, reliable and uninterrupted electricity delivery to customers, as well as the accomplishment of other social security objectives (flood prevention and control, irrigation, etc.). In some emergency cases, in order to prioritize the security of electricity supply, as well as social security objectives, interventions in the electricity market are inevitable. Hence, suspension of the VCGM is only a temporary solution due to objective reasons arising during the operation.

Reporter: When do you expect the Ministry of Industry and Trade to re-operate the VCGM?

Mr. Nguyen Anh Tuan: It is expected that the VCGM will resume operation from January 1, 2018 or even earlier in 2017, as soon as the reasons mentioned above are dealt with. The Ministry of Industry and Trade has directed EVN, NLDC, power generators and related organizations to closely check hydrological situations at hydropower plants, load demands, transmission capacity on the North - South 500 kV line, the situation of mobilizing gas turbine power plants, etc. to make timely decisions to resume operation of the VCGM as soon as possible.

Reporter: Thank you Mr.!

  • 23/10/2017 02:54
  • evn.com.vn