Vietnam Competitive Generation Market (VCGM): Enhancing transparency
According to Mr. Tran Dang Khoa, Director of Electricity Market Department of Vietnam Electricity, the first and most obvious outcome after 4 years of operation of the Vietnam Competitive Generation Market (VCGM) is that the power system has been being safely operated, EVN has sufficiently supplied electricity to the socio-economic development of the country and people’s lives. The VCGM has been operating constantly, stably and reliably. Up to now, the operation of VCGM has gradually fine-tuned and increasingly professional. Organizations under and outside EVN have progressively grown up, well prepared for implementing the Vietnam Wholesale Electricity Market (VWEM) in their real production – business activities in the years to come.
“After more than 4 years, I have never had to interfere and stop the VCGM, even in the most difficult time when serious failures happened in the system”, said Mr. Khoa.
The safe VCGM operation during the past time has enhanced transparency and fairness when mobilizing power generation sources based on price offers of power plants; ensuring that power generation prices are set up on the basis of objective demand – supply rule and transparent electricity tariff according to the Government’s policy.
The introduction of competition in power generations has given power generation plants more incentives to reduce their production costs and to develop a proper price offer strategy in the electricity market, hence raising their profits. This is a requisite for developing a sustainable power sector in accordance with the Government’s roadmap.
Vietnam electricity market is operating safely and reliably
VWEM: Successful pilot implementation of phase 1
In 2016, Vietnam Competitive Wholesale Electricity Market (VWEM) completed its pilot implementation for phase 1: Calculation and simulation on paper, no real payments. The objective of this phase is to facilitate power corporations – who participate in the electricity market for the first time – to get familiar with new mechanisms in electricity generation and business activities, preparing human resources for meeting the VWEM’s requirements through training courses from basic to specialized, preparing information technology infrastructure (IT) for further development phases of the VWEM.
At present, each power corporation is entitled to have three power plants of three generation types: hydropower, coal fired thermal power and gas turbine, participating in the electricity market. Up to now, after one year of pilot implementing VWEM simulation on paper, power corporations have been familiarized with calculations and confirmations of payment statements of power companies; initially studying market design, processes, procedures, regulations on market supervision and operation, tools for mitigating risks in the electricity market such as power purchase agreements under CfD form, etc.
Particularly, recognizing the importance of human resource training, load forecast, study of financial tools to mitigate risks of the market, power corporations have actively studied and implemented… In addition, power corporations have basically completed their IT infrastructures, remote metering systems at boundary points to meet the VWEM’s requirements.
In Mr. Tran Dang Khoa’s opinion, IT infrastructure and human resource are considered to be the two especially important factors, deciding the success of VWEM implementation. In which, functions of IT system include receiving and processing price offers, establishing market plans, transmitting and confirming dispatching orders, announcing market information, payment and market oversight, etc.
“Without IT infrastructure, electricity market does not exist. This is also an important task assigned by the Ministry of Trade and Industry to Vietnam Electricity. Accordingly, EVN has instructed their relevant subsidiaries to quickly implement a Project for developing IT infrastructure to serve for the VWEM operation and oversight. To prepare for pilot implementation of the VWEM in 2017, basically requirements for IT infrastructure and human resource are met”, said Mr. Khoa.
The achievements in 2016 are pre-requisites so that in the year 2017 the VWEM will be officially put into pilot implementation, to operate safely and stably; at the same time power corporations will be capable of and responsive to market requirements when participating in the VWEM, etc.
Diagram on capacity growth, number of power plants participating in the competitive generation electricity market (1/7/2012 – 1/7/2016):
