Vietnam’s Competitive Generation Market: Creating positive effects to call for investment

'The competitive generation market in Vietnam (VCGM) has started to create an open competitive environment among participants and positive effects to attract investment", told Mr. Nguyen Anh Tuan - Director of Electricity Regulatory Authority (MOIT) after 4 years of operation of VCGM.

Mr. Nguyen Anh Tuan

Reporter: How do you assess the efficiency of the VCGM after 4 years of operation?

Mr. Nguyen Anh Tuan: After 4 years of operation, VCGM has in principle completed the set objectives and facilitate the participants in the operation of the market. On 01 January 2016, Vietnam wholesale electricity market (VWEM) was put into paper trial and will be put into pilot operation for 2 years (2017-2018), then completed and put into official operation by 2019.

It can be said, VCGM has created an open competitive environment among the participants; generating motivation in the power plants in improving their proficiency and reduce generation costs. In particular,  positive signs are initially produced, more investments are attracted into the power sector.

Reporter: In addition to these results, what shortcomings and difficulties are facing VCGM?

Mr. Nguyen Anh Tuan: There remain shortcomings that VCGM needs to overcome quickly. Firstly, there are quite a few power plants outside the market (covering 55% capacity). Therefore, in the coming period, there should be a mechanism that can mobilize power plants to the maximum quantity to engage in the competitive electricity market.

Secondly, the infrastructure serving the competitive electricity market remains limited. Particularly, information technology infrastructure needs further development.

Thirdly, there must be trained staff with qualifications and knowledge of the electricity market. The power plants which are new to the electricity market have to be well prepared in terms of workforce in order to perform activities more actively and efficiently in the market .

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Reporter: What are the measures that MOIT and the ERAV have taken to overcome the above mentioned obstacles, especially when the pilot wholesale electricity market is introduced in 2017?

Mr. Nguyen Anh Tuan: The MOIT has actively issued documents, circulars, regulations, guidelines, etc., to create a favorable legal framework for the electricity market participants. At the same time, the MOIT issued mechanisms allowing the multi-purposed hydropower plants to participate in the competitive generation market. The MOIT also directed the deployment of comprehensive IT infrastructure for the market participants, which are: the National Load Dispatching Center (NLDC), the generation agencies, the power corporations, etc. The MOIT has just approved the overall IT infrastructure design for the wholesale electricity market; issued Curriculum and the overall plan as a ground for EVN and the subsidiaries to perform, improve the quality of human resources serving the electricity market.

In the coming stage, the ERAV will expand the participants who attend monthly meetings on the electricity market, aiming at timely solving problems and obstacles, etc.

Reporter: There remain concerns about the transparency of the electricity market. What are the solutions that the MOIT should adopt to ensure fair competition in the market?

Mr. Nguyen Anh Tuan: The MOIT will direct and supervise the participants to strengthen and improve their communication exchange with the units operating and dealing in the market - the NLDC.

At the same time, the MOIT will push up the disclosure of information related to the electricity market, including information for participants as well as information for the majority of the population.

Reporter: As a key player in providing sufficient electricity to the whole country, what is the role of EVN in the electricity market for the last 4 years?

Mr. Nguyen Anh Tuan: It could be confirmed that EVN plays an important role in the successful formulation, implementation and operation of the electricity market in general and VCGM in particular. EVN has successfully completed the tasks entrusted by the MOIT in terms of VCGM operation for instance, building IT system, training human resources, etc. Simultaneously, EVN directed its members including NLDC, Power Purchase Company, GENCO, etc.. to fully implement the MOIT’s direction, helping to build a foundation and ensure the safe and reliable operation of the electricity market.

Reporter: Thank you!

As of June 2016:

There are 72/115 power plants participating in the electricity market, with a total installed capacity of 16,719 MW, increasing by 2.3 times compared with the starting point of time (July 2012) and reaching 45% of the capacity of the whole system.