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Electricity market reform to be piloted next year
Viet Nam would launch a pilot competitive market for electricity generation during the first six months of next year, Deputy Trade and Industry Minister Do Huu Hao revealed in Ha Noi on Wednesday.
The preparation for the market was now "basically done," he told a workshop organised by the Electricity Regulatory Authority of Viet Nam (ERAV).
It included market design, the way it would work and plans for its implementation.
The pilot market would provide a low-risk way to test market structure, its rules and procedures as well as identify and provide remedies for any deficiencies, the deputy minister said.
It would also allow participants to learn, practise and develop their skills for a competitive market
ERAV says the final market will start only when all generators can be paid in accordance with Viet Nam Competitive Generation Market (VCGM) Rules and any deficiencies in those rules and procedures have been identified and remedied.
The gathering was used to introduce the VCGM's approved design; operation mechanism; market-based tariffs and implementation plan to industry representatives; international consultants and representatives of international organisations.
Cost-based model
| Elecctricity market reforms
May 2006 to April 2007: Spanish energy consultant Soluziona analyses market models and recommends a change to a competitive market mechanism.
May 2007 to February 2008: US energy consultant KEMA provides a detailed comparison between a Cost-Based-Pool and a Price-Based-Pool and recommends the former. The consultant also provides a design for the CBP model and suggests ways to restructure the power sector to accommodate it.
February 2008 to May 2008: Britain's Campbell Carr provides an independent assessment of KEMA's overall market design and recommends the detailed mechanism to complete the overall Cost-Based-Pool.
May 2008 to September 2009: New Zealand consultant PB Associates Consultant provides detailed design and rules for the market's development. | The ERAV Electricity Market Unit director Pham Quang Huy said that after years of research, nine workshops and formal consultation with Electricity of Viet Nam, PetroVietnam, the State-owned Lilama Corporation; the World Bank and the Asian Development Bank, the cost-based Gross Pool had been chosen as the market model for Viet Nam.
The approval was embodied in Trade and Industry Ministry Decision 6713 of December 31, 2009 and its Circular 18 of May 10 this year, he said.
VCGM participants include entities competing in electricity generation and are: Power plants linked to the national grid with a capacity equal or higher than 30MW - excluding wind farms and geothermal plants, the Single Buyer - the Electricity Power Trading Company (EPTC); the Systems and Market Operator (SMO) - the National Load Dispatch Centre and service providers.
All the electricity generated by competing providers would be sold to the Single Buyer (EPTC), said marketing director Huy.
Their dispatch schedule would be based on their variable cost-based bids with the payment for the electricity made at either a contract or spot-market price.
ERAV's international consultant William Derbyshire told the workshop that the SMO would have primarily responsibility for collecting and managing market data.
Market monitoring and public data would be published weekly, monthly and yearly.
An independent auditor would make periodic checks of the SMO data and its compliance with VCGM rules.
ERAV would have responsibility for monitoring compliance with VCGM rules and penalties.
The penalties, as set in Decree 68/2010/ND – CP, include fines of up to VND40 million (US$2,100) as well as repair of the consequence and compensation for damage.
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