Vietnam competitive generation market (VCGM)

+ Vietnam competitive generation market (VCGM)

Electricity market model

Monopoly: One entity may have responsibility for all functions of power system management and operation, including: generation, transmission, distribution and retail to End-users.

Single Buyer Model: Generation Companies competes to sell electricity to Single Buyer (SB). Distribution companies buy electricity from SB and sales to End-users.

Wholesale Model: Generation Companies competes to sell electricity to Distribution Companies, Distribution Companies competes to buy electricity from Generation Companies and sell it to End-users.

Retail Model: This is the highest level of competition electricity market, in which, electricity is considered as the normal commodity, all customers can choose their supplier.

The power market structure is illustrated as below:

Vietnamese Competitive Generation Market – Single Buyer Model

Vietnam Competitive Generation Market – VCGM has been established after long period of research and development. VCGM was operated as interim market from 01/07/2011 and will be started in 2012.

Roles of market participants

• Entities competing in generation: these are power plants with installed capacity equal to or higher than 30 MW and connected to the national power grid either directly to the transmission network or via a distribution network, but excluding wind power farms and geothermal power plants. These entities are further classified into:

o Indirect trading Generators, including:

- Strategic Multi-Purpose Hydro Power Plants (SMHPs)

- Fast Start Reserve (FSRs)

- Cold Start Reserve (CSRs)

- Reliability Must Run (RMRs)

o Direct trading Generators

• Single Buyer (SB) – this is the Electricity Power Trading Company (EPTC) under EVN and will be subsequently referred to interchangeably as either SB or EPTC

• System and Market Operator (SMO) – this is the National Load Dispatch Center (NLDC)

• Service Providers including the:

o Metering Data Management Service Provider (MDMSP) – this is the Information Technology Center under the EVN Telecom (EVN.IT)
o Power Transmission Service Provider – this is the National Power Transmission Corporation (NPT).

Market operational Principles:

In the VCGM, all electricity generated by power plants is sold to EPTC (the SB), and their generating units are scheduled based on their variable cost-based bids. Payment for the transacted electricity is made at the contract price and the spot market price of each trading interval with the use of contract for difference. During the first year of the market, the proportion of electricity procured at the contract price will be set at 90% - 95% of the total electricity generated by the plant; the remaining will be procured at the spot market price. This proportion will be gradually reduced in the following years to enhance the competitiveness in generation, but shall not be less than 60%.

All Generators that own power plants with capacities above 30 MW are required to participate in the VCGM. The SMO, as a service provider, operates the market, and is responsible for scheduling and dispatching the energy and ancillary services. The required participation in the VCGM differs among the generators.
For example, the Generators with Standard VCGM Contracts participate directly in the trading process by bidding their energy outputs in the market. On the other hand, existing build, operate and transfer (BOT) power plants and strategic multi-purpose hydro power plants (SMHP) do not directly participate in the VCGM: EPTC submits the bids from BOT power plants; and the SMO declares the SMHP hourly energy schedules. The BOT power plants are not required to be registered as a VCGM member.

MO calculates and schedules the power plant generation based on their bid, merit order (from low to high price) to meet the demand.


Note: In this introduction, the fundamental issues in Vietnamese competitive generation market (VCGM) are described. For further information, please contact us:

Vietnam MW Co., Ltd

Address : 10th Floor, C’land Building, 156 Xa Dan 2 Street, Hanoi, Vietnam
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