IPPs push projects into Vietnam's open electricity market

More players want to ride on the open market and growing electricity demand which could rise 8-9% annually.

Expecting abundant returns, German power plant developer juwi marked its entry into the Vietnamese market with contracts for two solar projects in the Ninh Thuan province with capacities of 50MW and 30MW. It is one of the private electricity producers anticipating the launch of Vietnam’s wholesale electricity market, which will be fully operational in 2019 after a year-long pilot period.

“We have seen several Asian countries opening their wholesale market. Customers will be able to make their own choice about their electricity purchase, prices will very likely go down due to higher competition. With a growing electricity demand of 8-9% per year, the Vietnam electricity market has a great outlook for customers, developers and investors,” a juwi spokesperson told Asian Power.

Defining market models
During the pilot period of the open market, the Ministry of Industry and Trade tracked performance metrics in order to improve their services. The remaining time of the pilot period will be devoted to improving information technology infrastructure and training companies on how the market works.

The launch of the wholesale electricity market marks the second phase of Vietnam’s multi-year Power Sector Reform Road Map. The first phase involved the launch of a competitive generation power market, whilst the third phase will result in the launch of a competitive retail power market whose pilot will start in 2021.

Nguyen Anh Tuan, director of the Electricity Regulatory Authority of Vietnam, explained that the agency will put energy generated by the Electricity of Vietnam’s hydroelectric plants into the market. Renewable energy providers can connect to the national grid soon after. This is welcome news for the renewable energy sector, which continues to enjoy hefty investments.

“The landscape of electricity market in Vietnam is up for a change with the introduction of wholesale electricity market for large industrial customers. This will reduce the monopoly of EVN on the electricity market in Vietnam, as big industrial players can connect directly to the substations of the electricity supplier,” noted Beroe Inc. analyst Gadde Ramachandra.