Competitive wholesale electricity market has not operated properly
The draft Law amending and supplementing a number of articles of the Electricity Law is being appraised by the Ministry of Justice, and the Ministry of Industry and Trade (the drafting agency) proposes to abolish the single buyer model through policies on transferring electricity purchase and sale contracts signed by Vietnam Electricity Group (EVN) to other wholesale electricity purchase units.
Exchanging more about this proposal, Mr. Bui Quoc Hung - Deputy Director of the Electricity Department (Ministry of Industry and Trade) informed that the competitive electricity market in Vietnam is oriented to develop in 3 increasing levels of development, including: Competitive power generation, competitive wholesale electricity and competitive retail electricity.
In which, the competitive wholesale electricity market has officially operated since 2019. To date, after more than 14 years of operating the electricity market (calculated from the competitive power generation stage), although we have formed competition in the power generation stage with the active participation of both state-owned and private power generation units, in reality the competitive wholesale electricity market has not yet truly operated fully and meaningfully.
Explaining the reason, Mr. Bui Quoc Hung said that the core is that in essence, Vietnam Electricity Group (EVN) is still the only electricity buyer in the market, leading to the fact that power plant investors have very few choices to negotiate electricity purchase and sale contracts.
Therefore, the implementation of transferring power purchase and sale contracts (PPAs) signed between EVN and existing power generation units to directly affiliated power corporations is a very necessary step to form many independent power purchase units to compete with each other, making the competitive wholesale electricity market operate more substantively and efficiently, this is also an approach consistent with international experience.
Because the output of the wholesale market is the input of the competitive retail electricity market, so if there is no complete wholesale market in the true sense, we will not be able to form an effective competitive retail electricity market - strengthening the choice of electricity users and retail electricity distributors in accessing and selecting electricity suppliers suitable to their needs in accordance with the spirit of Resolution 70-NQ/TW," Mr. Hung said.
Roadmap for converting electricity sales contracts
When implementing the transition of existing electricity purchase and sale contracts, the Ministry of Industry and Trade assessed that the biggest difficulty that may arise comes from the fact that Power Corporations have different customer structures and consumption areas, leading to uneven financial capacity, competitiveness and electricity purchase costs.
According to a representative of the Electricity Department, to solve this problem and ensure maximum benefits for all parties, the Ministry of Industry and Trade is researching and developing regulations on contract conversion in 4 directions.
First, have an appropriate implementation roadmap and control the number of buyers at a reasonable level in the initial stage, in order to avoid the situation of too many wholesale electricity units receiving existing contracts, ensuring not to disrupt too quickly the implementation of commitments and agreements of the parties in the existing electricity purchase and sale contract.
Second, ensure the original transfer of commitments on electricity prices and electricity output in existing contracts.
Third, calculate and allocate the list of transfer objects scientifically, taking into account the actual competitiveness of each wholesale electricity unit to ensure risk tolerance and stable payment capacity for power plants.
Fourth, build and improve relevant regulations so that units have a basis for unified and effective implementation.
