POWER March 2012 - 55

POWER IN VIETNAM
also plans to revamp its industry, ownership,
and administration structures.
The Bane of Low Power Prices
Several organizations and businesses say that the
availability of capital to develop power projects,
which require large investments, remains " modest, "
because selling prices of electricity remain
low. " [With such a] low selling price of electricity
of some 5.5 US cents/kWh, no private investor
dares invest in the sector, " Deputy Minister
of Industry and Trade Do Huu Hao was quoted
as saying in a July 2010 EVN news release. Hao
noted that it was " hard to raise power prices " to
9 to 10 cents/kWh so that investors can make
profit. " As a result, the power sector will still
face difficulty in calling for local and foreign
investors to pour money into it. "
Renewables in particular will be affected.
The lowest price for 1 kWh of wind power is
at least 9 to 10 U.S. cents, equivalent to the cost
of nuclear power but much higher than hydropower
(3 to 4 cents) and coal-fired power (5 to
6 cents).
Low power prices have proven costly to
EVN itself. During periods of intense heat in
2008 and 2009, EVN was forced to pay 120 billion
VND ($5.7 million) each day for losses to
maximize the capacity of coal- and oil-fueled
power plants such as Ca Mau and Nhon Trach
to meet demand for electricity, Hao said.
Key players in Vietnam's power sector
have urged the government to adjust power
prices, and the government has considered
asking international credit institutions to invest
in the power sector and issuing government
bonds to fund important projects. The
government also has called on Vietnam's industries
to cut down on energy use, saying
steel, cement, ceramic, and frozen food sectors
could save 20% to 30% while the service
sectors could cut up to 25% to 30%.
Reform here, too, is budding. The Electricity
Law that became effective in 2005 sets out a
three-phase plan for a competitive power generation
market. The first phase was expected
to begin in January 2012 and end in 2014, but
it has been delayed until April because generating
units had yet to install technology for the
collection and processing of information to
calculate their power prices. The second phase,
from 2014 to 2022, involves the introduction
of a competitive wholesale power market. The
third phase, starting in 2022, will introduce a
new competitive retail power market.
Meanwhile, a 15% hike in wholesale
power prices in March 2011 (though retail
prices were not raised, to help curb inflation)
was followed by a new law in September that
will allow EVN to adjust monthly pricing so
that it is in line with foreign currency fluctuations,
fuel prices, and power output levels.
In late December, EVN announced it would
March 2012 | POWER
raise retail prices by 5%, to 1,304 VND (6.2
cents)/kWh, to offset costs incurred last year.
State media reported that Finance Minister
Vuong Dinh Hue has promised retail prices
would see a steeper hike, to 10%, in 2012.
The measures have so far had a modest
impact. Foreign build-operate-transfer (BOT)
and domestic IPP projects account for 62% of
the total new thermal capacity planned from
2007 to 2015. Unlike foreign BOT projects,
though, domestic IPPs typically only have
short-term power purchase agreements with
EVN, without government guarantees and no
fixed annual capacity charge in the form of a
take-or-pay agreement.
Increasing Power Capacity
In 2010, Vietnam's installed capacity and power
imports totaled 21,297 MW, but available capacity
was just 19,713 MW. About 36% of the
country's capacity was sourced from hydropower
in that year, 18% was coal-fired, 37.2% was
oil- and gas-fired (including 30% from gas turbines
and 2.5% from diesel), 3.2% came from
renewables, and 4.8% was imported.
Under the July 2011-approved Master Plan
VII, power capacity is expected to increase to
between 69,000 MW and 75,000 MW by 2020
and to between 139,000 MW and 146,800 MW
by 2030 (Figure 2). Among the plan's other
priorities are to increase power prices and create
a competitive power market; this includes
relinquishing state control of power generation,
though Vietnam intends to continue holding a
monopoly on the transmission network. The
country will need to increase its total of imported
and produced power from 194 billion kWh to
210 billion kWh by 2015, 330 billion to 362 billion
kWh by 2020, and 695 billion to 834 billion
kWh by 2030. Vietnam also plans to embark on
a rural electrification program, putting 800,000
more households on the grid. Finally, the plan
calls for reducing the electricity elasticity coefficient/GDP
from the current average of 2.0 to
1.5 in 2015 and 1.0 in 2020.
Growing the Grid
Among Vietnam's more prominent plans is
an overhaul of the national grid. Its 500-kV
transmission network and a 220-kV line are
managed and operated by EVN's National
Transmission Power Corp., while regional
power utilities manage smaller lines of 110
kV, 35 kV, and 6 kV.
The Master Plan specifically calls for investment
in the national power grids to bring
their development in line with national and
local power development plans, increase reliability,
reduce power losses, and enable mobilization
of power sources in the rainy and
2. How the Master Plan VII envisions capacity growth between 2010 and
2030. Coal is poised to provide a significant share of short-term capacity increases. Source:
Vietnam Ministry of Science and Technology
Nuclear
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
2010
2015
2020
2025
2030
Table 1. Grid support. Vietnam plans to overhaul its national grid to support ambitious
plans to increase power capacity from 21 GW to 75 GW by 2030, increase reliability, and reduce
power losses. This table shows the country's plans for building out its high-voltage and smaller
lines over that period. Source: Vietnam Ministry of Trade and Industry
2009
Station 500 kV
Station 220 kV
Line 500 kV
Line 220 kV
2011-2015
2016-2020
2021-2025
2026-2030
7,500 MVA 17,100 MVA 24,400 MVA 24,400 MVA 20,400 MVA
19,094 MVA 35,863 MVA 39,063 MVA 42,775 MVA 53,250 MVA
3,438 km
8,497 km
3,833 km
10,637 km
Notes: km = kilometers, MVA = mega-volt ampere.
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53
4,539 km
5,305 km
2,234 km
5,552 km
2,724 km
5,020 km
Renewables
Import
Oil & gas-fired
Coal
Hydro/pumped storage
Total capacity (MW)

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POWER March 2012

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