Users benefit more
According to the current price list, electricity prices are classified by sectors, voltage levels; peak and off-peak hours and household electricity prices are divided into steps, only calculating electricity prices. This policy has caused cross-subsidy between production electricity prices and household electricity prices to occur for a long time. Therefore, the establishment of a two-component electricity price mechanism is expected to contribute to building a transparent and clear electricity trading market at every stage from generation, transmission, distribution, retail and especially gradually eliminate cross-subsidy of electricity prices.
Two-component electricity price is considered to bring benefits to both users and businesses.
Director of the Electricity Regulatory Authority (Ministry of Industry and Trade) Tran Viet Hoa said that this two-component price policy helps reduce investment in power source capacity and grid expansion (reduces avoided costs) and recovers investment costs for customers who register for large capacity but use less than the registered capacity; ensuring that electricity prices accurately and fully reflect costs (in terms of capacity) to electricity customers. If a customer uses the same amount of electricity in a month (in kWh) but has a low load factor, they must pay a higher price than a customer with a high load factor...
Dr. Nguyen Huy Hoach, an energy expert, commented that applying a two-component electricity price would be a breakthrough in electricity price policy. The two-component electricity price, including capacity price and electricity price, has been applied by many countries, most recently China. If applied, electricity suppliers can offer a product package corresponding to the electricity price list sold to customers, like the way we buy a monthly phone package, depending on usage needs.
Energy expert Dao Nhat Dinh
For example, a manufacturing customer who registers to buy a capacity package of 1,000 kW and uses 4,000 kWh in 1 month will have a different price than a customer who registers to buy a capacity of 2,000 kW but also only uses 4,000 kWh.
Because electricity prices have long been calculated based on the capacity used, many manufacturers have registered very high capacities, forcing the electricity industry to invest in the grid and many towers to meet the demand, but in reality, the usage is not as high as the registered capacity. For example, seafood processing enterprises often have a very large demand for electricity during peak seasons, so when registering, they often register large capacities. Based on this data, the electricity industry must invest in transformer stations with capacities equivalent to the capacity registered by the enterprises. However, during the low season, the demand for electricity for production decreases sharply, the electricity industry still has to pay for maintenance costs, running base capacity... even though customers do not use it. Power generators and electricity investors, even though they cannot sell electricity, still have to pay for electricity capacity...
"Therefore, registering too high a capacity, the amount of electricity used is low, causing damage to investment in electricity infrastructure. The capacity price is much lower than the price of consumed electricity, but it is necessary to be clearly calculated to ensure fairness and transparency in electricity prices," Dr. Nguyen Huy Hoach stated his opinion.
Solving the cross-subsidy in electricity prices?
To reform the electricity market, late last year, China established a coal power capacity price. Accordingly, from the beginning of this year, coal power in China has applied a two-component electricity price policy, including capacity price and electricity price.
Energy expert Dao Nhat Dinh said that currently, coal-fired power plants sell electricity to the grid under a single-price mechanism - meaning that if no kWh is sent to the grid, investors will not receive revenue. Coal-fired power plant operating costs include fixed costs (such as depreciation, labor costs, repair costs, financial costs) and variable costs (such as coal and material purchase costs). Therefore, China has introduced a two-price policy to ensure fairness for source investors.
"In the future energy transition, coal power has to give way to renewable power, but it must always be available to compensate for the instability of renewable power. Therefore, for the electricity market to mature, it is necessary to implement a two-component electricity price system - that is, the power price mainly covers the fixed costs of the plant, while the power price mainly covers the variable costs. It is necessary to understand that renewable power is growing strongly but is inherently unstable. Therefore, there is a need for backup coal power plants - that is, thermal power provides support services even when there is no power generation, or power generation below optimal capacity. Coal power is China's most important supporting and regulating energy source, so introducing power prices will stabilize the expectations of the coal power industry to ensure safer operation of the power system. Vietnam is no different from other countries in its energy development policy, building a two-component electricity price is necessary," expert Dao Nhat Dinh analyzed.
However, according to Mr. Dao Nhat Dinh, the two-component electricity price should only be applied to users such as enterprises and factories that consume large amounts of electricity. Industrial and commercial customers in China have to pay a fixed monthly service price based on the capacity of their transformer stations. In addition, they have to sign electricity consumption contracts and pay penalties if they use more or less than the signed capacity. Therefore, calculating the new capacity price into the electricity price will not create a big change. The rest, customers using electricity for daily life and agriculture will still be charged electricity prices according to the current calculation and price.
Associate Professor, Dr. Ngo Tri Long analyzed the issue of two-component electricity price which was raised more than ten years ago, and it is a bit late to research it now. This policy needs to be formed and developed soon this year to ensure the stability of the energy market. More importantly, in two-component electricity price, it is necessary to overcome the cross-subsidy in electricity price and some other limitations related to current electricity price such as buying high, selling low, unfairness in the calculation method according to the scale...
In addition, the regulation of 2-component electricity price helps reduce the cost of investing in the power system a lot. Especially, in areas where households and businesses use stable electricity, the load at all times will be stable at a low level, without increasing the capacity during peak hours.
For consumers, the two-component electricity price helps reduce the purchase price of electricity by increasing the time of electricity use. Electricity price calculated by capacity only encourages saving capacity without taking into account the saving of electricity. Meanwhile, electricity price based on electricity encourages the use of electricity to save electricity consumption without taking into account the amount of related capacity.
"Therefore, the two-component electricity price has the advantage of overcoming the disadvantages of each of the above prices, contributing to the efficiency of the electricity system, bringing benefits to both electricity customers and the electricity industry," Mr. Ngo Tri Long emphasized.
The price of coal-fired power capacity in China, applied from January 1, 2024, is from 100 - 165 yuan/kW/year (equivalent to 340,000 - 561,000 VND/kW/year), depending on the energy transition process in each locality. Under normal operating conditions, if a coal-fired power plant fails to deliver the announced maximum output twice within 1 month, 10% of the monthly power generation capacity value will be deducted. Violations 3 times will be deducted 50% and 4 times or more will be deducted 100%.
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