This is the result of a study on forecasting electricity prices for production and business, announced by the Vietnam Energy Transition Initiative (VIETSE) at the Seminar “Forecasting Model: Electricity Prices and Electricity Storage Demand for Flexible System Operation”. The study is based on the results of forecasting spot electricity market prices (SMP) and assuming that the proportion of power plants directly participating in the electricity market is between 40 - 65%.
Increasing competition in the electricity market
According to information from the Electricity Regulatory Authority - Ministry of Industry and Trade, by the end of December 2022, there were 108 power plants directly participating in bidding on the competitive electricity market with a total installed capacity of 30,837 MW, accounting for about 38.8% of the total capacity of the entire system.
According to Dr. Mai Thanh Tam, Eindhoven University (Netherlands) - representative of the research team, basically, forecasting means there is an error, however, the output results are very necessary to shape the market trend of investment in developing new sources, combined with storage needs will give a competitive signal for providing ancillary services.
As one of the factors affecting power source development, future electricity prices are not easy to predict because they can change depending on many factors. VIETSE's research on electricity price forecasting models aims to provide objective signals on future electricity prices for production and business, helping policy makers and investors make appropriate decisions in the coming time.
According to experts, research results reflect that increasing the rate of power plants participating in the electricity market can help increase competition in the electricity market and reduce the rate of electricity price increase.
From forecasting the electricity price for production and business and the need for state storage, relevant agencies need to have policies to promote investment in storage systems according to a reasonable roadmap, to ensure the optimization of investment resources in the electricity sector of both the state and private sectors, thereby obtaining the most suitable electricity price for Vietnam's economy.
Need to increase electricity storage capacity
The Government issued the National Power Development Plan for the 2021-2030 period, with a vision to 2045 (Power Plan 8), creating an important premise to realize the goal of net zero emissions by 2050 as announced at COP 26 and implement the Fair Energy Transition Partnership (JETP) agreement in 2022.
To effectively implement the 8th Power Plan and ensure national energy security, this is an urgent issue that needs to be solved. Especially for Vietnam's power system, aiming to increase the proportion of renewable energy output including hydropower to 30 - 39% of the total commercial electricity. This context requires the application of new technical solutions and will also form new services to support the operation of the power system.
Another study by VIETSE on energy storage systems shows that, in the context of many variable renewable energy sources participating in the power system, system operators need solutions to ensure flexibility. Some ancillary services such as frequency control, voltage control (primary and secondary) and power system management (congestion, interruption and overgeneration), develop energy storage systems.
According to Mr. Dimitri Pescia, Head of International Group, Southeast Asia, Agora Energiewende, Germany: The development of wind and solar energy is reshaping the power system, so it is important to increase the flexibility of the system. To do this, Vietnam needs to mobilize all its flexible resources such as: increasing and decreasing existing power plants, shaping electricity demand, grid and energy storage. The key point is that Vietnam needs to find a new balance through solutions such as establishing new market mechanisms for short-term operations of the system, while maintaining the leading role of the State in planning and investment.
Modeling research results show that Vietnam will need to increase the capacity of pumped storage hydropower and electricity storage to accelerate the sustainable energy transition.
To achieve the JETP target, at least 6 GW of pumped storage and other storage systems are needed to ensure energy security. In addition to balancing energy, storage systems can contribute to ancillary services, especially reducing grid congestion. For areas with frequent power shortages such as the North, VIETSE proposes to install 2,000 MW of storage systems, while at the same time, installing the remaining storage systems in areas with high concentrations of renewable energy sources, specifically 1,000 MW in the North Central region and 1,500 MW in the Central Highlands region.
Dr. Nguyen Hong Phuong, Eindhoven University of Technology, the Netherlands, said that Vietnam needs to develop a roadmap for developing energy storage systems with appropriate policy mechanisms, encouraging the participation of ancillary services to increase the flexibility of the system's operation and ensure energy security. Accordingly, increasing the capacity of pumped storage hydropower and electricity storage is necessary to accelerate the energy transition towards zero net emissions and implement the Just Energy Transition Partnership (JETP).
7 transitional renewable energy projects complete commercial power generation procedures
According to Vietnam Electricity (EVN), as of May 31, 2023, 9/85 transitional renewable energy projects have submitted documents for recognition of commercial operation date (COD). Of which, 7 projects/project parts with a total capacity of 430.22 MW have completed COD procedures and are officially allowed to generate commercial electricity to the grid. In addition, 40 projects have had their temporary prices approved by the Ministry of Industry and Trade.
To date, 59/85 projects with a total capacity of 3,389.811MW have submitted documents to the Electricity Trading Company to negotiate electricity prices and power purchase contracts. Of these, 50 projects (total capacity of 2,751.611MW) have proposed a temporary price equal to 50% of the ceiling price of the price range (according to Decision No. 21/QD-BCT dated January 7, 2023 of the Ministry of Industry and Trade). EVN and investors have completed price negotiations and initialed PPA contracts with 46/50 projects.
19 projects have been accepted by competent State management agencies for the construction/part of the construction; 27 projects have been granted electricity operation licenses for the entire plant/part of the plant; 22 projects have had decisions to extend investment policies.
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