Electricity development in Vietnam

Power consumption in Vietnam is continued to rise over the year fueling the socio-economic development of the country.

Concerning the consumption structure, industry continued to take the biggest share of from 47.4 % to 52 % in total consumption in 2006 and 2010, respectively. Household consumption occupied the second largest share but slightly reduced due to fast industrialization in Vietnam, from 42.9% in 2006 to 38.2% in 2010. Altogether service, agriculture and other sectors occupied approximately 10% of electricity consumption.

Table 1. Electricity consumption by sectors during 2006-2010 (source: Master Plan VII)

No	Item	2006 (%)	2007 (%)	2008 (%)	2009 (%)	2010 (%)
1	Agriculture	1.1	1.0	1.0	0.9	1.1
2	Industry	47.4	50	50.7	50.6	52.5
3	Services (Commerce, Hotels and Restaurant)	4.8	4.8	4.8	4.6	4.5
4	Household consumption	42.9	40.6	40.1	40.1	38.2
5	Others	3.8	3.7	3.5	3.7	3.7

The growth rate of power consumption is far exceeding the GDP growth rate in the same period. For example, during 1995-2005 the annual growth rate of power consumption was over 14.9% while GDP growth rate was only 7.2%. The highest growth of power demand was found in the industrial sector (16.1%) then followed by the residential sector (14%).

In the future, according to the National Power Development Master Plan VII, the electricity demand of the country will be continued to grow by 14 - 16% per year in the period 2011-2015 and then slow down to 11.15% per year in the period 2016-2020 and 7.4 – 8.4% per year in 2021-2030.

Electricity generation

To satisfy this power demand, the Government of Vietnam has set specific production and import targets for the power sector. In the Master Plan VII for the period 2010-2020 with an outlook to 2030 the targets include: [1]

1) Produce and import a total of 194-210 billion kWh by 2015, 330-362 billion kWh by 2020, and 695-834 billion kWh by 2030,

2) Give priority to generating electricity from renewable resources by increasing the renewable electricity yield from 3.5% of total electricity generation in 2010 to 4.5% in 2020 and 6% in 2030,

3) Reduce the electricity-over-GDP elasticity from the present value of approximately 2.0 to the value of 1.5 in 2015 and 1.0 in 2020,

4) Speed up the rural and mountainous electrification program to ensure that almost all rural households will have electricity by 2020.

The strategies that will be applied to achieve the said targets are also lined out encompassing:

1) Diversification of domestic resources for power generation using both traditional resources (such as coal and gas) and new sources (such as renewable and nuclear power),

2) Balancing the development of power generation in different regions of the country to reduce losses of transmissions, effectively share the electricity yield and effectively utilize the seasonal electricity yield of hydropower,

3) Developing new power sources at the same time with updating the technology used in existing  power plants,

4) Diversification of investment sources to overcome the lack of financial and technical resources and also to improve economic efficiencies.

The structure of power sources for the period 2010-2020 with outlook to 2030 is outlined in the Master Plan VII, which is summarized in Table 2 below. At all time, the most important power source is coal and gas thermal power. Nuclear and renewable electricity shares are insignificant during 2010-2020 and will become relatively important during 2020-2030. Hydropower share will remain almost the same in between the two periods of 2010-2020 and 2020-2030 since it has been fully exploited all over the country.

Table 2. Structure of power sources by capacity and yield for the period 2010-2020 with outlook to 2030

No.	Power source	2020			2030
		Installed Capacity (MW)	Share in total installed capacity (%)	Share in total electricity yield (%)[2]	Installed Capacity (MW)	Share in total installed capacity (%)	Share in total electricity yield (%)[3]
1	Coal thermal power plants	36,000	48.0	46.8	75,000	51.6	56.4
2	Gas turbine thermal power plants	10,400	13.9	20.0	11,300	7.7	10.5
3	LNG turbine thermal power plants	2,000	2.6	4.0	6,000	4.1	3.9
4	Integrated hydropower plants	17,400	23.1	19.6	N/A	11.8	9.3
5	Pumped-storage hydropower plants	1,800	2.4		5,700	3.8
6	Biomass power plants	500	5.6	4.5	2,000	9.4	6.0
7	Wind power plants	1,000			6,200
8	Nuclear power plants	N/A	N/A	2.1	10,700	6.6	10.1
9	Import	2,200	3.1	3.0	7,000	4.9	3.8
	Total	75,000	100	100	146,800	100	100

Source: Summarized from information given in the Master Plan VII

Specifically by 2020, shares of power sources in terms of electricity yield are 46.8% for coal thermal power, 19.6% for integrated hydropower and pumped-storage hydropower, 24% for gas and LNG turbine thermal power, 4.5% for renewable power, 2.1% nuclear power and 3.0% imported from other countries (see also Figure 1).

Figure 1. Structure of power sources by 2020

Electricity market

Until 2010, electricity market in Vietnam is still a State monopoly market where Electricity Corporation of Vietnam (EVN), a state company, owned more than 71% of all electricity generation capacity, all transmission lines, all electricity operation systems, electricity distribution and electricity retail.

To mobilize investments for electricity development the government adopt the market-based electricity price approach and pursue environmental protection. [4] With Investment portfolio is different for different power sources.

However, the Government of Vietnam has set a target to develop a competitive electricity market in order to improve the economic efficiencies of power supplies and uses in the country. According to the Draft plan to develop a competitive electricity market, the power sector development is expected to undergo three stages:

1) Competitive power generation market (2005 -2014): power plants could offer to sell electricity to single buyers;

2) Competitive wholesale market (2015-2022): wholesale companies could compete in buying electricity before selling to distributors;

3) Competitive retail market from 2022: consumers could choose their own power suppliers.The electricity price in Vietnam is … Vietnam's electricity price in 2010 was VND1,058 - 1,060 per kWh (~ 5.3 US cents per kWh). In 2011 when the foreign exchange rate soars up, the set price consequently drops to just 4 US cents per kWh.

According to the Government, electricity prices would be adjusted annually under Decision 21 but with careful consideration of timing to ensure minimal impact on socio-economic issues in general and  on people's production in particular.  Followed the Decision 21, by March 2011 the average electricity price has raised to VND1,242 per kWh (around 6.5 US cents), which is 15.28 percent higher than the price in 2010.

Currently the main players in electricity generation in Vietnam are state-owned companies such as Electricity Corporation of Vietnam (EVN), Petroleum Corporation of Vietnam (PVN), Vietnam National Coal and Minerals Corporation (VINACOMIN) and other Independent Power Producers (IPPs) and foreign BOT. State-owned companies are holding a large part of electricity production. For example, of the total installed capacity of 17,521 MW by end of 2009  EVN held 53%, PVN 10%, and VINACOMIN 3.7%. IPPs and foreign BOT held only 10.4% of the total installed capacity of that year.

National grid

Vietnam power system is being operated at high voltage of 500kV, 220kV and 110kV and medium voltage of 35kV to 6kV. It is integrated by the 500kV transmission network, which is managed and operated by EVN’s National Transmission Power Corporation (NTC). The power transmission line of 500KV and 220kV are managed by the NTC while the line of 110kV, 35kV and 6kV are managed by regional power utilities.

To satisfy the country’s future electricity demand, Vietnam plans to expand its national grid in the future. The national plan aims to develop additional transmission lines which go hand in hand with the power plants developed in order to achieve the overall effectiveness of investment, satisfy the provincial power supply plans, improve reliabilities of the power supply system and utilize efficiently the power sources developed, support rural electrification programs, and robustly prepare for future development of the power system.

According to the Master Plan VII, for the period 2010-2020 with outlook to 2030 significant length of transmission lines and stations will be added into the system (see also Table 3).

Table 3. Amount of transmission lines and stations to be added into the national grid for the period 2010-2030

Item	Unit	2009	2011-2015	2016-2020	2021-2025	2026-2030
Station 500kV	MVA	7,500	17,100	24,400	24,400	20,400
Station 220kV	MVA	19,094	35,863	39,063	42,775	53,250
Line 500kV	Km	3,438	3,833	4,539	2,234	2,724
Line 220kV	Km	8,497	10,637	5,305	5,552	5,020

Source: Master Plan of national electricity development for the period of 2011-2020 with outlook to 2030 (Master plan VII)

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