developing electricity market in vietnam the current situation and the solutions

Topic: Developing electricity market in Vietnam: the current
situation and the solutions
Student:
Instructor: Dr. Hoang Xuan Binh
1
CONTENT
INTRODUCTION…………………………………………………………………………………
CHAPTER 1………………………………………………………………………………………
SOME THEORETICAL BASIS AND PRACTICAL BASIS OF THE ELECTRICITY
MARKET…………………………………………………………………………………………
1.1. T
heoretical basis of electricity market………………………………………………………….
1.1.1. Electricity and its role as commercial goods……………………………………………….
1.1.1.1. I
ntroduction to electricity…………………………………………………………………
1.1.1.2. C
haracteristics of electricity as commercial goods…………………………………………
1.1.2. Some determinants of electricity supply……………………………………………………
1.1.2.1. N
atural resources…………………………………………………………………………
1.1.2.2. C
apital………………………………………………………………………………………
1.1.2.3. T
echnology…………………………………………………………………………………
1.1.3. Some determinants of electricity demand…………………………………………………
1.1.3.1. E
conomic growth…………………………………………………………………………
1.1.3.2. B
udget constraint…………………………………………………………………………
1.2. S
ome practical basis of electricity market……………………………………………………

1.2.1. Wholly competitive electricity market in Brazil……………………………………………
1.2.2. Partly competitive electricity market in Italy………………………………………………
CHAPTER 2……………………………………………………………………………………….
THE CURRENT SITUATION OF ELECTRICITY MARKET IN VIETNAM…………………
2.1. An overview of electricity market……………………………………………………………
2.2. The current situation of electricity market……………………………………………………
2
2.2.1. Market structure……………………………………………………………………………
2.2.2. Supply of electricity………………………………………………………………………….
2.2.2.1. The current status of electricity supply…………………………………………………….
2.2.2.2. The issue of energy resources……………………………………………………………
2.2.2.3. The issue of capital………………………………………………………………………
2.2.2.4. The issue of technology……………………………………………………………………
2.2.3. Demand for electricity……………………………………………………………………….
2.2.3.1. The current status of demand for electricity……………………………………………….
2.2.3.1. The impact of economic growth…………………………………………………………
2.2.3.3. The impact of budget constraint…………………………………………………………
2.2.4. Some governmental regulations on electricity market……………………………………….
2.2.4.1. Regulations on electricity price……………………………………………………………
2.2.4.2. Regulations on electricity supply…………………………………………………………
2.2.4.3. Regulations on electricity consumption…………………………………………………
2.3. An assessment on electricity market in Vietnam……………………………………………
2.3.1. Some achievements…………………………………………………………………………
2.3.2. Some existing problems and their reasons…………………………………………………
CHAPTER 3………………………………………………………………………………………
ORIENTATION AND SOLUTIONS TO DEVELOP ELECTRICITY MARKET IN VIETNAM
3.1. Government orientation to develop electricity market………………………………………
3.1.1. Establishment of a competitive electricity market………………………………………….
3.1.1.1. Three-phase path………………………………………………………………………….
3.1.1.2. Plan to implementation……………………………………………………………………

3.1.2. Orientation for electricity supply…………………………………………………………….
3
3.1.2.1. Increase supply capacity…………………………………………………………………
3.1.2.2. Encourage a wide range of energy sources………………………………………………
3.1.2.3. Orientation to support renewable energy………………………………………………….
3.1.2.4. Develop transmission system……………………………………………………………
3.1.2.5. Financial support for electricity supply……………………………………………………
3.1.3. Orientation for electricity demand…………………………………………………………
3.1.4. Orientation for price settlement……………………………………………………………
3.2. Some specific solutions………………………………………………………………………
3.2.1. For supply side……………………………………………………………………………….
3.2.1.1. Cooperate with private and foreign investors……………………………………………
3.2.1.2. Reduce distribution losses…………………………………………………………………
3.2.1.3. Consider the option to settle price of electricity seasonally……………………………….
3.2.1.4. Widely publish information on three-price model…………………………………………
3.2.2. For demand side……………………………………………………………………………
3.2.2.1. Rent energy audition services……………………………………………………………
3.2.2.2. Adjust electricity consumption manner based on three-price model………………………
3.2.2.3. Consume small-sized energy generation system for households and buildings…………
3.2.3. For government and competitive authorities………………………………………………
3.2.3.1. Adjust tax levied on imported energy – saving equipments………………………………
3.2.3.2. Support research and assessment on power potential of Vietnam…………………………
3.2.3.3. Fulfill legal framework to support the application oaf alternative energy equipment…….
CONCLUSION…………………………………………………………………………………….
BIBLIOGRAPHY…………………………………………………………………………………
LIST OF GRAPH AND TABLES………………………………………………………………
4
INTRODUCTION
Electricity is one of the most important products in any national economy. In fact, it is the
essential input of almost products and services that modern people consume nowadays. That is

why even the smallest trouble in electricity provision system can cause many serious problems
for the whole country. Shortage of electricity can limit the national development. Electricity cut-
off can make huge losses for production, industrial factories, hospital, etc. and badly affect
people’s work and life.
Despite that great importance of electricity to the society and the economy, Vietnam is
facing serious shortage of electricity and regular power cut-off especially in dry season. Lack of
capital and technology, also skillful human resources to enlarge the size, also the number of
conventional-energy power projects is one issue. Low ability to exploit alternative energy
sources though they are estimated to be highly abandoned is another issue. There are not enough
instructions and guidelines to support a new competitive electricity market which is being
established; that is also a problem. Though in recent years, Vietnam has achieved significant
success in electricity market, no one can deny that there are a lot of things to do in coming years.
Due to the current situation of electricity market in Vietnam, this thesis is written for
three purposes. The first one is to collect and present the most scientific information and widely-
accepted opinions on a number of concepts, definitions, and models which are popular when
considering electricity markets in general. The second one is to identify the current situation of
Vietnam electricity market with up-to-date information. The third one is to propose some
personal suggestions as solutions for government, electricity suppliers, and also electricity
consumers to resolve existing issues and develop the efficiency of Vietnam electricity market.
There are three chapters corresponding to these three goals as following:
- Chapter 1: Some theoretical basis and practical ones of electricity market
- Chapter 2: The current situation of electricity market in Vietnam
5
- Chapter 3: Some solutions to develop Vietnam electricity market
Though a lot of time and efforts are put into this thesis, mistakes are still inevitable due to
limited knowledge, skills, and available information. As a result, I do desire for and highly
appreciate comments and assessment of readers for further fulfillment of this thesis.
My last words, I would like to show my great thankfulness to my family to support me
through hardness, to my lecturers in university for their inspiring lectures, and to Dr.Hoàng Xuân
Bình for his help through the long progress in which I did this writing.

6
CHAPTER 1
SOME THEORETICAL BASIS AND PRACTICAL
ONES OF ELECTRICITY MARKET
1.1. Some theoretical basis of electricity market
This part is designed to present some primary concepts and definitions relating to
electricity market, so that the readers can easily understand the nature of this market. These
concepts and definitions include ones about electricity itself as the only product in the electricity
market, supply of and demand for electricity and their determinants. About these determinants,
please be noted that among many factors which may have direct or indirect influence on supply
of electricity and demand for electricity, this thesis makes a selection of some factors only, due
to the limit of time, available information, and analysis tools.
1.1.1. Electricity and its role as commercial goods
1.1.1.1. Introduction to electricity
a. Definition
By definition, electricity is defined as the power of an electric current. It is measured by Watt or
1 joule per second. (Ministry of Education and Training, 2012)
b. Production of electricity
Electricity can be converted from hydro power, thermal power, geo-thermal power, solar power,
wind power, marine power, and nuclear power. Different ways of power conversion require
different technologies; though there is only one principle of production: there is one generator,
source power is input, and electricity is the output; productivity is always lower than 100
percent. In addition, geographical characteristics are also in need to be taken into consideration.
7
Graph 1: Hydro – energy: From water power to electricity
Source: Internet
Every hydropower plant has a lake for water reservation. Normally, this lake has higher location
than the placement of turbines. When it needs to generate electricity, water from this lake moves
to the lower place that helps storing energy. Water goes through turbines, and this stored energy
is converted to electricity by these turbines. Then, power is transferred to national electricity grid

and comes to consumers. (US Department of fthe Interior, 2005)
Graph 2: Thermal energy: From coal, oil, and natural gas to electricity
Source: Internet
Coal and natural gas are used to heat a great volume of water. Then, water steam generated from
this process makes some turbines work. In turn, these turbines activate a power generator and
this machine produces electricity. (Centreforenergy.com, n.d)
8
Graph 3: Geo – thermal energy: From natural heat to electricity
Source: Internet
Rather than heating artificially by coal and natural gas like a thermal power plant, a geo –
thermal power plant uses natural heat from the Earth to boil up its water, creates water steam,
and do the remaining in a similar way to a thermal power. (Darvill.clara.net, n.d)
Graph 4: Wind energy: From wind to electricity
Source: Internet
The movement of air or the wind itself stores a certain amount of energy. Wind makes wings of
turbines in wind – farm rotate at a specific speed. It means turbines and the electricity generators
inside are activated by wind. (Vinamain, 2011)
9
Graph 5: Solar energy: From light to electricity
Source: Internet
A solar plant includes a number of solar cells and some equipment to collect energy from those
cells. General speaking, a solar cell must have a large surface in order to get as much sunlight as
possible. When these cells receive sunlight, they will convert it into electricity thanks to their
semi – conductors inside. (Scientificamerica, n.d)
Graph 6: Nuclear energy – From nuclear to electricity
Source: Internet
The way a nuclear power plant generate electricity is quite similar with this one of thermal power
plants and geo – thermal power plant do. That is to heat up water and let water steam turn
turbines and activate electric generators. The difference is that nuclear power plants take energy
from nuclear reaction. (Howstuffworks.com, n.d)

10
Graph 7: Marine energy – From oyster wave and tide to electricity
Source: Internet
Similar to hydro power plants, marine power plants also use energy stored in the movement of
water flow to generate electricity. However, the different point is that in this case, water flow
includes wave and tide in the sea, rather than inland river flow like in the case of hydropower
plants. (bwea.com, n.d)
c. Application of electricity
These days, it is pretty difficult to find any place and any equipment that does not consume
electricity. People need electricity to cook meal, to heat water, to iron clothes, to clean the floor,
and to run television, lights, air conditioners, computers, and other electrical household
equipments, etc. We also need electricity to run computers, fax machines, lights, air conditioners,
photocopy machines, printing machines, etc. in any office. Electricity is in need in factories,
restaurants, hospitals, hotels and other private business. It is also essential for public works like
lights on the streets, roads, and highways. In short, electricity has a very wide range of
application in both social work and life.
1.1.1.2. Characteristics of electricity as commercial goods
a. Essential goods
Electricity is a compulsory input to produce most of products and services these days. In fact, it
helps operating home equipments like fans, lights, computers, air conditioners, etc; it also
provides energy for fax machines, photocopy machines, printing machines, computers, servers,
lighting, etc. for office staff to work. In addition, electricity is necessary for factories to run their
heavy machines and maintain production lines. Hospitals also need electricity for most of their
activities day by day.
11
Table 1: Global electricity intensity across sectors
Sector Unit 1980 1990 2000 2008
Industry (to
value added)
Kep/$05p 0.24 0.19 0.15 0.14

Transportation
(to GDP)
Kep/$05p 0.04 0.04 0.03 0.03
Households
(per capital)
kWh/hab 387.32 487.19 590.97 686.17
Service (to
value added)
kWh/k$05p 91.71 107.72 117.90 121.00
Agriculture
(to value
added)
kWh/k$05p 91.71 107.72 117.90 121.00
Source: World Energy Council
b. Inseparability
The production process of electricity includes three stages, namely generation, transmission, and
distribution. It is similar to the production of any other commercial product, except for the fact
that these three stages are happening simultaneously. (Nguyễn Thành Sơn, n.d)
c. Perish ability
The vital point of electricity production is that there is always a balance between supply capacity
and consumption capacity. Therefore, even when the electricity supply is surplus relatively to
electricity demand, that amount of exceeded energy cannot be stored, unless capacitors are in
used. (Nguyễn Thành Sơn, n.d).
d. Transmission Network: Natural monopoly
General speaking, electricity generated by a number of plants is transferred to the national
electricity network for distribution to individual households and organization. Through this
network, total supply meets total demand that guarantees the sufficiency of electricity
distribution through time in the market. By contrast, assume that there are several network
providers; each on makes contract with some electricity producers and some electricity
consumers. In case there is energy surplus or energy shortage, the inter – connection among

those providers must be very good in order to maintain stable quality of energy supply, or there
12
will be for sure some instability in economic activities and daily life. In conclusion, generation
and distribution stages can be highly competitive, but transmission stage should be monopoly in
order to gift people the best product.
1.1.2. Some determinants of electricity supply
As noted before, this thesis mentions only some of many factors which cause the fluctuation of
electricity supply. Here includes three factors, namely natural resources, capital, and technology.
All of these factors have some impacts on generation, transmission, and distribution phases in
electricity market. Generally, the abundance of natural resources determines the output volume
of electricity; obviously they are positively correlated to each other. Similarly, availability of
financial investment restricts the number and the installed capacity of existing power plants and
planned power projects that indirectly restricts the availability of electricity supply. Moreover,
though the output power cannot exceed the input power, the more advanced the technology in
used is, the higher productivity the electricity generation process has. In other words, modern
technology generates more output electricity from the similar volume of input power source,
compared with old technology.
1.1.2.1. Natural resources
As mentioned above, electricity is generated by converting other forms of energy (wind power,
thermal power, geo – thermal power, nuclear power, hydro power) to electric energy. Due to less
– than – 100 percent production productivity and distribution losses, we always need more than
one unit of input power in order to generate one unit of net output pwer as electricity. This rate
depends strongly on technology in used.
Table 2: Necessity of natural resources to generate electricity globally
Unit 1990 2000 2008
General power/
Total input
resources
% 37.1 38.8 39.0
Thermal power/

Total input
resources
% 32.2 34.5 34.8
Source: World Energy Council
13
This table shows that it always needs natural resources to generate some amount of energy in
general and electricity in particular. Through time, this need has made some changes. In more
details, the trend is these days, with the same volume of natural resources, people can produce
more and more power than their fathers and grandfathers could. Moreover, due to the lack of
information, here mention only the case of thermal power. See that the productivity of thermal
power production is always lower than the average productivity of electricity in general. It can be
interpreted that except for thermal electricity, the other forms of power generation is much more
effective. Productivity of thermal power technology also has the trend to increase over time.
However, while the general productivity gradually increases, thermal power productivity
increased faster in 1990 – 2000 and nearly unchanged in the next 10 years.
1.1.2.2. Capital
The table below shows the amount of capital needed to generate one megawatt electricity in
some power plants in Vietnam and also in other countries. The accuracy of information is not
mentioned. The point here is that people need capital to generate every unit of electricity. It can
be understood in this way: This amount of money is used to cover three kinds of cost, including
initial investment in research, building, and buying machines, maintenance cost, and
administration cost for hiring labor and other office expense.
The value of these investments was recorded in different point of time. As a result, in order to
make better comparison, all these values are adjusted based on inflation rate in corresponding
countries from the recording year to present; they are also converted into value of U.S Dollar at
the time of writing this thesis.
See that in large scale, solar power plants and nuclear power plants have lowest investment per
unit of electricity. In fact, this rate is only one – third or two – third of thermal power plants and
hydro power plants, the two most popular forms in Vietnam currently. In smaller scale, hydro
power plants are the best choice with lowest investment per unit of electricity.

In this table, we also see that a geo – thermal power plants needs highest investment per unit of
electricity. It is as big as 43 times of this amount of investment of a hydro power plant with
similar installed capacity; 38 times of this amount of investment of a thermal power plant while
installed capacity is only one – sixth of the capacity of that normal thermal power plant.
Definitely, it is very expensive to consume electricity made from this kind of power plant; and
14
that huge amount of investment is nearly impossible for such developing country. However,
researchers estimate that this source of power is considered to be infinitive. And once people can
exploit it, it is a guarantee for stable electricity supply for long time.
Table 3: Capital in need per unit of technology
Power plant Cost Output Cost per unit (2011)
(adjusted by CPI)
Trung Sơn
hydropower project,
Vietnam
411.57 mil USD (year
2005)
260MW 3.29 mil USD/MW
Kiên Lương 1 thermal
power plan, Vietnam
2.5 bil USD (year
2010)
1,200 MW 3.21 mil USD/MW
Bạc Liêu wind power
plant, Vietnam
4,500 bil VND (year
2010)
99MW 3.71 mil USD/MW
A geo – thermal
power plant in

Ngawha, New
Zealand
20 bil USD (year
2007)
200MW 142.2 mil USD/MW
Blythe Solar Power
project, U.S
4 bil USD (year 2011) 3,470 MW 1.15 mil USD/MW
Ninh Thuận Nuclear
power plant, Vietnam
200,000 bil VND
(year 2008)
4,000 MW 2.82 mil USD/MW
(Note: Information is collected from a number of sources which are listed in the bibliography as
numbers 19, 20, 24, 29, 30, 31, 45, 50)
1.1.2.3. Technology
a. Generation
Basically, turbines and electricity generators are main equipments, which help converting any
other form of energy to electricity. As a consequence, the more efficiently these equipments
work, the more electricity can be produced from a certain amount of input energy. The efficiency
here can be defined by the level of energy – saving consumption and stability in working.
Speaking of energy – saving consumption, see that one part of input power should be consumed
to start – up and make all machines run. The smaller power is spent on producing electricity, the
more net electricity can be provided to electricity market.
15
Speaking of stability in working, see that any error in execution of electricity production can
interrupt the whole process and cause temporary shortage of electricity supply in short term. The
first factor which affects this ability to work stably is the working environment of these
equipments. There is a fact6 that turbines and electricity generators have to work in different
environments, and face different problems due to specific characteristics of the environment in

which they work. For example, turbines and electricity generators in hydro power plants work
with the pressure of water and water flows. But in wind power plant, these equipments work with
the flow of air in dry condition. Turbines and electricity generators in thermal power plant have
to work in high temperature, high pressure, and high humidity also. The second factor which
influences the stability in working of these equipments is technological innovation. It not also
helps increasing the rate of output energy per one unit of input energy but also helps reducing
bad effects from environment.
b. Transmission
Technology is also necessary for electricity transmission network. It is for a high quality of
electricity supply, measured by productivity, stability, and losses of energy. Moreover, in some
countries, where there is market competition in transmission activities, technology has the role of
allowing good inter – connection among those competitors for better supply also. (ERAV, 2011)
c. Distribution
Distribution is the last phase of the whole electricity provision process. It includes the system of
electricity lines connecting with every household electricity network, the method in used to
calculate electricity consumed monthly, and the organization of electricity billing and payment.
For more efficient electricity distribution system, some modern technologies have been appliled
widely in some countries. Here are some of them:
Table 4: Technology in distribution activities in Brazil in 2011
Technology Popularity
Radio – frequency technology (RF) 400,000 customers
Power Line Communication technology (PLC) 120,000 customers
General Packet Radio System technology
(GPRS)
14,000 customers
HHU technology 10,000 customers
Source: ERAV (ERAV, 2011)
16
1.1.3. Some determinants of electricity demand
As noted previously, electricity demand is affected by many factors. However, due to the limit of

available information, analysis tools and personal knowledge, this thesis mentions only three
factors. They are economic growth, electricity price, and personal income.
1.1.3.1. Economic growth
Among all factors, economic growth should be the one to be mentioned at first. The reason is
economic growth reflects the actual needs for electricity. Please be noted that it should be needs
only, not the demand for electricity because only economic growth is not enough to judge the
ability to consume electricity as much as needed.
As mentioned before, electricity is an essential primary input for almost production activities in
the modern economy. The expansion of production activities surely leads to the increase of
electricity needs to support this enlargement. In short, the more the national economy expands,
the more electricity is in need.
1.1.3.2. Budget constraint
Budget constraint is one of the factors which have the most significant effect on demand for
electricity. It can be understood as either financial capability for electricity billing of business
and non – business organization or personal income. Altogether with electricity price, budget
constraint defines how much electricity a household or an organization can afford. It directly
limits how much electricity in need can be demanded.
1.2. Some practical basis of electricity market
1.2.1. Wholly competitive electricity market in Brazil (ERAV, 2011)
In short, all of three stages in electricity market in bvrazil are working under market mechanism.
For more details, there are more than 122 investors with more than 200 power plants with
capacity of more than 30 MW. There are 78 companies monitoring and operating transmission
network. 86 investors invest in distribution activities. However, Brazilian government still makes
some intervention to assure that the market works well. The National Committee of Electricity
(CNPE) as the most powerful competitive authority in electricity sector, the National Regulatory
Authority of Electricity (ALEEN), the National Department of Commercial Electricity (CCEE),
the Authority of Electricity Inspection. In addition, some private organizations also take part in
17
monitoring electric market. One of them is the ONS which monitors the national electricity
system. Another one is the Electricity Consultancy company, which provides consultancy

services for both domestic investors and foreign investors, and ONS for efficiency in work.
1.2.2. Partly competitive electricity market in Italy (ERAV, 2011)
Graph 8: Structure of Italian electricity market
Source: ERAV
TERNA – the organization who operates 90% of electricity transmission network and monitors
the national electricity system. This organization is owned by ENEL, which was initially the
national electricity company.
GME – A state – owned authority which operates electricity market. Its function is to encourage
transparency, competitiveness and the efficiency of electricity market.
18
AU – The only intermediary entity in the electricity market, who is the single buyer in the
wholesale market.
The picture above has shown the nature of electricity market in Italy. At the stage of generation,
there are only national generators and foreign ones, the private domestic ones do not count a
significant volume. From now on, there are two mechanism of trading, which are simultaneously
running. The first one relates to bilateral contracts between generators and traders, and supply
contract between traders and consumers. Under this mechanism, the market is wholly
competitive: generators and traders can choose their optimal partners; consumers can choose
their proper distributors. The second mechanism relates to Single Buyer – AU. In this part,
electricity generated is transferred to transmission network to be sold to AU, and Au in its turn
keep sells electricity to its protected customers. By this way, generators cannot choose their
buyers, and consumers cannot choose their sellers.
19
CHAPTER 2
THE CURRENT SITUATION OF ELECTRICITY MARKET
IN VIETNAM
2.1. An overview of electricity market in Vietnam
Take a look at electricity market in Vietnam, see that it is growing year by year and in the reform
process.
In term of administration, this market is regulated by a competitive authority named Ministry of

Industry and Trade of Vietnam. This authority is in charge of preparing, launching, and
monitoring the execution of all policies and regulation relating to electricity generation,
transmission, distribution, and trading. Recently, this ministry has approved the plan to establish
much more competition in the electricity market which is now dominated by EVN, and initially
state – owned monopoly in electricity market.
In term of operation or the balance between supply of and demand for electricity, see that both of
them have increased continuously in a recent decade and are forecasted to keep increasing in the
coming years. The electricity supply in Vietnam market bases on hydro Power and thermal
power which mainly utilizes coal and natural gas. And despite a lot of effort to develop supply
capacity, there is serious shortage of electricity in recent years. However, there are also some
plans to enhance the electricity supply capacity and resolve this issue in the near future.
2.2. The current situation of electricity market
2.2.1. Market structure
General speaking, the electricity market in Vietnam has been operated under the government
intervention and the monopoly power of Vietnam Electricity Corporation (EVN). Though there
20
is some participation of private investors in generation and distribution stages, but it takes a very
small proportion compared with the contribution of EVN.
In more details, electricity market is managed by four main competitive authorities including
Ministry of Industry and Trading (MoIT), Ministry of Planning and Investment (MoPI), Ministry
of Finance (MoF) and State Bank of Vietnam (SBV). MoIT and its Electricity Regulatory
Authorities of Vietnam (ERAV) are in charge of managing supply of electricity, demand for
electricity, and the price adjustment in the market (ERAV, 2011). MoPI is responsible for
making policies in order to encourage private and foreign investment in electricity generation
and distribution activities (Vietnam Prime Minister, 2011). MoF and SBV are cooperating to
each other to monitor capital flow in and out the national budge for electricity projects. (Vietnam
Prime Minister, 2011)
On the market, EVN has the position of a monopoly in term of its dominant contribution to total
electricity productivity, the role as single buyer in wholesales market, and its owner ship over the
transmission grids and distribution network. However, this corporation is not a price maker in the

market, because price is settled due to sectoral policies while market factors like cost of material
for example is not taken into consideration well enough.
In generation stage, in 2010, those power plants of EVN and power projects of power companies
whose major shareholder is EVN took 65% of total electricity supplied to the market (Nguyễn
Thị Hồng Nhung, 2011). Independent power projects ò private investors and BOT power
projects of foreign investors counted for the remaining, about 1/3 of total supply only. In
transmission stage, EVN is the only buyer who buys all electricity generated from all power
plants as possible; then put this energy volume into its transmission grids. In distribution stage,
EVN owns a great number of electricity consumption contracts. The balance of cross – region
demand for and supply of electricity in these two stages is done by the National Loading
Dispatch Center. This center is also responsible for guaranteeing the stability and efficiency of
the whole electricity supply system.
In short, market of electricity in Vietnam is still intervened by government through development
policies and price mechanism. As a result, though EVN is a monopoly, its power in setting
market price is restricted. The characteristics of this monopoly situation are best described by
two points. Firstly, in wholesales market, generators do not have any other choice rather than
21
selling their electricity to EVN. Secondly, in retail market, majority of consumers also do not
have any other choice rather than buying electricity from EVN.
Graph 9: Structure of Vietnam Electricity Market
Sources: Vietnam Power Industry Overview Report (Nguyễn Việt Cường, 2009) & The National
Electricity Development Program no.7
22
EVN: Vietnam Electricity Corporation, the monopoly in electricity market
BOT: a popular form of foreign investment in electricity market in Vietnam
NPT: National Power Transmission Corporation, the monopoly in transmission stage
NLDC: National Loading Dispatch Center, the authorities which is in charge of balancing
demand for and supply of electricity national wide.
2.2.2. Supply of electricity
2.2.2.1. Current status of supply of electricity

a. Volume of electricity supplied
Graph 10: Actual and forecasted supply of electricity in the relation with demand for electricity
in Vietnam electricity market in the period 2007 – 2015
Source: Vietnam Power Report, Q4 2011 by BMI
Speaking of electricity supply volume, we see that from 2007 to 2020, it is foreseen that supply
of and demand for electricity will keep increasing at the similar rate. This is described by those
two curves which are nearly parallel to each other. Beside, this developing rate is forecasted to
be very stable now and in the future, based on the very slight fluctuation of the scopes of these
two curves.
23
In addition, even though supply of electricity does exceed demand for it, there has been always
serious shortage of energy in some recent years. The reason is high losses in transmission stage.
In fact, after deducting this loss from the total electricity generated, the net supply has just
matched the demand in 2007 – 2008. From 2009 and then, the trend is clear: the shortage of
electricity is becoming more serious in the period 2010 – 2015, but stops to be widened in the
next 5 years.
b. Quality of electricity supply
Speaking of the quality of electricity supply, see that Vietnam has the medium one as 98/139
(World Economic Forum, 2011). This quality contains three contents. Firstly, commercial
quality of quality of connection, customer care services, technical services, and metering and
billing services provided by distribution companies or even the generators. Secondly, continuity
or the availability of electricity, which are measured by customer minutes lost per year and the
number of unplanned interruption (except for exceptional events). Thirdly, voltage quality or
technical properties of electricity line, which helps avoiding dips and swings of electricity line
for both household and business. (The Council of European Energy Regulation, 2008)
2.2.2.1. The issue of natural resources
This content will clarify two points. The first one is the important role of natural resources for
the supply of electricity. And the second one is about the current availability of those resources
in Vietnam, also mentions the potential lack of resources in the near future.
a. The dependence of electricity supply on natural resources

Graph 11: Sources of power in 2011 (TWh)
Source: BMI, Vietnam Power Report Q4 2011
24
The report shows that Vietnam until 2011 has only two ways to generate electricity, including
thermal power plants and hydro power plants. Between these two types, thermal power is the
dominant form with 68% of supplied electricity. Natural gas is the main raw material for
electricity generation process that provides nearly one half of the total productivity. Coal is the
second important material that supplies one – fourth of electricity supply for the market.
b. The current availability of energy resources in Vietnam
In this part, energy resources are divided into two categories: conventional ones (hydro power
and thermal power with coal, oil, and natural gas), and alternative ones (renewable energies and
nuclear energy).
# Conventional energy resources in Vietnam
Table 5: Availability of crude oil of Vietnam in 2011
Proven reserves
1
(barrel) 600,000,000
Production (barrels per day) 305,000
Consumption (barrels per day) 321,500
Export (mainly crude oil, barrels per day) 210,500
Import (mainly oil product, barrels per day) 227,100
Estimated time remaining for exploitation
2
5,39
Source: The World FactBook 2011, Central Intelligence Agency
Table 6: Availability of natural gas in Vietnam 2011
Proven reserves (cubic meter) 192,500,000,000
Production (cubic meter) 8,500,000,000
Consumption (cubic meter) 9,500,000,000
Import (Cubic meter) 1,000,000,000

Export (Cubic meter) 0
Estimated time remaining for exploitation 22,65
Source: The World FactBook 2011, Central Intelligence Agency
Table 7: Availability of coal in Vietnam in 2011
Proven reserves (million tons) 151
1
“Proved reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be
estimated with a high degree of confidence to be commercially recoverable from a given date forward, from known
reservoirs and under current economic conditions:, Central Intelligence Agency, n.d, The World Fact Book, central
Intelligence Agency, United States of America, vewed 29
th
march 2012,
/>2
This result is calculated assuming that volume of resources exploited will not change in the coming year.
25