Disscussion of the solutions to diversify investment in power transmission network in Vietnam

The Standing National Steering Committee for Electricity Development (NSECD), Electricity and Renewable Energy Administration (EREA) (Ministry of Industry and Trade) held a scientific conference on “The connection issues of power source projects and mechanisms and policies to diversify investment in power transmission network in Vietnam” in Hanoi in the morning of 03 December 2020.
Overview of the Conference

Making an opening speech of the Conference, Mr. Hoang Trong Hieu – Deputy Chief of the Office of the National Steering Committee for Electricity Development said in the past 20 years, the electricity industry has had a strong growth and basically met the power demand for socio-economic development. Up to now, the power system capacity has reached about 58,000 MW, with 3 main power transmission networks of 500 kV from North to South, the national grid has reached 100% of communes, 99.26% of rural households. Commercial power output per capita in 2019 reached nearly 2,500 kWh, making an important contribution to the high-speed economic growth in the past decades.

In the development of the electricity industry, especially the development of power sources in recent years, in addition to the core role of Electricity of Vietnam (EVN), of the state’s economic corporpations, there are also the active contributions from the local private sector and foreign investors.

8e01659f210a482add1b1686b935261cMr. Hoang Trong Hieu – Deputy Chief of Office of the National Steering Committee for Electricity Development

Currently, in the power source structure of the whole country, the capacity proportion of power plants invested by the private sector (IPP and BOT) has accounted for 34.4%. Of these, only in the past 2 years (to October 2020), the number of renewable power projects invested in and operated by the private sector included 11 wind power plants (with capacity of 494 MW) and 106 solar power plants (with capacity of 5,853 MW). This is a clear message about the State’s proper policy on mobilizing social resources in diversifying investment in power sources.

However, the engagement of power projects under IPP and BOT in the past time also revealed many big problems that need to be solved in the upcoming time, including the synchronous investment between the power source and the transmission grid.

According to current regulations, the power transmission grid belongs to the natural monopoly of the state. The entire transmission network according to the national power master plan is assigned to EVN for investment. In fact, most of the tranmission lines connecting IPP power plants to the national grids have been built by IPP investors. However, many transmission line grids managed and operated by EVN are overloaded, or failed to invest in time that affected the capacity release of power plants especially from solar and wind power sources. With this situation, recently some investors have been allowed by the Prime Minister to self-invest some 500 kV power transmission lines into the national power system (such as connections of the 500 kV of Trung Nam Thuan Nam solar power – Vinh Tan; 500 kV Éasup solar power – Pleiku and some other 220 kV connections).

According to the statistics up to now, IPP projects have been added to the National Power Master Plan and Provincial Power Master Plan with operation schedule before 2021, including 187 wind power projects (with capacity of 11,419 MW), 135 solar power projects (with capacity of 13,617 MW). In addition, about 320 solar power projects with capacity of 34,000 MW and 300 wind power projects with capacity of about 74,000 MW are being proposed by the investors and local government to supplement the master plan before 2021-2023.

Regarding LNG power, up to now, 11 LNG power plant projects have been added to the Master Plan (with total capacity of 16,100 – 16,400 MW).

Therefore, the connections of these power sources to the national grid and the additional upgrading of the power transmission grids to release the capacity of these plants are remarkable challenges for the electricity industry.

According to Mr. Hoang Trong Hieu, at present, the Ministry of Industry and Trade is finalizing the formulation of Power Planning 8 (PDP 8). Preliminarily, in order to meet the power demand in the next 10 years (to 2030), it is essential to put into operation of 7,500 – 8,000 MW power capacity of all kinds on a yearly average; regarding the transmission network, it is essential to put into operation of 1,200 km of 500 kV transmission line network (current average of 400 km/year), 2,000 km of 220 kV transmission line network (current average of 1,048 km/year) 8,000 MVA capacity of 500 kV, substation (current capacity of 2,800 MVA/year) and 8,400 MVA capacity of 220 kV substation (current capacity of 5,800 MVA/year). The total average investment capital per year is over USD 13 billion /year; the average structure ratio of investment capital between the source and the grid is 72/28.

Thus, the investment in the 500-220 kV transmission grid for the period of 2021-2030 will be a huge challenge for the electricity industry, the annually average investment volume is about 2 times higher than the current one.

“With the policy of a competitive electricity market development with the participation of all economic sectors and strong mobilization of all social resources while the Government minimize all the commitments and guarantees from the State in developing power source projects and studying the possibility of diversifying investment in the power grids as specified in the Politburo’s Resolution No.55, the formulation of a comprehensive and full legal framework to attract the private investment in the electricity industry in general and each scope of the transmission grid in particular is vital,” said Mr. Hoang Trong Hieu.

Next, at the Conference, the investors from state-owned enterprises such as EVN, PVN and private investors (other than EVN) as well as the foreign investors operating in the field of power production from wind power, solar power, hydropower, gas-fired power, coal-fired power, biomass power… presented and discussed the current status and the grid infrastructure development demand, the possibility to participate in power grid investment in general and the power transmission grid in particular, in order to share the burden of the state budget and to create the favorable conditions for their own power projects (or a cluster of power sources by many investors) to connect into the national power supply system, with an increasingly larger scale and role.

At the same time, the investors also presented the advantages, difficulties, obstacles and proposed to supplement and adjust the contents of the legal framework, mechanisms, policies, the economic – technical – finance regulations on the involvement in the development of transmission grid projects, the connections of power sources other than EVN (including projects under the state-owned enterprises and the private enterprises) into the common infrastructure system in line with the orientations of the Politburo’s Resolution No. 55.

35f08cae0972b6b6349263b37acc7075Mr. Nguyen Tuan Anh – Deputy Director of Electricity and Renewable Energy Administration

Concluding of the Conference, Mr. Nguyen Tuan Anh – Deputy Director of the Electricity and Renewable Energy Administration emphasized that in order to actualize the policy of the Party and State, the Standing Committee of the National Steering Committee on Electricity Development, the Ministry of Industry and Trade, as well as relevant ministries and departments are urgently updating the actual situation, finalizing the legal framework and guiding documents, proposing and advising the competent authorities to issue legal regulations in order to facilitate the development of IPP power source projects.

However, in the progress of investing in grid connection in power source projects and diversifying investment in power transmission grid, there are still many

barriers and shortcomings. Therefore, in the upcoming time, the National Steering Committee for Electricity Development, the Ministry of Industry and Trade will have recommendations to the competent authorities to supplement, adjust the legal framework and appropriate regulations, in order to create favorable conditions for promoting the development of Vietnam’s energy industry in the near future. Details are as follows:

Firstly, regarding the grid connection of the power source to the transmission system:

Regarding the scope of investment: It is basically agreed with the recommendations that the private investors investing in IPP power sources can participate as investors in power grid connection project components as part of the power source project (regardless of connected voltage level) and comply with the connection agreement between the investor and EVN/EVNNPT.

Regarding the recovery of investment capital of the connecting grid: For renewable power projects benefiting the FIT price: The investment in the transmission grid from the power source to the “national power transmission system” is under the responsibility of the Investors. Power source investors must balance investment efficiency in selecting an investment location (related to the connection distance with the transmission system) and the FIT price regulated by the Government.

For other power source projects: The transmission grid from the power source to the transmission system is considered as a component of the power source project, included in the investment cost of the power source and calculated into the PPA price according to the negotiation mechanism on power price as regulated by the Government. In the case of the connecting grid for a cluster of plants, the basic investment cost sharing is calculated on the principle of proportion of the installed capacity corresponding to the same type of power source. In the long term, the Ministry of Industry and Trade should consider formulating connection prices to match the transparency of the electricity market and be clear for capital recovery, or investment efficiency calculations.

Regarding operation and management: The power source investor manages and operates the power plant and shall be responsible for the management and operation of the transmission grid invested by themselves, have the enough capacity to operate and manage by themselves, or hire a operator. It is necessary to consider unifying regulations on the content of operation handing-over of the investor’s connecting grid with EVNNPT in case that the connecting grid serves a cluster of source projects, or later becomes an inter-regional transmission grid, or the transmission grid to provide power load.

Secondly, regarding the main and inter-regional transmission grid for the power supply:

In the medium term, the State still has the monopoly, assigning EVNNPT to be responsible for the investment. But in the long term, it will be considered to pilot the gradual participation of private investors on the basis of established connection prices and transmission usage prices.

Thirdly, regarding legal issues:

1. Proposing the organization to develop and amend the Electricity Law and legal documents on clarifying the content of “the State monopolizes power transmission”, in the direction of demarcating the state’s responsibility for investment and construction of the main and inter-regional transmission and distribution grid projects (collectively referred to as the national power transmission network). Diversify the transmission grid investment (regardless of voltage level) of the source projects into the national transmission system. At the same time, the regulations on power transmission and distribution prices are added to the Electricity Law.

2. Recommending the Ministry of Industry and Trade to organize, formulate and admend the regulations on the transmission prices in the structure of connecting prices and transmission system usage prices, as well as power distribution prices.

3. Regarding the planning, the requirement for the grid connection to release the capacity should be planned in association with the source project (Do not separate from the planning). The planning of source and grid connection projects should be overall in clusters, do not separate, or insynchronization.

In addition, the Electricity and Renewable Energy Administration also proposed to “clear up” a number of contents such as:

– Reviewing legal regulations related to investment, construction, planning, land management, bidding, etc., thereby proposing amendments and supplements to the overlapping and inconsistent issues. At the same time, it is necessary to soon study and guide investors to implement new provisions of the laws, ensure synchronization and efficiency, and create an open, lawful and legal corridor for investors.

– Regulations on technical standards, safety, and minimizing the environmental impacts should also be studied and promulgated soon.

– The state management agencies further speed up the simplification of administrative procedures in order to shorten investment preparation and site clearance time.

– The investors need to actively research and understand the legal regulations related to investment, construction and land laws. Coordinate well with specialized agencies of ministries, departments and local authorities to prepare complete and quality dossiers to avoid affecting the progress of projects. On the other hand, ensure sufficient financial capacity and human resource capacity to implement the project; perform well the construction and

installation work, ensure the quality, safety, environmental protection and efficiency of the project.

“Standing Committee of the National Steering Committee on Electricity Development, the Ministry of Industry and Trade received the comments, opinions and recommendations of investors and managers in the Conference to propose a report to the Government, the Prime Minister to direct the ministries, departments and local authorities to propose the best and fastest solutions to meet actual needs, remove difficulties for power transmission and power connectiong grid projects to the national transmission system” – Mr. Nguyen Tuan Anh concluded.

Some of pictures of the Conference:


Mr. Pham Tien Dung – Deputy General Director of the Vietnam Oil and Gas Group proposed to remove obstacles in handing over the assets of the 500kV Distribution Yard of Vung Ang 1 Thermal Power Plant and Song Hau 1 Thermal Power Plant.


Mr. Tran Hong Phuong – Head of Electricity Prices and Fees Department – Electricity Regulatory Authority of Vietnam presented an overview of some typical international experiences on the power transmission and distribution pricing mechanism and current regulations of Vietnam.

df3b0b647c32d8b87e0affe84843b58cMr. Mac Quang Huy – Member of the Board of Directors of Truong Thanh Vietnam Group made a presentation on the need to “remove all barriers to attract and encourage the private sector to participate in investment and development of energy projects” and specific steps of the Ministry of Industry and Trade in the direction of studying of “building a mechanism to mobilize resources from all socio-economic sectors for investment and development of the transmission grid”.
5dd01484805be94c9ab6c849317dde94Mr. Nguyen Ngoc Tan – Member of the Board of Directors of the National Power Transmission presented a number of contents related to investment regulations, technical requirements for power transmission grids, and regulations on connection to the national power transmission system; difficulties and obstacles in the progress of investment and operation management of the transmission grid in recent years as well as some proposals and recommendations to handle difficulties and shortcomings. Thereby, it is possible to utimize the country’s resources in investment and development of the transmission grid in accordance with the guidelines and orientations of the Party and Government.

Trung Nam Group introduced the 500 kV substation and 220/500 kV transmission line projects in association with 450 MW Trung Nam Thuan Nam solar power plant, in Phuoc Minh commune, Thuan Nam district, Ninh Thuan province.


Enterprize Energy Group introduced the world’s largest wind power project in Vietnam – Thang Long Wind – proposed for the construction in Ke Ga sea (Ham Thuan Nam – Ninh Thuan province) with an expected capacity of 3,400 MW, total expected Investment capital of about 12 billion dollars.


Mr. Pham Dang Thanh – Ninh Thuan Department of Industry and Trade proposed to remove the specific obstacles of grid connection projects in Ninh Thuan.

Mr. Nguyen Tung Minh – Director of CADIVI Research and Development Division
3cad2fb2201d2aafb4b1a4ae7b88e767Mr. Kim Jong Pil – General Director of LS VINA Cable & System Company

Mr. Nguyen The Vinh – General Director of Van Phong Power Co., Ltd. discussed and counter-argued at the Conference

– Source: Vietnam Energy Newspaper –


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