Only when a strong-enough system of mechanisms and policies is established for ensuring interests of stakeholders - the users and suppliers of electricity - the DR market in Vietnam could develop.

The Demand Response Program (DR) is one of the solutions to improve the efficiency of electricity usage, contribute to ensuring balance of electricity supply and demand, optimizing the power system, improving reliability and safety of power supply, ensuring energy security and sustainable development. The Government of Vietnam has approved the National Program on Electricity Demand Side Management (DSM) for the period of 2018 - 2020, with a vision to 2030, in which DR is a key program with the goal of reducing at least 30% of the peak load capacity of the national power system, respectively reducing at least 90 MW in 2020, 300 MW in 2025 and 600 MW in 2030.

North-South 500kV transmission line

The DR Program will contribute to reducing or changing the needs and usage habits of customers in using electricity, reducing the peak capacity at peak hours of the national power system and regional power systems or in areas of overloaded power grids. For the power industry, DR will reduce management and operation costs, improve efficiency and operational flexibility, reduce the need for capital investment into the power system and improve service quality for customers.

According to the program's design, there are 03 levels of implementation: non-commercial, voluntary DR, DR under the direct financial incentive mechanism (by receiving incentive money on the saved output/capacity) and DR under the electricity price mechanism (by applying the two-component electricity tariff; the real-time current peak electricity tariff). Customers participating in any level will have a corresponding incentive mechanism.

Xuan Loc substation 

Currently, Electricity of Vietnam (EVN) is implementing a non-commercial and voluntary DR Program on the basis of selecting businesses which have electricity consumption output of one million kWh/year or more and are equipped with measuring equipment and data storage in accordance with the requirements of the Program. Enterprises voluntarily participate, actively decide the size and type of load to stop or reduce the demand for electricity at peak hours. Up to now, EVN has planned to deploy DR to more than 4,000 target customers, mainly customers in the industrial and construction sectors (ie. commercial buildings).

In order to increase the attractiveness of the DR Program, EVN has implemented many management and technological solutions such as: applying modern technology in grid management and operation, repairing by hotline method, maintaining in-loaded substations, improving electricity access index, improving power supply reliability and quality of service for customers who signed up to participate in the DR Program.

EVN always takes care of the power transmission lines to reduce the rate of power loss on the grid 

According to EVN's data, more than 60% of target customers have signed agreement to participate in the DR Program. However, the actual implementation shows that the participation of selected customers is still limited. Although the agreement has been signed, when EVN announced the implementation of activities under the DR Program, some customers were not enthusiastic, delayed their implementation, even refused to participate in it with reason of changing or adjusting their production and business plans etc.

EVN is implementing the DR Program at the non-commercial level and voluntary participation of electricity users. According to assessment and analysis from experts in relevant forums and seminars on DR (recently organized by the Ministry of Industry and Trade and EVN), if there is no complete mechanism and policy, especially the specific financial mechanism and electricity tariff, it will be very difficult to achieve the targets of the Program. Only when a strong-enough system of mechanisms and policies is established for ensuring the interests of stakeholders - the users and suppliers of electricity - the DR market in Vietnam could develop. Customers will voluntarily participate in DR when benefits are associated with responsibilities.

Cleaning, testing and energizing 110kV Bo Trach substation, Quang Binh province in final stage. Source: VNA 

According to the experience of countries around the world, the electricity price mechanism applied at peak hours of the power system should be prioritized for research and application when implementing the DR. Two-component tariff (for electricity price and capacity price) and real-time peak power tariff are effective financial tools to encourage customers to change their habit in electricity usage, actively change their electricity demand or reduce demand during peak hours of the power system, ensure the success of the DR Program.

Thus in immediate period, it is necessary to focus on amending and supplementing legal documents under the authority of the Ministry of Industry and Trade and related ministries, giving priority to amend and promulgate guiding documents related to the financial mechanism and the cost of implementing the DR Program (including the cost of encouraging and supporting electricity customers to participate in the DR Program), especially the costs directly related to the production and business activities of the power suppliers, including electricity generation, transmission or distribution when implementing the DR Program. In long term, the Ministry of Industry and Trade should have a plan to study, amend, supplement and revise the provisions of the Electricity Law, including activities on Demand Side Management and Demand Response Programs.

The 110kV transformer station built by General Contractor EEMC at Cam Hoa Solar Power Plant was officially connected to the national grid on June 12, 2019 

According to forecasts, the growth rate of electricity demand in Vietnam is still at more than double digits and will continuously be high in the coming years, the investment to develop generation sources and electricity grids will be difficulty which results to the power supply and demand imbalance and to the risk of electricity shortage. The Demand Response Program with the goal of reducing at least 30% of the peak load capacity of the national power system in the period of 2018 - 2020, with a vision to 2030 is the expected solution, contributing to many practical benefits for the economy.

Nguyen Hiep

Vietnam Energy Conservation and Energy Efficiency Association - VECEA