Grenada’s experience showcases some of the restrictions of this market structure. Private VIU structures may be too rigid to accommodate new sector objectives such as increasing renewable generation. The initial privatization agreement and subsequent regulation in Grenada was not structured in a way to encourage the private VIU to improve sector sustainability through investment in renewables as this was not a key sector objective at the time. As a private entity, it was unlikely that the GRENLEC management would encourage the development of thirdparty renewable generation that would put its own market share at risk unless it felt adequately compensated or equipped to profit from generating from its own renewable generators. GRENLEC as the monopoly would have to drive any large-scale transition to renewables.

# **_4.2 Bundled vs Unbundled SBM_**

Ten economies switched from an integrated single buyer model where the VIU acted as a single buyer, purchasing power from IPPs alongside its generation assets, to an unbundled single buyer design. No country that unbundled its single buyer has reverted to an integrated SBM structure. These countries had several overarching objectives for this switch, including the following.

**_Incentivize private sector entry:_** From 1995 until 2005, Viet Nam’s state-owned VIU, EVM, was the only player in the market. In 2005, the country’s first IPP started operations and selling electricity to EVN. For seven years EVN acted as an integrated single buyer purchasing electricity from IPPs. There were power supply shortages as investment in generation did not keep pace with growing demand. EVN also faced financial issues as the regulated power tariffs did not cover its costs (Lee and Gerner 2020). Furthermore, the PPAs with the IPPs were denominated in foreign currency (USD and yen) resulting in financial stress for EVN when the currency depreciated. In 2012, the government legally unbundled EVN to create a separate Electricity Power Trading Company that purchases power both from state owned generators and IPPs. The government’s vision for unbundling EVN was to trigger further private sector investment into the sector, including privatization of the state-owned generators. Under this market design private sector investment increased. By 2023, private players were estimated to own 42% of installed capacity (Thu and Ha 2023). EVN retains monopoly in the transmission segment but changes to the Electricity Law in 2022 now allow private sector investments in the grid. One private company in 2023 has taken advantage of this change in the law by building the transmission line from its solar plant to the grid (Thu and Ha 2023).

**_Prepare for a transition to a competitive wholesale market structure:_** A few countries created independent separate single buyers to gain experience in power trading before transitioning to a competitive wholesale market structure. For example, Oman Power and Water Procurement Company (OPWP) was an integrated power and water VIU that functioned as a single buyer purchasing power from IPPs starting in 1996. In 2005, the government unbundled the company creating a separate Oman Electricity Transmission Company as an independent system operator while OPWP became the market operator. OPWP envisaged moving to a more competitive wholesale market structure as the long-term PPAs with IPPs gradually expired. It began operational trials of a gross pool wholesale spot market in 2019. On January 2022, Oman formally transitioned to a gross pool market structure operated by OPWP. Currently, all generators that do not have existing PPA obligations are mandated to sell on the pool. The generators submit daily offers via a single unified portal. They can access market data such as schedules and prices and receive payment for electricity sold through the spot market. The market has created new revenue opportunities for generators especially for solar and wind projects (Al Arabiya English 2022).

27