**Establishment of the Vietnam Competitive Generation Market (VCGM) occurred ahead of the planned privatization of EVN generation companies.** In 2011, the VCGM was established as a pilot, followed by full operation in 2012 with direct participation of 9.3 GW installed capacity. The market design is based on an energy-only model from Australia. Market participants included EVN and locallyowned plants by other SOEs with installed capacity of 30 MW and above. Competition occurs through spot trading for the day-ahead and fixed-term contracts with the EPTC as the single-buyer. Strategic multi-purpose hydropower plants and some IPPs are ‘indirect participants’ where EPTC bids on their behalf. Indirect participants totaled 17.2 GW in 2012. Foreign-owned BOT plants have long-term power purchase agreements with EPTC and do not participate directly in the VCGM. All plants below 30 MW, mostly small hydropower plants, sell directly to distribution companies.

**By 2018, direct participants in the VCGM grew to 23 GW, representing more than 50 percent of total installed capacity of large power plants in Vietnam.** Figure 3 shows the growth of direct and indirect participation in the VCGM from 2012 to 2018. Excluding plants below 30 MW, a total of 149 power plants were operating in Vietnam in 2018, with a total installed capacity of 45 GW. Among these, 90 power plants with a combined capacity of 23 GW directly trade in the VCGM competing to get economically dispatched. Indirect participants totaled 22 GW. In 2018, NLDC reported that the total value of electricity traded through the spot market was US$4.6 billion. With those generators bidding every day, every hour into a spot market competing to be dispatched has substantially improved operational efficiency of generators and their financial performance, contributing to keep generation costs lower than they would have otherwise. However, the VCGM has not yet served to set investment incentives for the private sector independent of long-term PPAs.

**Figure 3: Capacity Traded in the Vietnam Competitive Generation Market (GW), 2012-2018**

<!-- Start of picture text --> 50<br>Direct Indirect<br>40<br>20.10 21.98<br>30 24.32<br>21.16<br>21.14<br>20 18.65<br>17.16<br>10 18.16 22.54 23.02<br>9.31 11.84 12.82 15.11<br>0<br>2012 2013 2014 2015 2016 2017 2018<br><!-- End of picture text --> Source: NLDC

# **As the planned successor to the VCGM, the Vietnam Wholesale Electricity Market (VWEM), has been**

**running in pilot ‘paper’ phase since 2016.** In 2013, the government updated the roadmap to articulate a pilot phase of the VWEM from 2015 and full operation by 2021. Achievements to date include finalization of the market design, installation of relevant IT infrastructure for billing and settlement, and activities to build the capacity of market participants. The key feature of the VWEM is that large industrial consumers and PCs (i.e. distribution companies) can negotiate and contract directly with public and private generators. This provides further transparency in the market and stimulates competition among multiple buyers and sellers. Once the VWEM is implemented, EVN will lose its status as a single buyer. The spot market will initially operate on an hourly basis and be eventually reduced to 30-minute trading intervals. In 2018, MOIT approved the detailed VWEM market rules and key market features. These include: (i) gradual transition from cost-based to price-based pool model;

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