Building a more efficient and transparent electricity market

On the morning of June 16 in Hanoi, the MoIT held a technical consultation meeting on the review and adjustment of Vietnam’s competitive electricity market design. The meeting was chaired by Deputy Minister of Industry and Trade Nguyen Hoang Long.

The event was attended by representatives from major economic groups and corporations, power generation and transmission companies, large electricity consumers, industry associations, research institutes, universities, and other relevant stakeholders.

In his opening remarks, Deputy Minister Nguyen Hoang Long emphasized that the consultation represents an important step in implementing the orientations and objectives outlined in Politburo Resolution No. 70-NQ/TW dated August 20, 2025, on ensuring national energy security through 2030 with a vision to 2045. The Resolution calls for the continued improvement of mechanisms and policies governing the electricity market, while progressively developing an effective and feasible competitive electricity market in accordance with the established roadmap.

Following a comprehensive review and assessment of the development and operation of Vietnam’s competitive electricity market over the past 14 years, undertaken with contributions from relevant stakeholders and support from technical consultants, the meeting provided an opportunity for regulators, the National Power System and Market Operation Company (NSMO), power generation, transmission and distribution entities, large electricity consumers, experts, industry associations, and other stakeholders to exchange views, provide feedback, and clarify technical and practical issues arising in the process of refining the market design. The ultimate objective is to adjust the market structure at all levels to ensure feasibility and efficiency during implementation.

Nguyen Quoc Trung, Deputy Director of NSMO, together with the consulting team, presented the draft findings of the review and proposed adjustments to the competitive electricity market design. The proposal covers improvements to Vietnam’s competitive wholesale electricity market, the development of a competitive retail electricity market design, and an overall implementation roadmap.

According to the presentation, the proposed framework for both wholesale and retail competitive electricity markets closely aligns with the Party’s policies and the directives of the Government and the MoIT regarding the development of a competitive electricity market in Vietnam. Key principles include ensuring reliable electricity supply; guaranteeing transparent and fair transactions and risk allocation; enhancing market participants’ ability to manage risks; and providing clearer investment signals and development directions for the electricity sector as a whole.

The development of a competitive electricity market, however, should not be implemented hastily. Instead, it must proceed in a gradual, practical, and effective manner, particularly by meeting prerequisite conditions related to regulatory frameworks, infrastructure, and the resolution of longstanding issues that have emerged over recent years. A competitive retail electricity market should only be introduced and expanded in stages once the competitive wholesale market has become more mature and the necessary preconditions have been fully met. This is especially important when expanding customers’ rights to choose electricity suppliers, in order to ensure system security, operational stability, and the protection of consumer interests throughout the market development process.

Another important principle is open access, ensuring fair service provision for all market participants and preventing unfair preferences or advantages among market actors. At the same time, safeguarding consumer interests must remain a fundamental requirement under any electricity market model.

Laying the groundwork for a competitive retail electricity market

Regarding the overall approach, NSMO leadership stressed that the wholesale electricity market must serve as the foundation for the retail electricity market. The wholesale market should first be developed and refined in a systematic and standardized manner, after which the retail market can gradually evolve on that basis. The retail electricity market should not be designed as an independent structure detached from the wholesale market but must instead reflect the level of maturity achieved in wholesale market development.

Before a retail market can be implemented, outstanding issues within the wholesale market need to be addressed, while the market itself must adapt to the broader development of the power sector. The goal is to establish an integrated and consistent roadmap spanning electricity generation, wholesale trading, and supply to end consumers.

During the consultation, participants offered a wide range of specialized perspectives drawn from regulatory practice, operational experience, and international expertise. There was broad consensus on the necessity of reviewing and adjusting the electricity market design to improve overall market performance and efficiency.

Discussions focused on several key issues, including the gap between the current market design and actual market operations; increasing direct participation in the electricity market; contractual arrangements, settlement mechanisms, data management, pricing mechanisms, and ancillary services; options and solutions for transferring existing power purchase agreements (PPAs) from Vietnam Electricity (EVN) to regional Power Corporations; the role of EVN during the transition period; the responsibilities of Power Corporations; risk management mechanisms; payment guarantees and cost allocation following the transfer of PPAs; and the design and implementation roadmap for a competitive retail electricity market suited to Vietnam’s conditions.

Following the discussions, representatives of NSMO and the consulting team responded to questions, clarified issues raised by participants, and acknowledged the feedback received for incorporation into the next draft of the proposal.

Trinh Quoc Vu, Deputy Director of the Electricity Authority, stated that refining the competitive electricity market design is a challenging task with broad scope and significant implications. It is a reform process that requires close coordination among state management agencies, the system and market operator, EVN, PVN, TKV, Power Corporations, power generation companies, large electricity consumers, and other relevant organizations and individuals.

After 14 years of operating a competitive electricity market and the introduction of the competitive wholesale electricity market in 2019, Vietnam’s electricity market now needs to move to a new stage of development. Existing challenges and shortcomings have already been clearly identified, and the priority now is to determine solutions that can be implemented in a coordinated, effective, and timely manner.

Therefore, improving the competitive wholesale electricity market and moving toward a competitive retail electricity market is an essential requirement, fully aligned with the orientations of the Party and the State, as well as the directives of the Government and the MoIT.

The consultation serves as an important step in gaining a more comprehensive understanding of the issues at hand, clarifying options for the design of Vietnam’s competitive electricity market, and building consensus on future policy directions. Based on the feedback received, representatives of the Electricity Authority called on all agencies and stakeholders to continue working closely, responsibly, and proactively to support NSMO in finalizing the Vietnam Competitive Electricity Market Design Project for submission to the MoIT.