Proposal of Vietnam Energy Magazine on pumped storage hydropower price framework

According to Power Plan VIII, by 2030 Vietnam will have 2,400 MW of capacity from pumped storage hydropower (TDTTN). Currently, Vietnam Electricity Group (EVN) is constructing the Bac Ai Power Plant project in Phuoc Hoa and Phuoc Tan communes, Bac Ai district, Ninh Thuan province.

With a total investment capital of more than 21,100 billion VND, Bac Ai is the first TPP project that started construction in early January 2020 and the project is expected to be completed and put into operation by the end of 2028. However, , due to many difficulties, the schedule has been adjusted to put it into operation 1 year later than planned.

The Bac Ai Power Plant Project plays an important role in the national power system, with the task of storing electricity, generating peak power, reserving generation capacity, helping to stabilize the system, and adjust frequency - is a tool to help regulate the national power system to operate stably, safely and reliably in the context of increasing installed capacity of wind and solar power. By the end of 2023, wind and solar power sources will account for 26.9% of the entire system's capacity structure.

Also according to Power Plan VIII, Phuoc Hoa Hydropower Plant with a capacity of 1,200 MW is the second Hydropower Hydropower Project that will be put into operation in 2030. However, currently this project still does not have an investor. Therefore, the ability to put into operation a hydroelectric power plant with a total capacity of 2,400 MW in 2030 is a big question, because the time from now to 2030 is only 6.5 years left.

In addition, because there is no price frame for TPP and it is not known whether the investment will be effective or not, investors are not interested in considering investing in this power source.

According to updated data, pumped storage hydropower currently accounts for 99% of the power storage systems on the world's grid, with a capacity of about 140 GW. In the European Union, pumped storage hydropower capacity is 45 GW. In Asia, the leaders in pumped storage hydropower are Japan (30 GW) and China (24 GW). The United States also has significant pumped storage hydropower capacity (20 GW) [3].

Working mode of pumped storage hydropower:

Pumped storage hydropower is a form of hydropower that stores energy, with the main purpose of accumulating electricity to supplement the system at times of need - a solution to balance the load to support the system. Other power plants operate more efficiently. Hydropower can provide balanced, stable energy, storage capacity and power system ancillary services (frequency control and energy storage). TPP also provides ancillary benefits such as hardening capabilities, as well as storage (both increased and decreased) of reactive power, start-up and reserve capabilities.

In power generation mode, the turbine-generator can respond very quickly to frequency deviations like conventional hydroelectric generators, thus increasing the overall balance and stability of the grid. .

In both turbine and pump modes, the motor-generator excitation can be varied to contribute to reactive power loading and voltage stabilization. The efficiency of this two-way process is between 70% and 85% [3]. The day and night load chart of the power system is characterized by unevenness, there are times when the load demand is high, but there are also times when the load demand is low. Therefore, TPP performs the task of "covering the peak - filling the bottom" to level out the load chart, supporting other power plants to operate more efficiently (see figure 1

Figure 1: Illustration of power generation and pumped water storage periods of TPP in the daily load chart.

According to data from the National Power System Dispatch Center (A0): In June 2024, both maximum capacity (Pmax) and daily electricity consumption (A day) on a national scale increased high with numbers reaching new levels for the national electricity system.

In particular, at 1:30 p.m. on June 19, 2024, the peak capacity of the national power system reached 49,533 MW. Looking at the load chart (Figure 2) shows: The system's off-peak time is from 5 to 7 a.m. in the morning and the average peak time is about 8:00 p.m. to 11:00 p.m. Peak rush hour is from 13:00 to 17:00.

Figure 2: Power system load chart on June 19, 2024. Source: A0

Although there is currently no power storage system, the system is still safely regulated, without overloads or power outages. However, when the TPP operates, it will be easy to overcome the problem of peak capacity as was the case on June 19, 2024. Pumped-storage hydropower works daily for about 8 to 10 hours in pumping mode and 5 to 7 hours in generating mode with maximum generating capacity during peak hours.

What price range for pumped storage hydropower is reasonable?

Pumped storage hydropower is both a consumer of electricity and a source of generation - meaning it must buy electricity from the system during off-peak hours to pump water to the upper lake and generate electricity to the grid (sell electricity) during peak hours. So, at what level does the electricity purchase price and electricity selling price for TPPs allow the investor to recover capital and make a profit? This is a question for the authorities of the Ministry of Industry and Trade.

Obviously, if you want to attract investment in any field or industry (including TPP), investors are interested in the ability to recover capital and the best possible profit. On the other hand, despite the desire to have more power storage systems like TPP to ensure safe operation of the power system when wind and solar power sources increasingly account for a large proportion in the source structure, EVN cannot buy them. electricity from TPP with electricity prices higher than regulations of the Ministry of Industry and Trade.

Therefore, on May 29, 2024, the Ministry of Industry and Trade announced a draft Circular stipulating the method of building a power generation price frame for TPP plants and sent it for comments to relevant units and EVN.

According to the draft, the PND electricity generation price (VND/kWh) of the standard power plant is determined according to the following formula: PND = FC + FOMC + VC. In there:

- FC is the average fixed price of the standard factory equal to the investment capital cost of building the standard factory divided by the average annual electricity at the delivery point.

- FOMC is the fixed operating and maintenance price of a standard power plant, calculated as the total fixed operating and maintenance cost of the plant divided by the average electricity delivered over many years of the power plant.

- VC is the variable price of the year applying the price bracket of the standard power plant determined according to the method specified in this Circular (VND/kWh).

Accordingly, the electricity generation price frame of the TPP power plant is the value range from 0 (VND/kWh) to the price of the standard power plant. After the Circular stipulating the electricity generation price framework of TPP plants is issued, TPP plants will negotiate prices with EVN.

The operating mode of TPP is to buy electricity during off-peak hours (pumping water to the upper lake) and sell electricity to the system (working like a conventional hydroelectric plant) during peak hours. Therefore, the proposed calculation plan needs to consider two specific cases:

1. Electricity purchase price at off-peak hours for TPP: Price from 0 VND/kWh to the price of off-peak hours.

2. Electricity selling price into the system: Price from normal hours to peak hours.

Currently, EVN's business electricity price list is being implemented based on Decision 2941/QD-BCT, dated November 8, 2023 of the Ministry of Industry and Trade, from November 9, 2023 (currently applied). regulations for voltage levels from 22 kV and above are as follows:

If based on the table above, applied to the calculation for TPP (for example TPP is put into operation in 2024), the electricity price that TPP investors will have to buy from the system to pump water to the above lake will be from 0. - 1,465 VND/kWh and the electricity selling price to EVN is from 2,629 - 4,575 VND/kWh. Does this price attract investors to TDTN?

In addition, it is recommended that the Ministry of Industry and Trade should consider and add capacity prices applicable to TPP. Because, simply applying the calculation method such as the draft electricity generation price frame of a TPP with a value range from 0 (VND/kWh) to the price of a standard power plant will be difficult to attract investors. Invest in TDTN.

The simple reason is to invest in a 1,200 MW power plant (for example, Bac Ai power plant) with a total investment of 21,100 billion VND (unit price in 2020), each year only operating to generate electricity for about 1,800 MW. - 2,000 h, while having to pay the cost of buying electricity from the system to pump water to the upper lake from 3,000 - 3,650 h/year is not small. Balancing revenue and expenditure will ensure the ability to attract investment in TNTN.

Epilogue:

Developing power storage systems, including renewable energy sources, in the context of increasing renewable energy in the power source structure to reach the goal of carbon neutrality by 2050 is an inevitable trend for safe operation, Trust our country's electricity system. From now to 2030, 2,400 MW of power plants will be put into operation to support the integration of large-scale renewable energy sources and by 2050, the capacity of power plants and battery storage will reach 30,650 - 45,550 MW.

Currently, EVN is researching and evaluating the application of two-component electricity prices and plans to pilot application in 2025. Thus, in addition to determining the price frame for TPP (as current regulations), it is necessary to include The input capacity price calculated for TPP is in line with the general trend of how electricity prices are calculated in the world.

When there is a suitable electricity generation price frame for a TPP power plant, harmonizing the interests of the TPP investor (electricity seller) and the electricity buyer, it will certainly bring great benefits to the economy - that is, Operate the power system safely, reliably, and effectively, providing enough electricity for the country./.

Dr. NGUYEN HUY HOACH - EXPERT OF VIETNAM ENERGY MAGAZINE