MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM

Transcription

1 MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM

2 Imprint Authors Annex Power January 2013 Publisher Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH On behalf of the German Federal Ministry of Economics and Technology (BMWi) Contact Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Köthener Str. 2, Berlin, Germany Fax: +49 (0) Web: Web: This report is part of the Project Development Programme (PDP) South-East Asia. PDP South-East Asia is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry of Economics and Technology (BMWi) under the energy efficiency Made in Germany initiative. More information about PDP and about energy efficiency markets in South-East Asia can be found on the website This publication, including all its information, is protected by copyright. GIZ cannot be liable for any material or immaterial damages caused directly or indirectly by the use or disuse of parts. Any use that is not expressly permitted under copyright legislation requires the prior consent of GIZ. All contents were created with the utmost care and in good faith. GIZ assumes no responsibility for the accuracy, timeliness, completeness or quality of the information provided.

3 Content 1. Executive Summary 1 2. Task of the study Background Objectives Tasks of assignment Introduction to Smart Grid Smart Grid meaning, necessity, potential, impact, and requirements Existing Smart Grid Definitions and Technologies Global Smart Grid development and demonstration projects Energy Situation in Thailand Key Challenges of the Countries Energy System Overview about Energy Situation and Energy Market Primary Energy Consumption Electricity Generating Capacity and Consumption Relevant Energy Institutions Provincial Electricity Authority (PEA) Metropolitan Electricity Authority (MEA) Electricity Generating Authority of Thailand (EGAT) Energy Regulatory Commission of Thailand (ERC) Department of Alternative Energy Development and Efficiency (DEDE) Energy Policy and Planning Office (EPPO) Independent Power Producer (IPP) Small Power Producer (SPP) Very Small Power Producer (VSPP) Energy Related Policies Power Development Plan Thailand s 20-Years Energy Efficiency Development Plan ( ) Power Purchase Agreement (PPA) Pricing Structure Demand Side Management Ten Years Alternative Energy Development Plan (Year ) Smart Grid Activities in Thailand Smart Grid Policy/Activities by Governmental Institutions Energy Policy and Planning Office (EPPO), Ministry of Energy Provincial Electricity Authority (PEA) Metropolitan Electricity Authority (MEA) Electricity Generating Authority of Thailand (EGAT) PTT Public Company Limited Additional Smart Grid Activities Objectives to Develop Smart Grid Market in Thailand Results from Interviews Issues/Barriers for Smart Grid Deployment in Thailand Energy Situation in Vietnam Overview about Energy Situation and Energy Market Vietnamese Energy Market Vietnamese Energy Infrastructure Relevant Energy Institutions Ministry of Industry and Trade (MOIT) Electricity Regulatory Authority of Vietnam (ERAV) - Ministry of Industry and Trade 60 i

4 3. Vietnam Electricity (EVN) Institute of Energy (IE), Ministry of Industry and Trade Ministry of Planning and Investment (MPI) Ministry of Information and Communication (MIC) Relevant Energy Policies and Regulation Development of the Vietnamese Electricity Market - Decision Number 26/2006/QD Construction of Infrastructure Systems - Resolution No. 13-NQ/TW Resolution No. 16/NQ-CP 2012 on action plan to implement the Resolution 13-NQ/TW Technology Development Strategy of EVN to 2015, with vision to Smart Grid Activities in Vietnam Smart Grid Policy / Activities by Governmental Institutions Decision 1208/QD-TTg - Approving the National Electricity Development Master Plan Circular No. 12/2010/TT-BCT - Structuring of the Electricity Distribution System Proposal on Roadmap of Smart Grid Development in Vietnam Current Smart Grid Activities/Projects in Vietnam TOU meter program Research program load (Load Research) Project "10-Years Road Map for Smart Grid Distribution in Vietnam" Project SCADA/ EMS Project Installation of Electronic Meters Electric Vehicles in Tourism and Large Cities Future Pilot Programs and Projects Program 1: Improvement of Operational and Managerial Efficiency of the Power Grid Program 2: Installation of AMI Infrastructure Program 3: Encouragement of Customers Participation in Energy Usage Management Program 4: Integration of Renewable Energy Program 5: Green Transportation Conditions for Smart Grid Market Development in Vietnam Main Results from the Interviews with relevant institutions in Vietnam about Smart Grid development Governmental Institutions Utilities and Related Companies Technology Suppliers Issues/barriers for Smart Grid Deployment in Vietnam Technical Financial Political Basic Commercial Rollout Scenario Identified / Undeveloped Business Opportunities in Smart Grid in Thailand Identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects Substation and distribution automation Advanced metering infrastructure and communication Utility Enterprise Applications Micro-grid systems Electric vehicle charging stations Identified concrete investment plans by PEA Identified / Undeveloped Business Opportunities in Smart Grid in Vietnam Identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects Wide area monitoring and control Information and communication technology integration 86 ii

5 3. Renewable and distributed generation integration Transmission enhancement Distribution grid management Advanced metering infrastructure Electric vehicle charging infrastructure General opportunities Concrete investment plans kV/22kV Smart Distribution Substation (Da Nang City) Grid automation in Khanh Hoa Province Project Installation of electronic meters of EVNCPC: Integration of renewable energy in EVNCPC Micro-grid systems in remote islands Electric vehicle charging stations Recommendations Matrix for Smart Grid Opportunities in Thailand Matrix for Smart Grid Opportunities in Vietnam Recommendations for Concrete Opportunities Thailand Demonstration Project 1: Thailand Demonstration Project Vietnam Demonstration Project Vietnam Demonstration Project Vietnam Demonstration Project iii

6 List of Tables Table 1: PEA Smart Grid Phase I 9 Table 2: Example Hardware and Software System, per Technology Area [1] 29 Table 3: Smart Grid maturity levels and development trends [1] 29 Table 4: Comparison of the new AEDP and the old REDP [15] 43 Table 5: PEA s 3 stage Smart Grid implementation plan [9] 46 Table 6: Road Map of Smart Grid Development in Vietnam: Stage 1 67 Table 7: Road Map of Smart Grid Development in Vietnam: Stage 2 68 Table 8: Road Map of Smart Grid Development in Vietnam: Stage 3 69 Table 9: Smart Grid opportunities under the TOU meter program 70 Table 10: Smart Grid opportunities under the research program 71 Table 11: Smart Grid opportunities under the 10 years road map for Smart Grid distribution 71 Table 12: Smart Grid opportunities under the SCADA/ EMS project 72 Table 13: Smart Grid opportunities under the EVNCPC installation project 72 Table 14: Smart Grid opportunities for electric vehicles 72 Table 15: The priority of the various targets of Smart Grid development in Vietnam [17] 76 Table 16: PEA Smart Grid Phase I Smart Grid Development 85 Table 17: PEA Smart Grid Phase I AMI Development 85 Table 18: PEA Smart Grid Phase I Micro Grid Development (Mae Hongson Province) 85 Table 19: PEA Smart Grid Phase I Micro Grid Development (Trad Province) 85 Table 20: Smart Grid Opportunities in Thailand Offering Institution: PEA (continuation on next page) 92 Table 21: Smart Grid Opportunities in Thailand Offering Institution: MEA 94 Table 22: Smart Grid Opportunities in Thailand Offering Institution: EGAT 94 Table 23: Smart Grid Opportunities in Vietnam Offering Institution: EVN 95 Table 24: Smart Grid Opportunities in Vietnam Offering Institution: ERAV 95 Table 25: Smart Grid Opportunities in Vietnam Offering Institution: EVNHCMC 95 Table 26: Smart Grid Opportunities in Vietnam Offering Institution: EVNCPC 95 Table 27: Smart Grid Opportunities in Vietnam Offering Institution: KHPC 96 Table 28: Smart Grid Opportunities in Vietnam Offering Institution: DPC 96 List of Figures Figure 1: Core Smart Grid concept marrying ICT with Power Systems [3I] 27 Figure 2: Mapping Technologies onto Power System Domains [1] 28 Figure 3: Detailed Technology-Domain Mapping for Thailand and Vietnam [(Annex Power)] 30 Figure 4: Iterative, Incremental Process of Smart Grid Development [1] 31 Figure 5: Primary energy consumption in Thailand in 2010 ( Numbers: [6], Graph: [Annex Power]) 32 Figure 6: Shares of fossil fuel and renewable energy in total primary energy in 2010 (Numbers: [6] Graph: [Annex Power]) 32 Figure 7: Energy consumption by sectors (Numbers: [6], Graph: [Annex Power]) 33 Figure 8: Energy intensity for Thailand compared with other countries and world average [4] 33 Figure 10: Thailand electricity installed capacity in 2011(Numbers: [6], Graph: [Annex Power]) 34 Figure 9: Projection of energy consumption during [5] 34 Figure 11: Comparison of energy sources for electricity generation to national grid in 2011 (Numbers: [6], Graph: [Annex Power]) 35 Figure 12: Monthly peak demand in 2009, 2010, 2011, [7] 35 iv

7 Figure 13: Thailand Energy Related Institutions Overview [8] 36 Figure 14: Alternative Energy Development Plan [14] 43 Figure 15: PEA Smart Grid [16] 45 Figure 16: Three stages for Smart Grid implementation [16] 45 Figure 17: Evolution of Vietnamese power capacity & demand from [17] 52 Figure 18: Power Development Plan [17] 53 Figure 19: Shares of energy by owners and sources (Data taken from [19]) 54 Figure 20: Roadmap of energy market development [17] 55 Figure 21: Vietnamese national grid [22] 56 Figure 22: Vietnamese energy related organizations 60 Figure 23: The vertical-integrated structure of Vietnamese Energy Sector [17] 61 Figure 24: Strategy of Energy development to 2025 [24] 70 Figure 25: Key scenario characteristics [32] 81 Figure 26: The Cost-benefit analysis on new electrical technologies [24] 88 Currency 1 USD = 29,79 THB (January 2013) 1 = 40,6578 THB (January 2013) 1 USD = VND (January 2013) 1 = 28408,6256 VND (January 2013) Measurement W Watt W p Watt peak Wh Watt hour kw Kilowatt kw p Kilowatt peak kwh Kilowatt hour MW Megawatt MW p Megawatt peak MWh Megawatt hour GW Gigawatt GW p Gigawatt peak GWh Gigawatt hour v

8 List of Acronyms ABC Aerial Bundled Cable AEDP Alternative Energy Development Program AFA Automatic Fault Analysis AMI Advanced Metering Infrastructure AMR Automatic Meter Readers ATS Ltd Applied Technical Systems Ltd. BAU Business as Usual BO Business Opportunities BST Bulk Supply Tariff CIS Customer Information System CMIS Content Management Interoperability Services CPC Central Power Company DCS Distribution Control System DEDE Department of Alternative Energy Development and Efficiency DEP Distribution Efficiency Project DG Distributed Generation DMS Distribution Management System DNP3 Distributed Network Protocol, version 3 DPC Danang Power Company DSM Demand Side Management EEDP Energy Efficiency Development Plan EERS Energy Efficiency Resource Standards EGAT Electricity Generating Authority of Thailand EMS Energy Management System EPPO Energy Policy and Planning Office ERAV Electricity Regulatory Authority of Vietnam ERCR Energy Regulatory Commission of Thailand ERI Energy Research Institute of Chulalongkorn University ESCO Energy Service Company EU European Union EV Electric Vehicle EVN Vietnam Electricity Corporation EVNCPC EVN Central Power Company vi

9 EVS FDIR Ft G2V GDP GIS GIZ GTAI HHU HV HVAC HVDC ICCP ICT IE IEA IEC IPP ISGF ISGTF IT JICA KfW KHPC JSC KMITL KPI LTE LV MDMS MEA MIC MOIT MPI MV MWM Electric Vehicles Fault detection, isolation, restoration Fuel Adjustment Charge Grid-to-Vehicle Gross Domestic Product Geographic Information System Deutsche Gesellschaft für Internationale Zusammenarbeit Germany Trade and Invest Hand-Held Unit High Voltage High Voltage Alternate Current High-Voltage Direct Current Inter-Control Center Communications Protocol Information and Communication Technology Institute of Energy International Energy Agency International Electrotechnical Commission Independent Power Producer India Smart Grid Forum India Smart Grid Task Force Information Technology Japan International Cooperation Agency Kreditanstalt für Wiederaufbau (Reconstruction Credit Institute) Khanh Hoa Power Joint Stock Company King Mongkut s Institute of Technology Ladkrabang Key performance indicators Long Term Evolution Low Voltage Meter Data Management System Metropolitan Electricity Authority Ministry of Information and Communication Ministry of Trade and Industry Ministry of Planning and Investment Medium Voltage Mobile Workforce Management vii

10 NEPC NESDB NPC NPT OMS PDP PEA PECC1 PMU PPA PTT PV R&D RD&D RE REDP RMU RTU SAS SCADA SME's SOP SPC SPCG SPP SPS TEBA TFEC THB TOU US USD V2G VAR VCGM National Energy Policy Council National Economic and Social Development Board Northern Power Company National Power Transmission Company Outage Management System Power Development Plan Provincial Electricity Authority Power Engineering Consulting Join Stock Company Phasor Measurement Units Power Purchase Agreement Public Company Limited Photovoltaic Research and Development Research, Development, and Demonstration Renewable Energies Renewable Energy Development Plan Remote Monitoring Unit Remote Terminal Unit Automated System Control Station Supervisory Control and Data Acquisition Small and Medium Enterprises Standard Offer Program Southern Power Company Solar Power Company Group Small Power Producer Special Protection Scheme Thai European Business Association Total Final Energy Consumption Thai Baht Time of Use United States of America US Dollar Vehicle-to-Grid Reactive Power Vietnam Competitive Generation Market viii

11 VN VND VSPP WAAPCA WAMS WMS Vietnam Vietnamese Dong Very Small Power Producer Wide-Area Adaptive Protection, Control and Automation Wide Area Monitoring System Workforce Management System ix

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13 1. Executive Summary Background and Objective The Southeast Asian region with its high electricity rates and further potential for economic growth is facing massive challenges implementing a reliable, efficient, and modern electricity and power supply that can cope with the fast rising energy and electricity demand in its countries. Thailand and Vietnam are now highlighted within Southeast Asia, since they are among the heaviest energy consumers in the Region with predicted high rates of increasing energy demand. Both countries are already reacting to this development, as witnessed by their ambitious plans and promotion activities covering energy efficiency as well as renewable power supply. The overall objective of the market analysis and recommendations is to identify target market segments and subtechnologies that allow at first commercial-scale demonstration and, in the long term, large-scale deployment of modern and reliable Smart Grid technologies in Thailand and Vietnam. Concrete opportunities for commercialscale demonstration- and pilot-projects identified and outlined in the study are meant to demonstrate the potential cost savings through the deployment of Smart Grid technologies and their positive impacts on energy security, and to position German companies as key technology and service providers in that area. After an introduction to the Smart Grid topic (Chapter 3) the study firstly describes the key energy challenges for Thailand s power system and looks into the on-going Smart Grid activities in Thailand (Chapter 4-5). For this purpose personal interviews with all major stakeholders were held. Next, the study describes the key energy challenges for Vietnam s power system and the on-going Smart Grid activities in Vietnam (Chapter 6-7). Again, personal interviews with all major stakeholders were held. After outlining basic commercial rollout scenarios (Chapter 8) the study focusses on identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects in Thailand and Vietnam (chapter 9-10). Finally, in Chapter 11 of the study some initial ideas for demonstration projects are outlined as recommendations. This study on Market Potential for Smart Grid Technology in Thailand and Vietnam has been conducted in the frame of the Energy Efficiency made in Germany initiative by the German Federal Ministry of Economics and Technology (BMWi). The BMWi has commissioned the German - Bilateral Chambers of Commerce (AHKs) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to jointly implement the initiative s regional activities in South-East Asia. The Energy Efficiency made in Germany initiative aims at sharing knowledge and technology and creating business partnerships and sector-specific networks between German and South-East Asian companies and business associations in order to join forces to maximize project opportunities in the field of energy efficiency. The GIZ is implementing these activities through its Project Development Programme (PDP). Situation for Smart Grid Deployment in Thailand Currently four aspects, which are hindering the actual development of the Smart Grid, were mentioned in almost every interview: 1. Lack of knowledge and willingness on the private side, as seen in many countries where Smart Grid is currently deployed; 2. Missing regulations and a missing common Smart Grid plan including budget regulations; 3. Unwillingness of the industries due to unknowns and non-existent key performance indicators (KPI s); 4. Lack of expertise and undeveloped technologies for Thai and Vietnamese infrastructure, relative to the situation in many countries where Smart Grid is currently deployed. All interviewees pointed out that a realization of a Smart Grid will only be possible if the following factors are in place: further education of the private sector 1

14 clear KPI s benefits for industrial utilities benefits for the private sector common Smart Grid plan, including regulations by the government These factors will have to be implemented by demonstration projects and business opportunity research. Experts and business cooperation will be needed to bring the know-how to Thailand in order to build up sufficiently trained experts and technicians. Another important factor is data security. Currently, concerns and public discussion regarding data security are still limited due to the lack of interest and knowledge in Smart Grid. Official regulations should however be prepared and try to implement regulations before these concerns grow and may cause additional problems. Current Installations and Applications in Thailand Supervisory Control and Data Acquisition (SCADA), which is considered as one of the major means for remote communication and control, has been installed and utilized in Thailand for a long time. The state owned Metropolitan Electricity Authority (MEA) has used SCADA for the acquisition of information between stations and the central control room. The system has been revised and updated three times. PTT Public Company limited, the state owned oil and gas company that is also involved in electricity generation, has also transferred information from its natural gas valve stations through SCADA. As a power distributor mainly for the Bangkok region, MEA acquires electric power mainly from the Electricity Generating Authority of Thailand (EGAT). It also gets a small amount of power from Small Power Producers (SPPs) and Very Small Power Producers (VSPPs), and distributes the power to its customers. MEA has been using an Energy Management System (EMS) to analyze power flow and contingency on the supply side, which is planned to be revised with inclusion of standard communication protocols like DNP3 and ICCP for communication between MEA and the Provincial Electricity Authority (PEA), the state owned power distributor for over 97% of Thailand s provinces. Substation automation, which includes communication through an intranet and fiber optic lines in compliance with IEC 61850, is gradually being installed for MEA s substations, at a rate of substations a year. On the distribution side, a Distribution Management System (DMS), which enables remote control of feeders, medium voltage load break switches, and manages distribution transformers and the supply of medium voltage customers, is installed. For efficiency and operation improvement 8,000 units of Automatic Meter Readers (AMR), which communicate through fiber optic lines, are being procured for installation for time-of-use (TOU) customers. It is planned by MEA to procure and install 23,000 more AMR units next year. Planning for Future Installations in Thailand: PEA has had its Smart Grid roadmap completed by the Energy Research Institute (ERI) of Chulalongkorn University, and has announced three stages of implementation. Stage I, running from , is scheduled to be used for planning and pilot projects. The planned pilot projects include automated electricity networks or microgrids to support Smart Grid and electricity storage, smart meter infrastructure, smart offices, energy management systems, and real time power trading (buy or sell from/to different suppliers). Stage II, , will expand the pilot scale projects into large-scale facilities, i.e. asset management, a Mobile Workforce Management (MWM) system, substation automation, automated networks covering major cities, development of renewable energy (RE) and energy storage, Advanced Metering Infrastructure (AMI) deployment, applications for electric transportation, community lighting, and bundled services, such as common billing, etc. Stage III, , is the ultimate stage, which is supposed to enable nationwide automated electricity networks, large renewable energy resource integration, balance of energy production and utilization, and intelligent two-way power supply of electric vehicles. A series of investment of 10, 40, and 65 billion Baht is planned for the tree stages respectively. 2

15 Independently from PEA s roadmap, the Energy Policy and Planning Office (EPPO) has engaged the Energy Research Institute of Chulalongkorn University to prepare a plan for Smart Grid application. State enterprises like EGAT, PEA, and MEA require EPPO s endorsement for their investments. The plan, which will be completed in mid-2013, will provide strategies and guidelines for future investment and Smart Grid promotion. In addition, EPPO has also granted financial support to the energy research group at King Mongkut s Institute of Technology Ladkrabang (KMITL) for a pilot project to transmit customers information from their power meters through a 3G mobile telephone system to the center. The information is useful for energy efficiency improvement. As well, the topic of constructing high voltage direct current (HVDC) transmission systems in order to enhance transmission quality and reduce losses is presently being widely discussed by the utilities and is about to play a role in Thailand. The Thai-European Business Association (TEBA) is currently developing a Smart Grid development plan for Thailand in cooperation with the Senate of Kingdom of Thailand. For that reason TEBA started to set up a Smart Grid Round Table, showing the significance of the topic in Thailand. Main Barriers for further Smart Grid Deployment in Thailand: 1. Unavailable National Smart Grid Plan: Some of the utility providers and private companies are hesitant to invest in Smart Grid facilities, as there has not been a firm official policy of Smart Grid. This hesitation will most likely remain until the middle of 2013, when EPPO s Smart Grid road map will be finalized. However, some utilities like PEA and MEA have decided to invest already in certain parts of Smart Grid systems to improve their operational efficiency. 2. Electricity Tariff Structure: The electricity tariff in Thailand is rather low compared with those in other countries. This has been a governmental policy to keep the electricity tariff at a low level and to subsidize electricity costs for some income classes. The low tariff will restrict the utilities income and in turn will not encourage further investments, as the investments will require longer periods of time to be paid back. 3. Renewable Energy Promotion Programs: Although Smart Grid facilities are meant to accommodate the variable electricity levels supplied by renewable energy, Smart Grids are designed for type and size specific renewable power plants. The promotion of renewable energy power needs to be carried out in parallel with the design of the Smart Grid systems to achieve the maximum efficiency of both the renewable energy power plants and the smart systems. It seems that the renewable energy electricity generating plants are promoted under the Alternative Energy Development Program (AEDP), for which DEDE is responsible, while the Smart Grid roadmap is under EPPO s responsibility as mentioned earlier. While drafting the road map, it is hoped that EPPO will take full acknowledgement of the AEDP in order to avoid conflicts during implementation and to accommodate the renewable energy plan, since it has already been developed and announced. 4. Communication and Compatibility among Different Utilities Facilities: Communication among utilities is one of the key factors for success in Smart Grid applications. EGAT is viewed as the main generator, while PEA and MEA are the transmitters and distributors of electricity. The overall efficiency of the system requires good communication among the parties involved. With communication compatibility, real time communication, monitoring, and control can be achieved and hence the efficiency can be improved. The designs of facilities of different utilities should be done in compatibility with each other, in order to make the exchange of information among utilities substations possible. Moreover, connectors in electric vehicle charging stations must be versatile and usable with all brands of vehicles. 5. Investments from Private Sectors: Most of the Smart Grid related facilities included in the plan are relatively costly because they are equipped with automation and modern communication, which allows two-way communication as well as remote monitoring and control. These instruments can be justified for 3

16 investments only in large and medium businesses, whose revenues and sales margins are large enough to compensate the cost increments. In fact, one of the large businesses expressed its concerns for positive return prior to deployment of the Smart Grid technology. For small businesses whose revenues are comparatively low and households where additional expenses are difficult to justify, the high cost of instruments and meters will be unaffordable. The cost of an AMR unit is rather high and can be a burden to small customers, and perhaps even more difficult to justify if the units are required for all customers. 6. Coordination among Stakeholders: Energy related organizations in Thailand include the generators including EGAT, Independent Power Producers (IPPs), SPPs, and VSPPs. The installations and implementations of Smart Grid facilities involve almost all related organizations. Not only do the compatibility of Smart Grid design for all parties facilities and the efficiency of the system matter, but the coordination of all related parties is also a significant factor for successful system operation. EPPO will have to take the position to lead the process of planning, design review, and coordination of all parties. 7. Human Capacity Development: Smart Grid systems mainly include hardware and software systems for supply, transmission, and distribution of electricity. The operation and maintenance of these systems are crucial in the later phase. Human capacity development to ensure operation and maintenance resources has to be planned and implemented in parallel with other activities. There are specific courses in Smart Grid offered in many renowned universities in other countries. Smart Grid system suppliers also offer training for operation and maintenance. The know-how transfer could also be realized by setting up cooperation projects with industry experts and so called round tables between industries, governmental institutions and educational institutions. Situation for Smart Grid Deployment in Vietnam The next part of the study focuses on key energy challenges for Vietnam s power system and looks into the on-going Smart Grid activities in the country. For this purpose personal interviews with all mayor stakeholders in Vietnam were held. The Vietnamese electricity market is still under development, and will be transformed in the next ten years to a competitive energy market in three stages: Level 1 ( ): the competitive electricity market Level 2 ( ):the competitive wholesale electricity market Level 3 (from 2022): the competitive electricity retail market. The expected total investment of the power industry until 2020 is approximately 929,700 billion VND (equivalent to 48.8 billion USD), averaging 4.88 billion USD annually. During , the estimated total investment is expected to be 1,429,300 billion VND (75 billion USD). According to the Electricity Regulatory Authority of Vietnam (ERAV) and the Institute of Energy (IE), in the context of Vietnam, Smart Grid should be described as technologies for grid automation and optimization for low loss. It includes distributed generation with renewable energy and advanced metering infrastructure. Among Smart Grid technologies, the focused technologies in Vietnam will be: 1. Automation of substations, SCADA/DMS system; 2. Smart metering for large customers; and 3. Integration of renewable energy source into the national grid. The introduction of Smart Grid in Vietnam is expected to bring economical, political, environmental and technical benefits: 4

17 Economical: First to reduce the pressure on the investment for constructing new power plants and second to encourage customers on saving energy; Political: Distributed generation and integration of renewable energy will guarantee energy security and limit energy import; Environmental: Conserving fossil resources and environment protection; Technical: Since Smart Grid integrates advanced ICT infrastructure, it is the platform to deploy applications to enhance reliability, manage power cuts, and improve power quality. However, at present, the deployment of Smart Grid in Vietnam faces various barriers such as: Low public awareness; Large investment required; Lack of expertise and independent high quality consultant, who is not affected by foreign technological providers, so that the chosen technologies will be future-proof and not soon be obsolete; No clear policies from Vietnam Electricity Corporation (EVN) and Ministry of Trade and Industry (MoIT). The Vietnamese grid infrastructure is not well designed and financed, thus it has combined equipment from many vendors, which are not fully compatible; Acquiring large Smart Grid investment poses a challenge to the government since it could have broad effect on the whole society due to increasing electricity prices. In order to encourage Smart Grid deployment in Vietnam, the following activities need to be undertaken: 1. Propose on the basis of recent data and studies to the MOIT to issue a comprehensive legal framework to support Smart Grid in VN; 2. Invest in SCADA for central and regional operating and control centres to optimize the grid and minimize losses and blackouts; 3. Deploy smart meters to create a platform for new smart applications on the grid; 4. Integrate distributed generation and renewable energy, and pilot green transportation; 5. Consulting to EVN and its member companies on setting up "systematic tenders" for upcoming investments that allow more coherencies among sub-technologies in (smart) grid infrastructure, in order to obtain future-proof scalable SG solution and avoid future system incompatibleness. 6. Consulting and knowledge exchange on the development and deployment of new energy technologies. Governmental agencies, such as Japanese JICA, are pushing this market to promote their technology companies. For raising public awareness, Smart Grid demonstrations in the following areas could be helpful: 1. A pilot in upgrading obsolete substations to Smart Grid technology; 2. Energy efficiency, smart meters, smart buildings; 3. Electric vehicles (EVs) in large and tourism cities. According to DPC (Danang Power Company) and PECC1 (Power Engineering Consulting Join Stock Company), at this period, Smart Grid deployment should be focused in substation automation and smart meters for large customers, which will show immediate benefits. Concerning Germany s role in the Vietnamese Smart Grid market, case studies of German power companies who successfully upgrade their systems to Smart Grid compliance would allow Vietnamese utilities to learn from German case studies. Highly qualified German consulting companies are also desired for co-operating and contracting in this field. 5

18 A big concern of utilities when upgrading to Smart Grid is that the new technology will be quickly obsolete and therefore, careful selection of solutions must be done to avoid waste of investment. For the awareness of Smart Grid in Vietnam, especially for utilities, a demonstration of upgrading a substation of 110/22kV transformer to Smart Grid compliance (fully interoperability with some IEC Smart Grid related standards such as IEC 61850, IEC 61968, IEC 61970) would be helpful. According to ATS Ltd. (Applied Technical Systems Ltd), the term Smart Grid in developed countries is very different to Vietnam, which can be briefly defined as a platform to improve the efficiency and reduce loss in generation, transmission and distribution. Smart Grid also aims to create a culture of energy saving and conservation, and stimulate the integration and development of RE. The most important benefit of Smart Grid to Vietnam is the improvement of grid reliability, stabilities and the quality of power transmission and distribution. To promote Smart Grid in Vietnam, the legal framework must be of the highest priority. The roadmap must be developed, then the design framework and pilots customized for Vietnam, which must be constructed mainly by Vietnamese, because Vietnamese grid is far different from other countries, especially developed countries. From ATS s (Applied Technical Systems Ltd.) point of view, a Smart Grid demonstration project requires a comprehensive study of the project s definition and design. It can be selected from one of four domains: generation, transmission, distribution and operation. Main barriers for Smart Grid Deployment in Vietnam: Technical barriers: Vietnamese grid infrastructure is highly heterogeneous from a large number of vendors from many countries (Germany, France, Sweden, USA, Russia, etc.). Much of the equipment is obsolete, not fully compatible with each other and not standardized. Therefore, it will require heavy investment for improving and modernizing generation, transmission, distribution and even household systems. Lack of standardization in operation, generation, transmission, and distribution. Lack of Smart Grid expertise. The public relations activities regarding Smart Grid are still limited in closed conferences and workshops without working illustrative demonstrations to convince audiences. Financial Barriers: Funding a very large investment for Smart Grid over the next 20 years is a very challenging task for the government. Investing in Smart Grid will finally result in the increase of electricity price, which will have a broad effect on the whole society. The current electricity price schemes are too low to provide market incentives for Smart Grid. The business model for Smart Grid in Vietnam is yet to be defined, while Smart Grid is a very expensive technology and needs very strong market incentives. Political Barriers: Low public awareness, especially among electric authorities, power companies and customers on the benefits of Smart Grid. Low awareness of authority consulting to EVN and its member companies on setting up "systematic tenders" for upcoming investments that allow more coherency among sub-technologies in (smart) grid infrastructure, in order to obtain future-proof scalable Smart Grid solution and avoid future system incompatibleness. 6

19 The legal framework for Smart Grid deployment and Smart Grid applications is still under development. Identified Business Opportunities in Smart Grid in Thailand Chapter 9 of the study focusses on identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects in Thailand. Concrete business opportunities are listed in sections to and have been prioritized regarding the time frame. The energy service providers and related authorities, like EPPO, EGAT, PEA, MEA, PTT, have been convinced of the necessity of Smart Grid application for the electricity grid system in Thailand. Most of them either have utilized or plan to install Smart Grid related hardware and applications in their facilities. The addition of the Smart Grid applications can be done as most of the utilities already have SCADA in their systems (SCADA enables communication between the service providers and their customers and it allows a transfer of gathered data between different authorities). Utilities will be able to improve their services by providing advice to their customers for more efficient and more cost effective use of energy. Furthermore, the distribution management system can process realtime information of the grid conditions and promptly detects fault locations with the advanced sensors and meters. The main areas for Smart Grid component applications in Thailand are the following: Substation and distribution automation The automated distribution management system can detect and identify disturbances and their location with advanced sensors almost immediately, and this improves repair time resulting in shorter outages. The system can maintain balance of voltage, frequency, and reactive power. It includes the following elements: Substation controller and transformer monitoring and diagnostics Energy Management System (EMS) analyzing power flow and contingency for the supply side Fault detection, isolation, restoration (FDIR) Integrated Volt/VAR management, including switched capacitors and voltage regulator DMS/OMS software and interface to existing applications, control center digitalization, and enterprise integration Advanced metering infrastructure and communication The advanced metering infrastructure (AMI), which includes two-way communication with smart meters, enables a transfer of customers consumption information and remote control of customers appliances. The systems and software are as follows: Smart meter (Single phase and poly-phase), Two-way communication, Meter Data Management System and interfaces to other enterprise applications, SCADA and Wide Area Monitoring System (WAMS) may be added to the points mentioned above, since they are indirectly related. (SCADA usually describes systems for controlling transmission and distribution and WAMS is normally based on Phasor Measurement Units (PMU).) 7

20 Utility Enterprise Applications Energy efficiency at the level of end-users is also a key success-factor to the smart applications. Demand side management with an integration of energy storage can reduce peak demand and enhance energy efficiency and is being explored under utility enterprise application by PEA. Smart household energy management will provide flexibility for the customers to sell their excess power from their vehicles back to the grid. These include: DSM application, Building energy automation systems, In-house displays, EV charging (G2V) and discharging (V2G) systems Micro-grid systems Electricity end-users can be producers of electricity from renewable energy or other types of distributed generation. Micro-grid systems will facilitate the integration and aggregation of very small power producers and their connection to the main grid with reliability and safety. Micro-grid systems will allow islanding when there is instability of the main grid or adequate generation from the micro-grid members. Electric vehicle charging stations Many energy service providers are interested in EV charging stations, which will supplement or replace traditional gas stations in the future. Existing gas stations, department store parking lots, and office building parking lots seem to be the best targets for public EV charger installation. A few demonstration stations have been set up with batteries, inverters, and charging equipment. Identified Concrete Investment Plans in Thailand There are plans for investment from utilities in the near future. PEA has announced its investment plan for Smart Grid development of 10 billion Baht (250 million Euro) during , 40 billion Baht (1,000 million Euro) during , and 65 billion Baht (1,625 million Euros) during MEA does not make known its investment plan, but clearly indicates that the acquisition of Smart Grid facilities and smart meters has been ongoing. Although there have not been any announcements on budgets, EGAT has issued its plan for communication improvement, while PTT has shown a strong interest in EV charging stations. The roadmap prepared by PEA, the facilities planned for installation by MEA, and the interviews given by EGAT, MEA, Solar Power Company Group (SPCG), one of Thailand s biggest developers of solar farms, and the research unit at KMITL indicate the equipment and software that are included in the future investment plan. PEA declared the scope and budget of phase 1 (PEA Smart Grid Phase I, ), as outlined below in Table 1. 8

21 MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM Concrete opportunities stating planned and on-going tenders, contact details and time frames can be found in Table 1 - Table 28 and Chapter 9.2 for Thailand and 10.2 for Vietnam respectively. Smart Grid Development Project, Phase I Project Area Scope of Work Budget Smart Substation System Installation 20 sets Chiangmai Province Nakornrachasima Province Phuket Province Pattaya Solar Energy Roof top 24 units Energy Storage 12 units Charging Station 24 units AMI Development Project, Phase I Project Area Scope of Work Budget 4,860 million Baht (121.5 million Euro) 26 municipalities in PEA service area Advanced Meter Infrastructure Installation (1,000,000 sets) 5,350 million Baht ( million Euro) Micro-Grid Development Project (Mae Hongson Province) Project Area Scope of Work Budget Mae Saraeng District Mae Hongson Province Install Energy Storage 1 set Install Micro-Grid Controller 1 set 330 million Baht (8.25 million Euro) Micro-Grid Development Project (Trad Province) Project Area Scope of Work Budget Koh Kood Install Hydro Power Plant 1 set Koh Maak Trad Province Install PV Plant 2 sets Install Energy Storage 2 sets 225 million Baht (5.62 million Euro) Table 1: PEA Smart Grid Phase I Identified Business Opportunities in Smart Grid in Vietnam Chapter 10 of the study focusses on identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects in Vietnam. Identified application areas and sub-technologies for Smart Grid systems in Vietnam are for the short to mid-term prospects. Guided by MoIT and ERAV, EVN and its member companies are actively deploying Smart Grid technologies following the strategy of EVN and the Roadmap of Smart Grid development in Vietnam. The near-term focused application areas are substation automation in transmission and distribution, advanced metering, integration of renewable energy and electric transportation. Sorted by IEA definition for SG, the main application areas in Vietnam are: Wide area monitoring and control SCADA/EMS system is the prioritized target for modernization of Vietnamese grid. This can be seen in the large number of pilots throughout Vietnam, which can be considered as the first step toward Smart Grid in Vietnam. 9

22 Information and communication technology integration As a preparation for the competitive market, a customer information system (CIS) is also a focus in the Strategy of EVN, which is strongly related to the information and communication technology (ICT) infrastructure of the power sector. Renewable and distributed generation integration As Vietnam has high potential for renewable energy including hydro, solar, wind and biomass, the development of new RE power plants in both centralized and distributed form and the integration of these sources into either the medium or low voltage grid is very important for national energy security. Large pilot projects are being deployed in middle and southern Vietnam, backed by the US, the EU and Japan. Transmission enhancement HVDC is planned in the EVN strategy as an alternative for current high voltage alternating current (HVAC) transmission lines. Distribution grid management Geographic information system (GIS) substations, distributed management system (DMS) and outage management system (OMS) are being deployed and/or piloted in the distribution grid as a means of improving operational efficiency and power stability and quality. Advanced metering infrastructure Advanced metering infrastructure (AMI) projects have taken a large part of Smart Grid development activities in Vietnam. Due to the large investment required, it is first applied to large customers such as industrial sites and commercial buildings. Electric vehicle charging infrastructure As Vietnamese traffic and environment are being heavily affected by millions of motorbikes and cars, electric transportation is planned in large cities and/or tourism cities, thus raising the demand for charging infrastructure. However, due to its special nature, the electric transportation is currently under direct control of the Ministry of Transportation. Based on the plan to establish a fully competitive retail energy market by 2022 and the national electricity development plan for with vision to 2030, substantial investment will happen in Vietnam, in average around 5 billion USD per year: The total investment in the power industry until 2020 is approximately 929,700 billion VND (equivalent to billion USD), average is 4.88 billion USD annually. In the period of , the estimated total investment is 1,429,300 billion VND (75 billion USD). In the whole period , the investment demand is 2,359,000 billion VND (123,8 billion USD) including: generation: : 619,300 billion VND (66.6% of total investment) and is 935,300 billion (65,5% of total investment); power grid: : 210,400 billion VND (33.4% of total investment) and : 494,000 billion VND (34.5% total investment). The business opportunities in Smart Grid market include: Technology, equipment and solutions provision in: 1) grid automation; 2) smart metering; 3) renewable energy; and 4) electrical Transportation. Investment or co-financing in pilot projects, technological demonstrations. Consulting in design, implementation and operation of Smart Grid. 10

23 Consulting to EVN and its member companies on setting up "systematic tenders" for upcoming investments that allow more coherencies among sub-technologies in (smart) grid infrastructure, in order to obtain future-proof scalable Smart Grid solution and avoid future system incompatibilities. Consulting & knowledge exchange on the development and deployment of new energy technologies. Most of the current projects in Vietnam are testing all these three business opportunities. According to the Roadmap of Smart Grid Development of Vietnam, the expense for development of the legal framework, standardization, and piloting of Smart Grid technologies are approximately 50 million USD for the period of It is expected, that these investments will bring the following benefits: Reduce generation expense of peak generation cost to average 143 USD/MW (or 3000 VND/kWh) Reduce the demand for the construction of new power plants, of investment rate 2 million USD/MW Benefit of reducing operational and maintenance cost: equal 10% investment for the period 10 years Reduce power loss Increase system stability Environmental benefit due to reductions of CO2 emission New job creation Identified Concrete Investment Plans in Vietnam kv/22 kv Smart Distribution Substation (Da Nang City) Duration: ; Project Area: Thuan Phuoc substation, Da Nang City; Owner: Danang Power Company (DPC) Scope of work: New installation of a 110kV/22kV smart distribution substation including two transformers with total power of 103 MVA Totally integrated digital control infrastructure with smart gateway or substation controller conforming to Smart Grid standards, e.g. IEC standards such as IEC Communication with existing SCADA/DMS installed at control center via IEC Budget: 65 Billion VND (2.4 million Euros) 2. Grid automation in Khanh Hoa Province Khanh Hoa Power Joint Stock Company (KHPC JSC) is operating the grid of 110 kv and below 110 kv including (as of 03/2012): 110 kv transformer station: 13 stations; 110 kv line: km; Intermediate station kv: 6 stations; Public load stations and clients: 2928; Re-closer equipment: 51 sets. In the three phase upgrading project, the first phase was completed with the following results: Online monitoring and administration of the system, sharing operational data with the user. Combining remote control system of 110 kv substations and information collection system operated at 110 kv substations into a common system. The data: P, Q, U, I, cos-(phi)... at the meters on the 110 kv, 35 kv, 22 kv, 110 kv substations were collected, processed and stored in the new ICT infrastructure. Assists for the monitoring and management of power trading in the company. 11

24 In Phase 2 of the project it is planned to complete the following: Complete remote control of 110 kv stations (9 stations), additional SCADA/DMS for electricity distribution networks, and metering management for commercial and industrial customers. The project will provide full system monitoring and information management capability. General scope of the project includes: Hardware: additional, redundant management computers and applications to ensure that no single incident can disrupt the normal operation of the system. Software: additional software modules integrating services and applications on the basis of data collected from the dispatch center, 110 kv station, MV systems and meters. Develop automated system control station (SAS) for the remaining 9 stations. Develop systems to collect data from the meters of industrial and commercial customers. Expect around 1500 endpoints. Develop data collection system connecting the reclosers, medium-voltage terminals, RMU and deploy test monitoring and control of some circuit-breakers, estimated at about 200 endpoints. The scope of Phase 3 will include: Additional SCADA/DMS for the distribution grid, and metering management for a wide range of consumer activities. The project will provide full system monitoring and information management measures. General scope of the project will include: Hardware: additional media management computer to be able to manage and collect data from the meter of the consumer protection activities. Expect to add about 10,000 households each year. Software: supplement and upgrade the historical database to suit the amount of data growth when connected to a wide range of consumer activities. Implement system to connect to data collected from the public and client stations and reclosers, for medium-voltage substations, RMUs, and deploy test monitoring controls for a number of circuitbreakers targeted to manage the entire high-voltage power grid. Expected around 2000 points. Budgets: Phase 2: 45 billion VND = 1,7 million Euros, (5 billion VND per Substation); Phase 3: 12 billion VND: 0,5 billions VND per 10,000 meters/ annually + 10 billion VND per phase meters. 3. Project Installation of electronic meters of EVN Central Power Company (EVNCPC): This is a Distribution Efficiency Project (DEP) project of the World Bank to install approximately 10,000 electronic meters with a total investment of approximately 100 billion VND. The project when completed is expected to improve the quality of customer service, increase productivity, reduce power losses, contribute to increased operating power production efficiency, and improve the business of EVNCPC. Project implementation period is from 2012 to Integration of renewable energy in EVNCPC This project aims to integrate small hydro power plants to the SCADA/DMS of EVNCPC to study the effect of implementing RE to the operation of distribution grid of EVNCPC. 5. Micro-grid systems in remote islands The demand for micro-grids is very high on islands (like Truong Sa, etc.) to both provide electricity for the island population and for national security. 12

25 6. Electric vehicle charging stations In large cities and tourism cities, where electric cars and buses for tourists are becoming popular, the demand for EV charging stations is also increasing. (Such as: Hanoi, Ho Chi Minh City, Hai Phong, Cua Lo, etc.). Concrete opportunities stating planned and on-going tenders, contact details and time frames can be found in Table 20 - Table 28 and Chapter 9.2 for Thailand and 10.2 for Vietnam respectively. Recommendation of the Market Study Vietnam and Thailand are just starting to develop their Smart Grid infrastructure and already now many overseas companies are active and have started to build up their relations with the local utilities, which are responsible for SG investment planning and implementation. Germany is in this area not at the forefront, other countries are much more active so far. This market study is timely to provide a snapshot of the current situation and identify some concrete opportunities for German companies providing proven high quality technology and services to participate in the on-going Smart Grid investments. The most important point for Thailand is that in mid 2013 the national Smart Grid roadmap shall be ready for publication by EPPO and then a more concrete picture will exist in which direction and with which technologies Thailand wants to proceed. GIZ will closely follow up with EPPO on the Smart Grid roadmap, spread the information on latest developments and scrutinize the implementation. At that point even more business opportunities can be identified. Until now only PEA has a publicized their Smart Grid investment plan, others are investing as well, but do not make it public in a Smart Grid plan. In Vietnam large investment opportunities exists, due to the need to upgrade the infrastructure independent of SG. Here the provision of financial assistance seems to be a precondition for companies to be able to participate in the Smart Grid market. Therefore a close cooperation between public and private financial institutions and private companies in Germany will represent a key success factor. Especially for Vietnam GIZ will determine the possibilities of financial institutions to support the further development of Smart Grid technologies in Vietnam. Of particular importance are therefore the financing requirements in this sector with the focus of including SG technologies in the already planned expansion and strengthening of the grids. A general issue in Thailand and Vietnam is the standardization for a systematic integration of technologies into the existing grid infrastructure. Internationally accepted standards, e.g. from the International Electrotechnical Commission (IEC), could be used as a guideline and orientation to establish standards. This would help to reduce incompatibilities, and therefore financial losses, from grid technologies. In the short term there will be a potential for grid stabilizing and grid efficiency enhancing technologies and systems for Thailand and Vietnam, which in turn leads to an acceptance of Smart Grid technologies later on. The aim is a stabilized grid with a certain quality and/or the enhancement of transmission capacity, which could also include reactive power compensation. 13

26 To follow up on the developing Smart Grid market a matrix for Smart Grid opportunities is envisioned, to be regularly updated by GIZ and other German organizations in Thailand and Vietnam to provide German companies with an update about planned and on-going investment opportunities. Proposed Demonstration Projects to be further enhanced by GIZ In Chapter 11 of the study some initial ideas for demonstration projects are outlined as recommendations. These projects can be in a form of a public-private partnership or an Energy Service Company (ESCO) investment model. They shall serve as a proposal to GIZ for initiating further activities and their involvement in this developing market. The purpose of these demonstrations projects is to support the involvement of German companies in the Smart Grid market development in Thailand and Vietnam. There are two demonstration projects proposals for Thailand and three for Vietnam. Thailand Demonstration Project 1: Smart meters with data transmission capability Background: Smart meters are now in the focus of the electricity service providers, both MEA and PEA, and have a large business potential in near future. The demonstration project can start with an installation of a number of smart meters for customers of different sizes, that is large, medium, and small consumers, manufacturers, buildings and households. The smart meters must have a data transmission capability back to the electricity utility companies, which allows two-way communication, information storage, and remote monitoring capability. Remote control of customers appliances can be an option. The system should include information feedback to the customers. A display of electricity usage may be installed with the meter to provide continuous information for the user. The display can be in forms of a list of historical usage, daily accumulation, comparison with previous month, or graphs. An alternative of the feedback can be provided at a dedicated website, where the customers can access and view all their usage information. The installation of the smart meters encourages effective demand side management, enhances services to the customers, and encourages energy efficiency improvement. Justification: It was stated during the interview that MEA is procuring 8,000 automatic meters, and planning for 23,000 units more next year. PEA plans to install 400,000 advanced meters for its customers in cities during with a budget of 4,860 million THB. Potential benefit of the demonstration project: MEA, PEA and EGAT There are sizable budgets from the main utility service providers for the replacement of the existing meters with advanced meters. As customers, MEA, PEA and EGAT can have a chance to verify the qualities of German products through the demonstration project. German suppliers This is an opportunity for the meter suppliers in Germany to bring their products to the attention of the main utilities and engage in future sales. Through the participation in the demonstration project, German suppliers who have never been involved in any business with Thai authorities can get acquainted with the local procurement requirements and procedures. This will also help in the introduction of newcomers to the system. Potential partners for the project: MEA, PEA, and EGAT Objective: 14

27 The main objective is to make PEA and MEA as early as possible aware about the special advantages of German smart meter suppliers and their products; To connect suppliers and utilities, so they can develop good relationships and build a foundation for future business; To allow both suppliers and their customers (utilities) to exchange information and to adjust their technical requirements; To create a positive attitude towards the products featured in the demonstration project. Activities: To install a number of advanced meters (10-20 units) for the utilities customers and a central receiving unit to retrieve information from the meters; To test the units by allowing the utilities to have access and control of the system for a period of time (3-6 months); To compile and analyze the information together with the utilities (MEA, PEA, EGAT); To analyze the performance of the system in comparison with the utilities requirements. Impact: Learn about the advantages of having smart meters and its benefit for grid management, demand management, tariff impact and customer relation issues; Goodwill and better understanding of the products to be demonstrated; An initial acquaintance and long term relationship among German suppliers and local utility agents. Next Steps: 1. Discuss smart meter topic with PEA, MEA and potential suppliers further; 2. Possibly organize a study tour for local utility staff to German smart meter projects to see potential benefits of a holistic approach of smart meter programs; 3. Discuss with PEA and MEA specifications of smart meters for demonstration project; 4. Install a number of smart meters for different groups of PEA or MEA customers with communication means; 5. Monitor the performance and adjust specifications in accordance with PEA and MEA requirements. Thailand Demonstration Project 2: Micro-grid with a management system Background: There will be more and more distributed generators, both with rotating generators and renewable energy with inverters, installed in parallel with the supply of electricity from the main grid. The additional distributed generators are meant for peak reduction and islanding capability, including selling power back to the grid. A micro-grid arrangement will help in balancing the supply from the main grid with power from embedded distributed generators in the system to achieve the objective and principle of the design. In addition, an unintentional islanding facility will disconnect the local grid from the main grid when there is an interruption in electricity supply from the main grid, and will start its own generation to compensate the shortage. This can be viewed as an enhancement of the reliability of the local system. A micro-grid capable of integrating the system and including a management system for efficient operation are required to fulfil the purposes. A successful demonstration of a micro-grid can create a great business opportunity for the future. 15

28 As a suitable demonstration project we regard the installation of an island power solution involving conventional generators, renewables and battery storage for stabilization. This is a solution addressing specifically the issue of weak/overloaded grids and rarely electrified areas lacking a stable power supply. On the one hand implementation is straightforward and does not require the approval of too many authorities typically required for any large infrastructure project. On the other hand a precise calculation of the amortization period is doable for this type of project encouraging potential investors to participate. Furthermore this would basically be a Smart Grid project on a small scale showing a clear economic benefit. The demonstration of an island power solution (micro grid) would involve conventional generators, renewables and battery storage for stabilization. A perfect place for such an autonomous power supply would either be a geographic island with no connection to the central transmission grid or a remote industry site currently powered by diesel generators and facing high fuel costs. We could supply and implement the required diesel-offsetting solution turnkey from a technical and execution perspective. But the involvement of a strong equity partner would be mandatory from our point of view. (Dr. Leif Wiebking, Chief Technology Officer of the Instrumentation, Electrical and Control Business Unit at Siemens Energy) Justification: There is a plan to install demonstration micro-grid systems for PEA s customers in Mae Sareang district, Mae Hongson, with a budget of 330 million THB, and in Koh Kood and Koh Maak, Trad, with a budget of 225 million THB. There will also be an expansion of the project after the success of the demonstration project, which will require a large amount of hardware and more micro-grid systems. Potential benefit of the demonstration plant: MEA, PEA and EGAT Due to the projects planned by PEA and the budget set forth, there is an opportunity for German suppliers to offer their collaboration with PEA on demonstration micro-grid systems. German suppliers Future business can be developed if German suppliers can convince PEA of their products quality and superior performance. Micro-grids are site specific, and require careful study and proper design to suit the site conditions and environments. It is a good chance for the German suppliers to provide suggestions and recommendations for the design and specifications of the micro-grid components to the local authorities, which will possibly be included in the future purchase orders. Potential partners for the project: MEA, PEA, EGAT, and industrial parks with distributed generations (DG). Objective: The main objective is to make PEA aware of the specific comparative advantage of German suppliers in micro grid system components and field experience. This should be done as early as possible as some micro grids will be implemented in the near future in Thailand anyway. To create an opportunity for German suppliers to access PEA and other private power producers (SPP, VSPP, and industrial parks); To allow both suppliers and PEA an opportunity to collaborate in design of the micro-grid systems to the needs of the customers; To make known the availability of the hardware and software from Germany. Activities: 16

29 To collaborate with PEA in the design, procurement, and installation of micro-grid systems for PEA s demonstration plants; To investigate and analyze the performance of the micro-grid systems together with PEA; To conclude and modify the final specifications of the micro-grid systems to be procured and installed in the expansion projects. Impact: A better understanding of the system requirements and product availability through collaboration with PEA in the demonstration; A closer relationship among German suppliers, local utility agents and other private power producers (SPP, VSPP, Industrial parks). Next Steps: 1. Organize a workshop with PEA and German suppliers on the topic of micro-grids to show comparative advantage of German system concept and their experience. 2. Organize a study tour to show successful micro-grid systems operated with German technology 3. Define scope and area of the demonstration project for micro-grid application with PEA and potential German suppliers 4. Develop a PPP concept approach or an ESCO concept with potential German suppliers; once the micro-grid demonstration system is installed, assist in monitoring the performance and yield of the demonstration project and disseminate the results. Vietnam Demonstration Project 1: Smart metering for large customers and distribution grid management Background: Smart metering is one of the main targets in the national roadmap of Smart Grid deployment. Due to the large investment requirement, the main focus in the first phase will be large customers. In this demonstration project, a number of smart meters with TOU pricing can be installed for industrial customers (such as steel and textile manufacturers) to demonstrate the benefit of AMI in distribution grid to improve energy efficiency and some energy policies such as TOU. The smart meters must have a data transmission capability back to the utility, which allows two-way communication, information storage, and remote monitoring capability. To provide direct feedback to customers, a number of displays should also be provided to show real-time energy consumptions and historical data/graphs of usage, daily accumulation, and comparisons with previous month. Distribution grid management software should be installed on the utility side to help operators to monitor the load. Automatic alerts to customers for reduction in energy usage can be integrated to assist the load-shifting (at the moment, utility s staff is using manual phone calls for this purposes). Other benefits such as grid stabilization and outage management can also be demonstrated. Thus this Demonstration is considered to be beneficial to both customers and utility. Justification: There is a large plan of EVN Central power Cooperation (EVNCPC), which is financially supported by World Bank to install approximately 10,000 electronic meters with a total investment of approximately 100 billion Vietnamese Dong. Potential benefit of the demonstration plant: EVN, EVNCPC, DPC The project completion is expected to improve the quality of customer service, increase productivity, reduce power losses, increase the operating efficiency of power production, and improve the business of EVNCPC. There is a sizable budget for upgrading current mechanical meters to electronics meters. As customers, EVN, EVNCPC and DPC can have a chance to verify the qualities of German products through the 17

30 demonstration project. In addition, at the moment, EVNCPC having some difficulties in accessing cheap loans to implement this project and therefore, financial supports from German banks will greatly support this project. German companies: The demonstration project is opening opportunities for German suppliers to participate in the World Bank project to deploy electronic meters. In this project, German companies can play active roles in providing equipment s, technologies and especially consulting services, while German institutions and banks can provide financial supports such as low interest loan which is highly desired. Potential partners for the project: EVN, EVNCPC, DPC German suppliers Optional intermediation partners Objective: The main objective is to make EVNCPC and DPC as early as possible aware of the special advantages of German smart meter suppliers and their products; To connect suppliers and utilities, so they can develop good relationships and build a foundation for future business; To allow both suppliers and their customers (utilities) to exchange information and to adjust their technical requirements; To create a positive attitude towards the products featured in the demonstration project; To connect German suppliers and utilities for exchanging information, adjusting their technical requirements; To demonstrate the capabilities of German technologies, German consulting; To increase the awareness on Smart Grid/ Smart meter benefits to utility, customers, and authorities. Activities: To install a number of advanced meters (10-20 units) for the utilities customers and a central receiving unit to retrieve information from the meters; To test the units by allowing the utilities to have the access and control of the system for a period of time (3-6 months) or transfer the system to utility; To compile and analyze the information together with the utilities (DPC); To analyze the performance of the system in comparison with the utilities requirements. Impact: Goodwill and better understanding of the products to be demonstrated and an initial acquaintance and long term relationship among German suppliers and local utility agents. 18

31 Next Steps: 1. Discuss smart meter topic with EVNCPC and DPC and potential suppliers further; 2. Possibly organize a study tour for local utility staff to German smart meter projects to see potential benefits of an holistic approach of smart meter programs; 3. Discuss with partners specifications of smart meters for demonstration project; 4. Install smart meters and assist in monitoring. Vietnam Demonstration Project 2: Upgrading obsolete substation to Smart Grid compliance Background: In the demonstration project an un-instrumented substation of 110/22 kv can be equipped with SCADA/DMS system with smart meter and wide-area monitoring systems (WAMS), wide-area adaptive protection, control and automation (WAAPCA). This will not only improve the reliability of the grid but also allow new Smart Grid applications running through the ICT infrastructure. KHPC JSC is among few joint stock power companies. KHPC is also considered the most active in deploying modern grid technologies with a long-term plan to upgrade the power grid of Khanh Hoa Province. Justification: Upgrading current substations to Smart Grid compliance is the highest priority target in the national roadmap of Smart Grid deployment. In this project, there is a very strong demand for low interest loans. The involvement of German institutions and banks providing financial supports such as low interest loans will be the key success factor. As KHPC is a joint stock company, the tender procedure is very flexible and fast. While KHPC complete the first phase of modernizing its provincial grid, the next phase 2 and phase 3 will be worth 45 billion VND (1,7 million Euros) and 12 billion VND (0,5 million Euros), respectively. Potential benefit of the demonstration plant: KHPC As KHPC JSC is very active in R&D in Smart Grid deployment, they will obtain great benefits from German expertise in this field through this demonstration. Through the project, not only a typical technological model of Vietnamese Smart Grid can be prototyped but also a financial and business model based on Public Private Partnership (PPP) can be assessed. In this project, the financial supports such as low interest loans are also highly desired. German partners: German companies/institution can play active roles in 1) consulting services; 2) providing equipment and technologies; and 3) providing loan. As the Khanh Hoa model is currently considered among most successful models of Vietnamese grid modernization, the demonstration can be easily expanded. It is a good chance for the German suppliers to provide suggestions and recommendations for the design and specifications of the KHPC s Smart grid components to the local authorities, which will possibly be included in the future purchase orders. Potential partners for the project: Khanh Hoa Power Joint Stock Company (KHPC JSC) Objective: German suppliers/consultant The main objective is to make KHPC as early as possible aware of the special advantages of German suppliers and their products; 19

32 To connect suppliers and utilities, so they can develop good relationships and build a foundation for future business; To create a positive attitude towards the products featured in the demonstration project; To connect German suppliers and utilities for exchanging information, adjusting their technical requirements; To demonstrate the capabilities of German technologies and German consulting in designing/providing integrated solutions, which are highly scalable and customizable for Vietnamese grids and compliance with popular Smart Grid standards; To show the tangible benefits of deploying smart grid to utilities/operator/authority. Activities: To integrate digital control infrastructure with smart gateway or substation controller conforming to Smart Grid standards, e.g. IEC standards such as IEC in an existing substation; To communicate with existing SCADA/DMS installed at control center via IEC standards. Impact: Great experience with Vietnamese power grid modernization through collaborations with KHPC, which can be expanded for larger scale; Great public awareness on the new model of Vietnamese Smart Grid. Next Steps: 1. Contact KHPC through either German agencies or intermediation partners; 2. Compilation of all requirements, site survey, etc.; 3. Requirement analysis, design and planning; 4. Discuss with German financial institutes low cost loan offers; 5. Discuss this topic with KHPC and potential suppliers; 6. Organize a study tour for local utility staff to German Smart Grid projects to see potential benefits of an holistic approach of German Smart Grid model; 7. Discuss with partners specifications of smart grid for demonstration project. Vietnam Demonstration Project 3: Renewable and distributed generation integration Background: The integration of distributed generation is among main targets of the Vietnamese national roadmap of Smart Grid. The fact that Vietnam has very high potential of renewable energy including small hydro, solar, wind and biomass will contribute to the high demand for Smart Grid. This demo project aims to integrate small hydro power plants (> 5 MW) to the SCADA/DMS of EVNCPC to study the effect of integrating RE to the operation of EVNCPC distribution grid. Justification: This pilot activity is also planned in the National Road Map of Smart Grid Development in Vietnam, Stage 1 ( ), thus showing its importance to the EVN strategy. Potential benefit of the demonstration plant: EVNCPC, SPP, VSPP, Utilities The successful integration of distributed RE into the grid will encourage RE development, thus strongly motivate SG deployment in Vietnam. 20

33 Especially, through the PPP (Public Private Partnership) mechanism, RE can be linked with a new business model of green development in Vietnam, where RE, SPPs, and VSPPs can play a more active role in contributing green energy to the current grid. German partners: By successfully demonstrating the clear benefit of RE integration into current grid, not only the Smart Grid business can be promoted but also new business opportunities for German RE vendors will be created. This is a great advantage thanks to the worldwide reputation of Germany as a leader in RE. It is a good opportunity for the German suppliers to provide suggestions and recommendations for the design and specifications of the Smart Grid components to EVNCPC, SPP, VSPP, and utilities, which will possibly be included in the future purchase orders. Potential partners for the project: EVN Central Power Company (EVNCPC) Private SPP, VSPP German suppliers/consultant Objective: To demonstrate the capabilities of German technologies, German consulting in the field of renewable energy integration; To connect German companies to local SPP, VSPP and utilities to open new business opportunities for German RE suppliers. Activities: To equip selected small hydro plant (< 5 MW) with appropriate devices to integrate with utility distribution grid and connect them to the SCADA/DMS system of utility; To control and monitor the electricity produced by hydro plant, according to load conditions. Impact: Raising public awareness of tangible benefits of both Smart Grid and RE for which Germany is internationally renowned. Initial acquaintance and long term relationship among German suppliers and local utility/ SPP / VSPP. Next Steps: 1. Contact EVN CPC through either German agencies or intermediation partners; 2. Requirement collection; 3. Requirement analysis, design and planning; 4. Discuss with German financial institute for low cost loan offers; 5. Organize a study tour for local utility staff to German Smart Grid projects to see potential benefits of an holistic approach of German Smart Grid model; 6. Discuss with partners specifications of smart grid for demonstration project. 21

34 2. Task of the study 1. Background The Southeast Asian region with its high electricity rates and further potential for economic growth is facing massive challenges implementing a reliable, efficient, and modern electricity and power supply that can cope with the fast rising energy and electricity demand in its countries. In this study Thailand and Vietnam are highlighted within Southeast Asia, since they are among the heaviest energy consumers in the region with predicted high rates of increasing energy demand. Both countries are already reacting to this development, as witnessed by their ambitious plans and promotion activities covering energy efficiency as well as renewable power supply. Approaches and technologies for sustainable power supply, and in particular improving grid capacities, are internationally and also in countries of Southeast Asia discussed in a more systematic and integrated perspective: instead of only extending and improving grid capacities in the existing power supply system, established and emerging concepts, systems and technologies combined under the term Smart Grids offer a new systematic solution to the problem of ageing or lacking infrastructure, making it possible to leap-frog conventional technologies and systems. The Smart Grid is a very broad concept covering the entire energy and in particular electricity supply chain as well as the demand side. Its precise scope is interpreted differently according to perspective and environment. In general, technologies and applications that belong to Smart Grid systems already exist and have to varying degrees, been technically proven. However, given the specific needs of developing countries and emerging economies, such as countries in Southeast Asia, it is obvious that a Smart Grid approach for such regions cannot simply be a copy of practices in industrialised countries the starting points, challenges and opportunities are too different. But as countries in that region belong as stated above to those nations with strong need for efficient and innovative infrastructure investments and economic growth, they provide interesting market potential for German technology and service providers, which however has not yet been assessed in detail. This study on Market Potential for Smart Grid Technology in Thailand and Vietnam will provide comprehensive details of the current market situation. It has been conducted in the frame of the Energy Efficiency made in Germany initiative by the German Federal Ministry of Economics and Technology (BMWi). The BMWi has commissioned the German - Bilateral Chambers of Commerce (AHKs) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to jointly implement the initiative s regional activities in South-East Asia. The Energy Efficiency made in Germany initiative aims at sharing knowledge and technology and creating business partnerships and sector-specific networks between German and South-East Asian companies and business associations in order to join forces to maximize project opportunities in the field of energy efficiency. 2. Objectives The overall objective of the market analysis and recommendations is to identify target market segments and subtechnologies that allow at first commercial-scale demonstration and, in the long term, large-scale deployment of modern and reliable Smart Grid technologies Thailand and Vietnam. Opportunities for commercial-scale demonstration that are to be identified and outlined in the market study are meant to demonstrate the potential cost savings through the deployment of Smart Grid technologies, the positive impacts on energy security, and to position German companies as key technology and service providers in that area. Specific objectives are: 1. Identification of application areas and sub-technologies for Smart Grid systems that exhibit promising short- to mid-term prospects as significant market segments for technology products and services 22

35 innovative solutions to the improvement of a given energy (sub-) system (sustainability, efficiency, security) that could trigger new paths of energy sector developments which bypass obsolete approaches opportunities for small- and medium-sized technology providers 2. Recommendation regarding the selection of 3-4 concrete opportunities that are suitable for commercial-scale demonstration projects are highly visible to relevant local stakeholders and demonstrate the benefits of Smart Grid systems can be largely supplied by German products and services can be expected to kick-off market development 3. Outline 3-4 concrete demonstration projects In terms of target group and users, the market analysis and recommendations will provide companies with a concise and compact overview and information about the modalities, requirements, and regulations of undertaking business in Thailand and Vietnam in the field of Smart Grid technology. Likewise, technology providers, manufacturers, and other investors will be supported in finding access to demonstration projects of Smart Grid technologies that offer market entry approaches. Besides determining the market possibilities for German companies in the area of Smart Grid in the near and medium future, the objective of this study is as well to assist in the defining of themes and areas of intervention, where German development cooperation can intervene with various partners and support this development. In short, the study shall not only look at markets for commercial companies but as well how German international cooperation can position itself in this whole process. The demonstration projects are the most visible outcome for that. This study focusses on the current market situation and opportunities for Smart Grid development and implementation in Thailand and Vietnam, redefining the term Smart Grid in the context of the respective countries analyzed compared to the definition from IEA in Chapter 3 Introduction into Smart Grid, and provides data about market segments and sub-technologies to allow the execution of commercial demonstration projects, and later on large scale deployment of modern and reliable Smart Grid technologies in Thailand and Vietnam. This study also provides detailed information to determine the opportunities for German companies, especially SMEs, to tap these markets. The opportunities outline the potential cost savings through implementation of Smart Grid technology. Furthermore, they define the positive impacts on energy security and position German companies as key technology and service providers in that area. The outlined proposals can be found in Chapter Tasks of assignment Based on a rough assessment of potential Smart Grid markets in Southeast Asia, the market analysis and recommendations have been conducted for Thailand and Vietnam. An in-depth market analysis was conducted considering the data generation methods described below and addressing the following issues with a view to the objectives explained above. Main pints of the market analysis will be: 1. Key challenges of the countries' energy systems (technical, political, regulatory etc.) 2. Potential role and prioritization of Smart Grid technologies and deployment areas in addressing these challenges 3. Basic commercial rollout scenario (short-, mid- and long term). 4. Undeveloped business opportunities taken into account Investment climate and regulatory framework 23

36 a. Policies and regulation (including existing power tariff system) b. Applicable public sector support / financing mechanisms and sources c. Campaigns and others Business partners and competitors a. Overview of key market players b. Overview of major and/or most emblematic projects c. Highlights in local market developments d. Relevant activities of international donors 5. Recommendations and outlines for 3-4 Smart Grid commercial-scale demonstration projects and market entry in the selected countries (i.e. prioritization and combination or technologies considering the degree of maturity, business models, framework conditions to be addressed, focus are for pilot urban vs. rural, etc.) The following data generation methods should be applied for the elaboration of the market analysis by the consultant: Desktop research (existing market studies, grid studies, documentation of national energy sector planning etc.) Interviews with relevant players in the selected target markets, as well as German technology providers / manufacturers and international Donors, in particular KfW, World Bank and ADB. In addition, also interviews with correspondents of GTAI (Germany Trade and Invest) in Southeast Asia are to be conducted. 24

37 3. Introduction to Smart Grid 1. Smart Grid meaning, necessity, potential, impact, and requirements What exactly does the term Smart Grid mean? As stated above in Section 2.1 this will vary according to perspective and context. Nevertheless, it is helpful to have a high-level definition and we will start with this characterization: A Smart Grid is an electricity network that uses digital and other advanced technologies to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end-users. Smart Grids co-ordinate the needs and capabilities of all generators, grid operators, end-users and electricity market stakeholders to operate all parts of the system as efficiently as possible, minimizing costs and environmental impacts while maximizing system reliability, resilience and stability. [1] It is now fairly widely accepted that the development of such Smart Grid solutions are essential if the global community is to achieve shared goals for energy security, economic development and climate change mitigation. [1] As indicated, these three high-level goals are common to all the nations of the world, whether industrially far advanced or in an earlier stage of development. In advanced industrial nations, the challenges facing electricity system planners include ageing infrastructure; security of supply in the context of shrinking reserve margins (local, regional, or national); the transition to deregulated, market-driven energy pricing and nodal trading; and the introduction of advanced energy services. In developing nations, paramount are factors such as minimizing capital and operational expenditures; integrating renewable and sustainable energy sources; increasing the choice of technologies for flexibility in addressing varying regional conditions; and access to a rich supply chain including innovative solutions from SMEs who see a worldwide market. In all nations and regions, there is a perceived need to reduce the environmental impact of greenhouse gases from generation based on fossil fuels, and reduce the safety risks arising from nuclear generation. Even where political or economic scepticism seems to impede progress, there is a strong undercurrent of scientific and social awareness that is driving the industry towards these critical, long-term goals. The potential for Smart Grid developments fundamentally to transform the electrical power industry has become clear through demonstration projects and some early large-scale rollouts. Many national governments are making significant investments in Smart Grid research, development, and demonstration (RD&D) programs, and there has been a strong increase in the quantity and quality of international standards activities. There is growing interest and engagement by major Information and Communication Technology (ICT) industry actors, with deep expertise and portfolios in embedded controls, radio frequency and power line communications, data networking, software systems, and cyber security. Most recently there has been an emphasis on the increasing use of massive volumes of data from smart metering and other data collection systems to inform integrated operational and business analytics, which are being adapted and adopted from other industries in which asset utilization, logistics, and deep understanding of customer behavior, perceptions, reactions, and the maximization of customer retention are critical to success. From what has been noted above, the impacts of Smart Grid developments have the potential to be broad and deep. They may include transformations in and of the electrical industry, power system architectures, equipment and component supply chains, regulation and markets, end user behaviors and benefits, and more. A key potential impact, which this study begins to assess, is the opportunity for Thailand and Vietnam to benefit from this transition, intercepting trends and using new approaches, technologies, and a broad worldwide supply base to develop their own, country-specific electrical system roadmaps and to pursue independence in energy matters. There is potential for regional economic development as well, in two ways: a) the opportunity to lower the cost and 25

38 raise the reliability, availability, and quality of electrical energy; and b) the opportunity for indigenous and multinational industrial firms to base Smart Grid-related manufacturing and services in the region. The requirements for Smart Grid are extensive, but we can already see from our survey of the literature and demonstration projects that they include: increasing and eventually, deep penetration and integration of renewable energy sources; increasing utilization of ICT for operations: monitoring, control, system modeling and optimization, reliability and robustness to failure, and efficiency. These four broad, high-level requirements engender others, including: standards development, to make for a more efficient, competitive worldwide supply chain (compelling models include the worldwide Consumer Electronics and ICT industries); a steady flow of investments by governments (in RD&D) and private parties (e.g. venture capital, industrial giants); education of researchers, engineers, and technicians in the new Smart Grid technologies, as well as professional certification and recognition; sustained public focus on Smart Grid benefits through education and awareness campaigns, especially of demonstration projects showing early promise, results, impacts, etc. 2. Existing Smart Grid Definitions and Technologies The Annex Power team surveyed and analyzed definitions, formulations, analyses, and architectures of the Smart Grid presented by international and national agencies, industry R&D groups, standards setting organizations, and solution providers and equipment vendors 1. Naturally, there are variations in perspective and detail according to the context, goals, applications, and technologies in question. Our purpose in this section is to establish a definition of the Smart Grid that includes all relevant emerging technologies, and provides a basis for our analysis of Smart Grid roadmaps and market opportunities for Southeast Asian nations. We draw primarily and essentially on [2]. 1 Exemplary or all references to Smart Grid definitions, or a pointer to the global list of references. 26

39 A defining feature of all Smart Grid models we reviewed is the intensive integration of Information and Communications Technologies (ICT) with power components and systems, from the core to the edge of the grid as depicted schematically in Figure 1, in order to improve the situational awareness, control, reliability, security, flexibility, efficiency, and overall value of the electrical system. Figure 1: Core Smart Grid concept marrying ICT with Power Systems [3I] A horizontal, end-to-end capability for power system communication and control is indeed the Smart Grid vision and end goal, but in practice grid modernization typically proceeds in projects and trials based in the traditional domains of generation, transmission, distribution, and consumption. Some of these projects affect and are managed primarily within one domain, while others, such as Wide-Area Monitoring and Control, and Electrical Vehicle Charging Infrastructure, involve multiple domains. The mapping of Smart Grid technology categories onto power system areas depicted in Figure 2, from [1], illustrates that ICT and renewable and distributed generation are foundational, cross-cutting technologies that can involve and affect every domain. The other technology areas shown affect at least three domains. 27

40 Figure 2: Mapping Technologies onto Power System Domains [1] This mapping of Smart Grid technologies onto power system domains can help in situating products and applications in established procurement and operational processes, even as they may by their very nature blur the boundaries between domains 2. As such, it is well suited to our study of market entry opportunities for innovative technologies. Each technology area involves hardware and software systems that may exist, in some form and at some level of development, in a given power system. Table 2 lists representative systems in the identified technology areas, while Table 3 provides an approximation of their industry-wide maturity level and development trend, or speed of adaptation. 2 Indeed, a definition of the Smart Grid in terms of institutional transformation might be: the application of technologies in order to break down the boundaries between vertical silos and thereby transform a fairly centralized, monolithic system into a more distributed, flexible, responsive and resilient system of systems. 28

41 Table 2: Example Hardware and Software System, per Technology Area [1] Table 3: Smart Grid maturity levels and development trends [1] The mapping shown in Table 3 above can be expanded into a finer-grained matrix of technology and application types, to support more precise analysis and planning in a specific (e.g. utility, control/market region, or national) context. The Annex Power team used the detailed mapping shown in Figure 3 below as a baseline to compare other Smart Grid models and definitions, and to derive country-specific mappings of Smart Grid projects and priorities for Thailand and Vietnam. 29

42 MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM Operational Area EVN and PEA : Smart Grid Technology IEA : Smart Grid Phasor measurement units (PMU) Supervisory control and data acquisition (SCADA) Wide-area monitoring systems (WAMS) Wide-area adaptive protection, control and automation (WAAPCA) Wide-area situational awareness (WASA) Power line carrier WIMAX LTE RF mesh network Cellular Routers Relays Switches Gateway Computers & servers Enterprise resource planning software (ERP) Customer information system (CIS) Power conditioning equipment for bulk power and grid support Communication and control hardware for generation and enabling storage technology Energy management system (EMS) Distribution management system (DMS) Geographic information system (GIS) Superconductors FACTS HVDC Network stability analysis Automatic recovery systems Automated re-closers Switches and capacitors Remote controlled distributed generation and storage Transformer sensors Wire and cable sensors Outage management system (OMS) Workforce management system (WMS) Smart meter In-house displays Meter data management system (MDMS) Charging infrastructure Batteries Inverters Energy billing software Smart grid-to-vehicle (G2V) and vehicle-togrid (V2G) systems Smart appliances Routers In-house displays Building automation systems Thermal accumulators Smart thermostat Energy dashboards Energy applications for smart phones and tablets Advanced Metering & Communication, System Integration Wide-area monitoring and control Advanced metering infrastructure (AMI) Information and communications technology (ICT) integration Distribution Automation, Substation Automation, Distribution Operations Transmission enhancement applications Distribution grid management Utility Enterprise Applications Renewable and distributed generation integration Electric vehicle charging infrastructure Customer-side systems (CS) ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü Figure 3: Detailed Technology-Domain Mapping for Thailand and Vietnam [(Annex Power)] The highlighted cells indicate areas of current and planned engagement in Smart Grid projects by government agencies, utilities, and other entities (i.e. universities) in the two countries. (These projects are described below in Section 5 Smart Grid Activities in Thailand and in Section 7 Smart Grid Activities in Vietnam.) In contrast, the empty cells show areas of little or no activity, and therefore indicate opportunities for additional Smart Grid research and development. 3 Another feature of the mapping in Figure 3 is its grouping of IEA Smart Grid technology categories (second row, blue labels) into three main focus areas (top row, red labels), in which Smart Grid RD&D activities have been organized in Thailand and Vietnam. This grouping is one of the ways that Annex Power has been able to adopt global definitions and analysis of the Smart Grid to local institutions and conditions in Southeast Asian countries. 3 Comment on figure 3: Presently HVDC / Enhancement of Transmission is a focus for Thailand only, not Vietnam. 30

43 Finally, given the emerging nature of Smart Grid technologies, and the scope and complexity of their integration into existing power systems, the process is bound to take many years, even decades, and will be shaped by evolving technical, business, regulatory, financial, social and organizational factors. Smart Grid planning is therefore being done according to technology roadmaps, which are meant to be revised and approved at fixed intervals (e.g. five- or ten-year plans). This incremental development process is represented in the diagram below, in which once again the increasing penetration of ICT and renewable, distributed energy is shown as the power system evolves over time towards the Smarter Grid. Figure 4: Iterative, Incremental Process of Smart Grid Development [1] 3. Global Smart Grid development and demonstration projects Since the late 1990s there has been steady growth in Smart Grid trials, demonstration projects, and commercial deployments. The first wave of activity began with Automated Meter Reading (AMR) deployments in Europe (Italy, France, and Spain) and Smart Meter/Advanced Metering Infrastructure (AMI) deployments and the United States. In parallel with these large-scale commercial roll-outs, hundreds of demonstration projects have been or are being pursued worldwide, to explore the feasibility and value of every Smart Grid technology area and application surveyed in the previous section. These trials are helping drive a second wave of Smart Grid activity, in which a number of innovative technologies and applications stand to become proven as suitable for large-scale commercial deployments. There are many such Smart Grid demonstration projects, in every region of the world and at various stages of planning, execution, and evaluation. Resources for learning about them are widely available, although the quality and quantity of information is variable. 4 As part of this study, the Annex Power team conducted a thorough review and analysis of all the leading Smart Grid projects worldwide and the available studies of their effectiveness to date; filtered and rationalized the information; and summarized the aspects most relevant to this project s goals. That summary, included as an Appendix A to this report, informed our analysis of current power system realities and Smart Grid projects in Thailand and Vietnam (Sections 0 to 7), and helped to shape our recommendations for potential demonstration projects in those two countries (Sections 0 to 11). 4 Among the most complete and accurate sources are government entities accountable for the expenditure of public funds on Smart Grid RD&D, so we have relied on those wherever possible. 31

44 4. Energy Situation in Thailand Key Challenges of the Countries Energy System This chapter gives a broad background of the current energy situation in Thailand, including an overview of actual energy consumption and energy generating capacities, the relevant energy institutions, and the local energy policies and regulations. 1. Overview about Energy Situation and Energy Market 1. Primary Energy Consumption Thailand is an energy import dependent country, with 48% of its primary energy consumption in 2010 being imported. Spending for this imported energy accounted for 10% of the GDP or 319 billion USD in Out of the total energy import in 2010, crude oil dominated with a share of 62.5% or 65 Mtoe. Natural gas and coal followed with 17.5% and 16.4% respectively. Figure 5: Primary energy consumption in Thailand in 2010 (Numbers: [6], Graph: [Annex Power]) Fossil fuel has dominated the total primary energy supply of the country. In 2010, more than 80% of the total primary energy supply was fossil fuel. Oil and natural gas took the major portions of 35% and 33% respectively, and were followed by coal with 13%. Renewable energy and hydropower shares were 18% and 1% respectively. Figure 6: Shares of fossil fuel and renewable energy in total primary energy in 2010 (Numbers: [6] Graph: [Annex Power]) 32

45 The industrial sector and road transport took the largest shares of final energy consumption in Those were 36% and 35%. Residential and commercial sectors consumed 15% and 8%, while the others took the rest. Figure 7: Energy consumption by sectors (Numbers: [6], Graph: [Annex Power]) Energy intensity, defined as energy consumption per GDP, was relatively high for Thailand compared to the world average and developed countries. Even among Asian countries, Thailand consumed more energy per GDP than Malaysia, the Philippines, and Singapore. It is worth noting that the energy intensity for Thailand in 2009 was on the increasing trend compared with that in Figure 8: Energy intensity for Thailand compared with other countries and world average [4] 33

46 The total final energy consumption (TFEC) growth rate has closely followed the economic growth rate in the past decade. The average growth rate of TFEC was 4.4% during , while the GDP growth rate was 4.5% during the same period. The leading economic sectors, which had high growth in consumption, were the commercial sector, the industrial sector, and the transportation sector. They grew 7.5%, 5.9% and 4.3% on average, respectively. The residential sector and the others followed with 2.2% and 3.0% growth rates. It is also projected that the average TFEC growth rate in the case of BAU, business as usual, is 4.2% each year for the next two decades. Electricity demand grew even faster, at 7.1% annually, and became more dependent on gas imports from neighboring countries. Figure 9: Projection of energy consumption during [5] 2. Electricity Generating Capacity and Consumption The installed electricity capacity at the end of 2011 was 31,446 MW, which increased by 0.9% from the previous year. The total capacity consisted of 14,998 MW (48%) from EGAT, 12,082 MW (38%) from Independent Power Producers (IPP), 2,182 MW (7%) from Small Power Producers (SPP), and 2,184 MW (7%) imports from neighboring countries. Figure 10: Thailand electricity installed capacity in 2011(Numbers: [6], Graph: [Annex Power]) Natural gas was the major source of energy used for electricity generation in It accounted for 71.1% of electricity generation, while coal and lignite and hydropower represented 21.4% and 5.9% of generation. Fuel oil and diesel took small portions of 1.4% and 0.2% of generation. 34

47 Figure 11: Comparison of energy sources for electricity generation to national grid in 2011 (Numbers: [6], Graph: [Annex Power]) The monthly peak demand in electricity generated by EGAT and the IPPs for January 2009 through March 2012 is shown in Figure 12 below. This figure is excluding the generated amount of energy from renewable and conventional SPP s and VSPP s, which amounts to a total of 16,639 GWh. The annual peak demand normally took place in summer, which was April, May, and June. The annual peak demand was in April in 2009, and in May in 2010 and The annual peak demand consistently increased every year except in 2011, which was slightly lower than that in They were 24,009.9 MW in 2010 and 23,900.2 MW in On March 23, 2012 the electricity supply by EGAT and IPP was 24,464.7 MW. It was reported later that the latest peak demand of the whole country was 26,121 MW on 26 April Figure 12: Monthly peak demand in 2009, 2010, 2011, [7] It was reported in DEDE s annual report 2011 that the total electricity consumption by end-users in 2011 was 148,700 GWh. The electricity consumption in the Bangkok Metropolitan Region (BMR) was 44,191 GWh or 29.7% of the whole country consumption, while the customers outside BMR consumed the rest: 104,509 GWh, or 70.3% of the total consumption. By sectors, industry was the largest consumer with 63,418 GWh (42.7%), while commercial sector, and residential sector consumed 51,019 GWh (34.3%) and 32,920 GWh (22.1%), respectively. The agricultural sector and others took much less than the other three sectors, consuming 304 GWh (0.2%) and 933 GWh (0.6%) respectively. A small amount of electricity of 106 GWh was consumed by sky train, subway and Airport Rail Link. 35

48 2. Relevant Energy Institutions Thailand s energy related institutions are generally divided into governmental and private sector organizations as follows. Governmental Organizations: Transmission and Distribution Utility General Utility Provincial Electricity Authority (PEA) Metropolitan Electricity Authority (MEA) Electricity Generating Authority of Thailand (EGAT) Relevant Government Agencies in the Energy Sector Energy Regulatory Commission of Thailand (ERC) Department of Alternative Energy Development and Efficiency (DEDE) Energy Policy and Planning Office (EPPO) Private Organizations: General Utility Independent Power Producers (IPP) Small Power Producers (SPP) Very Small Power Producers (VSPP) Figure 13: Thailand Energy Related Institutions Overview [8] 36

49 1. Provincial Electricity Authority (PEA) The Provincial Electricity Authority (PEA) is a government enterprise under the Ministry of Interior, established under 1960 Act by the Royal Decree executed on 20th September [ ] The authority s responsibility is primarily concerned with the generation, distribution, sales and provision of electric energy services to the business and industrial sectors as well as to the general public in provincial areas, with the exception of Bangkok, Nonthaburi and Samut Prakran provinces. The PEA has expanded electricity supply to all areas covered 73 provinces, approximately 510,000 km2, accounting for 99% of the country s total area. Further information can be found at 2. Metropolitan Electricity Authority (MEA) The Metropolitan Electricity Authority is a government enterprise under the Ministry of Interior. Established in 1958, this organization was responsible for generating and selling electrical power in the metropolitan area until 1961, when the generating aspect was transferred to EGAT. MEA provides high-class service while laying emphasis on sustainable growth of related business as well as responsibility for society and the environment. Further information in regards to MEA can be found under 3. Electricity Generating Authority of Thailand (EGAT) The Electricity Generating Authority of Thailand was established on May 1, It presently is the state enterprise under the Ministry of Energy. EGAT presently builds, owns and operates several types and sizes of power plants across the country with a combined installed capacity of 13, MW, accounting for about 47.8 percent of the country's 28, MW generating capacity. EGAT also purchases electric power from private power companies and neighboring countries. Further information in regards to EGAT can be found under 4. Energy Regulatory Commission of Thailand (ERC) The Energy Regulatory Commission of Thailand (ERC) is appointed as the independent regulatory agency. The foundation of all functions and responsibilities follows the enactment of the Energy Industry Act B.E (2007). ERC aims to work independently and separately from policy framework so as to ensure equality and fairness between consumers, producers, and other relevant interest groups. Its primary functions and duties are to oversee the regulations that deal with electricity systems of generation, transmission, distribution, and their system operator. In particular, ERC's main objectives consist of monitoring energy market conditions by tariff review, licensing, approval of power purchase, dispute settlement and fulfilling its mandate to counterbalance the parties and ensure maximum interests of the people and the country. Further information in regards to ERC can be found under 5. Department of Alternative Energy Development and Efficiency (DEDE) The Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy, has as its mission to support and promote clean energy production and consumption that is consistent with the situation in each area, which is cost effective and sustainable. It aims to develop clean energy technologies commercially for both domestic consumption and export, including creating co-operation networks that will lead Thailand to an energy knowledge base society so that the country s economy will be secure and the people can live in social harmony and sustainable happiness. The duties of DEDE prescribed under the Act on Administrative Organization of the State Affairs are: to be responsible for energy efficiency promotion, energy conservation regulation, energy sources provision, alternative development of integrated energy uses, and energy technology dissemination in a systematic and continuous manner, in order adequately to respond to demand from every sector at optimal costs beneficial to the country s development and the people s better living standard. The duties prescribed under The Energy 37

50 Conservation Promotion Act B.E.2535 are: to be responsible for regulation, supervision, promotion and assistance provision to the designated factories and buildings to comply with laws and regulations for efficient use of energy and savings. Further information in regards to DEDE can be found under 6. Energy Policy and Planning Office (EPPO) The Energy Policy and Planning Office (EPPO) is a pivotal agency under the Ministry of Energy, being tasked with the development of national energy policies and planning, including measures to manage and administer the energy sector, with due consideration of economic and social development, consistent with environmental protection. In order to undertake the mentioned tasks, it is crucial to acquire substantial information and data for analysis and development of recommendation on energy issues to be presented to management. EPPO, therefore, has developed an energy statistics database system with a view to following up both national and global energy situations. Further information can be found under 7. Independent Power Producer (IPP) IPPs = Independent Power Producers (Capacity sold to EGAT 90 MW) With the attempt to promote competition in this industry, the government has promoted private sector participation in the generation business in the form of Small Power Producers (SPPs) and Independent Power Producers (IPPs) since Under the power purchase agreements, both SPPs and IPPs are required to sell electricity to EGAT that it subsequently transmits to the distributors. In December 1994, EGAT announced for the first time that it would purchase electricity from IPP sectors, for a total of 5,800 Megawatts. During the years , seven IPP projects signed contracts with EGAT to sell a total of 5,944 Megawatts of electricity to EGAT. 8. Small Power Producer (SPP) SPPs = Small Power Producers (Capacity sold to EGAT < 90 MW) In 1992, the same year as the IPP program, Thailand also began the Small Power Producer (SPP) Program. SPP generators connect to PEA or MEA lines and sell electricity under power purchase agreements (PPAs) to EGAT. SPP generators are divided into two categories: firm and non-firm, depending on their ability to guarantee availability. Firm fossil fuel-fired SPPs must generate for at least 7,008 hours per year and must generate during the months March, April, May, June, September and October. SPPs could sell up to 90 MW of capacity and employ Combined Heat and Power (CHP) or Cogeneration systems burning conventional fuels (i.e. natural gas and coal) or renewable technologies using non-conventional resources (i.e. waste, agricultural residues, biomass and solar energy) to generate electricity. 9. Very Small Power Producer (VSPP) VSPPs = Very Small Power Producers (Capacity sold to MEA/PEA < 10 MW). Very Small Power Producers (VSPPs) are private power producers selling electricity to the Metropolitan Electricity Authority (MEA) or the Provincial Electricity Authority (PEA) with generating capacity of less than 10 MW. They can be Combined Heat and Power (CHP) or Cogeneration systems or renewable technologies using nonconventional resources (i.e. waste, agricultural residues, biomass, and solar energy). In 2002, the Government of Thailand introduced policies to promote power generation from non-conventional resources and renewable energy with a very small capacity of not greater than 1MW selling electricity to power distribution utilities. Considering the advancements and high potential of renewable technologies, it was found that VSPPs using renewable energy are also feasible for the generating capacity greater than 1 MW. As a result, NEPC agreed to enlarge the VSPP s contract 38

51 capacity from 1 MW to 10 MW on 4 September As well as SPPs using renewable technologies, all VSPPs are eligible for the Adder scheme. (The Adder is the additional amount of money, paid to the producer, on top of the actual electricity price per kwh. It varies with different types of technology.) It was anticipated that power generation from renewable energy would increase dramatically and be strategically important to the sustainable development of the country. 3. Energy Related Policies 1. Power Development Plan EGAT s Power Development Plan (PDP) is a 20-year investment plan that specifies which power plants and transmission lines are to be added at what time. A new official PDP is issued about once every two years by EGAT. EGAT s PDP is reviewed by the Ministry of Energy and approved by the National Energy Policy Council, then by the Cabinet. After the approval of its PDP, EGAT then undertakes to develop and expand the power system according to the plan. The current Thailand Power Development Plan or PDP 2010 embraces the horizon of 2010 to 2030 and the total contract capacity at the end of 2030 is 65,547 MW comprising 1. 29,212 MW existing capacity as of December 2009, 2. 54,005 MW of future added capacity from EGAT power plants, power purchase from IPP, SPP and VSPP, 3. 17,671 MW of retired power plants and expiration of Power Purchase Agreement (PPA) term. Generating Capacity in : Power projects coming online during this period are to satisfy the country s demand, though not yet assigned to particular sites. The total added capacity of 32,411 MW can be categorized as follows: New Gas Fired Combined Cycle Power Plant (10,400 MW) New Clean Coal Thermal Power Plant (6,400 MW) New Nuclear Power Plant (4,000 MW) EGAT s Renewable Energy Projects (96 MW) Power Purchase Projects from SPPs (3,800 MW) Power Purchase Projects from VSPPs (1,718 MW) Power Purchase Projects from Neighboring Countries (6,000 MW) The new PDP was designated as a Green PDP which highlights greenhouse gas emission reduction and promotes efficient energy utilization and electricity production through cogeneration systems, in addition to system reliability. Smart Grid systems could have a significant impact these areas. EGAT, as a member of the subcommittee and the working group, formulated the Thailand Power Development Plan (PDP 2010) within the following frameworks: Extend the planning horizon from 15 years to 20 years ( ) Revise Thailand s Load Forecast based on National Economic and Social Development Board (NESDB) s long-term economic growth Analyze and integrate the effects of DSM projects in both the load forecast and the generation expansion planning 39

52 Combine the re-estimated amount of power purchase from renewable energy regarding AEDP into the plan Review the amount of power purchase from SPPs in and further regarding the NEPC s resolution on 24 August 2009 to promote power production by cogeneration system Reconsider power import from neighboring countries and identify only promising projects Lower greenhouse gas emissions. PDP 2010 was approved by National Energy Policy Council (NEPC) and endorsed by the Cabinet on 12 March 2010 and 23 March 2010, respectively. 2. Thailand s 20-Years Energy Efficiency Development Plan ( ) Thailand s 20-Years Energy Efficiency Development Plan (EEDP) ( ) released on 25th of February 2011 by the Ministry of Energy in Thailand, is an investment plan with the target to reduce the actual energy intensity in Thailand. The investment in energy conservation each year will result in energy saving and cumulative avoided carbon dioxide (CO2) emissions in following years throughout the 20-years period of this EEDP. The main objectives and key challenges are as listed below. The full report can be seen at 20yrs/EEDP_Eng.pdf. Reduce energy intensity by 25% in 2030, compared with that in The economic sector with priority for undertaking energy conservation is the transportation sector. The EEDP is aimed at reducing energy elasticity from an average of 0.98 in the past 20 years to 0.7 in the next 20 years. Emphasis will be placed on: Measures that will bring about market transformation and energy consumers behavioral change, by enforcing energy efficiency labeling for equipment/appliances, buildings and vehicles so as to provide options for consumers. Large-scale energy businesses, e.g. those in the electricity, oil and natural gas industry, will be required to implement energy conservation promotion measures to encourage their customers to reduce energy use by a specified minimum standard (Energy Efficiency Resource Standards: EERS) Assisting measures, both financial and technical, will be provided for small operators, e.g. SMEs, particularly the provision of funding via the Standard Offer Program (SOP) and technical assistance via the Energy Efficiency Resource Standards (EERS). The private sector will become an important partner and greater roles will be entrusted to local administration organizations. In addition, government agencies must set a good example of energy conservation practices. 3. Power Purchase Agreement (PPA) The Power Purchase Agreement (PPA) between the private sector and EGAT for a power plan was introduced in 2006 with, at the beginning, insufficient defined limits to apply for those. The direct consequence is that many private people applied for it without having enough resources to build up a Power Plant. As example, the demand of PPAs for solar power, was always higher than the available amount of PPAs, the total Volume of PPAs was increased and is currently at 2,000 MW for Solar Systems, with a demand of around 3,787 MW. 40

53 To limit the audience the following regulations were introduced. The power purchase agreement conditions of IPPs and SPPs and VSPPs consisted of the following: The private sector needs to prioritize on clean fuel, stable price, ascertain supply, and agree with the policy on promotion of fuel diversity. The private sector can propose the project location but needs to follow the zoning criteria in line with the National Economic and Social Development Plan (NESDP), which is to expand the development to regional, and customer location, future electricity need and distance from EGAT transmission line system. Since EGAT is the one who demands production of power plant as well as power delivery to the system, hence, the tariff structure is set up as two part tariff, consisting of Availability Payment (to be paid no matter whether the power plant is operated or not) and Energy Payment (to be paid when the power plant is operated, which will be tied to fuel price). The private power plants under the conditions of IPP and SPP need to follow environmental standards assigned by the government, and an Environmental Impact Assessment (EIA) report is required for approval from the Office of Natural Resources and Environmental Policy and Planning prior to project start-up. 4. Pricing Structure The following reviews on Pricing Structure and Bulk Supply and Retail Tariff Structure generally describe each category of pricing and tariff; however, even if there is no current pricing related to Smart Grid, this will definitely be an important aspect to take into consideration when implementing Smart Grid in the country. In determining the electricity tariff structure, the following criteria have been taken into consideration: marginal costs, load pattern, revenue requirements of the power utilities and financial criteria, and social criteria for the electricity tariff determination Due to the changing load pattern, in early 1997 the Time of Use (TOU) rate was introduced by the three power utilities. Under the TOU rate, the tariffs would be expensive during the peak period and would be cheaper during the off-peak. In addition, Saturday and Sunday were considered to be the off-peak period. Full details of the scheme are given in Appendix B. Structure of the Bulk Supply Tariff The main details and an introduction to the structure are given below. Further details can be taken from Appendix B if needed. Bulk Supply Tariff by Time of Use (TOU Rate) The tariff structure of the bulk supply that EGAT sells to the MEA and PEA will be without surcharge onto/deduction from the bulk supply tariff (BST) imposed by EGAT on the sale to the two distribution utilities. Instead, the subsidization between the MEA and PEA will be in the form of a lump sum financial transfer. The generation and transmission costs comprise the BST. 41

54 Automatic Adjustment Mechanism (Ft) On 29 January 1991 the cabinet passed a resolution approving the Automatic Adjustment Mechanism in order to have the actual costs reflected by the tariffs and to reduce impact of the fuel price volatility on the power utilities financial status. According to EPPO, Ft stands for Fuel Adjustment Charge. Thus, the power utilities can adjust electricity tariffs to correspond with the changing actual costs which are beyond control of the utilities, including costs of fuel and energy purchases, impact of foreign exchange rates, affected revenues of the three power utilities, inflation, and DSM expenditures. Retail Tariff Structure The calculation of the retail electricity tariffs consists of two parts as follows; further details can be found in Appendix B. Base tariff: The base tariff includes the costs of generation, transmission, and distribution. The tariff structure for generation, transmission, distribution and retail is clearly unbundled. Tariff varies according to each consumer category with its own particular group s load pattern. There are currently eight categories of users. The electricity tariff structure is different in each category. For example, a time of use (TOU) rate is applied for medium and large general services, whereas a progressive rate is applied for the residential and small general services group. Automatic Adjustment Mechanism (Ft): The calculation of base tariff rests upon certain assumptions regarding fuel prices, inflation rates, exchange rates, operating efficiency and other factors, which might not reflect actual costs at the time of consumption. The principle of Ft is to have the actual costs reflected by the tariffs. The mechanism allows for adjustment of electricity tariffs to correspond with the changing actual costs, which are beyond the control of operators. Ft value will be adjusted every four months taking into account factors such as costs of fuel and energy purchased. 5. Demand Side Management Demand Side Management (DSM) is the management of electricity utilization or promotion of electricity energy efficiency, in general. DSM is a supplement to planning and developing a more efficient system of electricity generation, transmission and distribution and is an important concept needed when implementing Smart Grid. With regards to smart meter or AMI, which is part of Smart Grid system, it is certain that the concept of DSM is necessary in order to manage the electricity utilization. 6. Ten Years Alternative Energy Development Plan (Year ) The objectives of the 10 Years Alternative Energy Development Plan are: To utilize alternative energy as a major energy supply of the country for replacing oil imports, To increase the energy security of the country, To promote an integrated green energy utilization in communities, To enhance the development of the alternative energy technology industry, To research, develop and encourage high efficiency alternative energy technologies. The objective of AEDP is to increase the portfolio of renewable energy to 25% of the final energy consumption in the next ten years. At the end of the plan, the portion of renewable energy in power generation shall be 2.4 % or 5,608 MW. 42

55 The 10 Years AEDP is a revision of the Renewable Energy Development Plan (REDP), which had been published earlier. Figure 14 gives an overview of the AEDP and Table 4 shows the differences to the old REDP. Figure 14: Alternative Energy Development Plan [14] Table 4: Comparison of the new AEDP and the old REDP [15] 43

56 5. Smart Grid Activities in Thailand The government offices and institutions introduced in Chapter 4.2 are involved in the energy supply and services in Thailand. Those who have studied or planned for Smart Grid implementation are Energy Policy and Planning Office (EPPO), Ministry of Energy, Provincial Electricity Authority (PEA), Metropolitan Electricity Authority (MEA), Electricity Generating Authority of Thailand (EGAT) and PTT Public Company Limited. The others may have started similar studies, but have not announced any plans. The plans and roadmaps of the organizations mentioned above are summarized in the following paragraphs. 1. Smart Grid Policy/Activities by Governmental Institutions The following will give information on the different proposed smart grid policies and road maps from different players in the market. The funding for the studies of EPPO and PEA must be under their annual budgets and the source of investment after the studies has not yet been decided. However, normally PEA and MEA invest out of their annual incomes for example. 1. Energy Policy and Planning Office (EPPO), Ministry of Energy EPPO has engaged Energy Research Institute (ERI) of Chulalongkorn University to prepare a Smart Grid implementation plan and roadmap, which will be the guideline for future investment for Smart Grid facilities. The study is expected to complete by the middle of Provincial Electricity Authority (PEA) PEA has also developed a Smart Grid roadmap with Energy Research Institute (ERI) of Chulalongkorn University, and has planned to implement Advance Metering Infrastructure (AMI) in Pattaya. The road map is divided into areas of application, such as advanced metering and communication, distribution system automation, substation automation, utility enterprise applications, and system integration. [16] 44

57 PEA Smart Grid Future Power Flow Central Power Plant Industrial Plants Existing Offices Houses Figure 15: PEA Smart Grid [16] PEA has planned to implement Smart Grid facilities in three stages. The first stage is Planning and Pilot Project which will take place during The second stage, which will be implemented during , is Large Scale Expansion. The last stage is the Optimal Stage which is planned for Large investments are planned for the implementation of Smart Grid, 10 billion Baht for the first stage, then 40 billion Baht and 65 billion Baht for stage 2 and stage 3, respectively. 100 Smart Level Stage Planning & Pilot Project Road Map Stage Large Scale Expansion Stage Optimal Stage Year Figure 16: Three stages for Smart Grid implementation [16] 45

58 Stage 3 ( ) Stage 2 ( ) Stage 1 ( ) MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM In the following table the activities and plans of PEA are reported according to the different areas of Smart Grid. Supply Grid Demand Micro grid (Community Power Network) Pilot storage Supply of renewable energy sources and energy storage Pilot Smart Grid at Pattaya City Pilot green and low carbon smart island Micro grid at Kood island, Maehonsson Electricity networks in 4 cities with automated systems Integration of enterprise systems Completion of substation automation AMI pilot at Pattaya city (1,000,000 units) To limit and manage blackouts Intelligent street lighting / public lighting Pilot electric vehicle charging stations AMI complete in central region and 9 other large cities (3,000,000 units) Energy management: Covering all large and medium cities. Virtual power plants Balance and forecast system of production and energy utilization Expand fully automated network covering major cities across the country Automation electricity networks nationwide / self healing features enabled Adequate cyber security system Domestic consumers can produce their own electricity; surplus can be sold to the utility AMI across the country (15,000,000 units) Use of electricity transportation available extensively Power users can buy or sell and choose to buy electricity from different suppliers Two way power supply of electricity vehicles (V2G) Energy management optimized Table 5: PEA s 3 stage Smart Grid implementation plan [9] Besides this, EPPO, together with PEA, has supported a demonstration smart micro grid and smart metering system at King Monkut s University of Technology Ladkrabang. PEA plans to implement another demonstration Smart Grid project in collaboration with King Monkut s University of Technology Ladkrabang at Pattaya City. This would be a micro-grid, which connects the electricity generation from renewable energy (PV), wind simulation and a diesel generator with the main grid. 46

59 3. Metropolitan Electricity Authority (MEA) MEA has indicated projects that modify and improve the existing facilities in relation to efficiency in operation, customer services, and system security and reliability, such as SCADA for the transfer of information between stations and central control room, Energy Management System (EMS) for the analysis of power flow and contingency for the supply side, substation automation, Distribution Management System (DMS), and Automatic Meter Readings (AMR). MEA is now in cooperation with a research unit in a university for a study on impacts of the connections of VSPPs on grid for the preparation of future VSPP connections. But so far no concrete timetable for future investment projects in Smart Grid technologies have been announced by MEA. Although MEA has been revolving into Smart Grid technology for years, there are certain emerging technologies worth demonstrating, e.g. energy storage, demand response and control, and underground system monitoring. Inside MEA the IT planning department is responsible for the specification of the technologies. The main contact person is currently Mr. Praemsak Lothong, who is an electrical engineer. 4. Electricity Generating Authority of Thailand (EGAT) EGAT has utilized modern technologies like SCADA, protection systems, and communication systems, such as power line carrier and optical fiber in overhead ground wire (Source : Smart Grid for Future System, presented by Dr. Suthep Chimklai). EGAT has set up a Smart Grid work group to study Smart Grid applications for future implementation, which includes interoperability standards, renewable energy integration, and effects of electric vehicles (EVs). EGAT s Smart Grid working group has identified the new technologies to be applied as digitalized substation, Wide Area Monitoring System (WAMS), Special Protection Scheme (SPS), and Automatic Fault Analysis (AFA). But so far no concrete timetable for future investment projects in Smart Grid technologies have been announced by EGAT 5. PTT Public Company Limited PTT has an interest in Electric Vehicle (EV) charging stations, and has set up a demonstration station to verify the applicability of the technology. There is a plan to continue the verification of the technology and to expand the number of EV charging stations, which can be located at PTT gas stations and department stores parking lots. But so far no concrete timetable for future investment projects in Smart Grid technologies have been announced by PTT 6. Additional Smart Grid Activities The Solar Power Company Group (SPCG) has engaged with ENEGATE Co., Ltd., a company from Japan, and plans to launch a smart energy management system next year. Although details of the smart energy management system are not disclosed, the system will enhance energy efficiency for end-users. 2. Objectives to Develop Smart Grid Market in Thailand Different energy related organizations have different objectives in the implementation of Smart Grid systems, which can be summarized as follows: Self-Healing to correct problems early Interaction with consumers and markets Optimization to make best use of resources Prediction to prevent emergencies 47

60 Distributed assets and information Integration to merge all critical information More Security from threats from all hazards There have been plans for applications of Smart Grid in Thailand being studied by utilities and EPPO. The major objectives are to enhance their facilities for efficiency improvement, operation cost reduction and better services for their customers. The improvements, which can be achieved from the application of Smart Grid may be highlighted as follows. System reliability enhancement Smart Grid, which allows two-way communication, remote monitoring and control, and automatic responses will improve the system s reliability by reducing interruptions and facilitating self-healing in the system. Utilization of assets can be optimized through the deployment of Smart Grid. Operation and maintenance cost reduction With remote monitoring and control, operators will be alerted of disturbances and can have early access to information concerning equipment conditions and early warnings of the risk of equipment overload. Preventive maintenance can be planned and performed properly and in time to avoid equipment damage and major maintenance. In addition, smart devices, which allow efficient operating conditions will help reduce losses in transmission and distribution. Distribution system efficiency improvement Real time monitoring of the electricity distribution system allows prompt control and adjustments for better balance of load flow and reactive power compensation. Interruptions are detected and corrected in shorter time, and even islanding can be triggered to save the majority of customers from service interruptions. Power quality and system stability will be maintained with minimum interruptions. Renewable energy integration Electricity supplies of different sizes can be kept connected to the grid with the application of micro-grids and advanced protective devices. Smart distribution system management will also provide flexibility to cope with fluctuations of the electricity supply from renewable energy. System security improvement Multiple layers of protection devices and sensors can be included to enhance the system security. The Smart Grid will facilitate more connections of distributed generators, which increases the security of the system. Customer service management Automated meters with two-way communication can allow remote control of household appliances and consumption behavior. Fault detection and quick repair are also possible. Customers loads can be managed to their benefit. The utilities will be able to access information of their customers through two-way communication. In return they are able to advise their customers of the specific conditions for efficient operation. 48

61 Electricity peak load management Smart Grid technology will enable demand response and peak load management, which shifts the customers load from peak to off-peak periods, and reduces their cost of electricity consumption. Energy storage can be accommodated to store excess energy for use during peak periods. The Smart Grid definition in Thailand can be compared with that of IEA as in Figure 3 in Chapter Results from Interviews The interviews were designed to include stakeholders who represented all relevant organizations and companies. The interviews were carried out in person successfully, except for ERC and EGAT who were not available for interviews. The full notes of all interviews are attached in the Appendix C. Four aspects, which are hindering the actual development of the Smart Grid, were mentioned in almost every interview 1. Lack of knowledge and willingness on the private side 2. Missing regulations and a missing common Smart Grid plan including budget regulations 3. Unwillingness of the industries due to unknowns and non-visible Key Performance Indicators (KPI s) 4. Lack of expertise and undeveloped technologies for Thai and Vietnamese infrastructure All interviewees pointed out that a realization of Smart Grid will only be possible if the following points are in place: further education of the private sector clear KPI s benefits for industrial utilities benefits for the private sector common Smart Grid plan, including regulations by the government These factors will have to be implemented by demonstration projects and business opportunity researches. Experts will be needed to bring the know-how to Thailand in order to build up a sufficiently trained experts and technicians. Another important factor is data security and upcoming concerns, which are still limited due to the lack of interest and knowledge in Smart Grid. Official regulations should however be prepared and try to implement regulations before these concerns grow and may cause additional problems. Current installations and applications SCADA, which is considered as one of the major means for remote communication and control, has been installed and utilized in Thailand for a long time. MEA has used SCADA for the acquisition of information between stations and central control room. The system has been revised and updated three times. PTT has also transferred information from its natural gas valve stations through SCADA. As a power distributor, MEA acquires electric power mainly from EGAT, gets a small amount of power from SPPs and VSPPs, and distributes the power to its customers. MEA has been using an Energy Management System (EMS) to analyze power flow and contingency on the supply side, which is planned to be revised with inclusion of a standard communication protocols like DNP3, and ICCP for communication between MEA and PEA. Substation automation, which includes communication through an intranet and fiber optic lines in compliance with IEC 61850, is gradually being installed for MEA s substations, at a rate of substations a year. On the distribution side, a Distribution Management System (DMS), which enables remote control of feeders, medium voltage load break switches, manages distribution transformers, and supply of medium voltage customers, is installed. For 49

62 efficiency and operation improvement 8,000 units of Automatic Meter Readers (AMR), which communicate through fiber optic lines, are being procured for installation for TOU customers. It is planned by MEA to procure and install 23,000 more units of AMR next year. Planning for future installation PEA has had its Smart Grid roadmap completed by Energy Research Institute (ERI) of Chulalongkorn University, and has announced the three stages of implementation. The first stage, , is for planning and pilot projects. The planned pilot projects include automated electricity networks or micro-grids to support Smart Grid and electricity storage, smart meter infrastructure, smart offices, energy management systems, and real time power trading (buy or sell from/to different suppliers). Stage II, , will expand the pilot scale projects into largescale facilities. Those are asset management, Mobile Workforce Management (MWM) system, substation automation, automated networks covering major cities, development of renewable energy and energy storage, Advanced Metering Infrastructure (AMI) deployment, applications for electric transportation, community lighting, and bundled services, such as common billing, etc. Stage III, , is the optimal stage, which enables nationwide automated electricity networks, large renewable energy resource integration, balance of energy production and utilization, and intelligent two-way power supply of electric vehicles. A series of investment of 10, 40, and 65 billion Baht is planned for the tree stages respectively. Independently from PEA s roadmap, EPPO has engaged Energy Research Institute of Chulalongkorn University to prepare a plan for Smart Grid application. State enterprises like EGAT, PEA, and MEA require EPPO s endorsement for their investments. The plan, which will be completed in mid-2013, will provide strategies and guidelines for future investment and Smart Grid promotion. In addition, EPPO has also granted financial support to the energy research group at King Mongkut s Institute of Technology Ladkrabang (KMITL) for a pilot project to transmit customers information from their power meters through a 3G mobile telephone system to the center. The information is useful for energy efficiency improvement. The Thai European Business Association (TEBA) is currently developing a Smart Grid development plan for Thailand in cooperation with the Senate of Kingdom of Thailand. For that reason TEBA started to set up a Smart Grid Round Table. 4. Issues/Barriers for Smart Grid Deployment in Thailand This chapter identifies and explains issues and barriers currently existing in Thailand regarding Smart Grid deployment. Unavailable National Smart Grid Plan Some of the utility providers and private companies are hesitant to invest in Smart Grid facilities, as there has not been a firm official policy of Smart Grid. This hesitation will most likely remain until the middle of 2013, when EPPO s Smart Grid road map will be finalized, as explained in Sections and 5.3. However, some utilities like PEA and MEA have decided to invest already in certain parts of Smart Grid systems to improve their operational efficiency. Electricity Tariff Structure The electricity tariff in Thailand is rather low compared with those in other countries; more detailed information can be found in Chapter This has been a governmental policy to keep the electricity tariff at a low level and to subsidize electricity costs for some income classes. The low tariff will restrict the utilities income and in turn will not encourage further investments, as the investments will require longer periods of time to be paid back. Smart 50

63 Grid facilities are so capital intensive that their investment needs a strong justification. Reasonable pricing of electricity is needed to promote energy efficiency and future investment. Renewable Energy Promotion Programs Although Smart Grid facilities are meant to accommodate the variable electricity levels supplied by renewable energy, Smart Grids are designed for type and size specific renewable power plants. The promotion of renewable energy power needs to be carried out in parallel with the design of the Smart Grid systems to achieve the maximum efficiency of both the renewable energy power plants and the smart systems. It seems that the renewable energy electricity generating plants are promoted under the Alternative Energy Development Program (AEDP), explained in Chapter 4.3.6, for which DEDE is responsible, while the Smart Grid roadmap is under EPPO s responsibility as mentioned earlier. While drafting the road map, it is hoped that EPPO will take full acknowledgement of the AEDP in order to avoid conflicts during implementation and to accommodate the renewable energy plan, since it has already been developed and announced. Communication and Compatibility among Different Utilities Facilities Communication among utilities is one of the key factors for success in Smart Grid applications. EGAT is viewed as the main generator, while PEA and MEA are the transmitters and distributors of electricity. The overall efficiency of the system requires good communication among the parties involved. With communication compatibility, real time communication, monitoring, and control can be achieved and hence the efficiency can be improved. The designs of facilities of different utilities should be done in compatibility with others, in order to make an exchange of information among utilities substations possible. Moreover, connectors in electric vehicle charging stations must be versatile and usable with all brands of vehicles. Investments from Private Sectors Most of the Smart Grid related facilities included in the plan are relatively costly because they are equipped with automation and modern communication, which allows two-way communication as well as remote monitoring and control. These instruments can be justified for investments only in large and medium businesses, whose revenues and sales margins are large enough to compensate the cost increments. In fact, one of the large businesses expressed its concerns for positive return prior to deployment of the Smart Grid technology. For small businesses whose revenues are comparatively low and households where additional expenses are difficult to justify, the high cost of instruments and meters will be unaffordable. The cost of a unit of automatic meter reader (AMR) is rather high and can be a burden to small customers, and perhaps even more difficult to justify if the units are required for all customers. Coordination Among Stakeholders Energy related organizations in Thailand include the generators including EGAT, IPPs, SPPs, and VSPPs. The installations and implementations of Smart Grid facilities involve almost all related organizations. Not only do the compatibility of Smart Grid design for all parties facilities and the efficiency of the system matter, but the coordination of all related parties is also a significant factor for successful system operation. EPPO will have to take the position to lead the process of planning, design review, and coordination of all parties. Capacity Building for Manpower Smart Grid systems mainly include hardware and software systems for supply, transmission, and distribution of electricity. The operation and maintenance of these systems are crucial in the later phase. Capacity building for future manpower for operation and maintenance has to be planned and trained in parallel with other activities. There are specific courses in Smart Grid offered in many famous universities in other countries. Smart Grid system suppliers also offer training for operation and maintenance. The know-how transfer could also be realized by setting up cooperation projects with industry experts and also round tables. 51

64 6. Energy Situation in Vietnam 1. Overview about Energy Situation and Energy Market 1. Vietnamese Energy Market Basically, the current infrastructure of Vietnamese grid meets basic electricity demand of the national economy. However, electricity demand growth of nearly 14% annually is causing pressure on the construction of new power plants and is also a threat to the national energy security. Figure 17: Evolution of Vietnamese power capacity & demand from [17] Some of the main challenges for Vietnam's power sector are indicated in the Electricity Planning VII, approved by the Prime Minister in Decision No. 1208/QD-TTg on 21/7/2011,[20] as follows: Pressure on investment: Electricity Planning VII determined: in the period , investment for electricity sector is expected to be around trillion VND ($48.8 billion); investment plan for the period is trillion VND ($75 billion). The demand of large amount of capital investment in the electricity sector over the next 20 years is very difficult and challenging. This demand is much higher than the capital raised from non-government financial sources. For example, the capital raised over the last 5 years ( ) for the electricity sector is trillion VND (only 44.9% of the average annual investment of the period from , 29.2% of the average annual investment of the period from ). Figure 18 shows that Vietnam relies very much on an extensive expansion on coal power plants in the range of 80,000 MW (!) in the next 15 years, while the renewables will contribute only very marginal proportion. 52

65 Figure 18: Power Development Plan [17] Imports of energy: In 2004 Vietnam started to import electricity directly from China. In the future, Vietnam will continue to import electricity from China and from hydropower plants in Laos and Cambodia. In terms of primary energy, Electricity Planning VII, Vietnam may start to import coal from By 2020, of the total power of 75,000MW, 2.6% of thermal power is produced from liquefied petroleum gas (Liquid Natural Gas - LNG) and 2.1% from nuclear power. However, Vietnam has to import both liquefied petroleum gas and nuclear fuels because it does not have the resources and/or guaranteed technologies for production. Figure 19 indicates the share of the installed capacity mix by owners and fuel types for the year The installed capacity, including imports, was MW and the available capacity was MW. 53

66 Figure 19: Shares of energy by owners and sources (Data taken from [19]) The increasing requirement of reliability and power quality: In addition to demand growth of approximately 14% per year in recent years, electric customers have increasing interest in power reliability and quality. Some industrial customers such as electronic circuit manufacturers, steel mills, and cement factories require high power quality (frequency, voltage). However, satisfying these requirements is very challenging due to poor grid infrastructure, which does not guarantee reliability and backup level. The reaction of society to increasing electricity prices: The Electricity Master Plan number 7 [20] determined electricity price is based on market guidance mechanism with Government regulation and adjustment. According to this plan, the retail price of electricity is to be adjusted gradually to achieve long-term marginal costs in 2020 at 8-9 US cents/kwh (current retail price of about 6.5 US cents/kwh). Retail price is to ensure the recovery of costs and a reasonable profit for re-investment to expand production. However, the increase in electricity prices will cause short-term reactions from society, especially from consumers in the time of economic crisis. The development of the electricity market in Vietnam: The Electricity Law specifies the level of development of the electricity market in Vietnam and the Prime Minister issued Decision No. 26/2006/QD - dated 26 May 01, 2006 [21] approving the roadmap, the formation conditions and development of the electricity market in Vietnam. The market will be formed and developed through three levels: Level 1 ( ): the competitive electricity generation market; Level 2 ( ): market competitive wholesale electricity; Level 3 (from 2022): the competitive electricity retail market, (i.e. after 2022 electric customers may decide to participate in electricity trading in the competitive retail electricity market) 54

67 Figure 20: Roadmap of energy market development [17] Environmental protection: Environmental protection requirements are becoming increasingly important as Vietnam is on the list of the countries most affected by climate change. The electric power industry is one of the sectors with the largest CO2 emissions especially if the addition of 80,000 MW coal power plants will be realized in future. 2. Vietnamese Energy Infrastructure In comparison with the Smart Grid reference model, the power system infrastructure layer of current Vietnamese electricity system has full configuration of components including: power plants, power transmission, customer's distribution grid, from which the customer load are mainly passive load. Distributed power sources and electric vehicles have negligible numbers. The following sections describe the specific status of each component.[18] Power generation The total installed capacity of the national electric power system by the end of 2011 was 24,559 MW (of which 23,559 MW is the capacity of the power plant and 1,000 MW is imported from China). Of the total capacity, the capacity of the hydro power plant is the largest (about 41%) followed by the capacity of the gas turbine power plant (about 31%), the capacity of the thermal coal power plant (about 18%) and finally the capacity of the thermal gas power plant (about 2%), thermal oil (about 2%) and other types of electricity production (also about 2 %).[ 55

68 The national power grid: The Vietnamese grid contains transmission and distribution grids. The transmission grid consists of 500 kv, 220 kv, 110kV lines and substations that receive power from the power plants and transmit to the national electricity system. The distribution grid consists of lines and substations of 35 kv or less. Figure 21: Vietnamese national grid [22] Transmission grid The 500 kv power grid started operations in 1994 and connects the electrical system of three areas, North, Central and South, into a unified system. Through the end of 2011 the 500 kv grid continues to be constructed to shape the backbone of the national electricity system, which connect all areas and connects load centers to the power generators. Its total length is 4,132 km and the total number of transformers is 29 units with a total capacity of 13,950 MVA. 220 kv grids serve as the main transmission voltage levels in each of the three areas. The 220 kv grids have extended across the country, forming 220 kv power rings to power all regions. The total length of the current line is 9388 km and the total number of transformers is 162 units with total capacity of 25,839 MVA. 110 kv transmission grids transmit power from the power plant to the national electricity system. The total length of the current line is 13,141 km and the total number of transformers is 787 units with total capacity of 30,284 MVA. [18] 56

69 The main weaknesses of the transmission lines are the following, which require upgrade: Some parts of the transmission grid do not meet reliability requirements of power supply, do not comply with the criteria n 1 backup, or have small cross-section wires. ICT infrastructure technology for operating the transmission grid is not comprehensively invested at some points. The reliability of the grid is not high; there is frequently congestion or overload on the transmission grid. The distribution grid of high voltage (HV), medium voltage (MV) and low voltage (LV) In the current distribution grid voltage levels of 110, 35, 22, 15, 10 and 6 kv co-exist. The grid structure is not evenly distributed between the three northern, central and southern areas; between cities and towns, urban and rural; and between the power companies. This is a major difficulty in the operation as well as the application of technical solutions for comprehensive technology investment in the power distribution grid. The operation of 110 kv grids is relatively stable. In major cities, especially in high density areas, the power sector has implemented many measures to invest in new construction and upgrades. Most of the substations are powered from two or more sources thus increasing their reliability. In some low-load areas, for example mountainous and rural areas, due to restrictions on investment the 110 kv grid has not been renovated and upgraded, so the reliability of the 110 kv grid is not high and does not comply with the n 1 backup standard. The medium-voltage power grids of 35 kv or less still have area-specific characteristics. Although there is strategic orientation of using a common voltage of 22 kv in distribution grid system, due to limited investment this upgrading is yet to be fully deployed. The low voltage distribution grids have structure of 1-phase 2-wire or 3-phase 4-wire, neutral phase is directly grounded providing voltage of 220 (380) V. The total length of low voltage distribution grid lines by the end of 2008 was 218,424 km with many different types of cable such as underground cables (copper or aluminium), shielded cable, twisted cable ABC, or bare bimetal cable. The low voltage distribution grid is owned by various stakeholders, such as the power sector, private enterprises, etc. The result is uneven quality, non-compliance with technical standards, and high losses. According to reports of the electricity sector, power loss ratio has been significantly improved, down from 14.1% in 2001 to 9.23% in According to the deep analysis of IE, the main reasons for the high loss ratios in Vietnamese grid are the followings [2]: Very long transmission grid along geographical topology of Vietnam. Limited finances for upgrading transmission and distribution grid. The percentage of hydro power plants is high whereas they are far from the central loads thus require long transmission grid. This results in very high losses, especially during rainy seasons. Instable voltage at some grid nodes. The percentage of home loads is still high in comparison with industrial loads. Limited management capacity leads to sale losses. The implementation of IT applications (such as CMIS) in power sale is still in pilot phase. Limited implementation of new technologies. Lack of studies on standardization in the management of high-loss load. 57

70 The status of information systems, automation and data communication in the Vietnamese power system: Compared to the Smart Grid infrastructure reference model, ICT infrastructure layer, information, automation and data communication system the Vietnamese power system is still in distributed form, not connected into a unified system and lacks many important elements as follows: Information systems in the power unit According to the Circular No. 12/2010/TT - BCT dated 15/4/2010 [23] of the Ministry of Trade and Industry, effective since 01/6/2010, power plants of more than 30 MW and power plants that are connected to the transmission grid must be equipped with two physically independent DCS (distributed control system) ports, which are directly connected to the SCADA / EMS system of the electricity operator s system and to the electricity market operator. However, only a few plants comply with this regulation. The remaining plants are not in compliance and only equipped with different levels of system terminals for data gathering and communication ports to exchange information (RTU / Gateway), for example: In Vietnam power system with all 96 power plants in operation, the power plants equipped with RTU/Gateways number 94 plants (71 plants with a capacity greater than or equal to 30 MW and 23 plants with capacity less than 30 MW), at the rate of 98%. In 94 power plants equipped with RTU/Gateways, those connected with SCADA / EMS with Load Dispatch Center number 52 (including 50 power plants with a capacity greater than or equal to 30 MW and two with a capacity of less than 30 MW), at the rate of 55%. In recent years, a number of power plants have been equipped with distributed control systems (Distribution Control System - DCS) in order to support the power generation units for operating power plant. However, investments in this equipment are not always in compliance with the Circular No. 12/2010/TT-BCT dated 15/4/2010 of MOIT [23], so the equipment comes from a variety of providers, causing difficulty in control, manage and replacement. Information systems in the transmission grid As instructed by the Circular No. 12/2010/TT-BCT dated 15/4/2010 of MOIT, [23] transformers of more than 220 kv must be equipped with two physically independent DCS (distributed control system) ports, which are directly connected to the SCADA/EMS system of the electricity operator s system and the electricity market operator. Likewise, 110 kv transformers must be equipped with two physically independent DCS port or RTUs, which are directly connected to the SCADA/EMS system of the electricity operator s system and the electricity market operator. In fact, most of the current high-voltage transformers only have data collection and data transmission through RTU/Gateway. Even at this level, the number of transformers at a voltage level of kv connected with the SCADA/EMS of the Centre is only 248/635 stations, at the rate of 39%. The details are the followings: Of the total of 635 transformers at a voltage of kv in operation, 341 have been equipped with RTU/Gateways (including 17 transformers of 500 kv, 69 of 220 kv and 255 of 110 kv), at the rate of 54%. Of those 341 transformers having RTU/Gateways, 248 stations have been connected to the SCADA/EMS of the Center (including 17 transformers of 500 kv, 59 transformers of 220 kv and 172 transformers of 110 kv), at the rate of 73%; and of the 248 transformers connected to the SCADA/EMS of the Centre, only 170 stations have completed the connection process, at the rate of 69%. The number of transformers not connected to the SCADA / EMS of the Center is 93 stations, accounting for 27% in the absence of information channels, channel loss in the long run, or due to the SCADA channel not being set. 58

71 Information systems in the distribution grid Distribution grids are managed by power companies. Distribution grid structures at the local level are not consistent, especially in the low and medium voltage grid. This is one of the difficulties in the operation as well as investment in equipment and upgrading information systems, automation and data communication in a uniform power distribution network. For the dispatch grid at medium voltage level, currently only a few pilot projects are equipped with RTU/Gateways and SCADA/DMS systems, for example: Installation of pilot SCADA/DMS information systems for operation data measurement, collection and management in major cities, high population areas such as Hanoi, Ho Chi Minh City, Ba Ria-Vung Tau, Bien Hoa, Can Tho, Da Nang, Buon Ma Thuot, Hue, Quy Nhon, etc Research automation of distributed grid (Distribution Automation System, DAS) in Hai Phong and radio controlled load control system under load management program (Distribution Side Management, DSM) in Hanoi and Ho Chi Minh City. For current low-voltage electricity distribution networks: Communication between power companies and consumers primarily through the power meter, which is most likely the mechanical meter. Electronic meter is only provided for large customers. As of 31/12/2011 the total number of meter installation is 18,760,57 including 18,292,358 mechanical meters and 468,214 electronics meters. Small-scale experiment with the system for remote recording of data from electronic meters for service payment, customer management, energy trading and customer services. Specifically, since 2004, the power sector has piloted and applied a number of technology solutions for reading power meter e.g. AMR (Automatic Metering Reading) and semi-automated systems to read HHU (Hand-Held Unit) meter along with Power Line Communication, RS-485 and HHU for data transmission. So far, power companies have installed 57,904 AMR devices. 59

72 2. Relevant Energy Institutions Figure 22: Vietnamese energy related organizations 1. Ministry of Industry and Trade (MOIT) MOIT is the policy maker of the whole national power sector and stands above all other relevant energy institutions as shown in the figure above. It is responsible for the advancement, promotion, governance, regulation and management of industry and the growth of industry in Vietnam. It became a ministry on its own in 1955 and has its origins in 1945 with the formation of the modern National Unification Cabinet. Further information in regards to MOIT can be found under 2. Electricity Regulatory Authority of Vietnam (ERAV) - Ministry of Industry and Trade ERAV was established in October, 2005 as an entity under MOIT, to conduct: Development and regulation of power markets Economic regulation (electricity pricing) Monitoring supply/demand balance to promote security, efficiency and conservation Licensing and Dispute resolution Further information in regards to ERAV can be found under 60

73 3. Vietnam Electricity (EVN) The main business lines of Vietnam Electricity Group include: Production, transmission, distribution and trading of electricity; Administration of power production, transmission, distribution in the national electricity system; import and export of electricity; Investment management and investment power projects; Management, operation, repair, maintenance, overhaul, renovation, upgrading electrical equipment, and electrical experiments. In the field of distribution, EVN owns 5 power companies, namely: Electricity North Vietnam (EVN NPC), Southern Electricity Corporation (EVN SPC), Central Electricity Corporation (EVN CPC), Hanoi Power Corporation (EVN HANOI), the Electricity Corporation of Ho Chi Minh City (EVN HCMC). In the field of transmission, the National Power Transmission Corporation (NPT) was established on the basis of the merging and reorganizing of four transmission companies (Transmission Company 1, 2, 3, 4) and 3 project management boards of North, Central, South areas. In general, EVN structure is a vertical integration of Generation, Transmission and Distribution. Figure 23: The vertical-integrated structure of Vietnamese Energy Sector [17] Further information in regards to EVN can be found under 4. Institute of Energy (IE), Ministry of Industry and Trade IE is the main organization doing research and contributing to the national energy policy. The main functionalities of IE are the followings: 1. Study on national energy strategies, policies and development plans Formulation of energy development strategies and policies; Preparation and amendment of legal documents for energy activities; Preparation of National Energy Development Master Plan, and monitoring and assessment of Power Development Master Plan implementation process, as Advisor to Ministry of Industry and Trade on steering measures; Preparation of National Power Development Master Plan; Preparation of National Renewable Energy Development Master Plan; Preparation of Energy Conservation and Energy Efficiency Master Plan; 61

74 Preparation of human resource development plan for energy sector; Preparation of power development plans for territories, provinces, cities, industrial zones and residential areas throughout the country and countries in the region; Preparation of plan for grid-connection of power plants, power transmission lines, inter-connection with power systems of neighboring countries; Preparation of development plans for thermal power, hydropower and nuclear power; Preparation of renewable energy development plans; Preparation of national rural electrification master plan; Development of energy data bank for MOIT; as the focal point in providing international and regional organizations with energy data and techno-economic indicators; research on compiling procedures and norms to serve energy sector development. 2. Consulting on formulation of national strategies and policies Consulting on the formulation of national strategies and policies on energy and power development. Further information in regards to IE can be found under 5. Ministry of Planning and Investment (MPI) The Ministry of Planning and Investment is an agency of the Government that performs the functions of State management over planning and investment, including the provision of general advice on strategies, planning and plans for national socioeconomic development, mechanism and policies for general economic management and for some specific fields, domestic and foreign investment, industrial parks and export-processing zones, management of official development assistance source, bidding, enterprises, and business registration throughout the country; and it performs the State management over public services in the fields under its management as prescribed by law. Further information in regards to the MPI can be found under 6. Ministry of Information and Communication (MIC) The Ministry of Information and Communications of the Socialist Republic of Vietnam is the policy making and regulatory body in the fields of press and publishing; posts; telecommunications and Internet; transmission; radio frequency; information technology and electronics; broadcasting and national information infrastructure; and management of related public services on behalf of the government. Further information in regards to the MIC can be found under 3. Relevant Energy Policies and Regulation 1. Development of the Vietnamese Electricity Market - Decision Number 26/2006/QD This decision is the orientation for the development of electricity market toward competitive market, which was approved by the Prime Minister on the 26th of January 2006.[26] According to this decision, the Vietnamese electricity market will be formed and developed through three levels in each period: level 1 ( ): the competitive electricity market; level 2 ( ): market competitive wholesale electricity; level 3 (from 2022): the competitive electricity retail market, i.e. after 2022 electric customers may decide to participate in electricity trading in the competitive retail electricity market. The Figure 20 on page 54 has shown the development plan. 62

75 2. Construction of Infrastructure Systems - Resolution No. 13-NQ/TW During the 4th conference of the Central Party Committee on the construction of infrastructure systems, in order to industrialize Vietnam by 2020, the above resolution pointed out the limitations and weaknesses, and the outdated, inconsistent, and poor connectivity of Vietnamese infrastructure, which is currently the bottleneck of the development of the national economy. It also orients the national resource to invest in four key focused areas: Transport infrastructure, Energy infrastructure, Irrigation infrastructure, Large urban infrastructure Especially, the energy infrastructure should ensure adequate supply of electricity for production and daily life to meet the requirements of industrialization and modernization of the country, along with the capability to reduce power consumption and to increase energy efficiency and conservation. [28] As for energy infrastructure, the resolution indicated the need for: "Research on application of Smart Grid and modern technologies in order to improve the quality of electricity distribution networks. Connect Vietnamese electric system to the power network of Southeast-Asia region. Promote energy efficiency, in order to reduce the ratio of energy demand growth/gdp growth to 1.0 in 2020" 3. Resolution No. 16/NQ-CP 2012 on action plan to implement the Resolution 13-NQ/TW This resolution, implemented during the 4th conference of the Central Party Committee on infrastructure development, is the Government Action Program to implement the Resolution No. 13-NQ/TW in construction of synchronous infrastructure to make Vietnam become an industrial country by It clearly states the objectives and requirements of the program including major tasks for ministries. As for energy infrastructure, the Government assigned the Ministry of Industry and Trade (MOIT) in 2012 in collaboration with the Ministry of Planning and Investment (MPI), the Ministry of Information and Communications (MIC), Hanoi and Ho Chi Minh Cities, the responsibility of proposing investment projects to develop ICT applications for the management, exploitation and operation of Smart Grid systems in big cities, especially Hanoi and Ho Chi Minh City.[29] 4. Technology Development Strategy of EVN to 2015, with vision to 2025 This strategic document, released in December 2008 (with the consulting of the Institute of Energy) provides analysis and assessment of the current state of EVN technologies in power production, an overview of the development of the energy technologies in the world and in the Asian region. Based on these analyses, it proposed the technology development strategy for EVN in the period up to 2015 and orientations to 2025 including roadmap and implementation solutions. The strategy also clearly states the targets for the technology development roadmap (including generation, transmission, distribution, business technologies and customer service) of EVN to 2015 with orientation to The key points in the implementation of this strategy of high relevance to Smart Grid are the followings: 63

76 In transmission technology From , improvement of operational and maintenance quality of transmission system Implement the backup standard of n-1 for 110kV and 220kV and n-2 for Hanoi and highly priority areas Implement HVDC and FACTS Construction of the infrastructure for the competitive market in 2016, according to the approved master plan of the Government Focus on technology of hot maintenance for transmission system Mastering technology for selective production of electrical equipments From Improvement of transmission power along with increasing operational stability and reliability Mastering technology for selective production of electrical equipments Complete the new national grid control and operational by 2025, with full integration of SCADA/EMS, AMI and infrastructure needed for the competitive electricity market. In Distribution Technology From Start migrating the voltage of Medium voltage grid to 22kV nation-wide Upgrade and modernize the distribution grid to improve the reliability of distribution From Complete the migration of medium voltage grids to 22kV Upgrade and modernize the distribution grid In power business and customer services From Upgrade the metering technology by implementation of solutions of HHU (Hand-held Unit), AMR- PLC, Smart meter, wired RS-485 and RF Deploy and upgrade the ICT infrastructure, exploit the (CMIS Customer Management Information System) to eliminate the manual electricity fee collection by From Complete the upgrade of integrated customer service center Deploy the Smart metering by inheriting result of previous phase Complete the preparation of technology and services for competitive power market by 2025, in order to start the market in [31] 64

77 7. Smart Grid Activities in Vietnam 1. Smart Grid Policy / Activities by Governmental Institutions 1. Decision 1208/QD-TTg - Approving the National Electricity Development Master Plan This decision is also known as the Electricity Master Plan Number 7 and was implemented and approved by the prime minister on the 22nd July 2011.[30] This decision presents the views, goals, orientation, and power development plan of Vietnam for the period including generation, power transmission and distribution, power grid linking with other regional countries. It also gives solutions and indicates tasks of ministries, local and relevant units as well as a list of power projects and power transmission network to be constructed and renovated. In this decision the Prime Minister assigned MOIT to organize the development of a Roadmap of Smart Grid development in Vietnam proposal for approval. (This document was released in 2012 by ERAV) Concerning grid development, the decision stated: Research on implementation of "Smart Grid" technology, to enable the interaction between households using electricity with the power grid in order to reduce grid development costs and improve the stability of the power grid. Application of modern technologies to improve the quality of distribution grids, step-by-step put the power grid into underground infrastructure in large cities to limit its influence on landscape and environment. Utilizing modern technology in investment, operation and management to reduce power losses. These activities are oriented towards building Smart Grid, Smart Communities in order to reduce power losses, improve energy efficiency. 2. Circular No. 12/2010/TT-BCT - Structuring of the Electricity Distribution System The circular was implemented on the 15th April 2010 by the Ministry of Industry and Trade and regulates the following points: 1. The standards for the operation of electricity transmission system. 2. Investment in the transmission grid development. 3. Electricity load demand forecasting. 4. Conditions and procedures for connection to the transmission grid. 5. Regulation and operation of the electricity transmission system. 6. Measure power at delivery points between the transmission and distribution grid, power plants connected to the transmission grid that are not involved in competitive electricity markets, and customers who receive power directly from the transmission grid. The Circular (in Vietnamese language) also provides detailed technical requirements, such as: For information systems, customers of the transmission grid are responsible for installation of information systems within their management reach and connecting it with the information systems of both the transmission company and the market operator for the communication purposes of power system operation and electricity markets. Customers devices must be compatible with the existing information systems of both transmission company and market operator. For SCADA/EMS, substations supporting voltages of 220 kv or more must be equipped with two physically independent DCS (distributed control system) ports, which are directly connected to the SCADA/EMS systems of the electricity operator s system and the electricity market operator 65

78 110 kv substations must be equipped with two physically independent DCS ports or RTUs connected to the SCADA/EMS of the electricity operator s system and the electricity market operator Power plants with an installed capacity of 30 MW or more and power plants connected to the transmission grid must be equipped with two physically independent DCS ports, which are directly connected to the SCADA/EMS system of the electricity operator s system and the electricity market operator These requirements are the important guidelines for the automation of transmission and distribution grids. [23] 3. Proposal on Roadmap of Smart Grid Development in Vietnam This proposal (motivated by Decision 1208/QD-TTg) was developed by ERAV MoIT and approved by the prime minister in October This is the most important document related to Smart Grid development in Vietnam. The document is in Vietnamese language. The most important information is translated here. It thoroughly analyzes the need for Smart Grid development; gives some basic concepts about Smart Grid and Vietnamese perspective; a Smart Grid reference model; international experience in developing Smart Grid; assesses the current status of the national grid including information systems, automation and data communication system of Vietnamese power system, and the current state of Smart Grid applications in Vietnam. Based on these in-depth analyses, the proposal orients Vietnam's electricity sector for and proposes short-term, medium-term and long-term goals for the development of the Vietnamese Smart Grid, as well as the master plan for deploying Smart Grid in Vietnam. According to the roadmap, the targets of Smart Grid development in Vietnam are the following: General targets: The implementation of Smart Grid in Vietnam is aimed at promoting energy conservation as well as encouraging the development of clean energy technologies and supporting industries. The targets and the road map have been split into three phases and the following tables indicate the targets as well as the necessary steps in order to achieve these targets. 66

79 Targets Reduce power cuts due to lack of power resources To limit and manage blackouts Improve load balancing for power companies Improve the capability of load forecast and power supply planning Development of technical infrastructure in order to prepare for the operation of the future competitive wholesale electricity market Common Activities Policy making for various fields in Smart Grid Building financial mechanisms for Smart Grid Deployment Technical Standardization for deployment of Smart Grid Complete the pilot program on AMI at some large customers in HoChiMinhCity Supply Pilot at EVN CPC of Renewable source integration (for > 5MW RE sources) Necessary Steps Grid Deploy SCADA/DMS systems for provincial power companies Smart Grid Training for power companies Deploy Applications to optimize grid operation and minimize transmission & distribution losses Complete the SCADA/EMS project for National Load Dispatch Centre and Regional Load Dispatch Centers Implement the applications for optimal operation of power transmission and distribution grid, reducing power losses Inspect and review the implementation of the ICT infrastructure in power plants, substations of 110 kv or more Demand Pilot: AMI pilot for large consumer at HCM city Evaluation of TOU (Time of Usage) Smart meter pilot Evaluation of Demand Response and Load Research pilot program MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM Stage 1 ( ) Table 6: Road Map of Smart Grid Development in Vietnam: Stage 1 67

80 Targets Empowering customers by giving them the capability to manage their own energy usage Reduce power losses Reduce the investment for the construction of new power plants Anti-power theft Development of infrastructure to prepare for the operation of competitive electricity retail markets Promote the development of supporting industries for the clean energy industry Common Activities Policy making for Renewable Energy encouraging, Zero Energy House, Energy exchange and sale between prosumers and power companies Technical standardization of Electric transportation and electricity storage Supply Pilot for competitive wholesale power market Pilot for competitive retail market Pilot of integration of Distributed Generation and Renewable Source into the grid through medium voltage grid Necessary Steps Grid Completion of SCADA/DMS deployment for large power companies and corporations Expand Smart Grid Training for power companies and deployment of Smart Grid applications Extend the deployment of DSM programs for country side areas Equip ICT infrastructure for distribution grid Further improve the operational efficiency of power grids, focusing on the distribution grid Step-by-step development of electrical transportation systems Demand Pilot and evaluation of other Smart Grid technologies such as Electric Transportation, Electricity Storage Deploy AMI for prosumers who join retail power market MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM Stage 2 ( ) Table 7: Road Map of Smart Grid Development in Vietnam: Stage 2 68

81 Targets Labor cost savings Development of clean energy to reduce environmental impact Ensure energy security, reduce the demand of importing energy Common Activities Policy making for deployment of Smart Grid applications on current ICT infrastructure Deployment of Smart Grid applications Supply Integration of Distributed Generation and Renewable Source into the grid through low voltage grid Deploy Dynamic Pricing and Retail power market Necessary Steps * The Energy storage including several technologies such as hydro-based energy storage and electrical storage at substation to stabilize power quality. The power storage technology for EV (such as G2V, V2G) is under pilot investigation. Grid Completion of SCADA/DMS for all provincial power companies Complete the Improvement of ICT infrastructure for distribution grid Demand Deploy Electric Transportation and Electricity storage Deploy Demand Response program at consumer level Deploying advanced metering system (AMI) for the customers to participate the competitive electricity retail market Power users can buy or sell and choose to buy electricity from different suppliers MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM Stage 3 (After 2022) Table 8: Road Map of Smart Grid Development in Vietnam: Stage 3 69

82 Figure 24: Strategy of Energy development to 2025 [24] The tables and figures above show the general energy development plan for Vietnam until It can be seen that the strategy aim at radical changes in the whole national power sector from generation, transmission, distribution, customer services and market with the deployment and upgrade of new technologies in the national grid infrastructure. EVN and its member companies all over Vietnam are the main workforce to implement the roadmap under the regulation and orientation of ERAV-MOIT. 2. Current Smart Grid Activities/Projects in Vietnam 1. TOU meter program By the end of 2011, the Electricity of Vietnam (EVN) is managing 18,760,572 meters on the grid, in which the number of 1-phase meters is 18,117,369 units (including 17,785,825 mechanical meters and 331,544 electronic meter) and 3-phase meter is 643,203 units (including 506,533 mechanical meter and 136,670 electronic meter). All 3-phase electronic meters (136,670 units) implement three prices (dynamic prices). This mechanism has certain effectiveness on load shifting. Some local industrial load areas (Bac Ninh province, Lao Cai) have shifted high consumption hours into off-peak hours to reduce peak load. Technology Area Hardware System and Software Advanced Metering Infrastructure 3-phase electronic meter Meter data management system (MDMS) Table 9: Smart Grid opportunities under the TOU meter program 70

83 2. Research program load (Load Research) This program is performed by EVN in cooperation with ERAV to be deployed in Hanoi Power Corporation and Ho Chi Minh Power Corporation. The program was implemented in two years (2011 and 2012). In the program, 1100 Smart meters, transmission lines, a server and software were installed. EVN is the project administrator, which manages the database and perform measurements and conducts load research. Technology Area Hardware System and Software Advanced Metering Infrastructure Table 10: Smart Grid opportunities under the research program Smart meters, transmission lines, server Meter data management system (MDMS) 3. Project "10-Years Road Map for Smart Grid Distribution in Vietnam" This 10-years road map by the Brattle Group (United States) was ordered by the EVN Northern power Company (EVNNPC). The project focuses on Smart Grid applications in distribution grid and considers the implementation of a demand side management program at Power Companies. Proposed project contains the following components: Smart Metering Customer Programs Distribution Automation The project has a plan to implement these components during 10 years in 2 phases: Phase I: Investment decision, including requirement collection, pilot testing and economical evaluation. Investment decisions can be made after 2 to 3 years from the project starting. Phase II: Deployment, including policy development, technology implementation, monitoring and evaluation of results. The complete implementation can take 5 to 7 years. Technology Area Hardware System and Software Advanced Metering Infrastructure Smart meter, servers Meter data management system (MDMS) Distribution Grid management Automated re-closers, switches and capacitors, remote controlled distributed generation and storage, transformer sensors, wire and cable sensors Geographic information system (GIS), Distribution management system (DMS), Outage management system (OMS), workforce management system (WMS) Customer-side systems building automation systems, Energy dashboards, energy management systems, energy applications for smart phones and tablets Table 11: Smart Grid opportunities under the 10 years road map for Smart Grid distribution 71

84 4. Project SCADA/ EMS This investment project by the Moderation Systems Center National Implementation is to equip the new SCADA/EMS system for four new Operating Centers including: Center of the National Power System (A0) and three centers in the North (A1), Middle (A2), South (A3) supported by a loan from the World Bank. Currently the project is in the bidding process of equipment suppliers. Technology Area Hardware System and Software Distribution Grid management Table 12: Smart Grid opportunities under the SCADA/ EMS project Automated re-closers, switches and capacitors, remote controlled distributed generation and storage, transformer sensors, wire and cable sensors Geographic information system (GIS), distribution management system (DMS), outage management system (OMS), workforce management system (WMS) 5. Project Installation of Electronic Meters This project of the EVN Central power Cooperation (EVNCPC) is a DEP project of the World Bank to install approximately 10,000 electronic meters with a total investment of approximately 100 billion Vietnamese Dong. The project completion is expected to improve the quality of customer service, increase productivity, reduce power losses, increase the operating efficiency of power production, and improve the business of EVN CPC. Project implementation period is from 2012 to Technology Area Hardware System and Software Advanced Metering Infrastructure Smart Meter Meter data management system (MDMS) Table 13: Smart Grid opportunities under the EVNCPC installation project 6. Electric Vehicles in Tourism and Large Cities As Vietnam has a very high number of motorbikes and an increasing number of cars, which cause traffic jams and pollutions in large cities, there is a strong demand for electric vehicles (e.g. buses) in large cities. At the moment there are several pilot projects in tourism cities: Cua Lo (Nghe An province), Sam Son (Thanh Hoa), Hai Phong, Hanoi and HoChiMinhCity from both public and private sector companies, backed by local authorities. Technology Area Hardware System and Software EV Charging Infrastructure Table 14: Smart Grid opportunities for electric vehicles Charging infrastructure, batteries, inverters Energy billing 3. Future Pilot Programs and Projects In order to implement the Smart Grid development plan, ERAV-MoIT proposes five main programs and two pilot programs as follows: 72

85 1. Program 1: Improvement of Operational and Managerial Efficiency of the Power Grid For the transmission grid: Investment in remote system monitoring, data collection & processing (SCADA / EMS); A capacity building project for the Electric Regulatory Centers, National Power Transmission Corporation (NPT) Deploy applications to improve transmission grid efficiency. For electricity distribution networks: Step-by-step development of infrastructure monitoring and control systems (SCADA/DMS); Training and capacity building for the General Power Companies and Power Companies. Develop Performance standard indications for the distribution grid to monitor operational efficiency Upgrade the grid, narrow radius of power supply and perform the management measures to reduce energy loss; Research distribution grid structures capable of integrating distributed generation sources, including renewable energy focus. 2. Program 2: Installation of AMI Infrastructure Perform pilot projects to research and evaluate the effectiveness of modern ICT infrastructure (including smart meter, communication lines, data acquisition, storage and process) Step by step deployment for customers according to the approved financial mechanisms. 3. Program 3: Encouragement of Customers Participation in Energy Usage Management Develop and issue the legal framework allowing Smart Grid applications to give permissions to customers. Deploy the application for customer s participation, based on load management; billing applications, information provision for customers, power cut management, etc. 4. Program 4: Integration of Renewable Energy Research and promulgate policies to encourage use of renewable energy at both centralized and distributed levels. 5. Program 5: Green Transportation Establish the mechanism for the development of electric vehicles and car charging stations. In the short term ( ), some pilot programs should be deployed early in order to evaluate their effectiveness to serve as the basis for extension. 73

86 These two prioritized projects are: 1. Installation of AMI Infrastructure: Installation of smart meters for large customers in the General Power Corporation Ho Chi Minh City along with transmission lines and server systems for data collection and data processing. Implementation of selective applications on the AMI platform. Purpose: To test ICT infrastructure and Smart Grid applications. Organizers: ERAV and General Power Corporation of Ho Chi Minh City. 2. Integration of Renewable Energy: Installation of ICT infrastructure between small hydro power plants (connected to the medium voltage grid) connected to the SCADA/DMS of the Central Power Corporation (CPC); training and capacity building for operational staff; study the effects of the operation of small hydropower plants to the operation of CPC distribution grid. Purpose: To ensure the integration of small hydropower plants in the CPC grid according to the following criteria: (1) Steady-state and short-circuit control; (2) power quality; (3) voltage reactive power control; (4) dependent services; (5) stability and DG's ability to withstand perturbations; (6) protection; (7) isolation and isolation mode operation. Organizers: ERAV and Central Power Company (CPC). 4. Conditions for Smart Grid Market Development in Vietnam In the context of Vietnam, Smart Grid is a platform that includes: The grid infrastructure including distributed generation, transmission, distribution, and customer grid that contain smart elements (such as SCADA, automated substation control, etc.) to optimize and increase grid stability, power quality, and reduce loss. Distributed generation with renewable energy. Advanced metering infrastructure for large customers. A platform to encourage the culture of energy saving and conservation, and stimulate the integration and development of Renewable Energy. The benefits of Smart Grid in Vietnam are clear, and include the following: By improving the transmission and distribution efficiency, in the long term Smart Grid will reduce the pressure of constructing new power plans Integrating RE, which in Vietnam has very high potential, thus reduce the need to import energy from neighbour countries, thus improving energy security. Integrating ICT infrastructure, which is the platform to deploy future applications and improve power quality and stability. 74

87 The Demand of Smart Grid in Vietnam Smart Grid is a new concept, which has been officially used worldwide since Promoting Smart Grid applications will contribute to solving the challenge in the development of the national power sector in both present and future, as follows: The long-term Smart Grid will relax the pressure on the investment in the power sector by improving the grid operational efficiency (by reducing power losses and increasing power savings). Customers are given the right to make decision on their own energy consumption to increase energy efficiency and integration of renewable sources (mainly from customer investment). Due to reduced demand and increased number of power sources, thanks to Smart Grid, the demand for investment by enterprises in the electricity sector will be reduced correspondingly. Smart Grid aims to increase energy efficiency, while allowing integration of renewable distributed energy, which in Vietnam has great potential so it will reduce the demand for imported electricity or other forms of secondary energy, thus ensuring better energy security. The integration of Smart Grid infrastructure with Information Technology & Telecommunications is the platform for enhanced energy reliability, power management, and power quality improvement. By the incentive mechanism and provision of more information to customers, they will have the right to control their energy use, be involved in the process of energy production and consumption through investment in distributed power sources. As a result, customers and society in general will better appreciate the value of energy conservation and avoid waste of non-renewable energy sources. Therefore, the reasonable adjustment of power prices will get more support from society. Smart Grid is the critical infrastructure for the operation of the electricity market in Vietnam at all levels. It is a platform to deploy applications to collect, process and manage information to ensure timeliness and transparency in transactions and payment for electricity on the electricity market. In the competitive electricity retail market, the Smart Grid also provides customers with information and opportunities to participate actively in the process of production and sale of electricity. This development is consistent with the orientation of the electricity market approved by the Prime Minister in the decision number 26/2006/QD - dated 26/01/2006. With the integration of renewable energy sources such as small hydro, wind power, solar power, biomass power, and geothermal power, Smart Grid contributes to reduce the rate of energy generated from fossil fuel sources, thereby achieving the goal of environmental protection. Currently, the investors in Vietnamese Smart Grid includes the Government, the World Bank, the Asian Development Bank, and some others foreign banks that are investing in grid extension and upgrading, like German KFW. In the short and mid-term, the focused Smart Grid technologies are transmission automation and AMI for large customers. Other technologies will have much smaller shares. Due to the difficulty in financing Smart Grid projects, the country that offers financial support for such project will gain great opportunity for its technology providers in Vietnamese market. In addition, for a successful Smart Grid project, highly-qualified independent consulting companies are desired to closely work with local partners in designing and implementing the project. 75

88 No Targets Priority Note 1. Improve the operational efficiency High 2. Reduce blackout due to lack of power source High 3. Reduce investment High 4. Management of power cut High 5. Customers empower Medium 6. Reduce labor cost Medium 7. Reduce power loss Medium 8. Develop infrastructure for competitive Medium electricity market 9. Encourage clean energy industry Medium 10. Improve energy security Medium Becomes High if load demand is increase up to 10% in the coming years 11. Integration of distribution generation Low 12. Reduce environmental impact Low 13. Anti-power theft Low Becomes Medium if electricity price increased Table 15: The priority of the various targets of Smart Grid development in Vietnam [17] Table 15 is taken from the Master Plan of Vietnamese Smart Grid Development in which the targets are sorted by their priorities to Vietnamese demands. It can be seen that Target 1-4 are related to the Transmission and Distribution Domains. In addition to Table 15, the table given in Section 3.2 can be used to see the comparison between Vietnamese Smart Grid definitions and IEA Smart Grid definition. 5. Main Results from the Interviews with relevant institutions in Vietnam about Smart Grid development The full notes of the interviews are attached in the Appendix D. 1. Governmental Institutions According to ERAV and IE, in the context of Vietnam, Smart Grid should be described as technologies for grid automation and optimization for low loss. It includes distributed generation with renewable energy and advanced metering infrastructure. Among Smart Grid technologies, the focused technologies in Vietnam will be: 1) Automation of substations, SCADA/DMS system. 2) Smart metering for large customers. 3) Integration of renewable energy source into the national grid. The introduction of Smart Grid in Vietnam will bring many benefits, from which the most significant are: Economical: Reduce the pressure on the investment for constructing new power plants Encourage customers on saving energy 76

89 Political: Distributed generation and integration of RE will guarantee energy security and limit energy import. Environmental: Conserving fossil source and environment protection Technical: Since Smart Grid integrates advanced ICT infrastructure, it is the platform to deploy applications to enhance reliability, manage power cuts, and improve power quality. However, at present, the deployment of Smart Grid in Vietnam will face various barriers such as: Low public awareness. The Vietnamese grid infrastructure is not well designed and invested, thus it has combined equipment from many vendors, which are not fully compatible. Acquiring a very large investment for Smart Grid is very challenging task to the government, it could have broad effect on the whole society due to increase of electricity price. In order to encourage Smart Grid deployment in Vietnam, the following activities need to be done: 1) Deeply study and propose MoIT to issue the legal framework to support Smart Grid in VN. Invest in SCADA for central and regional operating and control centers to optimize the grid and minimize losses and blackout. Deploy Smart meters to create a platform for new smart applications on the grid. Integrate distributed generation and RE, and pilot green transportation. Developed countries (US, JP, China, Korea, EU) are the main players in the Vietnamese market. Governmental agencies, such as Japanese JICA, are pushing this market to promote their technology companies. For raising public awareness, Smart Grid demonstrations in the following areas could be helpful: A pilot in upgrading obsolete substations to Smart Grid technology, Energy efficiency, Smart Meters, Smart buildings, Electric vehicles (EVs) in large and tourism cities. 2. Utilities and Related Companies According to DPC (Danang Power Company) and PECC1 (Power Engineering Consulting Join Stock Company 1), at this period, Smart Grid deployment should be focused in Substation Automation and Smart meters for large customers, which will show intermediate benefits. The most serious barriers to Smart Grid in Vietnam are: Large investment and Lack of expertise and independent high quality consultant, who is not affected by foreign technological providers, so that the chosen technologies will be future-proof and not to be overly obsolete. No clear policies from EVN and MOIT. Concerning Germany s role in the Vietnamese Smart Grid market, case studies of German power companies who successfully upgrade their systems to Smart Grid compliance would allow Vietnamese utilities to learn from 77

90 German case studies. Highly qualified German consulting companies are also desired for co-operating/contracting in this field. A big concern of utilities when upgrading to Smart Grid is that the new technology will be quickly obsolete and therefore, careful selection of solutions must be done to avoid waste of investment. For the awareness of Smart Grid in Vietnam, especially for utilities, a demonstration of upgrading a substation of 110/22kV transformer to Smart Grid compliance (fully interoperability with some IEC Smart Grid related standards such as IEC 61850, IEC 61968, IEC 61970) would be helpful. 3. Technology Suppliers According to ATS Ltd. (Applied Technical Systems Ltd. Web: the term Smart Grid in developed countries is very different to Vietnam, which can be shortly defined as A platform to improve the efficiency and reduce loss in generation, transmission and distribution. Smart Grid also aims to create a culture of energy saving and conservation, and stimulate the integration and development of RE. It is worth mentioning that the former director of ERAV, Mr. Tran Ahn Thai, is also the vice director of ATS Ltd.. The most important benefit of Smart Grid to VN is the improvement of grid reliability, stabilities and the quality of power transmission and distribution. There are many barriers to the deployment of Smart Grid in VN, such as: Lack of Standardizations of Vietnamese grid There is no business model at the moment for Smart Grid in Vietnam Weak market incentive and Low awareness by the authority To promote Smart Grid in VN, the legal framework must be of the highest priority. The roadmap must be developed, then the design framework and pilots customized for Vietnam, which must be constructed mainly by Vietnamese, because Vietnamese grid is far different from other countries, especially developed countries. From ATS s point of view, a Smart Grid demonstration project requires a comprehensive study of the project s definition and design. It can be selected from one of four domains: generation, transmission, distribution and operation (among 7 domains of the IEA Smart Grid model, as shown in Figure 2). 6. Issues/barriers for Smart Grid Deployment in Vietnam 1. Technical Vietnamese grid infrastructure is highly heterogeneous from a large number of vendors from many countries (Germany, France, Sweden, USA, Russia, etc). Much of the equipment is obsolete, not fully compatible with each other and not standardized. Therefore, it will require heavy investment on improving and modernizing generation, transmission, distribution and even household systems. Lack of standardization in operation, generation, transmission, and distribution. Lack of Smart Grid expertise. The public relation activities on Smart Grid are still limited in closed conferences and workshops without working illustrative demonstrations to convince audiences. 78

91 2. Financial Funding a very large investment for Smart Grid over the next 20 years is a very challenging task for the government. Investing in Smart Grid will finally result in the increase of electricity price, which will have a broad effect on the whole society. The current electricity price schemes are too low to provide market incentives for Smart Grid. The business model for Smart Grid in Vietnam is yet to be defined, while Smart Grid is a very expensive technology and needs very strong market incentives. 3. Political Low public awareness, especially among electric authorities, power companies and customers on the benefits of Smart Grid. The legal framework for Smart Grid deployment and Smart Grid applications is still under development. 79

92 8. Basic Commercial Rollout Scenario Clear definitions as well as clear policies need to be implemented for Smart Grid technologies in order to take the fear of investing and/or supplying to the market away from foreign companies. They will need strong governmental policies, which clearly show the short-, mid- and long-term possibilities. Even though PEA has defined a roadmap, as described in Section 5.1.2, for several parts of the Smart Grid already, it will be essential to finalize EPPO s roadmap in order to implement an official policy. It is expected that EPPO s roadmap will be finalized in June In Vietnam the situation is similar to Thailand. In October 2012 the prime minister approved a proposal written by ERAV on a roadmap of Smart Grid development in Vietnam. However, there are several policies existing, which will affect Smart Grid as well. These related policies are further explained in Section 6.3. Both countries are however a good way towards implementing Smart Grid related policies in the near future, which will remove one barrier for foreign companies to invest. A very likely scenario is that bigger companies will take the lead on first pilot projects, even without having an official policy, in order to be present in the market. Concrete examples for possible opportunities and demonstration projects are given in Section 11. Small and Medium Enterprises (SME) are hampered to do this step without having the policies in place and without seeing actual demonstration projects. Hence, large companies may operate as a market opener for SME s. In Vietnam it can be estimated that the focus of Smart Grid technologies will be on automation in transmission and AMI for large customers in the short and midterm. Further information on the current Smart Grid market in Vietnam can be found in the respective Sections. Possible European Market Scenarios as Example Short-term investments need to be made within the next 5-10 years by transmission and distribution grid operators. This includes an increasing penetration of renewable energy, distributed energy resources and new loads, such as electric vehicles, are the greatest drivers for utilities to invest in smarter networks. However, common standards and development partnerships are necessary to achieve true interoperability. The big unknown is what role the new entrants could play in the future and whether energy companies have anything to fear from them. Providing energy smart technologies, which create additional value in the energy sector whilst driving towards environmental objectives, would create new opportunities for policy makers. Nevertheless, they will also create new challenges for the regulators, whose decisions must meet the requirements of both private and public interests. The policies and decisions made today will fundamentally shape tomorrow s energy system. Hence, it is important to remove regulatory barriers, since technology usually develops faster than regulations. The following graph explores how smart energy investments could transform the business system of energy in European markets. This general graph can however be adapted for Southeast-Asian countries as well, especially for countries like Thailand and Vietnam, which have already made major steps in their development. 80

93 Figure 25: Key scenario characteristics [32] The Leadership Forum on Energy Smart Technologies hosted by Bloomberg: New Energy Finance in 2011 found that there are basically four possible scenarios for energy development, which are further explained below. Scenario A: High Smart Grid Investment / Monolithic Industry This scenario will leave most of the intelligence, decision-making and power with the major utility companies. There will be little choice for consumers, aggregation or other businesses. Smart appliances and home control would still see good market penetration in order to help the utilities to manage costs and energy system optimization, but their full potential will not be used in this scenario. Main investments would be in distribution automation and grid upgrades, to improve operational efficiency and reliability. The control would stay with the utilities and there would be little or no room for distributed generation, such as PV for example. Currently this scenario is unlikely to happen, because the momentum of deregulation and liberalization would need to slow down and perhaps even reverse. In addition, support for smart network investments would be needed over the next ten years. Scenario B: High Smart Grid Investment / Many New Entrants In this scenario utilities would still make a significant investment in smart energy technologies, but the overall market becomes fragmented with many new entrants offering products and services, which may compete with the utilities. The way energy is consumed will change and consumers may become prosumers, which means that they would not only consume but also generate (produce) energy. 81

94 Significant action from policy makers and regulators is needed to create this scenario, so that network utilities are allowed to earn higher returns on investments made in smart energy networks. Also, the market structure needs to be liberalized to allow new entrants to participate, particularly in distributed generation and demand-side resources. Distributed generation such as rooftop solar would have hit grid-parity in the majority of areas. Scenario C: Low Smart Grid Investment / Many New Entrants In this scenario the energy supply and services market becomes fragmented, with a number of new entrants offering products and services to customers and weakening the hold of the major incumbent suppliers. Only few investments in smart grid technologies such as smart metering and distribution automation would be carried out by the distribution utilities, due to a lack of specific policy and regulatory action on these technologies. This could lead to more intense competition for the energy supply to consumers and possibly greater convergence between energy and other consumer offerings. However, it could also result in a range of new services in the home, such as smart appliances and energy management and aggregation, driven by the disruptive newcomers. Scenario D: Low Smart Grid Investment / Monolithic Industry In this scenario control of energy supply remains firmly in the hands of utilities who do not invest in smart infrastructure. There would be only limited degree of smartness. Frequency-response appliances are prevalent since they can operate within the parameters of classical infrastructure. The economic situation would not favour either the expansion of non-traditional players into energy or venture investment for new entrants. In the absence of outside competition, utilities would have little to gain from experimenting with smart technologies. However, this scenario is unlikely to happen, because if there is an opportunity to capture value using smart technologies and business models, then somebody eventually will, which would cause a transition to scenarios A or C. 82

95 9. Identified / Undeveloped Business Opportunities in Smart Grid in Thailand 1. Identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects The energy service providers and related authorities, like EPPO, EGAT, PEA, MEA, PTT, have been convinced of the necessity of Smart Grid application for the electricity grid system in Thailand. Most of them either have utilized or plan to install Smart Grid related hardware and applications on their facilities. The addition of the Smart Grid applications can be done as most of the utilities already have SCADA in their systems. SCADA enables communication between the service providers and their customers and it allows a transfer of gathered data between different authorities. Utilities will be able to improve their services by providing advice to their customers for more efficient and more cost effective use of energy. Furthermore, the distribution management system can process realtime information of the grid conditions and promptly detects fault locations with the advanced sensors and meters. The components described in the service providers plans can be summarized as followings. 1. Substation and distribution automation The automated distribution management system can detect and identify disturbances and their location with advanced sensors almost immediately, and improves repair time resulting in shorter outages. The system can maintain balance of voltage, frequency, and reactive power. It includes the following elements: Substation controller and transformer monitoring and diagnostics Energy Management System (EMS) for some time. The system analyzes power flow and contingency for the supply side Fault detection, isolation, restoration (FDIR) Integrated Volt/VAR management, including switched capacitors & voltage regulator DMS/OMS software and interface to existing applications, control center digitalization, and enterprise integration 2. Advanced metering infrastructure and communication The advanced metering infrastructure (AMI), which includes two-way communication with smart meters, enables a transfer of customers consumption information and remote control of customers appliances. The systems and software are as follows: Smart meter (Single phase and poly-phase), Two-way communication, Meter Data Management System and interfaces to other enterprise applications, Supervisory Control and Data Acquisition (SCADA) and Wide Area Monitoring System (WAMS) may be added to the points mentioned above, since they are indirectly related. SCADA usually describes systems for controlling transmission and distribution and WAMS is normally based on Phasor Measurement Units (PMU). 83

96 3. Utility Enterprise Applications Energy efficiency at end-users is also the key success to the smart applications. Demand Side Management with an integration of energy storage can reduce peak demand and enhance energy efficiency and was mentioned under utility enterprise application in a presentation of PEA. Smart household energy management will provide flexibility for the customers to sell their excess power or from their vehicles back to the grid. DSM application, Building energy automation systems, In-house displays, EV charging (G2V) and discharging (V2G) systems 4. Micro-grid systems Electricity end-users can be producers of electricity from renewable energy or other types of distributed generation. Micro-grid systems will facilitate the integration of the very small power producers together and the connection to the main grid with reliability and safety. Micro-grid systems will allow islanding when there is instability of the main grid or adequate generation from the micro-grid members. 5. Electric vehicle charging stations Many energy service providers are interested in EV charging stations, which will supplement or replace traditional gas stations in the future. Existing gas stations, department store parking lots, and office building parking lots seem to be the best targets for public EV charging installation. A few demonstration stations have been set up with batteries, inverters, and charging equipment. 2. Identified concrete investment plans by PEA There are plans for investment from utilities in the near future. PEA has announced its investment plan for Smart Grid development of 10 billion Baht (250 million Euro) during , 40 billion Baht (1,000 million Euro) during , and 65 billion Baht (1,625 million Euro) during MEA does not make known its investment plan, but clearly indicates that the acquisition of Smart Grid facilities and smart meters has been ongoing. Although there have not been any announcements on budgets, EGAT has issued its plan for communication improvement, while PTT has shown a strong interest in EV charging stations. The roadmap prepared by PEA, the facilities planned for installation by MEA, and the interviews given by EGAT, MEA, SPCG, and the research unit at KMITL has indicated the equipment and software which are included in the future investment plan. PEA declares the scope and budget of the phase 1 as in the following details, which was presented by Mr. Suwat Chiochanchai, Assistant Governor (Planning and System Development) at Renewable Energy Asia 2012 conference on 6 June 2012 ( 84

97 MARKET POTENTIAL FOR SMART GRID TECHNOLOGY IN THAILAND AND VIETNAM PEA Smart Grid Phase I Smart Grid Development Project, Phase I Project Area Scope of Work Budget Smart Substation System Installation 20 Chiangmai Province sets Nakornrachasima 4,860 million Baht Province Solar Energy Roof top 24 units (121.5 million Euro) Phuket Province Energy Storage 12 units Pattaya Charging Station 24 units Table 16: PEA Smart Grid Phase I Smart Grid Development AMI Development Project, Phase I Project Area Scope of Work Budget 26 municipalities in PEA service area Advanced Meter Infrastructure Installation (1,000,000 sets) 5,350 million Baht ( million Euro) Table 17: PEA Smart Grid Phase I AMI Development Micro-Grid Development Project (Mae Hongson Province) Project Area Install Energy Storage 1 set Budget Mae Saraeng District Mae Hongson Province Install Micro-Grid Controller 1 set 330 million Baht (8.25 million Euro) Table 18: PEA Smart Grid Phase I Micro Grid Development (Mae Hongson Province) Micro-Grid Development Project (Trad Province) Project Area Install Hydro Power Plant 1 set Budget Koh Kood Koh Maak Trad Province Install PV Plant 2 sets Install Energy Storage 2 sets 225 million Baht (5.62 million Euro) Table 19: PEA Smart Grid Phase I Micro Grid Development (Trad Province) 85

98 10. Identified / Undeveloped Business Opportunities in Smart Grid in Vietnam 1. Identified application areas and sub-technologies for Smart Grid systems for short to mid-term prospects Guided by MoIT and ERAV, EVN and its member companies are actively deploy Smart Grid technologies following Strategy of EVN and the Roadmap of Smart Grid development in Vietnam (which are mentioned on previous sections in this report). The focused application areas, as stated in the interview and the strategic documents are Substation Automation in Transmission and Distribution, Advanced Metering, Integration of Renewable Energy and Electric Transportation in near future (with the direct involvement of the Ministry of Transportation). The following list the application areas (according to IEA definition): 1. Wide area monitoring and control SCADA/EMS system are the prioritized targets for modernization of Vietnamese grid. This can be seen in the large number of pilots throughout Vietnam, which can be considered as the first step towards Smart Grid in Vietnam. 2. Information and communication technology integration As a preparation for the competitive market, Customer Information System (CIS) is also a focus in the Strategy of EVN, which is strongly related to the ICT infrastructure of the power sector. 3. Renewable and distributed generation integration As Vietnam has high potential of renewable including hydro, solar, wind and biomass, the development of new RE power plant in both centralized and distributed form and the integration of these sources into either medium or low voltage grid is very important for national energy security. Large pilot projects are being deployed in middle and southern Vietnam, backed by the US, the EU and Japan. 4. Transmission enhancement HVDC is planned in the EVN strategy as an alternative for current HVAC transmission lines. 5. Distribution grid management GIS substations, Distributed Management System (DMS) and Outage management system (OMS) are being deployed and/or piloted in distribution grid as a measure to improve the operational efficiency and power stability and quality. 6. Advanced metering infrastructure AMI projects have taken a large part of Smart Grid development activities in Vietnam. Due to the large investment required, it is first applied for large customers such as industrial sites and commercial buildings. 86

99 7. Electric vehicle charging infrastructure As Vietnamese traffic and environment are being heavily affected by millions of motorbikes and cars, electric transportation is planned in large cities and/or tourism cities, thus raising the demand for charging infrastructure. However, due to its special nature, the electric transportation is currently under direct control of the Ministry of Transportation. 2. General opportunities According to the decision number 26/2006/QD - dated 26 Jan, 2006 on the development of the electricity market, the Vietnamese electricity market will be formed and developed through three levels in each period: level 1 ( ): the competitive electricity market; level 2 ( ): market competitive wholesale electricity; level 3 (from 2022): the competitive electricity retail market, i.e. after 2022 electric customers may decide to participate in electricity trading in the competitive retail electricity market. In Decision No. 1208/QD-TTg dated 21/7/2011 of the Prime Minister approving the national electricity development plan for with vision to 2030 stated: The total investment to the power industry to 2020 is approximately 929,700 billion VND (equivalent to 48.8 billion USD),), average is 4.88 billion USD annually. In the period of , the estimated total investment is 1,429,300 billion VND (75 billion USD). In the whole period , the investment demand is 2,359,000 billion VND (123,8 billion USD) including: Generation: : 619,300 billion VND (66.6% of total investment) and is 935,300 billion (65,5% of total investment) Power Grid: : 210,400 billion VND (33.4% of total investment) and : 494,000 billion VND (34.5% total investment) 87

100 Figure 26: The Cost-benefit analysis on new electrical technologies [24] In the time frame to 2025, according to the EVN technological strategy, the cost-benefit relationship can be seen from the Figure 26. The business opportunities (BO) in Smart Grid market include: BO1: Technology, equipment and solutions provision in: 1) Grid Automation; 2) Smart metering; 3) Renewable energy; and 4) Electrical Transportation (in prioritized order). BO2: Investment or co-financing in pilot projects, technological demonstration. BO3: Consulting in design, implementation and operation of Smart Grid BO4: Consulting to EVN and its member companies on setting up "systematic tenders" for upcoming investments that allow more coherencies among sub-technologies in (smart) grid infrastructure, in order to obtain future-proof scalable SG solution and avoid future system incompatibleness. BO5: Consulting & knowledge exchange on the development and deployment of new energy technologies. Most of the current projects involve all business opportunities from BO1 to BO5. 88