DECISION

ON PROMULGATION OF THE PROCEDURE FOR VALUING WATER

HEAD OF ELECTRICITY REGULATORY AUTHORITY

Pursuant to the Government’s Decree No. 95/2012/ND-CP dated November 12, 2012 on the functions, missions, authority and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Circular No. 30/2014/TT-BCT dated October 02, 2014 by Minister of Industry and Trade on the operation of the competitive electricity generation market;

At the request of the Manager of Electricity Market,

HEREBY DECIDES:

Article 1. This Decision is enclosed with the Procedure for valuing water as the guideline for implementation of the Circular No. 30/2014/TT-BCT dated October 02, 2014 by Minister of Industry and Trade on the operation of the competitive electricity generation market.

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Article 3. Manager of the Office of the Authority, Managers, Director of the Center for Research and development of the electricity market and Training under the Electricity Regulatory Authority, General Director of the Electricity of Vietnam, Directors of electricity-related organizations and other relevant units are responsible for implementing this Decision./.

DIRECTOR



Nguyen Anh Tuan

PROCEDURE

FOR VALUING WATER
(Enclosed to the Decision No. 120/QD-DTDL dated December 05, 2014 by the Head of the Electricity Regulatory Authority)

Chapter I

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Article 1. Scope

This Procedure defines the principles, method, sequence of actions, and responsibilities of entities with regard to the calculation of the value of water in hydroelectric reservoirs on the competitive electricity generation market.

Article 2. Regulated entities

This procedure applies to:

1. The operator of the electricity system and market.

2. The single bulk buyer.

3. Generating stations.

4. Transmission system operators.

5. Vietnam Electricity.

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In this Procedure, the following argot is construed as follows:

1. The single bulk buyer refers to the single buyer of electric power in the electricity market, whose function is to purchase all electric power on the electricity market and through power purchase agreements.

2. Generating stations are the owners of one or several power plants that engage in the electricity market and the signatories to power purchase agreements between the power plants and the single bulk buyer.

3. Transmission system operators mean electricity-related organizations licensed to conduct operations of transmitting the electric power and to assume responsibility for managing and operating the national transmission grid.

4. The operator of the electricity system and market refers to the body that regulates transactions in the electricity market and that directs and controls the generation, transmission and distribution of electric power through the national electricity system.

5. Water value is the expected marginal price of water in the reservoirs, which is consumed to generate electric power as an alternative to thermoelectric sources in the future. Water value is converted into a unit of electrical energy.

6. Electricity market information system consists of equipment and database, under the management of the operator of the electricity system and market, for administering and exchanging the information on the electricity market.

7. Load block refers to a parameter in the water valuation model, which is determined by two values, i.e. time (hour) and load (MWh). In the water valuation model, a weekly load block includes at least 05 (five) load blocks.

8. Water valuation model is an optimal hydro-thermal software system to value water. This model is utilized by the Operator of the electricity system and market to produce operational plans for the following year, following month and following week.

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10. A cluster of cascade hydroelectric plants combine hydroelectric plants, i.e. the discharge of the reservoir of the higher cascade hydroelectric plant makes up all or most of the intake of the reservoir of the lower cascade hydroelectric plant. Moreover, the storage time of regulating reservoirs between those power plants does not exceed one week.

11. Year N is the current calendar year of electricity market operation.

12. The procedure for planning the operation of the electricity market means the procedure for planning the operation of the electricity market for the following year, month and week, which is defined by the Electricity Regulatory Authority via the Circular No. 30/2014/TT-BCT dated October 02, 2014 by the Minister of Industry and Trade on the operation of the competitive electricity generation market.

13. Year M is the current calendar month of electricity market operation.

14. Week T is the current week of electricity market operation.

15. Ratio of unplanned downtime means the probability of a generator set being unavailable due to unplanned incidents, i.e. the ratio (%) of the amount of hours of unplanned outage out of the total number of hours of availability to the amount of hours of unplanned outage.

Article 4. General rules for valuing water

1. The value of water is calculated on a weekly scale for hydroelectric reservoirs under the national electricity system, which are capable of regulating water for more than one week.

2. The value of water in hydroelectric reservoirs is determined on a weekly basis for the following year, month and week.

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a) The operator of the electricity system and market shall be responsible for collecting and readying requisite input data. It shall utilize the water valuation model to calculate the value of water in hydroelectric reservoirs under the national electricity system for the following year, month and week;

b) Generating stations shall be responsible for providing operational parameters and plant repair plans to the operator of the electricity system and market as per Chapter III of this Procedure;

c) The single bulk buyer shall be responsible for notifying the operator of the electricity system and market of the expected price of fuel and progress of new construction works as per Chapter III of this Procedure;

b) Transmission system operators shall be responsible for informing the operator of the electricity system and market of operational parameters, line repair plans and progress of new construction works as per Chapter III of this Procedure;

Chapter II

WATER VALUATION MODEL

Article 5. Water valuation model

1. Water valuation model is an optimal hydro-thermal calculation software system. The model values water for a minimum valuation cycle of 1 year and on the lowest scale of 05 (five) load blocks per week.

2. The optimal hydro-thermal algorithm in the water valuation model meets these requirements:

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b) The optimal hydro-thermal algorithm in the water valuation model must simulate constraints on the operation of the power plant and the electricity system.

Article 6. Input data for water valuation model

Input data for the water valuation model includes:

1. System load.

2. Parameters of the hydroelectric plant.

3. Hydrography.

4. Parameters of the thermoelectric plant.

5. Fuel.

6. 500/220kV lines connecting regional electricity systems.

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8. Progress of new construction works.

9. General data of the electricity market.

Article 7. Result of the water valuation model

The result of the water valuation model includes:

1. Electricity production by load block of hydroelectric plants and thermoelectric stations (GWh).

2. Optimal water level in hydroelectric reservoirs, designed to regulate water in more than 01 week, at weekends (m).

3. Weekly water value in hydroelectric plants (VND/kWh).

4. Weekly available power of generator sets (MW).

5. Weekly variable costs of thermoelectric generator sets (VND/kWh).

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INPUT DATA FOR WATER VALUATION

Article 8. System load

1. Hourly load estimates of the national electricity system and regional electricity systems (i.e. in the North, Central and South of Vietnam) for the first 52 weeks of the valuation cycle, which are collected and processed according to the Procedure for estimation of the demand load of electricity systems.

2. The operator of the electricity system and market shall be responsible for converting the hourly load estimate into weekly load blocks. The method for conversion of hourly load to weekly load block is defined in Annex 3 of this Procedure.

Article 9. Parameters of the hydroelectric plant

Parameters of hydroelectric plants shall be collected and processed according to Article 11 of the Procedure for planning the operation of the electricity market.

Article 10. Hydrography

Hydrographic data shall be collected and processed according to Article 9 of the Procedure for planning the operation of the electricity market.

Article 11. Parameters of the thermoelectric stations

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Article 12. Fuel

Fuel data shall be collected and processed according to Article 13 of the Procedure for planning the operation of the electricity market.

Article 13. Power lines connecting regional electricity systems

Data on power lines connecting regional electricity systems shall be collected and processed according to Article 14 of the Procedure for planning the operation of the electricity market.

Article 14. Repair schedule

1. Repair schedule shall be obtained and processed according to Article 10 of the Procedure for planning the operation of the electricity market.

2. In the water valuation model, the repair schedule is simulated as follows:

a) The repair schedule of power plants is shown as the equivalent weekly available power of the plants;

b) The repair schedule of power lines is shown as the transmission limit of the lines.

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a) Calculating the equivalent weekly available power of power plants on the basis of the repair schedule approved. The method for determination of the equivalent weekly available power of power plants is defined in Annex 4 of this Procedure;

b) Calculating the transmission limit of power lines on the basis of the repair schedule approved.

Article 15. Progress of new construction works

The progress data of new construction works shall be obtained and processed according to Article 15 of the Procedure for planning the operation of the electricity market.

Article 16. General data of the electricity market

The general data of the electricity market shall be obtained and processed according to Article 20 of the Procedure for planning the operation of the electricity market.

Chapter IV

PROCEDURE AND RESULT OF WATER VALUATION

Article 17. Procedure and result of water valuation for the following year

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a) The cycle of water valuation for the following year is 52 weeks, which commences on the first day of year N with reference to the next 3 years;

b) The input data for the next 3 years is equal to that of the first-52-week cycle;

c) The water level at the start of the valuation cycle is the expected water level that the operator of the electricity system and market calculate on the basis of the actual water level of each reservoir upon calculation and the amount of water required from the time of calculation to the start of the valuation cycle;

d) The result of water valuation for first 52 weeks of the valuation cycle is utilized for establishing the operational plan of the following year.

2. Pursuant to the electricity market operation schedule as stated in the Procedure for planning the operation of the electricity market, the operator of the electricity system and market shall be responsible for valuing water for the following year as follows:

a) Calculate and input the data required into the water valuation model;

b) Use the water valuation model to value water for the following year;

c) Export the result, examine and evaluate the defined water value for the following year.

3. The result of water valuation for planning the following year’s operation includes:

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b) The output of electricity by hydroelectric plants in first 52 weeks of the valuation cycle (GWh);

c) The available power of generator sets in first 52 weeks of the valuation cycle (MW);

d) The optimal water level of hydroelectric plants in first 52 weeks of the valuation cycle (m).

Article 18. Procedure and result of water valuation for the following month

1. General rules of water valuation for the following month

a) The cycle of water valuation for the following month is 52 weeks, which commences on the first day of month M with reference to the next 3 years;

b) The input data for the next 3 years is equal to that of the first-52-week cycle;

c) The water level at the start of the valuation cycle is the water level that the operator of the electricity system and market calculate on the basis of the actual water level of each reservoir upon calculation and the amount of water required from the time of calculation to the start of the valuation cycle;

d) The result of water valuation for first 05 weeks of the valuation cycle is utilized for establishing the operational plan of the following month.

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a) Calculate and input the data required into the water valuation model;

b) Use the water valuation model to value water for the following month;

c) Export the result, examine and evaluate the defined water value for the following month;

3. The result of water valuation for planning the following month’s operation includes:

a) The water value of hydroelectric plants for the first 05 weeks of the valuation cycle (VND/kWh);

b) The output of electricity by hydroelectric plants in first 05 weeks of the valuation cycle (GWh);

c) The available power of generator sets in first 05 weeks of the valuation cycle (MW);

d) The weekly optimal water level of hydroelectric plants during the valuation cycle (m).

Article 19. Procedure and result of water valuation for the following week

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a) The cycle of water valuation for the following week is 52 weeks, which commences on the first day of week T with reference to the next 03 years;

b) The input data for the next 03 years is equal to that of the first 52 weeks;

c) The water level at the start of the valuation cycle is the water level that the operator of the electricity system and market calculate on the basis of the actual water level of each reservoir upon calculation and the amount of water required from the time of calculation to the start of the valuation cycle;

d) The result of water valuation for the first week of the valuation cycle is utilized for determining the quotation limit and power generation chart of the hydroelectric plant in the following week.

2. Pursuant to the electricity market operation schedule as stated in the Procedure for planning the operation of the electricity market, the operator of the electricity system and market shall be responsible for valuating water for the following week as follows:

a) Calculate and input the data required into the water valuation model;

b) Use the water valuation model to value water for the following week;

c) Export the result, examine and evaluate the defined water value for the following week.

3. The result of water valuation for the following week includes:

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b) The output of electricity by the strategic multi-purpose hydroelectric plant in the first week of the valuation cycle (GWh);

c) The water value of clusters of cascade hydroelectric plants for the first week of the valuation cycle (VND/kWh);

d) The water value of other hydroelectric plants with reservoirs regulating water over 01 week for the first week of the valuation cycle (VND/kWh);

dd) The weekly optimal water level of hydroelectric plants during the valuation cycle (m)./.

The objective function of the optimal hydro-thermal algorithm in the water valuation model minimizes the total variable cost of thermoelectric stations and constraint violation penalty in a calculation system over the entire system.

The water valuation model handles the optimal hydro-thermal algorithm by splitting the total variable cost into the instant operating cost and future operating cost. The objective function of the optimal hydro-thermal algorithm thereof is the minimization of the instant operating cost and the future operating cost.

Where:

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Total variable cost during the entire valuation cycle;

 :

Instant cost function:

 :

Quantity of load blocks;

 :

Quantity of thermoelectric stations;

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Operating cost of the thermoelectric station  ($/MWh);

 :

Electric power generated by the plant  from load blocks  during the period  (MWh);

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Constraint violation penalty factor;

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Constraint violations during the period ;

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Future cost function:

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Future cost, from the period  to the end of the valuation cycle;

 :

Reservoir volume at the end of the period  (10⁶ m³ );

 :

Reservoir inflow during the period  (10⁶ m³ ).

APPENDIX 2

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APPENDIX 3

CONVERSION OF HOURLY LOAD TO WEEKLY LOAD BLOCKS
 (Enclosed to the Procedure for valuing water)

1. Principle

The following principle applies to the conversion of hourly load to weekly load blocks:

a) Weekly load consists of five load blocks. Each load block corresponds with the load-derived output in the defined period, as follows:

Block (k)

1

2

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4

5

5%

15%

30%

30%

20%

Where:

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Block 2, 3, 4, 5: Other load.

b) Conversion must equalize total load-derived output of the blocks with the total load-derived output of the week.

2. Process of conversion:

a) Arrange the forecasted load-derived output of the national electricity system for 168 (one hundred sixty eight) hours in the week in descending order:

Where:

: Load-derived output of the national electricity system in hour i of the week;

: Load-derived output of the national electricity system has been re-arranged in descending order, at position j.

                                                                                                                                 Hình 1:         Orderly arrangement

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Where:

: Load-derived output of load block k;

: Combined values of load power in load block k in relation to the period of time ;

: Period of time of load block k, as % of time in one week.

b) Repeat step a and b for the load of other weeks in the valuation cycle.

3. Example

a) Given that the forecasted load for 1 week (168 hours) is as follows:

Hour

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Hour

P

Hour

P

Hour

P

Hour

P

Hour

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Hour

P

1

3,124

25

3,050

49

3,105

73

...

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...

97

3,356

121

3,289

145

3,352

2

2,906

26

...

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...

50

2,889

74

3,107

98

3,163

122

3,163

146

...

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...

3

2,987

27

3,011

51

2,871

75

3,116

99

...

...

...

123

3,181

147

3,248

4

2,832

28

2,880

52

...

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...

76

3,081

100

3,122

124

3,179

148

3,215

5

...

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...

29

2,963

53

2,906

77

3,213

101

3,283

125

...

...

...

149

3,425

6

3,618

30

3,369

54

3,900

78

...

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...

102

3,926

126

4,144

150

4,199

7

4,355

31

...

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...

55

4,603

79

4,737

103

4,459

127

4,731

151

...

...

...

8

4,558

32

4,384

56

4,628

80

4,800

104

...

...

...

128

4,922

152

4,825

9

4,620

33

4,519

57

...

...

...

81

4,994

105

4,776

129

5,010

153

5,016

10

...

...

...

34

5,081

58

5,513

82

5,485

106

5,352

130

...

...

...

154

5,588

11

5,813

35

5,465

59

5,932

83

...

...

...

107

5,844

131

6,076

155

5,979

12

4,349

36

...

...

...

60

4,579

84

4,651

108

4,274

132

4,649

156

...

...

...

13

4,186

37

3,788

61

4,295

85

4,407

109

...

...

...

133

4,372

157

4,359

14

4,264

38

3,989

62

...

...

...

86

4,564

110

4,511

134

4,694

158

4,581

15

...

...

...

39

4,353

63

4,663

87

4,638

111

4,761

135

...

...

...

159

4,833

16

4,939

40

4,700

64

4,884

88

...

...

...

112

5,228

136

5,260

160

5,129

17

6,215

41

...

...

...

65

5,952

89

6,352

113

6,512

137

6,584

161

...

...

...

18

7,104

42

6,818

66

7,416

90

7,365

114

...

...

...

138

7,485

162

7,474

19

6,257

43

6,066

67

...

...

...

91

6,476

115

6,498

139

6,580

163

6,593

20

...

...

...

44

5,487

68

5,860

92

6,030

116

5,801

140

...

...

...

164

5,967

21

4,908

45

4,667

69

5,212

93

...

...

...

117

5,206

141

5,208

165

5,360

22

4,029

46

...

...

...

70

4,392

94

4,234

118

4,568

142

4,399

166

...

...

...

23

3,818

47

3,616

71

3,978

95

3,775

119

...

...

...

143

3,985

167

4,172

24

3,235

48

3,090

72

...

...

...

96

3,377

120

3,347

144

3,551

168

3,575

b) Hourly load is re-arrange in descending order:

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P

No.

P

No.

P

No.

P

No.

P

...

...

...

P

No.

P

1

7,485

25

5,967

49

5,129

...

...

...

4,667

97

4,359

121

3,818

145

3,179

2

7,474

...

...

...

5,952

50

5,081

74

4,663

98

4,355

122

3,788

...

...

...

3,163

3

7,416

27

5,932

51

5,016

75

4,651

...

...

...

4,353

123

3,775

147

3,163

4

7,380

28

5,860

...

...

...

5,010

76

4,649

100

4,349

124

3,618

148

3,157

...

...

...

7,365

29

5,854

53

5,008

77

4,638

101

4,295

...

...

...

3,616

149

3,124

6

7,104

30

5,844

54

4,994

...

...

...

4,628

102

4,274

126

3,575

150

3,122

7

6,818

...

...

...

5,813

55

4,939

79

4,620

103

4,264

127

3,551

...

...

...

3,116

8

6,620

32

5,801

56

4,922

80

4,603

...

...

...

4,234

128

3,425

152

3,107

9

6,593

33

5,634

...

...

...

4,908

81

4,581

105

4,199

129

3,377

153

3,105

...

...

...

6,584

34

5,588

58

4,884

82

4,579

106

4,186

...

...

...

3,369

154

3,090

11

6,580

35

5,513

59

4,880

...

...

...

4,568

107

4,178

131

3,356

155

3,081

12

6,512

...

...

...

5,487

60

4,868

84

4,564

108

4,172

132

3,352

...

...

...

3,050

13

6,498

37

5,485

61

4,833

85

4,558

...

...

...

4,151

133

3,347

157

3,011

14

6,476

38

5,465

...

...

...

4,833

86

4,541

110

4,151

134

3,332

158

3,007

...

...

...

6,373

39

5,360

63

4,825

87

4,519

111

4,144

...

...

...

3,306

159

3,002

16

6,352

40

5,352

64

4,800

...

...

...

4,511

112

4,029

136

3,289

160

2,987

17

6,257

...

...

...

5,348

65

4,788

89

4,484

113

3,999

137

3,283

...

...

...

2,963

18

6,215

42

5,260

66

4,776

90

4,459

...

...

...

3,997

138

3,248

162

2,906

19

6,132

43

5,228

...

...

...

4,761

91

4,407

115

3,989

139

3,235

163

2,906

...

...

...

6,113

44

5,212

68

4,737

92

4,399

116

3,985

...

...

...

3,215

164

2,889

21

6,076

45

5,208

69

4,735

...

...

...

4,392

117

3,978

141

3,213

165

2,880

22

6,066

...

...

...

5,206

70

4,731

94

4,384

118

3,926

142

3,202

...

...

...

2,871

23

6,030

47

5,159

71

4,700

95

4,380

...

...

...

3,900

143

3,187

167

2,832

24

5,979

48

5,135

...

...

...

4,694

96

4,372

120

3,894

144

3,181

168

2,796

...

...

...

Block (k)

1

2

3

4

5

5%

15%

...

...

...

30%

20%

 - hour

8.4

25.2

50.4

50.4

33.6

* Remark:

...

...

...

The number of hours of other load blocks is construed similarly.

d) Calculate the output of each load block in corresponding hours to determine the load value of each load block:

Block (k)

1

2

3

4

5

 - MWh

...

...

...

154,209

248,916

203,388

103,544

APPENDIX 4

METHOD FOR CALCULATION OF THE EQUIVALENT AVAILABLE POWER OF A POWER PLANT
 (Enclosed to the Procedure for valuing water)

1.   Principle

The calculation of the equivalent available power of a power plant is subject to the principle that the power plant’s equivalent available power in one week varies with the number of available hours of the power plant (without repairs) in the week.

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a)   Update the repair schedule of each generator set of the generating station;

b)   Calculate the number of available hours of the generator set in one week;

c)   Calculate the equivalent available power of the generator set in the week:

Where:

: Equivalent available power of generator set i;

: Available power of generator set i in hour j, with reference to the repair schedule of the generator set;

: Generator factor;

: Hour factor.

...

...

...

Where:

:Equivalent available power of the power plant;

: Equivalent available power of generator set ;

: Quantity of generator sets in the power plant;

: Generator factor.

APPENDIX 5

WATER VALUATION SEQUENCE CHART
 (Enclosed to the Procedure for valuing water)

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Quyết định 120/QĐ-ĐTĐL năm 2014 Quy trình tính toán giá trị nước do Cục trưởng Cục Điều tiết điện lực ban hành