Decision No. 175/QD-BCT dated January 28, 2019 approval of roadmaps and plans for execution of Demand Response Programs

DECISION

APPROVAL OF ROADMAPS AND PLANS FOR EXECUTION OF DEMAND RESPONSE PROGRAMS

THE MINISTER OF INDUSTRY AND TRADE

Pursuant to the Government’s Decree No. 98/2017/ND-CP dated August 18, 2017 defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Law on Electricity dated December 03, 2004 and the Law on Amendments to some Articles of the Law on Electricity dated November 20, 2012;

Pursuant to the Government’s Decree No. 137/2013/ND-CP dated October 21, 2013 elaborating some Articles of the Law on Electricity and the Law on Amendments to some Articles of the Law on Electricity;

Pursuant to the Prime Minister’s Decision dated March 08, 2018 on approval of the National Program for Demand Side Management for the 2018 - 2020 period with vision towards 2030;

At the request of the Director General of the Electricity Regulatory Authority,

HEREBY DECIDES:

Article 1.The roadmaps and plans for execution of Demand Response Programs (hereinafter referred to as the “DRPs”) are approved. To be specific:

1. Objectives of a DRP

a) Overall objectives:

- A DRP is developed, designed and executed in line with the objectives and contents of the National Program for Demand Side Management for the 2018 – 2020 period with vision towards 2030 approved by the Prime Minister in the Decision No. 279/QD-TTg dated March 08, 2019 (hereinafter referred to as “the National DSM Program”); strengthen the execution of the DRP so that it becomes a key and strategic program, which will significantly contributes to accomplishing the specific objectives of the National DSM Program;

- Development and execution of the DRP are considered as tasks in business plans of power corporations and power companies so as to optimize their business, thereby contributing to ensuring the power supply, raising the quality of electric energy and electricity service reliability and improving the quality of customer service, contributing to the environmental protection and socio-economic development, and promoting the overall economic efficiency of the electric power system in association with the sustainable development of the electricity and energy sector;

- The peak load capacity of the national electric system and the electric systems of geographical areas or regions is expected to be reduced in order to lower the needs for investment capital for construction and expansion of the electric system, contribute to a reduction in the power price hike pressure and the reasonable exploitation of energy resources and the sustainable development;

- The DRP is executed in line with applicable regulatory policies, conditions of power infrastructure, developmental trends of the energy sector and the national electricity development planning, ensuring the optimization of all social resources, efficiency and benefits for consumers and electric utilities.

b) Specific objectives

- Formulate and call for the competent authority's consideration, approval and promulgation of a uniform, adequate and various number of appropriate regulatory policies, financial policies and incentives in order to provide a legal framework for the execution of the DRP included in the National DSM Program.

- Execute the DRP in sync with and in line with other contents of the National DSM Program, ensuring that after 2020, the DRP will involve a lot of voluntary consumers nationwide in the execution of that program and become one of the programs or solutions for providing ancillary services for operation of the electric power system, thereby lowering the needs for ancillary services provided by electrical sources in the national power system;

- Strive to reduce at least 30% the peak load capacity of the national power system in comparison with the objective of  National DSM Program, equivalent to at least 90 MW by 2020, 300 MW by 2025 and 600 MW by 2030 through the execution of the DRP;

- Improve the load factor of the national electric system (Kpt), electric systems of geographical areas or regions and each power company; gradually develop and execute the DRP at each distribution substation, thus contributing to improving its load factor;

- Contribute to lessening transmission loss on 500kV or 220kV northern-central and central-southern lines;

- Raise awareness among the consumers and the entire society of the demand side management and the effective use; gradually transform from traditional consumers to smart consumers;

- Combine the execution of the DRP with provision of incentives in order for the consumers to invest in distributed renewable energy resources, especially rooftop solar system and energy storage system to ensure the most effective execution of the DRP.

2. Execution roadmap and plan

A DRP is developed and executed according to the roadmap: Piloting - Gradual expansion (small scale - large scale) - Nationwide expansion. To be specific:

a) 2019 - 2010 period

- Develop regulations and regulatory policies. To be specific:

+ Research, develop and call for the competent authority's consideration, approval and promulgation of regulatory policies, financial policies and incentives in order to execute the DRP included in the National DSM Program, ensuring the conformity with the financial solutions approved by the Prime Minister in the National DSM Program; give priority to the development and adoption of policies on electricity prices such as two-tiered electricity pricing policy and incentive electricity pricing policy to execute the DRP;

+ Develop and promulgate regulations on processes of executing, managing, supervising and assessing the execution of DRPs, including responsibilities of relevant entities and approaches to organizing, managing and supervising the implementation of DRPs;

+ Research and develop policies and regulations to pilot DRPs at service providers and DR aggregators.

- Review and establish the organizational structure of the division in charge of execution of a DRP included in the National DSM Program in order to ensure that it conforms to requirements concerning the organizational machinery, business performance and actual conditions at electric utilities; speed up the establishment and enhancement of competency of officials and specialized divisions in charge of execution of the DRP.

- Design communication and awareness-raising programs. To be specific:

+ Organize the formulation and integration of communication and propaganda programs and strategies, and strategies and programs for raising public awareness of contents and benefits of DRPs included in the National DSM Program to gradually execute it in the next years from 2019;

+ Uniformly use appropriate information and communication means to disseminate and raise the population's awareness of DRPs, especially for the 2019 - 2020 period, give focus on relevant regulatory authorities, electricity distributors, large and key consumers, foreign consumers and consumers that have installed rooftop solar system or energy storage system.

+ Design documents about contents and benefits of DRPs in line with each training level in order for training institutions to use as references in their educational programs; especially give focus on tertiary, undergraduate and postgraduate education institutions that offer major in electric power or energy;

+ Integrate smart grid programs and programs for raising the awareness of the public and consumers in the process of establishing and performing tasks in DRPs.

- Execute DRPs. To be specific:

+ Organize the assessment of the potentials for executing DRPs, including clearly determining potential customers and demand response (maximum number of potential customers participating in a demand response event or load capacity adjustment event), thereby determining preconditions and objectives, and formulating annual plans for execution of DRPs execution in line with the National DSM program;

+ Give priority to the execution of DRPs according to the non-trade incentives and programs voluntarily joined by the consumers in line with regulations on tasks and processes of executing DRPs promulgated by the Ministry of Industry and Trade: design tasks and plans for official execution of DRPs at power corporations and power companies across the nation, especially those in the Southern region;

+ Regarding the DRPs executed according to the directly financial support policies and electricity price mechanisms: formulate plans (which specify contents, locations, consumers, participants and objectives) execute pilot or official DRPs in line with applicable regulatory policies at one or more power corporations or power companies, especially those in the Southern region;

+ Give priority to execution of DRPs in geographical areas or regions where a power supply-demand imbalance occurs, especially those in Southern region; key participants in DRPs are large and key consumers and consumers that have installed rooftop solar system or energy storage system;

+ Develop, designing, carrying pilot execution and gradually carrying official execution of Direct Load Control (DLC) programs in line with applicable regulatory policies and conditions of infrastructures of the electricity sector and consumers;

+ Pilot service providers and DR aggregators;

+ Research, assess and gradually adopt new and modern technologies and smart grid solution to facilitate the execution of DRPs such as Advance Metering Infrastructure System, Response Automation System, Rooftop Solar System, Energy Storage System, Building Energy Management System, high-efficiency and energy saving cooling system.

b) 2021 - 2030 period

- Comprehensively and uniformly complete the legal framework for widespread execution of DRPs. To be specific:

+ Develop regulatory policies, financial policies and incentives for DRPs executed according to direct incentives and electricity price mechanism for official execution of DRPs nationwide in line with the National DSM Program, including promulgating a legal framework for expanding the group of household consumers participating the DRPs;

+ Complete, develop and promulgate regulations in order for service providers and DR aggregators to be established and operate.

+ Review and promulgate specific regulations on supervision of implementation of regulatory policies, financial policies and incentives for DRP execution.

- Research, develop and pilot some regulatory policies and new forms of DRPs, including:

+ A demand response auction mechanism, which is aimed at creating a market and attracting customers and intermediary organizations to join DRPs;

+ A mechanism allowing customers to bid load reductions at specific prices during peak periods or high electricity price periods;

+ A mechanism for taking actions against customers who fail to execute the DRP according to the commitments/agreements signed with an electric utility.

- Design communications and awareness-raising programs. To be specific:

+ Continue to uniformly using information and communication means to disseminate and raise awareness of the public, electric utilities and consumers of contents and benefits of DRPs; widely disseminate DRPs to all consumers, including household consumers;

+ Strengthen the execution of communication campaigns and programs effectively executed in the 2019 - 2020 period; adjust and design communication programs appropriate to each area and consumer with a view to attracting multiple consumers to participate in DRPs;

+ Complete and update training documents about contents and benefits of DRPs in order for educational institutions to use as references and in order to ensure that these documents are suitable for different training levels.

- Execute DRPs. To be specific:

+ Design plans and determine annual objectives of DRPs such as demand response capacity (MW), contributing to improving the load factor of each power corporation and power company of province and 110kV distribution substation;

+ Determine geographical areas or regions where a power supply-demand imbalance occurs in order to strengthening the execution of DRPs;

+ Speed up and expand the execution of DRPs through non-trade incentives, programs voluntarily joined by the consumers and DLC programs according to result of execution of DRPs in the 2019 - 2020 period;

+ Gradually officially execute and expand the group of users participating in DRPs according to directly financial support policies and electricity price mechanisms in line with the approved regulatory policies, financial mechanisms and incentives;

+ Carry out official execution of DRPs and expand the group of service providers and DR aggregators;

+ Execute DRPs such as Virtual Power Plant model, thus contributing to providing ancillary services for operation of the electric power system and electricity market;

+ Strengthen the adoption of new and modern technologies and smart grid solution to optimize the execution of DRPs such as Advance Metering Infrastructure System, Response Automation System, Rooftop Solar System, Energy Storage System, Building Energy Management System, high-efficiency and energy saving cooling system;

+ Carry out pilot and official of DRPs in line with applicable policies and mechanisms such as demand response auction mechanism and mechanism allowing customers to bid load reductions at specific prices during peak periods or high electricity price periods.

Article 2.Implementary organization

1. The Electricity Regulatory Authority shall be assigned to:

a) take charge and cooperate with the Vietnam Electricity and affiliates of the Ministry of Finance in researching, developing and calling for the competent authority's approval and promulgation of regulatory policies, financial policies and incentives in order to execute DRPs, ensuring the conformity with the financial solutions approved in the National DSM Program;

b) research, develop and call for the competent authority's approval and promulgation of other necessary legislative documents to provide an adequate and uniform legal framework for execution of DRPs;

c) organize the formulation of a DRP execution plan to be added to the annual work plan of the Vietnam Smart Grid Development Steering Committee, which will submit it to the head of the Steering Committee for approval;

d) take charge and cooperate with the Vietnam Electricity and relevant units in working with Ministry of Education and Training and training institutions to design documents and provide training in contents and benefits of DRPs;

dd) organize the appraisal and approval of objectives and plans for execution of National DSM Program and DRPs annually and over periods in association with the annual work plan of the Vietnam Smart Grid Development Steering Committee;

e) take charge of carrying out supervision, expedition, inspection and assessment of results of execution of DRPs included in the National DSM Program and DRPs annually and over periods according to the approved roadmaps and plans;

g) take initiative in promoting international cooperation, making the best of grants or aids from domestic and international organizations for execution of technical assistance projects and pilot programs in order to develop and fully complete the legal framework for DRPs;

h) In the course of execution of DRPs, review and assess the outcomes in order to recommend the Prime Minister to consider approving supplementary or modified objectives or tasks in the DRPs.

2. The Vietnam Electricity shall be assigned to:

a) play a pivotal role in executing DRPs in order to accomplish the objectives and tasks approved in this Decision in line with applicable regulatory policies and mechanisms.

b) closely cooperate with the Electricity Regulatory Authority, affiliates of the Ministry of Finance and relevant units in developing and completing the legal framework, regulatory policies and mechanisms in order to execute DRPs and National DSM Program;

c) fully and uniformly perform and disseminate DRP tasks approved in this Decision to its affiliates; take initiative in formulating a master and specific plan to execute pilot programs and projects and gradually expand (from small to large scale) and widely expand them) in line with specific stages and tasks of DRPs; where necessary, establish a project on its execution of DRPs in the 2019 - 2020 period with vision towards 2030, and notify the Ministry of Industry and Trade via the Electricity Regulatory Authority thereof;

d) organize the formulation and execution of overall strategies, communication and propaganda programs, and programs for raising public awareness of contents and benefits of DRPs and National DSM Program to gradually execute them in the next years from 2019;

dd) direct and assign power corporations and power companies of provinces to perform the following tasks:

- Focus on and strengthen load researches, improve the capacity for forecasting the load demand and comprehensively exploit the results of these load researches to assess the potentials for executing DRPs and National DSM program;

- Development and execution of the DRP are considered as tasks in annual business plans of each unit and Vietnam Electricity so as to optimize their business;

- Establish and fully consolidate database of 2017 including load factor, peak capacity of the electric power system under its management, load profile (electric power system, substation, consumers, etc.), number and groups of consumers applying Time-of-Use electricity price, results of load researches, etc. to form a basis for determining objectives, inspect and assess the execution of DRPs and National DSM Program over years and next periods;

- In 2019, research and assess potentials for executing DRPs appropriate to each area and group of consumers.

- Execute DRPs in line with the roadmaps and plans approved in this Decision and regulations on contents and processes of executing DRPs promulgated by the Ministry of Industry and Trade;

- Review and establish divisions in charge of execution of DRPs included in the National DSM Program in order to ensure that they conform to requirements concerning the organizational machinery, business performance and actual conditions at electric utilities; speed up the establishment and enhancement of competency of officials and specialized divisions in charge of execution of DRPs.

- Develop and promulgate internal processes to instruct electricity employees and consumers to participate in DRPs;

- Focus on training electricity employees and officials in charge of tasks related to execution of DRPs, especially officials directly working with consumers;

- Invest in and upgrade electric power system, information technology system, infrastructure system, Automatic Meter Reading System, DRP execution management and execution system and gradually install Advance Metering Infrastructure System to effectively execute DRPs;

- Invest in and uniformly install automation and distribution grid control systems (OMS, SAS, DAS, GIS, etc.) in line with orientation towards smart grid development in Vietnam to assist in effective and optimal execution of DRPs;

e) Develop execution plans and objectives over years and periods in conformity with approved DRPs and National DSM Program and DRPs, submit them to the Ministry of Industry and Trade for consideration and approval to be included in the annual work plan of the Vietnam Smart Grid Development Steering Committee.

g) Take initiative in promoting international cooperation, making the best of grants or aids from domestic and international organizations for execution of pilot projects and programs in conformity with DRPs approved in this Decision;

h) submit quarterly reports on execution of DRPs by Vietnam Electricity and each power corporations to the Ministry of Industry and Trade via the Electricity Regulatory Authority.

3. Other relevant authorities and units affiliated to the Ministry of Industry and Trade shall, within their jurisdiction, take initiative in cooperating with the Electricity Regulatory Authority in the course of implementing roadmaps and plans for execution of approved DRPs. To be specific:

a) The Electricity and Renewable Energy Authority shall:

- research and propose specific strategies and solutions for the distribution and structuring of electrical sources in line with electrical load development and distribution as specified in the national power development planning so as to contribute to accomplishing the objectives of sustainable development of the electricity and energy industry;

- cooperate with the Electricity Regulatory Authority in researching and proposing regulatory policies and mechanism for executing DRPs and integrating them into the national power development planning in order to reduce the pressure for new electrical source and grid development and renewable energy development.

b) The Department of Energy Efficiency and Sustainable Development shall cooperate with the Electricity Regulatory Authority in researching and proposing solutions and mechanisms in association with execution of DRPs and Energy Efficiency Program to make the best of resources to achieve the highest efficiency.

c) The Department of Science and Technology shall take charge and cooperate with the Electricity Regulatory Authority and Vietnam Electricity and relevant authorities and units in performing scientific and technological tasks related to the National DSM Program and combine them with tasks specified in scientific and technological programs and projects at national level and of the Ministry of Industry and Trade.

d) The Department of Finance and Enterprises Renovation shall provide additional funding derived from the budget for operating the Vietnam Smart Grid Development Steering Committee after adding the approved functions and tasks of managing and executing the National DSM Program.

dd) The Industry and Trade Magazine, Industry and Trade Newspaper, research institutes and training institutions affiliated to the Ministry of Industry and Trade shall cooperate with the Electricity Regulatory Authority in designing and executing training programs, communication programs and programs for raising public awareness of contents and benefits of DRPs and National DSM Program.

Article 3.Effect

1. This Decision comes into force from the date on which it is signed.

2. Chief of Ministry Office, Chief Inspector of Ministry, Directors, Directors General, head of Vietnam Smart Grid Development Steering Committee, Director General of Vietnam Electricity and relevant units are responsible for the implementation of this Decision./.