July 03, 2019

11 Cua Bac Street – Ba Dinh – Hanoi

Attn: Mr. Tung, Director EVN CTI

RE: Vietnam Wholesale Electricity Market (VWEM)

Dear Mr. Tung, Director EVN CTI

We appreciate that EVN has now launched for the invitation to bid for RFP Package No.10
(Designing, Supplying and Implementing (i) MMS system; (ii) SCADA/EMS Integration; (iii)
Centralized Database System). We have now reviewed the documents in the package, and we
are writing this letter to advise on our position and recommendations as regards to the RFP
based on the requirements. These also follow our previous discussions including the letter
"Letter to EVN CTI 2019" dated 4th February 2019, which is you will also find attached here
for easy reference.

First of all, we understand that there has been some progress in defining the market rules as
stipulated in doc: “Annex 1 - VWEM Market Rules V2 25 clean for NLDC”. However, these market
rules are not validated / approved and remain at advisory stage. As highlighted during a num-
ber of discussions and meetings we have had, it is critical that the market rules are firm for
the successful implementation of such a project and need to be confirmed for us to be able to
consider responding to such an RFP.

We have also started reviewing other technical requirements and want to highlight some of
the other concerns we have identified. In Chapter VII - “TECHNICAL REQUIREMENTS AND
SPECIFICATIONS”: at a high-level, the scope is comprehensive, however a number of require-
ments do not have any level of details to allow us to tender and assess the expectations. Some
of the examples we can highlight at this stage are for items A.1.1.6, A.1.1.8, A.1.1.9, A.1.1.10,
A.1.1.12, which are related to alternative solutions, fuel constraints, hydro modelling and CCGT
modelling. None of these items contain any sufficient level of details for us to be able to pre-
pare a proposal. There are other technical / scope points that will need to be highlighted.

We also understand that initially the market will be a cost-based gross pool with a plan to
transition to a price-based pool model over time, which is only briefly mentioned in the docu-
ments.

Another concern is the implementation schedule of 18 months and some of the milestones
that have been defined. In particular only 2 months have been allocated to the System Devel-
opment Process and Training on sub-systems of the MMS. Based on all our previous imple-
mentations globally, core MMS modules (Registration, Scheduling and Dispatch, Settle-
ments, Market/Operator Participant Interface and related modules) require at a minimum an
average of 12 up to 18 months of work in the factory. In addition to this, non-core MMS mod-
ules such as Centralized Database, Outage Management System, Network Model Manage-
ment System and others are not included in the timeframe mentioned above. As such, the
schedule published in the RFP is not feasible and we are not in a position to provide a re-
sponsive bid under such conditions.

It is clear to us that you need to press with the VWEM project procurement process and in-
tend to push for a mandatory commissioning date. However, all the points described above
entail risks that cannot be mitigated on our side to submit a responsive bid in line with the
RFP requirements. Our ultimate goal being to respond with a clear plan for a successful pro-
ject implementation.

Please let us to provide a number of suggested amendments and mitigations we believe are
mandatory for the successful implementation of the project and that could allow us to con-
sider participating to such a RFP. First and foremost, the detailed requirements need be fi-
nalized during the design phase between EVN, consultant and the vendor and formally vali-
dated before being followed by the implementation phase based on these detailed
requirements. If this aligns with EVN’s approach , we can then recommend a revised ap-
proach to the project based on a two phased (“Statement Of Works” SOW 1 and SOW 2) con-
tractual approach:
· The first phase (SOW 1) would be the Requirements phase focusing on producing a
set of firm, detailed requirements for the project and cover all the concerns stated
above. During this time, to comply with a feasible schedule we would also recommend
focusing on core MMS requirements (different to the mandatory requirements in the
RFP) that are empirical to commission the market; and table the non-core MMS re-
quirements for a future phase
· Based on the first phase results, the second phase (Statement of Work 2 - implemen-
tation) would follow leading to the design, development, testing and commissioning
of the market
As there is no set timeframe for VWEM to transition from the cost-based to the price-based
market, ABB recommends a partnership with EVN based on a Time & Material commercial
model to implement the VWEM systems.

True value of capital investment in such MMS systems are realized when implementation is
based on a ready-to-go and approved market regulation. Further, we need to highlight the
risk of significant cost overruns / overspend due to any market rule changes and subsequent
requirement changes from draft format during implementation. Another key point is the leg-
islation applied to wholesale and retail power sectors. Alignment of these sectors are also
key to a smooth evolution for wholesale markets.
Based on all the points raised above, we sincerely request EVN to consider our recommenda-
tions to allow us to consider participating to such a project. We remain open to discussing all
these points with EVN and other stakeholders if you wish to do so, and notably elaborate on
the pre-requisites for such a project to be held and implemented.

Sincerely,

Yilang Chen

Executive Vice President

Global Product Group - Network Control

ABB Inc.
February 4, 2019

11 Cua Bac Street – Ba Dinh – Hanoi

Attn: Mr. Tung, Director EVN CTI

RE: Vietnam Wholesale Electricity Market (VWEM)

Dear Mr. Tung, Director EVN CTI

We are thankful to EVN for hosting the meetings with ABB at the EVN headquarters on January
17-18th 2019. We appreciate the opportunity to learn more about the latest developments on
the Vietnam Wholesale Electricity Market (VWEM) and its future roadmap.

ABB understands that as part of Vietnam’s sector reform roadmap, VWEM (Vietnam wholesale
electricity market) is the second phase for realizing fully competitive markets to be operational
in 2021. This phase is mandated by Ministry of Industry and Trade (MOIT) decision no.
2760/QD-BCT, No 8266/QDBTC: for information technology (IT) infrastructure for operating
and monitoring VWEM. The main goals of VWEM being (i) improve efficiency in the generation
segment of the electricity supply chain through competition; and (ii) assure timely availability
of the generation capacity needed to attend demand growing at high rates, at least-cost for
the country.

We appreciate the draft market rules (45/2018/TT-BCT) and associated technical require-
ments for expected RFP Package No.10 (Designing, Supplying and Implementing (i) MMS sys-
tem; (ii) SCADA/EMS Integration; (iii) Centralized Database System) that have been developed
so far in ensuring VWEM’s operations are safe, reliable and efficient as stipulated in MOIT’s
Decision No. 8266/QD-BCT dated 10 August 2015 on “Approval of the Detailed Design of the
Wholesale Electricity Market of Vietnam (VWEM)”. The purpose of ensuring the investment and
construction of IT infrastructure are economical, efficient; and optimally make use of the ex-
isting infrastructure for operating and monitoring VWEM. This is by no means a trivial task and
ABB appreciates the capital investment required for such an important project to both imple-
ment and maintain IT infrastructure and systems at the lowest lifecycle cost for EVN.

It is in this spirit that ABB would like to highlight certain items that could lead to premature
construction of the MMS system and the unfortunate consequence of significant capital in-
vestment overspend. A key phase leading to the implementation phase (see below pic for
standard market development phases ABB has experienced in North America and Europe) is
the establishment of the market rules and standards. What we understand from our meetings
with EVN CTI and NLDC is that the market rules are still in draft format and are not expected
to be ready when the RFP is issued. This is also evident in the draft technical requirements

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where there could be more details. True value of capital investment in MMS systems are real-
ized when implementation is based on a ready-to-go and approved market regulation. Further,
this mitigates the risk of significant overspend due to market rule changes and subsequent
requirement changes from draft format during implementation. As MMS system implementa-
tions are unique to the market country or regional jurisdiction, we have also seen no other MMS
system where it has applied another country’s MMS to operate its own market.

Another key point is the legislation applied to wholesale and retail power sectors. Alignment
of these sectors are also key to a smooth evolution for wholesale markets.

Based on all the points raised above, we sincerely request EVN to consider revising its procure-
ment timeline to enable a successful bidding implementation of VWEM MMS in the near future
and more importantly for years and years to come.

ABB remains open to discussing these points further with EVN and other stakeholders if you
wish to do so, and notably elaborate on the pre-requisites for such a project bid to be held and
implemented.

ABB remains open to discussing these points further with EVN if it wishes to do so.

Sincerely,

Yilang Chen

Executive Vice President

Global Product Group - Network Control

ABB Inc.

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