Assessment of risk in a power purchase contract between independent power producers and electric utility : the case of Vietnam | |
| Author | Dinh Tuan Minh |
| Call Number | AIT Thesis no.ET-99-10 |
| Subject(s) | Electric utilities--Vietnam Risk assessment--Vietnam |
| Note | A thesis submitted in partial fulfillment of the requirements for the degree of Master of Engineering, School of Environment, Resources and Development |
| Publisher | Asian Institute of Technology |
| Abstract | Independent Power Producers (IPPs) are considered as a major source to meet large financing gap for generation capacity expansion in Vietnam. However, only very few of BOT projects in power sector have been constructed, mainly due to the prolonged negotiation on power purchase contract between EVN and the IPP. Incentive forms are expected to allow both parties sharing risks and encourage them to control risks more efficiently. Reducing actual payment from EVN and remaining target profit level are expected after that. Risk simulation by Monte Carlo approach is used for risk analysis for both parties involving incentive contract at different risk sharing indexes (p). Based on risk statistics, especially coefficient of variability, two parties arrive at p that best fit them. Then, they can start an official negotiation to finalize the selection of p. Sensitivity analysis is used to assess payment provision for a billing period. The study confirms that type of probability distribution of risk variables is not so much important. Availability factor has the strongest contribution to the variation of NPV(41%). Next are heat rate (21%), variable O&M cost (18%), capacity factor (14%) and coal price (5%). It is found that, p suitable for the IPP to keep his risk at the level in the US electric industry is ranged from 0.45 to 0.7. Selection of contractual p depends on risk attitude, controllability of risk variables and budget of each party. Different levels of p should be applied for different risk variables. The results in the case using incentive contract with p as 0.6 for assessing payment provision in year six show that incentive contract is an effective tool for two parties to hedge and control risk better. |
| Year | 1999 |
| Type | Thesis |
| School | School of Environment, Resources, and Development |
| Department | Department of Energy and Climate Change (Former title: Department of Energy, Environment, and Climate Change (DEECC)) |
| Academic Program/FoS | Energy Technology (ET) |
| Chairperson(s) | Lefevre, Thierry |
| Examination Committee(s) | Shrestha, Ram M.;Pacudan, Romeo B.;Do, Ba Khang; |
| Scholarship Donor(s) | The French Government; |
| Degree | Thesis (M.Eng.) - Asian Institute of Technology, 1999 |