The Ministry of Industry and Trade has reached an agreement on temporary prices for 19 transitional wind and solar power plants, paving the way for these projects to supply electricity to the national grid once they meet all the necessary regulations. These temporary prices are part of the Feed-in Tariff (FIT) preferential electricity price mechanism, which aims to encourage investment in solar and wind power projects for a specified period.
The FIT mechanism sets a favourable electricity price to incentivize the development of renewable energy, but after its expiration, solar and wind power plants must adhere to the current regulations for determining electricity prices. To address this transition, the Ministry of Industry and Trade issued Circular No. 15/2022/TT-BCT and Decision No. 21/QD-BCT, allowing the Electricity of Vietnam (EVN) and transitional projects to negotiate prices within the electricity generation price bracket established by the ministry.
The investment costs of solar and wind power projects have been declining globally, which has led to adjustments in the price brackets. For instance, the FIT2 price for terrestrial solar projects has decreased by 8% annually compared to FIT1, and the electricity generation price bracket has reduced by about 7.3% per year compared to FIT2. These adjustments reflect the trend of decreasing prices in the renewable energy sector.
Despite the favourable FIT prices, some investors have faced challenges in meeting the urgent timelines for site clearance and construction, resulting in higher investment costs. Moreover, the revised price brackets for transitional renewable energy projects have been lower than anticipated for certain investors, leading to delays in price negotiation and wastage of resources.
As of March 20, 2023, only one set of investor documents has been received by the Electricity Regulatory Authority, despite sending requests to 85 investors to submit the required paperwork. To expedite the negotiation process and address these issues, the Ministry of Industry and Trade has instructed EVN to engage in negotiations with investors for temporary prices. Once agreed upon, the projects will be compensated according to the official price from the date of power generation on the grid, provided they have completed construction and legal requirements.
Out of the total 85 solar and wind power plants, 52 have submitted applications to EVN, with 42 plants engaging in price negotiations and 36 proposing a temporary electricity price equivalent to 50% of the price bracket. However, 33 power plants, accounting for about 33% of the total capacity, are yet to submit their negotiation documents.
Additionally, some investors have encountered legal violations related to planning, land, and construction, preventing them from engaging in price negotiations with EVN. The Ministry of Industry and Trade has urged these investors to promptly complete the necessary procedures and submit the required documents to expedite the electricity price agreement and operationalize the projects.
The Ministry of Industry and Trade has emphasized the importance of completing legal procedures for electricity projects to ensure compliance with regulations. As of May 23, 2023, only 18 out of 85 transitional renewable energy power plants have been granted electricity operation licenses. This delays the submission of necessary documents, including license applications, to the competent authorities.
The ministry has directed EVN to negotiate temporary prices and expedite the process of obtaining electricity operation licenses. It has also instructed relevant departments to assist investors with design appraisals, adjustments, and pre-acceptance tests. By adhering to the proper procedures and meeting legal requirements, investors can ensure their projects are fully operational and enjoy the benefits of the renewable energy sector.
Moreover, the Ministry of Industry and Trade has urged EVN to increase the mobilization of available power sources to supplement the national power system, which is facing challenges due to increased system load and poor water inflow from hydroelectric plants.
