Clearing up the petitions of 36 investors of the transitional solar and wind power projects in Vietnam

The investors consider that the progress of promulgating Decision 21 seemed to be too hasty, not yet ensured thorough appraisal and consultation, the assignment to Electricity of Vietnam (EVN), the Electricity Trading Company (EPTC) to determine the prices and use the results without consulting with an independent consultant was not suitable with reality and the calculation method of EVN was not also guaranteed and objective.

The MOIT submitted PM about the mechanisms for selling prices of the transitional solar and wind projects by document No 17/BC-BCT dated January 27, 2022, and about building regulation of PM on bidding mechanism for buying electricity from the transitional solar and wind projects by the Statement No 1513/TTr-BCT dated March 24, 2022, and the mechanism for the transitional solar and wind projects by the Report No 126/BC-BCT dated July 21, 2022.

In Announcement, No 55/TB-VPCP dated February 26, 2022, of the Government Office on the conclusion of the Deputy Prime Minister (DPM) Le Van Thanh in a meeting where MOIT proposed mechanism for the prices of the transitional solar and wind projects and DPM required MOIT to exactly the law requires.

According to the current legal regulations on jurisdiction to issue electricity generation framework (including the electricity price framework of the transitional solar and wind projects), MOIT is responsible to guide the method for developing electricity price framework for the transitional solar and wind projects. EVN is responsible to develop the electricity price framework for the transitional solar and wind projects to submit ERAV for appraisal before submitting the Minister of Industry and Trade for approval.

On October 3, 2022, the MOIT Leadership issued Circular No 15/2022/TT-BCT stipulated the method for developing the electricity price framework for the transitional solar and wind projects to send to the Independent consult council (including 9 members in electricity, prices, finance, State energy management) founded in accordance with No 2334/QD-BCT dated November 7, 2022, for getting the opinions. The organization, calculation, checking and getting opinions of the experts were carried out from November 20 to 30, 2022. So, drafting, and issuing Decision No 21/QD-BCT on the electricity price framework for the transitional solar and wind projects have fully ensured the regulated order and procedure.

In accordance with data of the international consult organizations, the parameters of the Institute of Energy, Power Engineering Consulting Join Stock Companies 1,2,3,4 and GIZ, the solar and wind power investment rate in the world strongly reduced in recent years despite the remarkable increase of material costs. Therefore, the results of the Electricity price framework of EVN with investment rate appropriated and elected on basis of investment rate of the projects with reducing 10% for 1 MWp of solar power and 1 MW of wind power.

In accordance with the national consulters, solar radiation in Vietnam is divided into 3 categories according to 164 solar power projects with assigned contracts by the EVN, among them 134/146 projects (91.78 %) in category 3 with solar radiation in Binh Thuan province (location of Phuoc Thai 2 solar power project, correlative 5.23 kWh/m2/day and 1,908.95 kWh/year).

According to the consult council opinion, for agreeing on the stipulates in Circular No 15/2022/TT-BCT dated October 3, 2022, the price framework for the on-ground solar power project is not calculated by the parameters of Phuoc Thai 2 but appraised on basis of making input parameters (as investment rate, solar radiation in category 3, Binh Thuan province) and other parameters collected from the ground solar projects with PPA assigned with EVN before the expiration of the FIT.

The average electricity price should be considered and regulated by the objective fluctuation of the input parameters in all the phases (electricity generation, transmission, distribution, retail, operation, management, and support service…). Clause 3 in Decision No 24/2017/QĐ-TTg dated June 30, 2017, of PM, stipulates the mechanism for adjusting the electricity average retail price. Therefore, the change in electricity average retail price is not only considering the electricity costs (including the solar and wind power projects) but including many other items.

FIT is a support mechanism designed to promote investment in solar and wind power projects in a certain period. The electricity price framework for the transitional solar and wind power projects should be calculated by the real costs regulated in the feasibility study report and technical design of the solar and wind power projects with PPA contracts signed with EVN before expiring FIT mechanism.