Collecting the opinions at the conference between the "transitional" RE investors and EVN

The electricity of Vietnam (EVN) held a conference to discuss with investors of transitional renewable energy projects.

Attending the conference on behalf of the Ministry of Industry and Trade was Mr. Pham Nguyen Hung - Deputy Director of the Department of Electricity and Renewable Energy, and the representatives of the Electricity Regulatory Authority.

On the side of Electricity of Vietnam were Mr. Tran Dinh Nhan - General Director, Mr. Ngo Son Hai - Deputy General Director, Representatives of some EVN functional departments, Representatives of the Electricity Power Trading Company (EVNEPTC), National Load Dispatch Center (EVNNLDC).

After the opening statement of the EVN General Director, the representative of EVN EPTC said: Up to March 20, 2023, the Company has only received one set of documents from the investor for the power purchase agreement (PPA), although the company has set up three working groups ready to receive applications. The negotiation can be only carried out after EVNEPTC receives all the documents.

The representative of EVNEPTC presented the definition of the transitional projects and clarified the contents and requirements in the guiding documents of the Ministry of Industry and Trade (MOIT) and the Electricity Regulatory Authority (ERA) on the preparing documents for the negotiation of PPA and electricity prices. In comparison with the solar power FIT (before January 1, 2021) and wind power FIT (before November 1, 2021), the electricity prices for the transitional projects are lower as shown in the following table:

The Representatives of the transitional renewable energy investors and several other unfinished investors who were present at the conference have tried their best to support the energy transition of the country, but due to many difficulties, including the Covid-19 pandemic, some have not been able to complete it on time. So investors have raised many questions, concerns, complaints and suggestions, which may be divided into three groups: Electricity prices, procedures for negotiating PPA and proposals for situational solutions.

Firstly: about the electricity prices: There are many questions about how to calculate the prices. The investor side generally disagrees with taking the highest capacity (P50) of the project with the most favorable conditions to calculate the power capacity. In the reality, solar and wind power projects cannot generate this capacity. The solar and wind power projects still got the sack in the high month up to 30% and in an average month for 10% in a year. So taking the total costs to divide the total highest capacity is not justice for more projects. Several investors required more calculations by independent consultants. The electricity prices cannot be converted to US$ and not be fixed for 20 years (for the solar power projects) and not a commitment to buy the whole electricity generation.

The investors worried that the exchange rate should change forward unfavorable for them. The foreign investors also considered the prices for buying electricity from renewable energy are low although they pay compassion to that with the current retail prices, EVN could not buy electricity from renewable energy projects with higher prices.

Secondly, Regarding the procedure for PPA negotiation, the Investors said that MOIT has not yet provided guidance on PPA negotiation for the transitional power projects. However, may apply the previous regulations for electricity negotiating the electricity purchase prices. For the procedures, it is just the assessment of the power system the operation on the absorption ability of the national power system, and the ability to release capacity of the power grid, investors said that is the target of EVNNLD and EVN.

Especially, in signing PPA, all the projects must be carefully considered in terms of the ability to absorb and release capacity.

The Investors also asked for clarification on the procedure requiring to have the preliminary design and approved technical design for construction projects. Some investors are worried that the MOIT has not yet provided guidance on negotiating electricity prices, so the negotiation period may be extended.

Thirdly: Regarding proposals and recommendations:

The Investors proposed to allow the immediate release of capacity because it is more than 2,000 MW of electricity that is being wasted every day, which is a great resource for the whole society, not just the capacity of the investors.

A group of investors proposed to sell immediately electricity at 90% of the price of electricity imported from Laos (6.95 cents/kWh). Another investor proposed a provisional price like the one in Decision 21/QD-BCT until the electricity purchase price in the negotiated contract. The Investors commit not to complain or sue for the past and are ready to return the difference if the contract price is different from the provisional price.

Answering and explaining some questions from investors, Mr. Pham Nguyen Hung - Deputy Director of the Department of Electricity and Renewable Energy (MOIT) said that the calculations on prices, currency types and term apply prices were fully compliant with applicable regulations. The renewable power output may need some more years because RE for each year's output is very different. Not buying the entire power output is also consistent with the reality of moderation in the past two years.

The representative of the Electricity Regulatory Authority explained more about the price formation mechanism and that EVN must comply with the price framework issued by the MOIT.

In the constructive spirit, careful listening to opinions from investors, EVN and related units noted the opinions of investors at the conference and at the same time wished the MOIT to soon make a document guiding the negotiation method for EVN and investors of transitional projects to negotiate.

Regarding the electricity grid connection agreement, if the old agreement has expired, EVN will consider and direct with the power or the transmission line corporation units that have agreed to connect with the project to be able to extend the connection agreement

EVN will consider the assessment of the power system operation the absorption ability of the national power system and the ability to release capacity of the power grid as an internal job of EVN. Thus, one less procedure for investors.

EVN's General Director shared the difficulties and hardships of investors who have put their money and efforts into wind power but failed to meet the deadlines of FIT1 and FIT2. EVN hopes that there will be a full set of documents after the first one to be able to negotiate and quickly release capacity for the projects on the basis of respecting the laws.