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Vietnam Energy Forum

EVN has completed a framework for electricity prices of the transitional solar and wind power projects

 - The Electricity of Vietnam (EVN) has just sent a document to the Ministry of Industry and Trade and the Electricity Regulatory Authority on establishing a framework for electricity prices of transitional solar and wind power projects.

1. The options and calculation results:

Up to November 16, 2022, EVN has received feedback from 208 renewable energy power projects, including 99 solar power projects (SPPs) with 4 floating and 95 land solar power projects and 109 wind power projects (WPPs). Among them, 147 SPPs and 146 WPPs have Power Purchase Agreements (PPA) with EVN.

Due to that Circular No. 15/2022/TT-BCT dated October 3, 2022 (TT15) has not yet taken effect and has not expired for investors SPPs and WPS to provide feasibility study reports or technical designs for EVN. EVN temporarily uses data for calculation based on feedback from investors of the 208 power projects mentioned above.

1. Option 1:

Calculation method:

For the calculation parameters regulated in TT15, EVN will use these parameters. For the calculation parameters not regulated in TT15. EVN calculates as follows:

- Investment rate: According to the provisions of TT15, the investment rate of a standard power plant is determined on the basis of the total approved investment capital of power plants that signed PPA with EVN before the moment of FIT price expiration with reference to the data of consulting organizations.

EVN uses the total investment with a value smaller than the total investment in basic and technical design. The calculated investment rate is taken as 90% of the investment rate provided by the investor (reducing 10% for the sparing value).

- The EVN proposes the rate of loans in foreign/local currency as 20/80%.

- The interest rate of loans in foreign/local currency is taken in Clause 4, Article 5 of TT 15 as the interest rate of loans in foreign/local currency for the power plants having PPAs in the 2017-2021 periods (%/year) or the interest rate of loans in foreign/local currency for the solar power projects regulated in point b, Clause 2, Article 1 in TT 15. Due to that, the interest rates of loans in foreign/local currency provided by the Investors are too different and tend to be high, EVN proposes that the interest rate of loans in foreign/local currency of power plants having PPAs in 2017-2021 periods as 4.62/9.87%.

- Corporate income tax rate: Applying all tax incentives, the calculated value would be 8.25%.

+ Enjoying the preferential tax rate of 10% for the first 15 years.

+ Tax exemption for 4 years (0%), tax reduction of 50% for the next 9 years (5%), tax rate of 10% for the next 2 years, and 20% tax rate for the following years.

- The average electricity delivered is implemented according to Clauses 5,6 and 7 of Article 5 and Clauses 5,6 and 7 of Article 8 in TT 15, they are based on apprising feasibility study reports and technical designs of the power plants having PPAs.

EVN selects calculation electricity output on the basis of average input parameters for calculating electricity output in accordance with regulations in TT15 and only calculates for the projects that provide sufficient calculation data. Specifically: According to the provisions of Clause 5,

+ For land solar power projects with delivered average electricity as 77.522.407kWh, Tmax = 1550 giờ.

+ For floating solar power project with the delivered average electricity as 68.750.634 kWh, Tmax = 1376 giờ.

+ For onshore wind power project with the delivered average electricity as 156.122.510 kWh, Tmax = 3122 giờ

+ For offshore wind power projects with the delivered average electricity as 153.220.760 kWh, Tmax = 3064 giờ.

EVN does not examine the calculation results higher than FIT.

No

Type of power plant

Average price (VND/kWh)

1

Ground solar power plant

1482.74

2

Floating solar power plant

1740.84

3

Inland wind power plant

1590.88

4

Wind power plant on the sea

1971.12

2. Option 2:

Calculation method:

EVN carries calculations for 4 power projects as the land power plants, floating solar power plants, the land and floating solar power projects, and onshore and offshore wind power projects with the same input parameters as in Option 1, except the investment rates corresponding each type of power project defined by the average calculation investment rates of the respective power projects.

The calculation results:

No

Type of power plant

Average price (VND/kWh)

1

Ground solar power plant

1508.39

2

Floating solar power plant

1569.83

3

Inland wind power plant

1597.55

4

Wind power plant on the sea

1944.91

3. Option 3:

The calculation method:

EVN carries calculations for 4 power projects the land power plants, floating solar power plants, as the land and floating solar power projects, and onshore and offshore wind power projects with the same input parameters as in the

Option 1, except the investment rates and electricity output that EVN is supposed to vary in Gauss standard dispose of and defined with the expected values provided by the investors

Calculation results:

No

Type of power plant

Average price (VND/kWh)

1

Ground solar power plant

1508.76

2

Floating solar power plant

Insufficient calculation data

3

Inland wind power plant

1630.21

4

Wind power plant on the sea

1973.99

4. Option 4:

The calculation method:

EVN calculates the price of Phuoc Thai 2 and 3 Solar Power Projects with the investment rate updated with the e-commerce value after the bidding and the cost of sharing the 220 kV transformer substation of the 3 solar projects as Phuoc Thai 1, 2, and 3.

Calculation results:

No

Type of power plant

Average price (VND/kWh)

1

Phuoc Thai Solar Power Plant 2

1187.96

2

Phuoc Thai Solar Power Plant 3

1251.66

II. The petitions:

1. With the data collected up to November 16, 2022, EVN proposes to apply the framework for electricity generation prices of each type as the smallest value in the calculation results according to the 4 options mentioned in Section I, as follows:

No

Type of power plant

The maximum value of price frame (VND/kWh)

1

Ground solar power plant

1187.96

2

Floating solar power plant

1569.83

3

Inland wind power plant

1590.88

4

Wind power plant on the sea

1944.91

2. EVN uses data reported by investors, so there is not enough bases to determine the accuracy, reasonableness and validity of the data. The investors are fully responsible for the accuracy, reasonableness and validity of the reported data and compliance with legal regulations in implementing projects. The Calculation parameters are only assumptions of EVN and need to be verified and decided by the Ministry of Industry and Trade.

3. Due to the urgent request of the Ministry of Industry and Trade (MOIT), EVN did not have enough time to hire independent consultants to calculate the framework for electricity prices as a basis for submission to the MOIT, so EVN proposed MOIT to use the independent experts., or an advisory council as prescribed in Article 10 of Circular 15/2022/TT-BCT dated October 3, 2022, to carefully study the calculations and proposals of EVN before deciding to approve it as a basis for determining electricity prices through the competition/auction mechanism as mentioned in Decision No. 13/2020/QD-TTG dated April 6, 2020, and Decision No. 39/2018/QD-TTG dated September 10, 2018, of the Prime Minister and the proposal of EVN in Document 5106/EVN-TTD dated September 12, 2022./.

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