MOIT proposes the solar and WPP s to directly negotiate withEVN for electricity selling

The report of MOIT states that in the three years from 2019 to 2021, there was a very rapid development of solar and wind power projects in Vietnam. Up to now, according to reports of Electricity of Vietnam (EVN) and localities, in a total of the whole national system installed capacity of 78,121 MW, there are 16,564 MW of solar power projects (including 8,904 MW of concentrated solar and 7,660 MW of rooftop solar power projects); 4,126 MW of wind power projects have been put into operation with the FIT according to the Prime Minister's Decisions.

According to MOIT, there are still many projects and parts of the solar and wind power projects that have been implemented in reality but have not been on time (October 31, 2021) to enjoy the FIT. In which, there are 62 wind power projects with a total capacity of 3,479 MW that have signed a power purchase agreement (PPA) with EVN but due to expiration of the FIT, there is no electricity selling price; 5 projects/part of solar power projects with a total capacity of 452.62 MW are also waiting to determine the electricity selling price.

Besides, some other projects have also been unfinished. To avoid wasting social investment, MOIT believes that it is necessary to define a mechanism on electricity prices for these projects.

In the report, MOIT also clearly stated the mechanism for the transitional solar and wind power projects, specifically projects that are in progress. Regarding the mechanism, sent by MOIT to Prime Minister from the ends of January and March 2022. In these reports, MOIT proposed two options: Option 1 as MOIT will develop and promulgate regulations on methods and procedures for setting up and appraising the framework of the generation electricity prices and stipulating the framework for solar and wind power generation electricity prices as a basis for EVN to negotiate and sign PPAs with project investors.

Option 2 is to develop the Prime Minister's decision on bidding mechanism to buy electricity from the transitional solar and wind power projects. Accordingly, it is expected that the buyer, EVN, will organize bidding for electricity purchase within a period of 3 years with the price framework issued by MOIT.

Analyzing two above options, MOIT acknowledged absolute compliance of the Option 1 with the provisions of the Electricity Law, the Price Law and guiding documents of the Electricity Law and Option 2 is not clear in comparison with the current regulations. Besides, in the process of developing this bidding plan to buy electricity, MOIT received many feedbacks from investors, most of them strongly reacted and expressed disagreement with the thought that the bidding to buy electricity in a few years is not a solid legal basis, affecting cash flow, ability to pay back capital and repay bank loans of implemented projects.

MOIT considered that solar and wind power projects in the future will be also implemented by the mechanism as project investors should negotiate electricity prices, PPA with EVN within the price framework and guidelines issued by MOIT for ensuring compliance with the Electricity Law, the Price Law and related documents. The MOIT proposes the Prime Minister to accept applying this mechanism to solar and wind power projects deployed later.

For the solar and wind power projects that are into operation, MOIT also proposes the Prime Minister to issue direction document for MOIT to base on the legal basis for guide, review the contracts between the EVN and Investors to harmony interests of the electricity seller, byers, consumers and state.

Regarding solar and wind power projects awaiting the mechanism, the press recently reported that the Police Department for Investigating Crimes on Corruption, Economy and Smuggling (C03 - Ministry of Public Security) is collecting information and documents on licensing and investing solar and wind power projects in Vietnam.

Accordingly, the police agency requested the State Bank of Vietnam (SBV) to provide information on credit contracts, outstanding balance, and debt classification for investors of solar and wind power projects.

This is to advise the Government on mechanisms and policies for electricity trading from wind power projects operating after November 1, 2021, to remove difficulties for businesses and credit institutions. Therefore, the police agency requested the inspection and supervision agency of the State Bank to coordinate, review and provide information and documents on credit contracts, outstanding balance, and debt classification for investors of 62 wind power projects and the projects with similar status.