Recently, 36 investors of solar power projects, transitional wind power in Vietnam signed a written recommendation submitted to the Prime Minister on overcoming the inadequacies in the power generation price mechanism for the transitional renewable energy projects.
Before the recommendations of investors, the Electricity Regulatory Authority (Ministry of Industry and Trade) has made specific answers and information.
The draft and promulgation of Decision No. 21/QD-BCT on promulgating price frame of transitional solar power and wind power plants to completely ensure sequence and procedures as prescribed
In respect of compliance with regulations
Regarding the report of the Prime Minister on mechanisms for transitional solar power and wind power projects, the Ministry of Industry and Trade (MOIT) issued Report No. 17/BC-BCT dated January 27, 2022, on the mechanism of selling price of wind power and solar power for transitional projects; Submittal No. 1513/TTr-BCT dated March 24, 2022, on the construction thereof, the Prime Minister's decision on stipulating the bidding mechanism to buy power from the transitional solar and wind power projects, and Report No. 126/BC-BCT on July 21, 2022, on mechanisms for transitional wind and solar power projects.
At Notice No. 55/TB-VPCP dated February 26, 2022, of the Government Office on the conclusion of Deputy Prime Minister Le Van Thanh at a meeting on the proposal of MOIT on the mechanism of determining the prices of wind and solar power for transitional power projects, requiring MOIT to comply with the provisions of law.
In accordance with the current legal provisions on the authority to issue the power generator price frame (including the price frame of transitional wind and solar power): MOIT is responsible for guiding the method of making a price frame to be applied to power generation for transitional wind power solar power projects. EVN is responsible for developing the power generation price frame for transitional wind power plants (WPP), and solar power plants (SPP) to submit it to the Electricity Regulatory Authority for appraisal before it is submitted to the Minister of Industry and Trade for consideration and approval.
On October 3, 2022, MOIT signed Circular No. 15/2022/TT-BCT stipulating the method of building the generation price frame for transitional solar power plants and wind power plants. The independent advisory council is to collect comments on the power generation price frame for the transitional projects which were established under MOIT’s Decision No. 2334/QD-BCT of 2022, under which the Council shall include 09 members who are experts with expertise in the field of electricity, price, financing and state management of energy. The organization of calculation, review and consultation conducted by experts and agencies with relevant units shall be implemented from November 20, 2022, to November 30, 2022.
Therefore, the draft and promulgation of Decision No. 21/QD-BCT on promulgating the price frame of transitional solar power plants and wind power completely ensure the sequence and procedures as prescribed.
FIT price mechanism is a supporting price mechanism, designed to promote investment in solar, wind power projects and prescribed in a certain period.
In respect of calculation methods and results.
According to the data of international consultancy organizations, parameters provided by the Institute of Energy, Power Engineering Consulting Joint Stock Companies 1, 2, 3, 4 and GIZ Consulting Organization (German Development Cooperation Organization), the investment rate in wind and solar power in the world tends to decline sharply in the recent period, despite the significant increase in material costs. Therefore, based on the report on the results of the price frame calculation of EVN, the investment rate is appraised and selected on the investment rate at projects of 10% deduction for 1MWp of solar power, and 1MW of wind power.
According to the international consultancy agency, the solar radiation on the territory of Vietnam is divided into 03 regions, based on 164 solar power projects that have signed a power purchase contract with EVN, 134/146 SPP projects in Region 3 (equivalent to 91.78%). Accordingly, the solar radiation used to calculate the average output for many years is taken according to the radiation of Binh Thuan province (the location in Region 3 and the construction site of Phuoc Thai 2 solar power plant) is 5.23 kWh/m2/day (equivalent to 1,908.95 kWh/m2/year) as calculated by the international consultancy agency.
The average power selling price is considered and adjusted according to objective fluctuations of input parameters of all stages (power generation, power transmission, distribution - power retail, operation - industry management, and auxiliary services for power system support) compared to the used parameters to determine the current average power selling price (as prescribed in Article 3 of Decision No. 24/2017/QD-TTg dated June 30, 2017, of the Prime Minister regulating on the mechanism of adjusting the average power retail price). Therefore, the change of this average price not only considers the cost of generating power (including the cost of buying power from solar power or wind power plants) but also includes many other stages.
The FIT mechanism is a supportive price mechanism, designed to promote investment in solar and wind power projects and shall be specified in a certain period. Meanwhile, the generation price frame for transitional solar power and wind power plants is calculated based on actual expenses specified in the feasibility study report, technical design of solar power, and wind power plants that signed a contract to buy and sell power with EVN before the expiry of the FIT mechanism.