Ministry of Industry and Trade proposing extending the application of fixed wind power pricing mechanism to 2023

In Document No. 2491/BCT-DL dated 9 April 2020, the Ministry of Industry and Trade (MOIT) proposed the Prime Minister to consider extending the fixed wind power pricing mechanism to December 31st, 2023.

According to the Ministry of Industry and Trade, to promote the development of wind power, on 10 September 2018, the Prime Minister issued Decision No. 39/QD-TTg on amending and supplementing some articles of Decision No. 37/2011/QD-TTg on mechanism to support the development of wind power projects in Vietnam.

Based on Decision No. 39, the price of wind power is adjusted for increase. Specifically, the purchase price of on-shore wind power at the delivery position is 1,927 VND/kWh, equivalent to 8.5 Uscent/kWh (excluding VAT); that of offshore one is VND 2,223/kWh, equivalent to 9.8 Uscent/kWh (excluding VAT). These unit prices shall be applied to wind power projects whose plant is partly or completely put into commercial operation before 1 November 2021 and the application duration shall be 20 years from the date of commercial operation.

Decision No. 39 has created a driving force for the development of Vietnam’s wind power market. Hundreds of projects have been proposed to be included in the planning; many projects are now under construction. However, just 11 projects have been put into operation with a total capacity of 377MW so far.

The reason is that right after the Decision No. 39 (1 November 2018) became effective, the investment registration and the planning supplement for new wind power projects and power transmission grid projects to release capacity were suspended for more than a year, due to the lack of a guidance on implementing the Planning Law (becoming effective from 1 January 2019). Currently, 45,000MW of wind power production (250 projects) proposed by provinces has not been appraised or supplemented into the planning.

Due to complicated happenings of the global COVID-19 pandemic which is impacting on the supplying progress of turbine, the required time for construction and installation is longer, slowing down the construction progress of wind power projects; the production and supply of main equipment, causing shortages of and delays in supplying components and items for these projects; the entry of foreign technical workers and experts is interrupted, etc.

In addition, most of wind power projects included the planning in the Southwestern provinces are offshore or near-shore ones with a capacity of 1,600MW, applying technologies and construction techniques different to that applied to onshore-installed turbines, requiring longer time for project preparation and construction (onshore wind projects take about 2 years; offshore ones take about 3 - 3.5 years for construction and completion). Besides, there are many issues involved in the implementing process, including complicated regulations on determining the sea area and issuing sea area use right certificate, so the time and costs related to these projects are increased, etc.

According to MOIT, from now to the end of October 2021 (when wind power projects coming into commercial operation to be applicable to the fixed power purchase price mechanism under Decision No. 39) is only about 18 months left. This time is not enough for investors to prepare and implement constructing their projects; particularly offshore wind power projects and projects which have not been approved or included in the planning, etc.

Therefore, to solve the difficulties for investment activities in order to develop wind power, contributing to ensuring power supply in the period towards 2025, MOIT proposed the Prime Minister to consider extending the application duration of the fixed power price mechanism for wind power projects in Decision No.39 to the end of 31 December 2023. Since 2023, competitive bidding and auction mechanism shall be applied to wind power projects. Besides, the Prime Minister is recommended to assign the Ministry of Industry and Trade to calculate and propose a new wind power purchase price applicable to wind power projects to be put into operation in the period from 1 November 2021 to 31 December 2023, reporting to the Prime Minister for review and approval.


  • 12/04/2020 04:08
  • evn.com.vn
  • 507