Vietnam Electricity (EVN) is responsible for negotiating prices and outputs with wind and solar power developers that have failed to meet the country’s feed-in-tariff deadline, says the Electricity Regulatory Authority.
“The state utility, as buyer in the market, is responsible for negotiating prices and outputs with renewable energy projects that have failed to meet the country’s FiT deadline,” the authority stated Friday.
According to the Ministry of Industry and Trade’s agency, the conditions for wind and solar power plants to join the electricity market include an installed capacity of over 30 megawatts, an operational IT infrastructure system, and a power purchase agreement (PPA).
“Such negotiations will lead to agreement on prices and outputs for a PPA prescribed by the industry ministry,” it added.
Earlier this week, EVN had said it could not negotiate PPAs with renewables projects that have failed to meet the FiT deadline of November 1, 2021 as “it is not feasible under Vietnamese conditions.”
“Such negotiations will be prolonged because these projects are at different stages,” EVN said, adding that the pricing mechanism cannot be retroactive if the PPAs are for large amounts.
The 20-year preferential FiT was 9.35 U.S. cents per kWh (Decision 11/2017) and 7.09-8.38 U.S. cents per kWh (Decision 13/2020) for solar power projects; and 8.35-9.8 U.S. cents per kWh for wind power projects that became operational by November 1, 2021.
The ministry had proposed in July a transitional mechanism for projects that missed the FiT deadline. Accordingly, EVN would negotiate purchase prices with investors under the ministry’s instructions to remove the deadlock for such projects.
EVN has argued that pricing negotiation is not feasible because calculating the average annual output of wind and solar power projects will be more complicated than traditional power plants. Moreover, it is not clear which agency will be responsible for data accuracy, it said.
In addition, negotiations based on the total investment and average power output declared by the investor would generate problems that EVN might not be able to explain. For example, projects located next to each other might get different prices, or projects that began commercial operations earlier, lower prices, it argued.
Another reason is that most countries have shifted to a bidding mechanism after their FiT schemes ended.
As a bidding mechanism is not available in Vietnam, the utility suggested that these projects should be allowed to join the electricity market and unlock their investment with spot prices that are not higher than ministry-set limits.
Many wind and solar power projects that were developed with an aim of benefitting from the incentives but missed the deadline are yet to have their electricity prices determined despite investments of hundreds of millions of U.S. dollars.
Currently, 62 wind power projects with a total capacity of nearly 3,480 MW have signed power purchase contracts with EVN, but are yet to have purchase prices fixed as they failed to meet the incentive deadline.
Five solar power projects or project components with a total capacity of 452.62 MW are also awaiting determination of electricity prices. In addition, a number of renewable energy projects are still being developed.
EVN data shows Vietnam’s total capacity of operational wind and solar projects accounts for nearly 27% of the total installed capacity, including 16,545 MW of ground and roof solar power, and 4,126 MW of wind power.