Purchase price frame for renewable energy projects missing FiT deadlines approved

The purchase price frame for wind and solar power projects in Vietnam that missed deadlines for preferential feed-in-tariffs (FiTs) has been set between VND1,185 and VND1,816 (5.0-7.7 U.S. cents).

These projects are often referred to as "transitional renewable energy projects".

Under the Ministry of Industry and Trade's Decision 21 dated January 7, 2023 that came into force the same day, the maximum purchase price for "transitional" solar power projects is now VND1,185-1,508 (5.0-6.4 U.S. cents) per kWh, depending on the type and excluding VAT.

The ceiling price for "transitional" wind power projects is VND1,587-1,816 per kWh (6.8-7.7 U.S. cents).

This framework will provide the basis for state-run Electricity of Vietnam (EVN) to negotiate prices with developers of transitional renewable energy projects after a two-year wait.

The rates for transitional projects under the ministerial decision are lower than the incentivized FiTs applied to the projects that met the FiT deadlines.

The 20-year preferential FiTs are 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 that became operational by December 31, 2020; and 8.35-9.8 U.S. cents per kWh for wind power projects that became operational by November 1, 2021.

In November 2022, EVN proposed a price frame for "transitional" projects. The proposed purchase prices per kWh for the four kinds of electricity generation - ground-mounted solar, floating solar, inland wind and offshore wind were VND1,188 (5.1 U.S. cents); VND1,570 (6.7 U.S. cents); VND1,591 (6.8 U.S. cents); and VND1,945 (8.3 U.S. cents), respectively.

This means the price bracket decided by the Ministry of Industry and Trade is lower than that proposed by EVN.

Link to Decision 21- QD-BTC in Vietnamese language.

Projects that failed to meet the deadlines mainly blamed the Covid-19 pandemic.

Pham Nguyen Hung, deputy director of the Electricity and Renewable Energy Authority, told a renewable energy conference organized by The Investor last November that: "Already-signed FiTs would remain valid."

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 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 prices. In addition, a number of renewable energy projects are still being developed.