Renewable energy projects switched off by legal procedures

Renewable energy projects that missed out on preferential feed-in-tariffs (FiTs) were not allowed to negotiate temporary prices with state utility Vietnam Electricity because they lacked the necessary legal documents, according to the Ministry of Industry and Trade.

"Some investors were asked to supplement documents at the end of March, but so far they have failed to do so," the ministry said.

Many developers have violated regulations on planning, land and construction so they have been unable to complete legal documents to obtain an electricity generation permit - a necessary procedure under the Electricity Law for a power project to be utilized, it said.

“This is the main reason for delays to the preparation and submission of documents to the authorities,” the ministry added.

As of Tuesday, only 18 transitional renewable power projects, or 19% of the total, had been granted a license. Among 19 projects with approved temporary prices, 68% had electricity generation permits. Meanwhile, 12 more have submitted price negotiation documents but have not yet received a license, including 11 wind power projects and one solar power project.

According to the ministry's Electricity & Renewable Energy Authority, as of Friday, 52 out of 84 transitional renewable power projects with a total capacity of 3,155 megawatts had submitted applications for price negotiations.

The ministry has told Vietnam Electricity (EVN) and developers to renew their power purchase agreements (if expired) before June 5. For projects that have registered for trial runs before a commercial operation date, EVN must check to see if the results meet technical and regulatory requirements and complete all related procedures before June 10.

Temporary price negotiation procedures need to be simplified, enabling the early operation and power generation of transitional renewable projects, the ministry said.

The ministry also required investors to urgently complete procedures and submit applications in order to put these projects into operation.

Eighty-four renewable energy projects with a total capacity of more than 4,600 MW have missed deadlines for commercial operations. Of these, 34 transitional projects (28 wind and six solar power) with a total capacity of nearly 2,100 MW have been completed and put on trial runs.

These projects will not enjoy FiTs for 20 years as they missed out on the government's power generation deadline and have to negotiate prices with EVN at 20-30% lower than FiTs.

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 (Decision 39/2018) for wind power projects that became operational by November 1, 2021.

To date, 19 transitional renewable energy projects have accepted temporary prices equal to 50% of the ceiling levels set in a new electricity generation price bracket under Decision 21 issued on January 7, 2023.

According to the new price bracket, the maximum purchase price for transitional solar power projects is VND1,185-1,508 (5.0-6.4 U.S. cents) per kWh, depending on the type and excluding VAT. Meanwhile, the ceiling price for transitional wind power projects is VND1,587-1,816 per kWh (6.8-7.7 U.S. cents).

The projects include 14 wind power plants, namely Nam Binh 1, VPL Ben Tre, Yang Trung, Cho Long, Hung Hai Gia Lai, Lac Hoa 2, Hoa Dong 2, Vien An, Hanbaram, Huong Hiep 1, Tan Phu Dong, Hiep Thanh, Ia Le 1 and Huong Linh 7; and five solar power plants known as Phu My 1, Phu My 3, Thien Tan 1.2, Thien Tan 1.3, and another in Phuoc Minh commune, Thuan Nam district, Ninh Thuan province.