Renewables pricing policy created with due process: energy regulator

The pricing policy for renewable projects that missed the government's preferential feed-in-tariffs was created in line with regulations, the country’s Electricity Regulatory Authority argued in response to a petition sent to the Prime Minister by 36 project developers.

A total 36 companies developing wind and solar projects across Vietnam sent a letter to Prime Minister Pham Minh Chinh earlier this week to ask for changes in power pricing policy for "transitional projects".

According to their petition, the Covid-19 pandemic slowed plans to start 84 wind and solar projects in the country, resulting in them missing the deadline to obtain favorable pricing, better known as feed-in-tariffs (FiTs).

The FiTs were for solar power projects that came into commercial operation by December 31, 2020, and it was November 1, 2021 for wind power projects.

The developers of the 84 projects are disappointed with the Ministry of Industry and Trade’s new pricing policy under Decision 21 dated January 7, 2023, which they consider might lead to their bankruptcy.

They argued the decision was made in a big rush that failed to be appraised thoroughly, failed to seek enough opinions, or independent consultancy.

Electricity of Vietnam's (EVN) method of calculation is not suitable and does not ensure objectivity, the petitioners claimed.

But the Electricity Regulatory Authority argued that Decision 21 was issued in a proper process with steps taken as regulated. The Independent Advisory Council, as well as Vietnamese and foreign consultants had advized this electricity pricing scheme.

The authority explained that the FiTs were designed to promote investment in solar and wind energy just in a certain period of time. Meanwhile, the pricing policy for post-FiTs projects was created based on actual costs specified in the feasibility study reports and technical design of solar and wind power plants that had signed power purchase agreements with EVN prior to the FiT deadlines.

Under Decision 21, 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 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.

The 84 post-FiT projects have a combined electricity generation capacity of 4,871.62 megawatts, of which 4,184.8 MW is wind power and 491.82 MW, solar power.