Vietnam to issue price frame to ease renewables project woes

The Ministry of Industry and Trade plans to introduce a price frame for renewable energy projects that have missed the deadline for incentivized feed-in-tariffs (FiTs) in late November this year.

Pham Nguyen Hung, deputy director of the ministry's (MoIT) Electricity and Renewable Energy Authority (EREA), disclosed the timeline for such a long-awaited price frame in a renewable energy workshop held by The Investor Friday.

On October 3, the MoIT issued Circular 15 stipulating a method of building a price bracket for the fail-to-meet-deadline renewable projects (4,000 megawatts), often referred to as "transitional renewable energy projects". The next day, the ministry asked EVN to build a price bracket for its appraisal to help the projects get out of trouble.

Hung told the workshop the MoIT was slated to introduce the price frame by end-November, which will serve as a foundation for EVN to negotiate purchase prices with generators. He said FiTs already signed 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 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.

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 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.

Hung also provided the latest information related to renewables from the ministry’s latest draft power development plan VIII dated November 11. PDP VIII is for the 2021-2030 period, with vision until 2045, with Vietnam targeting carbon neutrality by 2050.

Under the draft, the total capacity of power plants in Vietnam will reach 121,757-145,989 MW by 2030, with renewable energy accounting for 18-27%.

Coal-fired power will hold the biggest portion, at 20.6-29.8% (30,127-36,327 MW). It is followed by gas-fired and LNG-fueled power, 24.9-27% (30,330-39,430 MW); hydropower, 19.8-22.5% (27,353-28,946 MW); renewable energy (excluding hydropower, including solar, wind and biomass power), 18-27% (21,871-39,486 MW); and imported power, 3.3-3.4%.

By 2050, the total capacity of power plants will reach 368,461-501,608 MW, of which hydropower will make up 7.2-9.7%; coal-fired power, 0%; biomass/ammoniac-fired power, 5.1-7.8%; gas-fired power, 1.6-2.1%; LNG-fueled power, 4.2-4.9%; renewable energy sources, 54.9-58.9%; and imported power, 2.2-3%.

It is estimated that in the 2021-2030 period, Vietnam needs a total investment of about $104.7-142.2 billion to carry out power development programs, Hung told the event.

Meanwhile, the Vietnam Energy Association’s vice president Nguyen Van Vy said renewable energy development in the country has been facing obstacles, mainly legal problems, due to an absence of clear market regulations.

In addition, booming solar and wind power in the south-central provinces of Ninh Thuan and Binh Thuan has outpaced the national grid’s transmission capacity, not to mention difficulties faced by investors in accessing bank loans due to large amounts of investment needed for renewable projects.

Vy said the issues needed to be solved to help promote Vietnam’s renewables market so the country could reach its carbon neutrality target.

Another suggestion by Vy is for “transitional renewable energy projects": while price calculations, negotiations and signing of power purchase agreements (PPAs) are being awaited, the MoIT should propose the Prime Minister issue temporary purchase prices so that EVN could buy electricity from the projects; and revenues of the projects would be adjusted later in line with officially approved prices.

Nguyen Ngoc Tan, a board member of the EVN National Power Transmission Corp., said the national utility expected PDP VIII to be issued as soon as possible so that the country’s entire electricity generation and transmission network could become more balanced.

“For example, the northern region’s electricity demand increases by 6-7% each year, but the development of renewable energy is mainly in the south. Therefore, the southern region's transmission grids are often overloaded,” he said.

He added it was hard to get access to official development assistance (ODA) loans for energy development due to rules on use of the funds, therefore solutions were needed.

The Investor held the workshop as a platform for the government and the sector to discuss pressing issues on Vietnam’s development of renewable energy. The Vietnam Association of Foreign-Invested Enterprises (VAFIE) will submit to the Prime Minister policy recommendations made at the workshop.