Many renewable energy investors race to enjoy preferential prices, skipping procedures

Responding to delegates about renewable energy development and pricing mechanisms for wind and solar power in Vietnam on the afternoon of June 1, Minister of Industry and Trade Nguyen Hong Dien said that wind and solar power have developed quite rapidly in our country recently, due to the rapidly increasing demand for electricity and the state's incentive mechanisms and policies are quite attractive.

“Currently, the whole country has 85 factories that have signed power purchase contracts but do not meet the Fit price conditions with a total capacity of 4,736 MW. Pursuant to the Law on Prices, the Law on Electricity and related Decrees, the Government has directed the agencies to issue Circular 15 and Decision 21 stipulating the method of determining and the price framework applicable to transitional renewable energy projects,” said the Minister .

According to the Minister, by March 30, 2 months after the price frame decision took effect, only 1 investor had submitted an application.

Through many efforts of the Ministry of Industry and Trade, by May 31, 59/85 factories with a capacity of 3,389 MW, accounting for 71.6% of the projects have submitted their dossiers to EVN, of which 50 projects are being proposed with a temporary price equal to 50% of the price frame to continue completing the procedures. Currently, there are 26 factories with a capacity of 1,346 MW, accounting for 28.4% of the projects that have not yet submitted their dossiers to EVN.

Minister of Industry and Trade Nguyen Hong Dien.

"The reason why investors are slow to submit their documents is because they do not want to negotiate with EVN within the price frame issued by the Ministry of Industry and Trade, with the reason being that the price is low and legal procedures may not have been completed or the factory is in a location with difficulties in power transmission," said Mr. Dien.

The Ministry has also issued many documents urging investors to complete procedures and instruct EVN to promptly coordinate with investors to agree on electricity prices to soon put these projects into operation.

Along with that, the Ministry of Industry and Trade proposed that the National Assembly and the Government soon issue policies and mechanisms to resolve the issue, to have a basis for directing a complete resolution of the above problem, to avoid wasting resources, causing social frustration, and to ensure harmony of interests.

Regarding the handling of wind and solar power projects that do not meet the conditions for applying Fit prices, the Minister of Industry and Trade said that it is undeniable that there is waste when dozens of wind and solar power projects are invested in but not exploited or put into use.

"However, we cannot legitimize wrongdoing, or even violate the law, in order to fight waste. Recently, in the race to enjoy Fit prices, many investors have ignored regulations, even violated the law. The Fit price policy has expired, as shown in the Prime Minister's decision, so it is impossible to apply Fit prices but must follow the provisions of the Law on Prices, the Law on Electricity and related Decrees," said Mr. Dien.

The Ministry of Industry and Trade proposed removing difficulties for renewable energy projects to avoid waste.

The Minister of Industry and Trade said that Vietnam is considered a country with great potential for developing wind and solar power. However, there are some paradoxes: places with potential for sunshine and wind are also places with low load, so to use this power system, a large investment in electricity transmission and storage is required.

On the other hand, to maintain a regular and safe power system and promote the effectiveness of renewable energy, there must be a stable source of electricity, meaning it must be able to generate electricity continuously 24/7 to compensate when "there is no sun or wind, there must be something to intervene".

In Vietnam, coal, oil, biomass, and hydropower are also considered as base power sources. Therefore, even though they are more expensive and emit more carbon, and in the short term we do not have other alternative sources or solutions, traditional power sources are still maintained and mobilized to ensure the safety of the power system.

Coal and oil are primary materials, the prices of which are determined by the world market. In recent years, due to supply disruptions, high prices have led to higher electricity costs, not including transmission costs.

How is renewable energy priced?

Wind power and solar power do not cost money to buy, their cost depends only on the price of technology and equipment. However, as technology develops rapidly in the world, the cost of technology decreases every year, by an average of 6-8%, causing the cost of electricity and renewable energy, excluding transmission and storage costs, to decrease over time. In the long run, renewable energy will be the cheapest source of electricity if transmission and storage costs are not included.

"Regarding the mechanism for calculating renewable energy prices, the legal basis is based on the Electricity Law, the Price Law and Government Decrees. The Ministry of Industry and Trade has built a price framework determined based on statistical data of 102 solar power plants and 109 wind power plants that have signed power purchase contracts," said Mr. Dien.

Delegates at the meeting on the afternoon of June 1 (Photo: Quochoi.vn).

During the price comparison process, Mr. Dien said that he compared it with data from the international energy agency, and followed the correct procedure of consulting the Ministry of Finance, the State Capital Management Committee at Enterprises, and the Advisory Council on the results of the price framework appraisal...

"According to the number of investment reductions, the investment rate of grid-connected solar power projects in the 2018-2021 period decreased by 11%/year, the investment rate of onshore grid-connected wind power decreased by 6.3%/year. For Vietnam, the Fit 2 price of solar power projects issued by the Government in 2020 decreased by 8% compared to the Fit 1 price in 2017. Therefore, the electricity generation price framework according to Decision 21 in 2023 of the Ministry of Industry and Trade decreased by about 7.3% compared to 2020. Thus, the price mechanism for transitional renewable energy projects as the current price framework is consistent with world prices and domestic socio-economic practices," Mr. Dien commented.

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Source: https://vtc.vn/nhieu-chu-dau-tu-dien-tai-tao-chay-dua-huong-gia-uu-dai-bo-qua-thu-tuc-ar796834.html