Transitional renewable electricity prices criticized as low, what does the Ministry of Industry and Trade say?

The Ministry of Industry and Trade has just sent a report to Prime Minister Pham Minh Chinh and Deputy Prime Minister Tran Hong Ha on the implementation of the Deputy Prime Minister's conclusion on the issue of negotiating electricity prices for transitional solar and wind power projects.

Regarding the drafting of Circular No. 15/2022/TT-BCT regulating the method of determining the electricity generation price framework, the Ministry of Industry and Trade said it had received 30 written comments on the draft Circular. Most opinions agreed with the content of the draft Circular.

Regarding the contents with different opinions, the Ministry of Industry and Trade has accepted amendments and supplements to the draft Circular before officially promulgating it.

The Ministry of Industry and Trade also explained the construction of the transitional project electricity generation price framework in Decision 21/QD-BCT (issued in January 2023) - which was considered by some investors to be "too low".

According to this decision, the ceiling price for ground-mounted solar power plants is 1,184.90 VND/kWh; Floating solar power plants are 1,508.27 VND/kWh; Onshore wind power plants are 1,587.12 VND/kWh; and Offshore wind power plants are 1,815.95 VND/kWh.

According to this agency, based on the provisions of Circular No. 15/2022/TT-BCT, the Ministry of Industry and Trade has appraised the power generation price framework for transitional projects submitted by EVN.

In particular, regarding investment rate data, the Ministry of Industry and Trade has considered the reduction in investment rates for solar and wind power projects in the 2018-2021 period (based on data in the report of the International Renewable Energy Agency - IRENA).

Specifically, the investment rate for grid-connected solar power projects in the 2018-2021 period decreased by an average of 11% per year, and the investment rate for grid-connected onshore wind power projects decreased by an average of 6.3% per year.

The results of the electricity generation price framework in Decision No. 21/QD-BCT (issued in January 2023) decreased by an average of 7.3%/year for ground-mounted solar power; 4.2%/year for floating solar power compared to FIT 2 price (issued in 2020).

Average reduction of 4.19%/year for onshore wind power; 4.3%/year for offshore wind power compared to FIT 2 price (issued in 2018).

“During the appraisal process, the Ministry of Industry and Trade consulted with the Ministry of Finance , the State Capital Management Committee at Enterprises and held an Advisory Council meeting on the results of the appraisal of the price framework,” said the Ministry of Industry and Trade.

Therefore, the Ministry affirms: The issuance of Circular No. 15 is within the authority stipulated in the Electricity Law, the Price Law and guiding decrees. The electricity generation price framework for transitional projects has been calculated by EVN and appraised by the Ministry of Industry and Trade, issued in Decision No. 21/QD-BCT in accordance with the method in Circular No. 15/2022/TT-BCT, with reference to data from consulting organizations, in accordance with current socio -economic conditions.

However, the Ministry of Industry and Trade also said it will continue to coordinate with relevant agencies and units to review the content of the price framework for transitional projects and promptly edit and supplement "if any problems or shortcomings are discovered".

According to the Ministry of Industry and Trade, as of August 25, 79/85 transitional projects with a total capacity of 4,449.86 MW (accounting for 94%) had submitted documents to EVN.

There are 6/85 projects with a total capacity of 284.70 MW (accounting for 6%) that have not yet sent negotiation documents to EVN, although according to the report, EVN has urged them many times.

29/85 transitional projects have been granted electricity operation licenses, of which 20 projects have been granted full project licenses; 9 projects have been granted partial project licenses. In addition, 11 projects have submitted applications and are being reviewed and inspected by the Ministry of Industry and Trade for licensing; 45 projects have not yet submitted applications for licensing.

According to EVN's report in Document No. 3145/EVN-TTD dated June 11, many transitional projects have not yet received documents to extend/delay the implementation progress and put into operation from the Provincial People's Committee (decision to approve investment policy adjustment according to the provisions of the Investment Law) and have not yet completed land procedures and other requirements for investment and construction. These regulations are the conditions for the amended and supplemented power purchase contracts on the application of temporary electricity prices between EVN and the transitional projects to take effect.

"Therefore, up to now, only 20/58 transitional projects that have had their prices temporarily approved by the Ministry of Industry and Trade have been recognized for commercial operation date," the Ministry of Industry and Trade analyzed.

Ministry of Industry and Trade: Localities are responsible for selecting solar and wind power projects . Submitting to the Government the Plan to implement the 8th Power Plan, the Ministry of Industry and Trade said that the selection of solar, wind and small hydropower projects will be directly the responsibility of localities.

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