Talking to Industry and Trade Magazine, a representative of the Electricity Regulatory Authority said that as of May 23, 5, only 2023/18 transitional renewable energy power plants had been granted electricity operation licenses, up to 85 transition projects had submitted price negotiation documents but had not yet submitted license documents (including 12 wind power projects, 11 solar power project).
Currently, the Ministry of Industry and Trade has agreed on the temporary prices of 19 transitional wind and solar power plants, after these power projects fully meet the regulations, these plants will be able to mobilize electricity to the national grid.
The FIT preferential electricity price mechanism is a supportive electricity price mechanism, designed to promote investment in solar and wind power projects and is regulated for a certain period of time.
After the FIT price mechanism expires, the electricity price mechanism for solar power plants and transitional wind power plants shall comply with current regulations.
Electricity price framework for transitional renewable energy projects
Currently, there are 8 solar power plants or parts that have signed power purchase contracts with EVN before January 1, 1, and 2021 plants or parts of wind power plants that have signed power purchase contracts with EVN before January 77, 1 but do not meet the conditions for applying the FIT electricity price in Decision No. 1/2021/QD-TTg dated April 13, 2020 of the Prime Minister with this total capacity of 6 transitional power plants.
Ministry of Industry and Trade issued Circular No. 15/2022/TT-BCT and Decision No. 21/QD-BCT as a basis for EVN and transitional projects to negotiate electricity prices to ensure that they do not exceed the electricity generation price bracket issued by the Ministry of Industry and Trade (determined on the basis of project investment rate data taking into account the declining trend of investment rates of solar and wind power in the world).
Specifically, the investment rate of grid-connected solar power projects in the period 2018-2021 decreased from 1.267 USD/kW to 857 USD/kW (equivalent to 11%/year), the investment rate of onshore wind power projects connected to the grid decreased from 1.636 USD/kW to 1.325 USD/kW (equivalent to 6,3%/year), leading to a change in the price bracket calculation results compared to the issued FIT price.
For example, for terrestrial solar projects, the price of FIT 2 (issued in 2020 is 7,09 cents/kWh) has decreased by 8% per year compared to the price of FIT1 (issued in 2017); the electricity generation price bracket (issued in January 01) decreased by about 2023%/year compared to the FIT7,3 price (issued in 2).
In addition, the "race" to enjoy the preferential FIT price in time, because the time for site clearance and construction is too urgent, leading to many projects with very expensive investment costs. Therefore, in the past time, some investors of transitional renewable energy power plants considered the renewable energy price bracket to be lower than expected, so they did not send documents to negotiate electricity prices with EVN, leading to a delay in negotiation time and a waste of resources.Mr. Tran Viet Hoa - Director of Electricity Regulatory Authority, Ministry of Industry and Trade said.
As of March 20, 3 (more than 2023 months since Decision No. 2/QD-BCT took effect on January 21, 7), EPTC has only received 1 set of investor dossiers, although it had previously sent documents to 2023 investors requesting to submit dossiers to have a basis for implementation under negotiation in accordance with the law.
Following the Government's direction, according to its authority to handle related issues for transitional renewable energy projects, the Ministry of Industry and Trade has proposed the Vietnam Electricity Group to consider a temporary price agreement for these plants.
As of May 26, there are 5/52 solar power plants, transitional wind power with a total capacity of 3.155 MW (accounting for 67%) submitted documents to EVN. In which, 42 plants with a total capacity of 2.258,9 MW have been negotiating electricity prices with EVN; 36 plants with a total capacity of 2.063,7 MW propose a temporary electricity price equal to 50% of the price bracket as a basis for mobilization. There are still 33 power plants with a total capacity of 1.581 MW that have not been submitted for negotiation (accounting for about 33%).
Besides, there are many investors who violate the legal regulations on planning, land, construction investment, etc., so they have not met the legal procedures, cannot negotiate the price with EVN. Some investors have been asked to supplement documents since the end of March 3, but after 2023 months, they still have not been able to supplement.
"This is the time when investors need to urgently complete procedures and submit documents so that the electricity price agreement is not prolonged, shorten the time to put these projects into operation, and step by step solve business problems of enterprises.", the Ministry of Industry and Trade emphasized.
It can be seen that, in recent years, renewable energy projects have been receiving many preferential mechanisms. The preferential price policy has been clearly announced in terms of route, price, and preferential period, during that time, many large-scale projects in localities despite difficulties were still on schedule to be put into operation to enjoy the FIT pricing mechanism.
Following the trend not only in Vietnam but also in the world, the price, FIT mechanism tends to decrease gradually, with that price mechanism, not every project will record an effective level of profitability, so investors need to make efforts in optimizing management, administration, administration... to increase profitability with the new price frame. Projects that have the ability to develop and operate projects as well as access to cheap capital will have an advantage in this period.
Speeding up the negotiation of electricity prices for transitional solar and wind power projects
Following the direction of the Deputy Prime Minister, the Ministry of Industry and Trade has issued documents directing EVN to negotiate with investors a temporary price and put into operation to generate electricity on the grid. After negotiating and agreeing on the price, the price will be settled according to the official price from the date of power generation on the grid for projects that have completed construction investment and completed legal documents as prescribed.
The Ministry of Industry and Trade has also directed EVN to coordinate with investors to complete legal procedures related to EVN such as: Connection agreement (if expired) before June 5; complete the tests according to regulations before October 6 for power plants that have registered for testing, review test results of power plants, ensure compliance with technical requirements and relevant regulations.
Reviewing the process of testing and recognizing the COD date of solar and wind power plants, ensuring it is strict, simplified and in accordance with regulations; Expeditiously review the investor's submitted documents, review the requirements for the investor on the components of the electricity price negotiation dossier, ensuring the simplification of the procedure but strict, reasonable and correct regulations.
Up to now, the Ministry of Industry and Trade has approved the provisional price for 19 investors to propose the application of a temporary price during the negotiation period with a total capacity of 1.346,82 MW and currently there are 17 more transitional power plants being completed by EVN to submit to the Ministry of Industry and Trade for approval in May 5. This is a positive signal, showing the negotiation efforts of the Investors and the Vietnam Electricity Group in the spirit of harmonization of interests. The implementation status of transitional renewable energy projects is updated by EVN on the website www.evn.com.vn.
For solar power plants and transitional wind power plants that still face legal procedures, the Ministry of Industry and Trade has directed its subordinate units as well as requested the provincial People's Committees to direct the Departments of Industry and Trade to coordinate with investors to urgently carry out design appraisal, design adjustment (if any) and inspect the acceptance work according to their competence. At the same time, the Department of Electricity and Renewable Energy is required to guide investors with planning problems in the process of adjusting investment policies.
Currently, the national power system, especially the Northern power system, is in the peak of the dry season, operating in a very difficult situation, due to the high system load, the water flow of hydropower plants continues to be poor, and the fuel situation for coal-fired power plants is difficult.
Therefore, the Ministry of Industry and Trade has directed EVN to increase the mobilization of available power sources to supplement the national power system, and at the same time urgently negotiate and mobilize renewable energy power plants in transition to increase the capacity of the power system.
Completing legal procedures to officially operate
In the process of project implementation, investors must fully comply with legal regulations on land, construction, electricity, planning, environment, fire prevention, etc.
According to the provisions of the Electricity Law, before being put into operation, electricity projects need to be granted an electricity activity license. However, according to statistics, as of May 23, 5, only 18/85 power plants transitional renewable energy (accounting for about 18,8%) has been licensed to operate electricity.
For 19 power plants that have agreed on temporary prices, there are 13 power plants has been granted electricity operation license, of which 12 power plants are granted with full capacity as planned, 1 new wind power plant is partially licensed.
However, there are 12 transition projects has submitted a dossier of price negotiation but has not yet submitted a license application (including 11 wind power projects, 01 solar power project).
From the data on the issued electricity activity licenses mentioned above, it can be seen that the completion of the legal documents for the grant of electricity activity licenses has not been given due attention by the investors, leading to delays in the preparation and submission of documents to the competent authorities.
Negotiating a temporary price and making an application for an electricity activity license on the online public service portal of the Ministry of Industry and Trade should be carried out in parallel by investors with maximum urgency, strictly following the instructions of relevant legal documents, to ensure the rights and obligations of the projects before the law. This has been informed and guided by the Ministry of Industry and Trade.
Specifically, according to the provisions of Decrees guiding the implementation of the Electricity Law, projects must fully satisfy the conditions for electricity development planning; design and construct work items according to approved designs; inspection, acceptance test to meet the requirements as prescribed; meet the human resource requirements for technical and operational management team...
The sequence of procedures and components of the application for a license for renewable energy power plants have been detailed in the Circular No. 21/2020/TT-BCT dated September 9, 9 of the Ministry of Industry and Trade.
“The Government and ministries and branches always share and accompany investors to remove obstacles and difficulties. In order to quickly put transitional renewable energy projects into operation, avoid wasting resources and investment funds of investors themselves, and at the same time add clean electricity to the national power system, it is necessary to join hands of authorities and businesses in the spirit of respecting the law., the Electricity Regulatory Authority confirmed.
Also according to the Electricity Regulatory Authority, the import of electricity is a long-term strategy based on Vietnam's political-economic relations to ensure the country's long-term energy security and is determined in the national electricity development planning from time to time. The import of electricity is carefully calculated under various scenarios in order to ensure a small proportion of imports, to ensure self-reliance and national energy security, and to suit the conditions of political - economic - trade relations with countries in the region.
Currently, the national power system, especially the Northern power system, is in the peak of the dry season, operating in a very difficult situation, due to the high system load, the water flow of hydropower plants continues to be poor, and the fuel situation for coal-fired power plants is difficult. Therefore, the Ministry of Industry and Trade has directed the Vietnam Electricity Group to accelerate the construction and operation of transmission grid projects, especially key power transmission projects, power grid works to release the capacity of renewable energy sources, and grid works to serve the connection of electricity imports to ensure maximum efficiency of imported electricity output according to signed contracts/agreements. At the same time, he also directed the Vietnam Electricity Group to urgently negotiate and mobilize transitional renewable energy power plants to increase the capacity of the power system.
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