What is a reasonable price for transitional renewable electricity?

11/09/2023
11/09/2023

According to Decision 21/2023 of the Ministry of Industry and Trade on the electricity price framework for solar and wind power plants, the ceiling price for solar power plants is about 1,185 - 1,508 VND/kWh and for wind power plants is from 1,587 - 1,816 VND/kWh.

This price framework will be applied to 85 solar and wind power transition projects that did not make it in time to enjoy the previous FIT price.

Immediately after Decision 21 was issued, VNDirect Securities Company stated that the renewable energy transition electricity price framework somewhat disappointed investors, as it was 21% to 29% lower than the FIT2 price mechanism. In response to this issue, the Ministry of Industry and Trade, in a recent explanation, affirmed that the electricity price framework for transition projects proposed by the Vietnam Electricity Group (EVN) had been 'reviewed for reducing investment returns of solar and wind power projects during the 2018 - 2020 period' based on data from the International Renewable Energy Agency's report.

Given the current socio-economic conditions, the electricity generation pricing framework for transitional projects published in Decision No. 21 is methodical and therefore context-specific.
Then, following consultations between the Ministry of Industry and Finance and discussions between the State Capital Management Committee and the Advisory Council, the results of the evaluation of the price frameworks could be evaluated.

"The demand for electricity consumption is always high, but this playing field must also need fairness for many investors and should prioritize capable entities. Policies are also different from before because there are no longer new incentives to attract investment, but rather the need for a more equal and level playing field."

Mr. Nguyen Quoc Viet, Director of Vinasol Company

Invest in solar energy, and add storage batteries, the cost can be high up to 25-30 million VND/kW, the payback period is about 7 years, but in exchange for solar energy, companies with storage batteries will be able to use solar energy during the day, at night grid power outages have a low probability no need to buy backup generators.

This form of investment is also applied by many households and manufacturing enterprises, with the highest cost being around VND25 million/kW.

On the other hand, it represents a controversy for sellers who denounce the low purchase prices: as a result of covid 19, the purchase price of transitional renewable electricity has fallen a lot compared to reality, contrary to investors' expectations. The costs spent to apply for authorization, compensation for customs clearance, maintenance of the factory...

This is a real problem for them because it cannot be a support price, but a "squeeze" for investors, as the price of imported renewable electricity is currently higher than the domestic purchase price.

“Seeking opinions and making changes to establish a new pricing mechanism takes time and creates significant challenges for the electricity sector and businesses. Therefore, there is a need for a more streamlined, practical, and effective mechanism for purchasing renewable energy.”

Mr. Bui Van Thinh, Chairman of the Wind and Solar Association of Binh Thuan.

 

According to the Youth Newspaper