EVN proposes transitional wind and solar power projects to join the electricity market

Abandoning the negotiation plan that the Ministry of Industry and Trade proposed earlier, EVN proposed to the Ministry of Industry and Trade a mechanism to participate in the electricity market for transitional wind and solar power projects.

Abandoning the negotiation plan

Recently, in Official Dispatch No. 5106, EVN proposed that the Ministry of Industry and Trade have a mechanism for transitional wind and solar power projects to participate in the spot electricity market and not exceed the electricity generation price bracket of the type of power source which approved by the Ministry of Industry and Trade (the bid and announcement of capacity each trading cycle comply with regulations on electricity market operation).

Accordingly, explaining the negotiation plan will be difficult to implement, EVN said; Due to EVN’s assessment from practical experience in negotiation and international experience, as well as from experience in negotiating traditional energy projects under the guidance of the Ministry of Industry and Trade, EVN finds that the above proposal is not feasible in Vietnam’s conditions due to the length of time and Transitional Projects that have been invested in different stages and implemented with a non-retroactive electricity price bracket in the years before negotiating in large quantities with specific reasons such as:

Determining the average annual power output of wind and solar power plants to determine electricity prices will be more complicated than traditional energy projects and it is not clear which agency confirms and is responsible for the calculation accuracy of this data.

On the other hand, EVN also believes that the negotiation according to the Total investment declared by the Investor and the average power output as described above will incurred problems that are difficult to explain and beyond EVN’s control. For example projects that are next to each other but have different prices? And the projects that come into commercial operation first are cheaper than the ones that are put into commercial operation later?

In addition, EVN believes that the failure to control the PPA negotiation time will lead to the failure to control the progress of commercial operation of wind and solar power according to demand at each time in the future and this will affect to the system’s power supply security.

To explain this, the Ministry of Industry and Trade previously issued Official Letter No. 126 dated July 21, 2022, reporting to the Prime Minister on the Mechanism for transitional wind and solar power projects. In Official Dispatch No. 126, the Ministry of Industry and Trade submitted to the Government 02 options for transitional wind/solar power projects. In which, option 1 (stated in report 17) “The Ministry of Industry and Trade promulgates and stipulates the method, order of setting up and appraising the electricity generation price bracket and stipulating the electricity generation price bracket for wind power, solar power projects that be used as a basis for Electricity of Vietnam (EVN) to negotiate and sign power purchase and sale contracts with project investors, similar to how other power projects such as hydroelectricity, thermal power, turbine gas,…”.

However, in addition to the inadequacies affecting the business activities of investors that the representatives of the Associations have spoken out previously about the negotiation mechanism for solar power and transitional wind power projects, EVN also raised the difficulties of the negotiation mechanism which analyzed above. Therefore, EVN has requested the Ministry of Industry and Trade not to assign EVN to negotiate electricity prices and power purchase contracts for these transitional projects.

Mechanism for future project

EVN commented; From international experience, all countries switch to the bidding mechanism after the end of the FIT price period. Most countries apply FIT prices for a certain period and then switch to a bidding mechanism.

For the Project to be implemented in the future in Vietnam; In the long term, EVN proposes to apply the bidding mechanism in 2 steps: One is to select the investor (investor) in accordance with the new Investment Law with a decision on investment policy with a certain term. After a specified time, if the investor fails to implement the project, the competent state agency has the right to withdraw the project to assign another investor;

Second, investors are selected to participate in the electricity market or participate in bidding to sign PPA and develop the project; The bidding organization is the Ministry of Industry and Trade.

For the proposal of the Ministry of Industry and Trade on reviewing and reconsidering the Contract between EVN and the Investor in order to harmonize the interests between the seller – the buyer – the electricity consumer and the state for the projects already in operation, due to signed PPAs are sample PPAs issued by the Ministry of Industry and Trade, the basis of the PPA is the Commercial Law, the Electricity Law and the Civil Law. Therefore, EVN proposes that the cancellation or adjustment of the content of the PPA must be based on the terms of the signed PPA and the above Laws.

Source: diendandoanhnghiep.vn