Thirty-six renewable power investors have petitioned the prime minister to consider addressing pricing-related inadequacies in renewable power development that left 34 solar and wind power plants unable to sell their electricity to state-owned Vietnam Electricity Group (EVN).
These investors, in a petition recently sent to Vietnam’s Prime Minister Pham Minh Chinh, said that the impact of the COVID-19 pandemic resulted in 84 renewable power projects, with a total capacity of some 4,600 MW, lagging behind schedule to achieve commercial operation.
Among these, 34 projects, comprising 28 wind farms and six solar plants with a total capacity of more than 2,000 MW, are eligible to connect to the national power grid, but their investors have had to wait for a new pricing mechanism, which provides a foundation for renewable power investors and the national electricity buyer EVN to process power purchase agreements.
Six solar power projects have been waiting for a new pricing mechanism for more than 26 months, while 28 wind farms have been waiting for around 16 months.
The total investment for these 34 projects, which have reached completion but have yet to connect with the national grid, amounts to an estimated VND85 billion (US$3.6 billion), with VND58 billion ($2.45 billion) borrowed from banks.
Therefore, the investors said they are facing a risk of financial woes, adding that corporate debts would rise and banks would find it hard to recover capital.
If the pricing mechanism for solar and wind power projects remains ineffective in the long run, the development of such projects could grind to a halt, thereby resulting in energy insecurity and a lower chance of fulfilling the government’s commitments on energy transformation and carbon dioxide emission reduction.
Direct power purchase mechanism proposed
To remove obstacles facing the 34 projects, renewable power investors proposed the government leader ask the Ministry of Industry and Trade to study and introduce a new pricing policy for them.
In addition, the investors suggested hiring independent consultants to work out a price bracket for renewable electricity, strictly following requirements of an advisory council and the Ministry of Finance to ensure transparency.
Also, the price bracket must be worked out based on the internal rate of return of 12 percent as stipulated in the Ministry of Industry and Trade’s Circular 15 issued on October 2, 2022.
As for power purchase contracts, the investors of these 34 wind and solar farms suggested keeping policies to encourage the development of renewable energy that the government had issued previously.
According to the investors, the pricing policy for the projects should remain in place for 20 years. They sought the prime minister’s nod for the conversion of prices into U.S. dollars or for regulations on slippage in power generation.
They also proposed the prime minister direct relevant ministries and agencies to complete and issue a direct power purchase mechanism which would allow renewable power investors to sell their electricity to those in need.
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