New mechanism for Vietnamese wind power

quantriweb 30/10/2021

According to Decision 39/2018 amending and supplementing a number of articles on the mechanism to support the development of wind power projects in Vietnam, which has just been signed and promulgated by the Prime Minister, each kWh of wind power of inland projects costs will increase from the current price of 7.8 cents, to a new level of 8.5 cents (equivalent to 1,928 dong) from November 1.

For offshore wind power projects, the electricity purchase price at the time of delivery is 9.8 cents per kWh, about VND 2,223.

The buyer is responsible for purchasing the entire power output from wind power projects and the cost of purchasing electricity from the projects is calculated and included in the input parameters of the EVN’s annual electricity selling price plan. force of Vietnam (EVN).

The above electricity purchase price is applied to a part or the whole grid-connected wind power plant with commercial operation date before November 1, 2021 and is applied for 20 years from the date of commercial operation.

For wind power projects that have operated and generated electricity before the issuance of Decision 39, the new price will be applied from November 1 until the end of the remaining term of the signed power purchase agreement. Wind power projects applying the electricity purchase price according to this regulation will not be able to apply the price mechanism for the project’s electricity output according to other current regulations.

The Ministry of Industry and Trade is responsible for proposing and submitting to the Prime Minister for consideration and decision on the auction mechanism for wind power development, wind power purchase price applied from November 1, 2021.

In addition, Decision No. 39 also amends the conditions for starting the construction of wind power projects. Investors are only allowed to start the construction of wind power works when satisfying the following conditions: starting construction of the works according to the provisions of law; have signed power purchase and sale contracts with the electricity buyers; have a connection agreement with the  Distributor or transmission unit and report wind measurement data for a continuous period of at least 12 months.

The price of wind power (both onshore and offshore) has long been criticized by investors as being too low, making it difficult for them to arrange bank loans and low profits.

In a document the Ministry of Industry and Trade sent to the Government a year ago on a proposal to increase the price of wind power, this agency calculated that an increase in the price of this type of renewable energy would not significantly increase the cost of electricity production of Vietnam. EVN, about 0.23 VND per kWh in 2019.

It is expected that the total wind power capacity this year will be about 456 MW and will increase to 800 MW in 2020. Binh Thuan, Ninh Thuan… are recommended localities to develop onshore wind power; and Ben Tre, Bac Lieu, Tra Vinh and Soc Trang… are suitable places to develop offshore wind power.