Solar batteries in Gio Thanh 1 Solar Farm in Quang Tri Province. — VNA/VNS Photo Nguyen Ly

Vietnam Electricity (EVN) has just sent a response related to the mechanism for transitional wind and solar power projects, in which it is proposed not to assign them to price negotiations, power purchase and sale contracts.

EVN also said the "revision" of contracts must be based on the law. Responding to the Ministry of Industry and Trade (MoIT) regarding the mechanism for future wind power and solar power projects, EVN has said that it is "not feasible".

Specifically, from the experience of negotiating traditional energy projects under the guidance of the MoIT, EVN believes that the above proposal was not feasible in the conditions in Vietnam.

It said: “The time will be long and the transition projects have been invested in many different stages and implemented with a price bracket that cannot be retroactively negotiated in the previous years.”

EVN believes that determining the average annual power output of wind and solar power plants to determine electricity prices would be more complicated than traditional energy projects and it was not clear which agency has confirmed and is responsible for the accuracy of this data.

Besides, the negotiation according to the total investment declared by the investor and the above average power output would generate problems that were difficult to explain and are beyond EVN's control.

According to EVN, all countries have been switching to the bidding mechanism after the end of the pseudo-FIT (fixed price for electricity) period, most countries apply the FIT price for a certain period of time and then switch to the bidding mechanism.

To deal with it, EVN proposed to allow transitional wind and solar power projects to participate in the electricity market, to be paid according to the spot market price of electricity, and not to exceed the electricity generation price bracket of the same type and corresponding power source model approved by MoIT.

At the same time, EVN requested MoIT not to assign EVN to negotiate electricity prices and power purchase and sale contracts for these projects. In the long term, EVN proposed to apply the bidding mechanism in two steps. 

The first one was to select an 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 failed to implement the project, the competent state agency has the right to take back the project and hand it over to another investor. 

After that, the investors are selected to participate in the electricity market or participate in the bidding to sign the power purchase agreement (PPA) and develop the project, the bidding organisation was MoIT.

Regarding the proposal of the Ministry of Industry and Trade on reviewing and reviewing the contract between EVN and the investor in order to harmonise the interests between the seller - the buyer - the electricity consumer and the state for the projects already in operation. 

According to EVN, due to the current signed PPA form issued by the Ministry of Industry and Trade, the basis of the PPA was 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: Vietnam News