Sources said that the fixed electricity price policy applied in the solar power sector suggested by some ministries was rejected at the latest government meeting.

Instead, solar power projects will be chosen for development through bidding to ensure transparency and help reduce electricity prices. The FIT (feed in tariff) will only be applied to several projects under construction and when the investors sign electricity sale contracts with Electricity of Vietnam (EVN).

Experts have lauded the decision on removing the FIT mechanism. Tran Dinh Long, deputy chair of the Vietnam Power Association, said solar power and renewable energy are developing strongly and the prices of technologies used in the industry will go down rapidly. Therefore, it is unreasonable to set an FIT for a long time.

With the new policy on choosing investors through bidding, the hot race of developing solar power projects is expected to cool down.

“Investors want to sell electricity at reasonable prices. However, the prices which are reasonable today could become unreasonable tomorrow as the investment rate will decrease. Therefore, organizing bids to choose the investors who can offer best prices is the best solution,” he said.

According to Tran Viet Ngai, chair of the Vietnam Energy Association, the bidding mechanism has advantages. The investment rates, total investment capital and profitability can be calculated so as to find most reasonable prices. The mechanism will also help optimize the selection of contractors, thus avoiding the rampant development of solar power projects.

Investors worried

However, some experts warned that it will not be easy to deploy the bidding mechanism for solar power projects. The biggest problem lies in the legal framework.

The current laws don’t comprise any provision related to the bidding for power projects. In order to apply the bidding mechanism in the power sector, the government will have to ask the National Assembly to amend the laws.

An owner of a private enterprise in the power sector said the electricity shortage will become more serious if a series of solar power projects are postponed to wait for new legal documents.

Meanwhile, the technical procedures for bidding will be complicated. To serve the bidding, the state will have to spend big money to prepare infrastructure and land, among other things.

An energy expert, who asked to be anonymous, warned that the bidding mechanism may pave the way for Chinese investors to flock to Vietnam.

“Chinese investors, who can arrange capital at low cost, may come and manipulate Vietnam’s clean energy projects,” he said.

Investors are taking no action as they wait for new policies.

Linh Ha

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