The MOIT has taken the decision to transition some implemented wind and solar projects to the proposed mechanism.
Transition projects can choose to participate in the competitive electricity market. If a power station chooses to participate, it is responsible for carrying out its obligations and responsibilities as a generating unit in accordance with the electricity market regulations issued by the Ministry of Industry and Commerce (MOIT ).
Renewable energy expert John Yeap of Pinsent Masons said: “It is encouraging to see MOIT taking proactive steps to try and deal with projects that have passed the FiT deadline. However, investors may need more details about the proposed program before they can ask if they can go ahead with their projects. Issues related to discount risk, currency risk, and the limited period covered by the auction price will likely be issues that need to be resolved.
According to the draft document, the transitional power purchase agreement and the applied electricity price will apply until 2025. After 2025, projects to which the transitional provisions apply will be able to participate in auctions in accordance with the regulations. issued by the government or the MOIT.
Prices under the transitional arrangements are quoted in Vietnamese Dong (VND/kWh) and will not be adjusted due to fluctuations in the VND/USD exchange rate. Vietnam Electricity (EVN) mobilizes power plants based on demand on the power system and is responsible for ensuring the security of supply of the national power system.
The expected submission date for the Prime Minister’s decision on the transitional tender mechanism for the purchase of electricity from wind and solar projects is May 2022. The country’s government plans to make the decision effective a once the Prime Minister’s approval has been obtained. The MOIT also intends to publish a notice indicating the price range applicable to transitional projects, effective as of the same date as the Prime Minister’s decision.