Ministry reverts to old proposal on fixing solar power tariffs

By Anh Minh    February 19, 2020 | 01:32 pm GMT+7
Ministry reverts to old proposal on fixing solar power tariffs
Solar power panels at the BIM Solar Power Complex in southern Ninh Thuan Province. Photo by VnExpress/Quynh Tran.

The Ministry of Industry and Trade is arguing against using a bidding mechanism for deciding solar power tariffs, saying it could have negative impacts.

In its latest report to the government Tuesday, the MoIT has suggested that solar power projects approved before November 23, 2019 that begin operating before January 1, 2021 should enjoy fixed feed-in-tariffs (FIT) of 7.09 cents a kWh for plants on land and 7.69 cents for floating plants.

The suggestion is reversing its stand on a proposal it had submitted just last week, under which investors of projects coming online after 2020 would have to bid on solar power prices, and the cheapest one would be chosen.

Under its proposal sent last week, the fixed rates would have applied only to projects that: had begun construction before November 2019; come online this year; and had already signed power purchase agreements (PPAs).

Now, the MoIT is saying that for projects that have been granted investment certificates, investors have already spent a lot of time and money on planning, site clearance, preparations for construction and technical design evaluation. Therefore, getting a PPA is a final, objective step.

It also notes that after the government’s preferential FIT policy of $9.35 cents per kWh expired on June 30, there is no legal basis for EVN, Vietnam’s state-owned electricity distributor, to sign PPAs with investors anyway.

In this situation, using a bidding mechanism is likely slow down progress on these plants, and could waste more time, money and resources for investors.

Given that Vietnam could face power shortages in the next few years, and may have to use highly priced oil-generated electricity to cover them, it needs solar projects to come online this year to supplement the national grid.

According to the ministry, 36 projects nationwide with a total capacity of 2,989 MW have received investment certificates before November 23, 2019. Seven more with a total capacity of 517 MW have signed PPA contracts and are currently under construction.

 
 
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