Following Circular No. 15/2022/TT-BCT dated 03 October 2022 regulating the methods and procedures for building and promulgating the electricity generation price for transitional wind and solar power plants, and Report No. 6570/EVN-TTD dated 22 November 2022 by the Director General of the Electricity Regulatory Authority as well as the proposal of Vietnam Electricity (“EVN”). On 07 January 2023, the Ministry of Industry and Trade (“MOIT”) issued Decision No. 21/QD-BCT (“Decision 21”) stipulating the electricity generation price of transitional wind and solar power plants. Accordingly, this new price is quite close to the price proposed by EVN recently. Decision 21 will take effect from 07 January 2023.

Throughout this article, BLawyers Vietnam will summarize the main content of Decision 21 about the new electricity generation price for transitional wind and solar power plants.

1. The new electricity generation price of transitional wind and solar power plants

The electricity generation price of transitional wind and solar power plants under Decision 21 is as follow:

*According to Decision 39/2018/QD-TTg issued on 10 September 2018 and Decision 13/2020/QD-TTg issued on 06 April 2020.

Accordingly, the highest price of the electricity generation price (the “Ceiling Price”), excluding value-added tax, applied to ground-mount solar power plants is VND1,184.90/ kWh, floating solar power plants is VND1,508.27/ kWh. The Ceiling Price applied for the onshore wind power plants is VND1,587.12/ kWh, the offshore wind power plant is VND1,815.95/ kWh.

This price frame will be the basis for EVN and the transitional wind and solar power plants specified in Circular No. 15/2022/TT-BCT to negotiate the electricity generation prices according to regulations.

2. Some comments and evaluation of the new electricity generation price of transitional wind and solar power plants

The FIT price is applied to solar power projects with a commercial operation date before 31 October 2021 and wind power projects with a commercial operation date before 31 December 2020. Accordingly, the FIT price depends on the exchange rate of the Vietnamese Dong to the US Dollar. Meanwhile, the electricity generation price under Decision 21 is fixed in Vietnam Dong and is not adjusted by the exchange rate between Vietnam Dong and the US Dollar.

Based on the above electricity generation price, investors of electricity generation projects can negotiate with EVN on electricity generation prices but must not exceed the Ceiling Price. However, Decision 21 does not specify the criteria for determining the electricity generation price. The absence of specific guidance on this issue makes it difficult for the investor to negotiate electricity generation prices with EVN.

The FIT price level of Vietnam has been relatively low when compared to other countries in the region and around the world. Investors in electricity generation projects will be impacted as the Ceiling Price is reduced by 18-34% compared to the FIT price.

Investors could apply the Ceiling Price when negotiating electricity generation prices with EVN because the Ceiling Price is still much lower than the FIT price.

However, although the new price may not be as expected of investors, this is considered a “rescue” signal for projects that have been waiting for a long time since there is no price.

Therefore, project investors who have missed the FIT price appointment should quickly negotiate with EVN to determine the purchase price, ensuring that it does not exceed the Ceiling Price in order to put transitional wind and solar power plants into operation soon.

Should you have any questions about the above contents, please revert to BLawyers Vietnam at consult@blawyersvn.com. We are more than happy to hear from you!