Soon have policies and mechanisms to remove obstacles for renewable energy
Regarding the development of renewable energy and the pricing mechanism for wind and solar power in Vietnam, the Minister said that wind and solar power have developed quite rapidly in our country recently, due to the attractive incentive mechanisms and policies of the state. Vietnam is considered a country with great potential for wind and solar power development, however, there are some paradoxes that places with potential for sunshine and wind are places with low load, so to use this power system, a large investment must be made in electricity transmission and storage.
On the other hand, to maintain the power system regularly and safely and promote the efficiency of renewable energy, there must be a stable source of electricity to compensate when there is no sun or wind.
Minister of Industry and Trade Nguyen Hong Dien speaks at the plenary discussion in the hall on the afternoon of June 1.
In Vietnam, coal, oil, biomass, and hydropower are also considered baseload power. Therefore, even though they are more expensive and emit more carbon, in the short term, when there are no other alternative sources or solutions, traditional power sources are still maintained to ensure the safety of the power system.
According to the Minister, coal and oil are primary materials, the price of which is determined by the world market. In recent years, due to supply disruptions, high prices have led to higher electricity prices if transmission costs are not taken into account. Solar power does not cost money to buy, the cost only depends on the price of technology and equipment. However, world technology develops rapidly, so the cost of technology decreases every year, causing the cost of electricity and renewable energy, excluding transmission and storage costs, to decrease over time. In the long term, renewable energy will be the cheapest source if transmission and storage costs are not taken into account.
Regarding the mechanism for calculating renewable energy prices, the legal basis is based on the Electricity Law, the Price Law and Government decrees. The Ministry of Industry and Trade has developed a price framework determined on the basis of statistical data of solar and wind power plants that have signed electricity price contracts. In the process of determining the price framework, the Ministry compared it with data from international energy agencies, and followed the correct procedure of consulting the Ministry of Finance, the State Capital Management Committee at Enterprises, and the Advisory Council on the results of the appraisal of the price framework, etc.
The Minister affirmed that the price mechanism for transitional renewable energy projects as the current price framework is consistent with world prices and domestic socio-economic practices.
Regarding the issue of handling solar wind power projects that are not eligible to participate in FIT prices, the Minister of Industry and Trade admitted that it is undeniable that there is waste if dozens of solar and wind power projects are invested in but are not exploited or used before.
“However, in order to avoid waste but also not be seen as legitimizing the wrong, even violating current legal regulations, it is necessary to have the policy of the competent authority accept and the efforts of investors in the synchronization of functional sectors and local authorities to resolve the issue,” Minister Nguyen Hong Dien affirmed.
According to the head of the Ministry of Industry and Trade, most project investors have raced against time, so they have ignored or omitted steps and procedures according to the law, and even violated the provisions of specialized laws. The expired FIT price policy is reflected in the Prime Minister's decision, not suddenly stopped, so of course the FIT price cannot be applied but must follow the provisions of the Law on Prices, the Law on Electricity and related Decrees.
According to the Minister, on the basis of negotiations to share the benefits harmoniously between the State, people and businesses. Currently, the country has 85 factories that have signed electricity purchase contracts but do not meet the FIT price conditions with a total capacity of 4,736 MW. The capacity of these projects should avoid waste. Based on the Law on Prices, the Law on Electricity and unrelated Decrees, the Government has directed the departments to issue Circular 15 and Decision 21 stipulating the method of determination and price framework applicable to transitional renewable energy projects.
The Minister of Industry and Trade informed that the Ministry has also issued many documents urging investors to complete the procedures and instruct EVN to urgently coordinate with investors to agree on electricity prices to soon put these projects into operation. However, by March 30, that is, 2 months after the price frame decision took effect, only 1 investor had submitted documents. Through many efforts of the Ministry of Industry and Trade from meeting and dialogue with investors, related parties and issuing documents directing EVN, by May 31, 59/85 plants with a capacity of 3,389 MW, accounting for 71.6% of the projects had submitted documents to EVN, of which 50 projects were proposed to have a temporary price equal to 50% of the price frame to continue completing the procedures. There are currently 26 factories with a capacity of 1,346 MW, accounting for 28.4% of the projects that have not yet submitted their documents to EVN.
“The reason we know that investors are slow in submitting their documents is that they do not want to negotiate with EVN within the price frame issued by the Ministry of Industry and Trade, the reason being that it is low, and the second reason may be that legal procedures have not been completed or the factory is in a difficult location for power transmission,” said Minister Nguyen Hong Dien.
The Minister of Industry and Trade proposed that the National Assembly and the Government soon provide policies and mechanisms to remove obstacles so that the Ministry of Industry and Trade, ministries, branches and localities have a basis to direct the complete resolution of the above problem, avoiding waste of resources and causing social frustration, ensuring harmony of interests but organizations and individuals performing this task are not considered to be violating the law.
Import electricity only to supply border areas
Regarding Vietnam's import issue, according to the head of the Ministry of Industry and Trade, Vietnam's policy of buying and selling electricity from abroad is stipulated in the Electricity Law and related decrees. Electricity import is a limited strategy based on Vietnam's political and security relations with neighboring countries to ensure national energy security in all situations and is determined in the National Power Development Plan in each period.
Since 2015, Vietnam has been a net energy importer, importing coal, importing oil for electricity generation and will soon import LNG. Electricity imports have been implemented for many years, with China since 2010, with Laos since 2016. Imports from Laos are also reflected through the Agreement on Development of Cooperation in Energy and Mining Projects, the Memorandum of Understanding between the two Governments to strengthen comprehensive relations with our friends. Laos' electricity imports are not only economic relations but also political and diplomatic relations and to ensure the country's defense and security goals.
The Minister said that electricity sources have always been included in the power source structure of approved national power development plans. However, the rate of electricity imports is still very small, only 572 MW, equivalent to 0.73% of the system's installed capacity in 2022, and is only for border areas. What is special is that electricity imports from Laos are clean electricity, electricity imported from abroad is clean electricity, because if there are emissions, they are emitted at the place of production.
“Importing electricity in the past was only to supply the border areas, so it is cheaper than the price of domestic renewable energy electricity if we have to add transmission costs, the loss of the line from the Central and Southern regions to the North is very high. The electricity transmission system from domestic power plants to our border is currently not synchronized, not as convenient as the electricity system of neighboring countries to the border of the two countries. Importing electricity, connecting the grid and exchanging electricity between countries in the region is necessary to diversify the types of electricity sources, especially baseload electricity so that in the future we can exploit and develop renewable energy while there is no other baseload electricity source to replace it,” Minister Nguyen Hong Dien informed.
According to VNA/Tin Tuc Newspaper
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