Renewable energy businesses panic over high FIT price withdrawal

Many solar power production enterprises are worried that the current electricity selling price of 9.35 US cents/kWh will be reduced to 7.09 US cents/kWh, and cannot even exceed 1,184.9 VND/kWh.

Many solar power production enterprises are worried that the current electricity selling price of 9.35 US cents/kWh will be reduced to 7.09 US cents/kWh, and cannot even exceed 1,184.9 VND/kWh.

From 2,231 VND/kWh, it plummeted to less than 1,184.9 VND/kWh.

Many solar power enterprises that have had time to accept projects and minutes of project acceptance inspection after the time limit for enjoying electricity purchase prices according to Decision 11/2017/QD-TTg (FIT1) and Decision 13/2020/QD-TTg (FIT2) are in a panic.

The reason is that these plants may no longer enjoy the same electricity prices they have enjoyed since the plants were put into commercial operation (COD) of 9.35 US cents/kWh (FIT1) or 7.09 US cents/kWh (FIT2), in the spirit of solution No. 4 proposed by the Minister of Industry and Trade at the recent online conference to announce and implement the Government's Resolution on policies and directions to remove obstacles and difficulties for renewable energy projects.

Thus, if investors are no longer entitled to the solar power purchase price announced by Vietnam Electricity Group (EVN) at VND 2,231/kWh (equivalent to 9.35 US cents/kWh) or VND 1,692/kWh (equivalent to 7.09 US cents/kWh) to be applied in 2024 and are reduced to a price not exceeding the ceiling price of VND 1,184.9 as prescribed in Decision 21/QD-BCT issued in early 2023 for transitional projects, it is clear to see the difficulties of investors.

According to solution 4 proposed by the Minister of Industry and Trade, projects that are enjoying FIT prices and have violated the conclusion of competent authorities due to not fully meeting the conditions for enjoying FIT prices will not be entitled to preferential FIT prices, but must re-determine the electricity purchase and sale prices according to regulations; and recover the preferential FIT prices that have been enjoyed incorrectly through offset payments for electricity purchases.

According to the report of the Ministry of Industry and Trade announced at the above conference, there are 173 grid-connected solar and wind power plants/parts of grid-connected solar power plants facing the situation mentioned in solution number 4.

The issue of enjoying FIT1 or FIT2 prices while there are no construction acceptance results and the competent state agency has not yet issued a document approving the construction acceptance results of the investor has been mentioned many times by Investment Newspaper in the past.

According to research, if considering the concentrated solar power projects currently operating on the system, the number is approximately 150. However, the number of projects with acceptance results before the end of FIT1 is only 15. The rest are eligible for FIT1 and acceptance during FIT2, eligible for FIT1 and acceptance after the end of FIT2, eligible for FIT2 and acceptance during FIT2, eligible for FIT2 and acceptance after the end of FIT2.

For the wind power production sector, learning from experience in solar power projects, there should be 58 projects accepted before COD; 11 projects accepted after COD but before October 31, 2021 and 19 projects accepted after October 31, 2021.

Thus, wind power projects accepted after October 31, 2021, if currently enjoying a price of VND 2,028.6/kWh (equivalent to 8.5 US cents/kWh), will have to return to a price not exceeding VND 1,587.12 or VND 1,815.95/kWh, depending on whether they are onshore or offshore, according to Decision 21/QD-BCT for transitional projects when applying solution 4 of the Minister of Industry and Trade.

"The only way is to sue"

Mr. Bui Van Thinh, Chairman of the Binh Thuan Wind and Solar Power Association, said that the investment environment in renewable energy has encountered many problems in recent times. In addition to the policy gap, the review of FIT prices as proposed in Sections 4, 5 and 6 is discouraging investors.

“The violations of the law are clear as concluded by the investigation security agency and need to be strictly handled. Determining whether the remaining projects have violated the law or not, to what extent, and who has the authority to conclude that “the project has its FIT price revoked” are all questions that are not easy to answer,” Mr. Thinh said.

According to Mr. Thinh's analysis, investors, especially foreign ones, based on the power purchase agreement (PPA) signed with EVN, are recognized by EVN as COD, which is considered as completing the project. In all current regulations, there is no regulation that confirms: acceptance confirmation by the state management agency is one of the conditions for COD recognition.

“If we do not make things clear and transparent, I believe that when transitional prices are applied, many investors will be forced to sue EVN. It is not known who will win or lose, but the investment environment will certainly worsen and as a result, providing enough electricity for economic development will face greater challenges,” Mr. Thinh commented.

Source: https://baodautu.vn/doanh-nghiep-nang-luong-tai-tao-hot-hoang-lo-bi-thu-hoi-gia-fit-cao-d233800.html