September 27, 2020 07:05

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Anxiety over wind power when the Government has not finalized to extend the FIT price

20:08 | 09/08/2020

VCN- Up to now, the Government has not finalized the extension of the time of applying the fixed electricity price mechanism (FIT-PV price) to wind power projects. That means many wind power investors may not be able to keep up with the schedule andput the projects into operation before November 2021 to get FIT price.

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Renewable energy development, typically wind and solar power, is the top priority to quickly fill shortage in electricity of Vietnam. Photo: Nguyen Thanh

On July 29, the Office of the Government (GO) sent the MoIT a document conveying the opinion of Deputy Prime Minister Trinh Dinh Dung regarding the proposal to extend the time forapplying the FIT price mechanism for wind electricity projects.

This came after the Government convened a meeting with ministries on July 21. Deputy Prime Minister Trinh Dinh Dung said the worldwide impact of the Covid-19 pandemic has affected the progress of wind power projects in our country.

Many ongoing projects are delayed in equipment supply and construction, so they cannot be put into operation on schedule to apply the FIT price in amended Decision No. 39/2018/QD-TTg, supplementing articles of the Prime Minister's Decision No. 37/2011/QD-TTg of June 29, 2011, on mechanisms to support the development of wind power projects.

In this document, the Deputy Prime Minister has not finalisedwhether or not to extend incentives for wind power. Instead, the Deputy Prime Minister assigned the MoIT to continue coordinating with concerned ministries and agencies to study and agree on plans to solve difficulties in investment in wind power construction. This will be reported to the Prime Minister in September 2020.

"In case of necessity to extend fixed price mechanism for wind power, it is necessary to have the agreement of ministries on the subjects of application and report on the expected fixed price to be applied for the extended period," the document stated.

The Deputy Prime Minister also asked the MoIT to urgently research the bidding/auction mechanism applied to wind power projects and to pilot this mechanism soon to improve transparency, competition, and reduce purchase electricity prices from wind power projects; and report to the Prime Minister for consideration and decision in September this year.

The wind power sector only really attracted investment after Decision No.39. Decision No.39 provided preferential rates of 8.5 Uscents/kWh and 9.8 Uscents/kWh turn to apply for onshore wind power projects and offshore wind power projects.

The purchase price is applied to part or all of the grid connected wind power plants with commercial operation date before November 1, 2021 and applies for 20 years from the date of commercial operation.

Recently, many localities, as well as some international organizations and central agencies, have proposed the Prime Minister consider extending the FIT price mechanism for wind power projects that are deploying construction investment in but arepostponed due to adverse effects of objective reasons.

The MoIT has also proposed the Prime Minister to consider extending the time of applying the FIT price mechanism for wind power projects in Decision No.39 until the end of December 31,2023. After 2023, wind power projects will apply competitive bidding and auction mechanism.

The MoIT also petitioned the Prime Minister to assign the MoIT to calculate and propose the new wind power purchase price for wind power projects with operation dates from 1/11/2021 to 31/12/2023, report to the Prime Minister for consideration and approval.

Regarding this issue, at the high-level energy forum held at the end of July, Nguyen Tam Tien, General Director of Trung Nam Construction Investment Joint Stock Company (Trung Nam Company) analysed, wind power, in the past 10 years, the country has only produced 400 MW of wind power, of which Trung Nam Company alone is more than 100 MW.

Investing in wind power is quite difficult. Firstly, all construction and installation equipment for wind power requires super-size and super-weight equipment, which requires special vehicles and cranes.

In Vietnam, the market is very limited for this, especially now it is only beginning to develop Nearshore wind power (offshore wind power), Offshore (offshore wind power).Equipment used at sea is not a simple problem, Vietnam nearly doesn't havethis. This is a huge challenge for investors.

The whole equipment and technology of Vietnamese wind turbines is completely dependent on foreign countries.

With the policy until the end of 2021, there will be no preference for wind power prices (with the land price of electricity being 8.5 US cents/kWh and sea wind at 9.8 US cents/kWh-PV), recently, foreign investors have been stifling domestic investors that if they do not buy, there is no time to catch up, pushing domestic investors to face with many difficulties.

However, due to the effects of the Covid-19 pandemic, the MoITalso reviewed the proposals of investors, requesting the Government for wind power projects to enjoy fixed electricity purchase price mechanism until the end of 12/2023, then proceed to bidding, competitive auction to select the project developer.

"I think the change is reasonable for investors to offset the time affected by the Covid-19 pandemic, and at the same time return to negotiate fairly with foreign investors," said Tien.

By UyenNhu/Dieu Huong