MOIT answer to VEA petition about ‘FIT mechanism for wind and solar power’

MOIT answer to VEA petition about ‘FIT mechanism for wind and solar power’ - 

The Electricity and Renewable Energy Department (Ministry of Industry and Trade - MOIT) has just issued a written document to the Vietnam Energy Association (VEA) on the petition about “Extending the FIT mechanism for the wind and solar power projects” (according to the Paper No. 2040/ PC-VPCP dated December 7, 2020, from the Government Office to the MOIT).

The full text of the answer of the Department of Electricity and Renewable Energy (DERE) to VEA is as follows:

1 /On wind power development mechanism

On April 9, 2020, MOIT issued an Official Document No 2491/BCT-ĐL to the Prime Minister (PM) about difficulties in wind power development investment in the localities and proposal to prolong the fixed-price mechanism for wind power projects in Decision 39 and June 26, 2020, issued the official document No 4649 / BCT-DL to PM on explaining opinions of ministries and agencies to prolong the fixed wind power price mechanism.

Carrying out the guidelines of PM (in Document No 6155/VPCP-CN) dated on July 29, 2020, MOIT issued an Official Document No 8159/BCT-ĐL dated on October 28, 2020 to the ministers and agencies for asking comments on the draft report to the PM on resolving difficulties in the construction investment of wind power projects (with a calculation for expected wind power price). Based on the opinions and comments of the ministries and agencies, MOIT is studying and synthesizing them to report to the PM.

2 / On the solar power development mechanism

In recent years, the fixed FIT mechanism issued by PM in Decision 11/2017/QD-TTg and Decision 13/2020/QD-TTg dated 26/4/2020 on the mechanism to encourage the development of solar power projects in Vietnam had already mobilized investment resources in developing solar power projects, suitable for a new market in Vietnam.

However, the FIT mechanism has the following main limitations:

Firstly: The projects were concentrated on development in the areas with a good solar radiation potential, wich leaded to the overload of the power grid in these areas, affecting power system stability and increasing competition for land.

Secondly: The FIT mechanism limited the controlling scale and plan of developing power plants and power systems; at the same time, the solar power purchase prices could not closely and timely recount price change of the technologies in the market.

According to DERE, in the recent three years, the solar power sector in Vietnam developed very strongly, the total installed capacity has increased rapidly, the market for equipment production and service provision expanded. Therefore, policies and regulations on solar power development need to be reviewed, studied and adjusted towards approaching a competitive market, and at the same time, the investment manager must be effectively increased and the system operation must be stable and qualitatively.

To study and complete bidding mechanism for investor selection, auction (reverse) and electricity pricing is necessary and suitable with the world trends.

Implementing the provisions of Decision 13/2020/QD-TTg dated April 26, 2020, on the mechanism to encourage the development of solar power projects in Vietnam and PM concrete guidance (in Notice No. 221/TB-VPCP dated July 1, 2020 of the Government Office), on the basis of comments of ministries, agencies and localities, MOIT is currently completing a draft Decision of the Prime Minister on the auction mechanism for solar power development.

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