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Proposing to adjust peak generation hours and tariff of avoided costs for small and medium hydropower projects

Proposing to adjust peak generation hours and tariff of avoided costs for small and medium hydropower projects - 

The Vietnam Energy Association (VEA) has just sent a document to the Prime Minister, the Ministry of Industry and Trade (MOIT), the Electricity Regulatory Authority (ERA) and  Vietnam Electricity (EVN) on “Adjusting peak power generation hours and tariff of avoided costs for small and medium hydropower projects in 2021”.

The full text of proposal of VEA is as follows:

In recent years, the mechanism for encouraging medium and small hydropower projects, expressed in the Decision No 18/2008/QD-BCT dated July 18, 2008, Circular No. 32/2014/ TT-BCT dated October 9 / 2014 and Circular No. 29/2019/TT-BCT dated November 15, 2019 of MOIT on regulating tariff of avoided costs and sample power purchase agreement (PPA) applicable to the medium and small hydropower plants (as the renewable energy projects) has encouraged investors to actively participate in socializing investment in electricity sources.

Up to now, the total power generation capacity of medium and small hydropower plants in the country has reached about 3,600 MW, contributing more than 14 billion kWh of electricity to the national power system annually (accounting for about 6.5% electricity output of the whole system by 2020). Small and medium hydropower has played an important role in covering peak hours of Vietnam's electricity system, ensuring energy security, being a source of green and clean energy and with a cheap electricity price, contributing to reducing costs of EVN (according to the tariff in 2020, the average price was 1,110 VND - equivalent to 4.75 cents / kWh).

However, recently, EVN has issued Document No. 8608 / EVN-TTĐ dated December 30, 2012, on "adjusting peak power generation hours for hydropower plants applied the avoided costs" and Document No. 42 / EVN-TTĐ dated January 5 / 2021, on the "tariff of avoided costs in 2021" in which, there some contents proposed by EVN are not suitable with production and business activities of small and medium hydropower plants that are generating electricity.

To ensure the legitimate rights and interests of the buyer and the seller as stipulated in the PPA according to the content of the Sample PPA in Circulation No 32/2014 / TT-BCT issued by the Ministry of Industry and Trade, Vietnam Energy Association proposes to review some points in Documents No. 8608 / EVN-TTĐ dated 30/12/2012 and 42 / EVN-TTĐ dated 05/01/2021:

1/ Regarding the number of hours for peak price calculation in the dry season

Maintain the implementation of 5 hours / day from Monday to Saturday for 8 months of dry season in accordance with the provisions in Circular 32/2014 / TT-BCT and Circular 29/2019 / TT-BCT to ensure ensuring stability and consistency in the Law on Investment.

If according to EVN's proposal, on the absence of peak hours on Saturdays (35 days / 8 months) and official public holidays of the year (9 days), it is necessary to add 2 months of season. dry season (22 days / month) in September and October to ensure the total number of peak hours in dry season / year.

2 / Peak hour frame applicable to small and medium hydropower plants

Maintain peak hours from 17:00 to 20:00 as prescribed in Circular 32/2014 / TT-BCT and Circular 29/2019 / TT-BCT.

Consider changing peak hours applied to small and medium hydroelectricity (from 9:30 to 11:30) according to current regulations, to the time frame of 6:00 to 8:00 to better match the load chart of the National Power System in the period. 2021 and the following years due to the development trend of the domestic solar power system.

3 / Regarding the tariff of avoided costs in 2021

Calculating tariff of avoided costs in the 2021 in accordance with the content of Circular 29/2019 / TT-BCT dated November 15, 2019 for ensuring the interests of buyers and sellers (according to the calculation of avoided costs in 2021 calculated by EVN in Document No. 42 / EVN-TTĐ dated January 5, 2021).

In fact, in the recent 12 years, since applying the tariff of avoided costs (from January 1, 2009 to the end of 2020), the CPI has increased by 95%, leading to respective increasing investment costs for medium and small hydropower projects, the average price of EVN sale electricity also increased by 96.6% (from 948.5 VND to 1864.5 VND) while the electricity purchase price only increased by 36% (from 810 VND to 1,110 VND). The increase in electricity purchase price in 2021 by 13.6% (about 5.43 cents) for the investors of small and medium hydropower projects is also inadequate, so the approval of the above proposals is extremely necessary, for the investors to prevent money losses and for the banks to prevent the bad debt, help investors feel secure and continue to invest in remaining medium and small hydropower projects with a total capacity of about 2,600 MW (according to workshop on the Power Development Planning VIII), that leads to reducing electricity from Lao and China with a price of 6.86 cent/kWh.

It is very inappropriate that medium and small hydropower projects are also renewable energy sources as solar power projects while construction time longer, investment rate higher but electricity price lower.

The Vietnam Energy Association would like to suggest the Prime Minister, the Ministry of Industry and Trade and the Electricity Regulatory Authority of Vietnam to consider and approve the above contents to calculate the taiff of avoided costs in 2021 and the following years for harmonious ensuring the right and benefit of investors of medium and small hydropower projects.

VietnamEnergy.vn.

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