THE TRANSITIONAL FRAMEWORK FOR ELECTRICITY PRICES OF SOLAR POWER PLANTS WIND POWER PLANTS – DECISION 21
Electricity prices of transitional solar power plants and wind power plants
On January 7, 2023, the Ministry of Industry and Trade issued Decision 21/QD-BCT on the issuance of a framework for electricity prices for solar and wind power plants (“Decision 21”). Decision 21 stipulates that the price ceiling for electricity generation from solar and wind power plants is as follows:
- 1,184.90 VND/kWh for ground-mounted solar power plants;
- 1,508.27 VND/kWh for floating solar power plants;
- 1,587.12 VND/kWh for onshore wind power plants; and
- 1,815.95 VND/kWh for offshore wind power plants.
In addition, the Vietnam Electricity Group and solar and wind power generation units will negotiate electricity prices on the basis of the electricity price framework and relevant laws and regulations.
Various opinions on the new electricity price framework
Stakeholders have expressed various opinions on this new introduction of the electricity price framework. The following are some of the notable opinions.
- Positive impact on the renewable energy sector: The new electricity price framework is expected to encourage more investment in renewable energy, particularly solar and wind power, as it provides a predictable and stable revenue stream for investors and reduces uncertainties in project financing. 2.
- Competitive electricity prices: The new electricity price framework sets a price ceiling that is lower than the average electricity retail price in Vietnam, which could result in more affordable electricity for consumers.
- Concerns about profitability: Some renewable energy investors have expressed concerns about the profitability of their projects under the new electricity price framework, especially for those with higher investment costs or lower electricity output due to technical or environmental constraints.
- Need for flexibility and adjustments: The new electricity price framework may need to be adjusted over time to reflect changes in technology, market conditions, and regulatory requirements. It is also important to provide flexibility for project developers to negotiate electricity prices with the Vietnam Electricity Group and avoid rigid administrative procedures.
Overall, the new electricity price framework is a positive step toward promoting renewable energy development in Vietnam, but it also requires careful monitoring and adjustments to ensure its effectiveness and sustainability in the long run.