The Ministry of Industry and Trade has proposed to the Prime Minister that the time period available for applications to the electricity price mechanism for wind power projects be extended.
The Ministry of Industry and Trade, say that the proposed extension is due to the poor uptake of the offer because the price of wind power was not attractive to investors at that time. Only three wind power projects were built from its introduction in 2011 through to 2018 and when these projects were operated, they only had 153.2MW total electricity capacity.
In order to promote wind power development, on September 10, 2018, the Prime Minister released Decision 39th/2018 modifying some aspects of the Decision 37th, and increased the price of electricity produced through wind power.
Specifically, for inland wind power, the feed-in tariff (purchase price at the delivery point for supplier) is 1,927 VND / kWh, (equivalent to 8.5 Us Cent / kWh excluding VAT). For wind power at sea, the feed-in tariff is 2,223 VND / kWh (equivalent to 9.8 cents / kWh excluding VAT).
The electricity price is applied to wind power plants that have begun commercial operation before 1-11-2021 and applies for 20 years from that commercial operation start date.
The Ministry of Industry and Trade said the "Decision 39th" had provided an attractive option for wind power development.
However until now, only 11 projects giving a total capacity of 337 MW have been put into operation.
This is due to other barriers to development beyond the effects of decision 39th with projects stalled for more than a year due to lacking guidelines of implementation of the Planning Law.
Currently, 4,800 MW of additional wind power is planned, but an additional 250 proposed projects (about 45,000 MW) within the provinces have not yet been considered.
Furthermore, COVID-19, has halted progress by affecting the supply of turbines, extending the construction times and slowing down the wind power projects.
Moreover, most wind power projects in the southwest provinces which are both far and near offshore, and have a total capacity of 1,600 MW, require a long time for project preparation because of the complex technologies involved.
Regulations on determining the sea areas for these projects and then obtaining the licensing for these sea areas are quite complex and thus increases the cost and the time required for these projects.
The Ministry of Industry and Trade has been identified, from now to Oct/2021, during the time of Decision 39th regulation of operation wind power plant is applied to the fixed power purchase price mechanism for only about 18 months. This time is not enough for investors to prepare and implement the project construction.
Currently, 9 proposals for potential sites of wind power development have been sent related to the extension of the price mechanism under Decision 39th. These cover commercial operation projects up to 2022-2023.
Therefore to solve such difficulties for businesses who are contributing to ensuring electricity supply in the period to 2025, the Ministry of Industry and Trade proposed to the Prime Minister to consider extending the time of applying the stable electricity price mechanism for wind power projects of Decision 39th until the end of December 31, 2023.
The Ministry also wants to calculate and propose the new electricity purchase price applicable to wind power projects with operation dates in the period from November 1, 2016, to the end of December 31, 2023, and to also report the results of this to the Prime Minister. The Prime Minister will review for approval. After 2023, wind power projects will apply the competitive bidding and auction mechanism.