VietNamNet Bridge – The Electricity of Vietnam (EVN), the only electricity wholesale buyer, will buy power made from agricultural waste at 5.9 US cents per kwh, which is higher by 1.8 cents per kwh than the current average price.

The Prime Minister has released the Decision on the Financial Support Mechanism to be applied to the biomass electricity manufacturers, which will take effect on May 10, 2014.

Under the decision, within six months of the day that investors in biomass power projects make written proposals on selling electricity, EVN will have to sign electricity purchase contracts with them. A contract will be valid for 20 years, which can be extended later.

Investors in biomass power plants not only can sell electricity at high rates, but also can enjoy a series of investment incentives. They are exempted from the import tax for those material and equipment imports that cannot be obtained domestically. They will also enjoy the corporate income tax remission and the land use fee reductions as designed for priority investment projects.

Prior to that, in an effort to encourage investments in the energy recycling sector, the Ministry of Industry and Trade (MOIT) had suggested a price of 6.1 US cents per kwh for electricity made of bagasse instead of 4 cents per kwh, as currently applied.

A price level of 7.3 cent per kwh has been suggested for electricity from rice husk (4 cents per kwh currently). Meanwhile, electricity from the burning of garbage would be priced at 10 cents per kwh, and electricity from waste dumping 10 cents per kwh (now 4 cents per kwh)

However, the Prime Minister has decided that biomass electricity will be priced at 5.8 cents, lower than the price levels suggested by MOIT.

It is thought that the decision may discourage investors who are planning to pour money into biomass power projects.

Power experts have noted that investors currently are not interested in biomass power projects, because of the low prices EVN pays for the generated electricity.

They claim that the energy recycling sector in Vietnam can develop only if the government accepts to buy electricity at higher prices, thus allowing investors to make the profits that are sufficiently encouraging.

Total electricity output in Vietnam is about 26,000 MW, of which electricity from recycling accounts for only 3.7 percent.

A report of the Energy Institute asserts that there are 40 bagasse projects operational in Vietnam, but there are only five sugar plants that sell electricity to EVN to be sold on the national grid.

In the southern city of Can Tho, a rice husk-made power plant is nearly getting completed with the boiler for electricity generation having installed. However, the investor does not sell electricity to EVN because of the low prices. It now sells steam to the enterprises in the Tra Noc Industrial Zone to dry catfish products for export.

Scientists have pointed out that Vietnam has great potential to generate electricity from solid waste, with 100 million tons of material created every year. This includes 40 million tons of straw, 8 million tons of rice husk, 6 million tons of bagasse, and 0.3 million tons of coffee bean bark, wood and coconut waste.

TBKTSG