The Ministry of Investment and Trade (MOIT) is collecting opinions from ministries and local authorities on the draft Prime Minister decision on launching a pilot program on solar power pricing.

The reason, according to MOIT, is that more time is needed to build the bidding mechanism in accordance with the Prime Minister’s Decision No 13.

The FIT (feed in tariff) mechanism stipulated in Decision 13 is applied only to projects put into commercial operation prior to January 1, 2021.

The projects that cannot meet this requirement won’t be able to enjoy the FIT mechanism, but the prices will be defined through ‘competition’.

In Decision 13, the Prime Minister assigned MOIT to design a bidding mechanism for solar power projects and draft the roadmap for the implementation.

MOIT says it is necessary to create a bidding mechanism to choose investors and investment projects to serve as the foundation for determining solar power purchasing prices.

However, the current laws still don’t have regulations on choosing investors for solar power project development in terms of electricity purchasing prices.

The ministry needs more time to study and design a competitive bidding mechanism which ensures transparency in pricing and improves state management efficiency in investment.

The Prime Minister has agreed on adding another 21 projects with the total capacity of 1,000 MW to the plan, and 103 other projects with the capacity of 10,000 MW have completed procedures to be added to the plan.

This means that after the FIT mechanism stipulated in Decision 13 expires (December 31, 2020), the bidding mechanism for solar power projects would still not be set.

Meanwhile, as reported by MOIT, eight solar power projects which have been added to the national power development plan with total capacity of 610 MW, cannot meet the requirements to enjoy the FIT mechanism stipulated in Decision 13.

The Prime Minister has agreed on adding another 21 projects with the total capacity of 1,000 MW to the plan, and 103 other projects with the capacity of 10,000 MW have completed procedures to be added to the plan.

All these projects will have to wait for the new policy. This means that if MOIT doesn’t have a pilot program on defining solar power prices, they will have no other choice than to wait.

Projects to become operational prior to July 2022 will get benefits

MOIT said that in the transition period from FIT to bidding mechanism, the projects named in the national power development plan that cannot meet the requirements to enjoy FIT will be subject to the pilot program.

As of the end of August 2020, 92 solar power project had been put into operation with total installation capacity of 6,165 MWp.

MOIT has reaffirmed the high possibility of lacking electricity in 2021-2024. The volume of electricity in deficiency will rise from 400 million kwh in 2021 to a peak of 13.3 billion in 2023 before decreasing to 11 billion kwh in 2024.

One of the solutions to mitigate the risk is stepping up the development of renewable power, especially solar power, which can be implemented rapidly and put into operation in 2021.

The total solar power capacity expected to be developed is 14,450 MW by 2025 and 20,050 MW by 2030.

According to MOIT, the pilot program aims at several goals, including ensuring the continuity of policies on encouraging solar power, thus mobilizing power sources and ensuring supply amid the risk of electricity shortage in the southern region.

Under the draft decision on launching the pilot program, from November 2020 to May 2021, projects will be selected based on the prices to be offered. From 2021 to June 2022 procedures and implementation of projects will be followed.

The pilot program will be applied to solar power projects listed in the national power development plan and it will be valid only to floating and on-grid solar power projects.

The program won’t be applied to on-grid solar projects to be invested under the mode of PPP (private public partnership) and direct electricity purchase/sale.

In principle, projects will be selected based on prices to offer, from low to high, until the total capacity of the program is met.

The ceiling price for solar power to be applied in the pilot program will be defined in accordance with regulations in Decision 13. 

Luong Bang

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