Mechanism for Calculation of Electricity Generation Price Bracket and Its Implication for Transitory Solar/Wind Energy Investors
On 3 October 2022, the Ministry of Industry and Trade (MOIT) issued Circular 15 on the mechanism for setting up an electricity generation price (EGP) bracket applicable to transitory (chuyển tiếp) solar and wind power plants (Circular 15/2022), which took effect from 25 November 2022.
Determining EGP bracket under Circular 15/2022 will cause significant impact to the selling price of the transitory solar and wind energy projects in Vietnam. To be specific:
Circular 15/2022 only applies to solar and wind power plant developers (Developers) who have entered into PPAs with Vietnam Electricity (EVN) before 1 January 2021 (for solar power Developers) or 1 November 2021 (for wind power Developers) but failed to meet the requirements to apply the preferential EGP administered by the Prime Minister under Decision 13/2020 (for solar powers) and Decision 39/2018 (for wind powers) (Transitory Projects);
Circular 15/2022 requires the Developers of the Transitory Projects to provide Feasibility Study Reports or Engineering Designs of their power projects to EVN.
Based on data submitted by the relevant power plants, EVN will calculate and build up an EGP bracket of a standard solar and wind power plant (Maximum EGP Bracket), and obtain an approval from the MOIT for such Maximum EGP Bracket. The approved Maximum EGP bracket will be published on the website of the MOIT and the Electricity Regulatory Authority. The mechanism for calculation of the Maximum EGP Bracket is illustrated in the diagrams at the end of this post. Details on this mechanism are discussed in this document.
The price for selling generated power by the Developers of Transitory Projects to EVN cannot exceed the approved Maximum EGP Bracket. Accordingly, the data provided by the Developers may affect their profit in the future.
On 7 January 2023, the MOIT already issued Decision 21 which approves the Maximum EGP Bracket calculated in accordance with the mechanism specified in Circular 15/2022 (see the bar chart below) which will serve as a basis for EVN to agree on the selling price with the Developers of Transitory Projects:
Maximum EGP Bracket under Decision 21/2023 of the MOIT
Maximum EGP Bracket Calculation Diagrams
Maximum Solar EGP Formulas Diagram (click to view full size)
Maximum Wind EGP Formulas Diagram (click to view full size)
This post is written by Le Thanh Nhat, Nguyen Hoang Duy and edited by Hoang Thi Thanh Thuy.