7 billion USD in wind power investment 'played with' because of missing the price of FIT

Currently, there is about 7 billion USD "playing around" in wind power projects that do not have time to operate commercially before November 1 to enjoy the FIT price, of which banks contribute 4 billion USD.

As of October 31, 2021, there are 84 wind power projects in commercial operation (COD) to enjoy the preferential price (FIT) of 8.5 cents per kWh (about 1,927 VND per kWh, excluding VAT) for 20 years. . Thus, there are 62 wind power projects with a total capacity of nearly 3,500 MW that have not reached the destination on time to enjoy the above preferential price.

The next development policy for wind power or solar power after the end of the FIT price incentive has not been clear yet, making investors in the renewable energy type "stand still".

Investors are "shocked" because they do not know what the new policy will be

At the talk about Removing bottlenecks for renewable energy, on December 22, Mr. Dang Manh Cuong, Deputy General Director of BB Group affirmed, this business has tried to reach the finish line, not passively. The equipment and turbines were ordered from the beginning of the year, but returned to Vietnam at the right time when the epidemic began to break out strongly in the southern region. "Equipment of our two wind power projects to Ho Chi Minh City was kept at the port for 3 months due to the city's social distancing because of the epidemic, and could not be transported to the project," he said.

Difficulties due to Covid-19, he estimated the impact of business projects up to half a year. Due to this force majeure reason, despite trying, only 10% of the capacity of BB Group's two wind power projects can come into commercial operation (COD) before October 31, 2021 to enjoy the preferential FIT price for 20 years. . The remaining 90% has been completed but has not been tested yet because there is no follow-up policy for wind power.

"This negatively affects the financial situation of the business," said Mr. Cuong.

Mr. Dang Manh Cuong, Deputy General Director of BB Group, speaking at the conference Removing bottlenecks in renewable energy, December 22. Photo: Thang Quang

From the perspective of financial investors and lending to renewable energy projects, Mr. Pham Nhu Anh, a member of the Executive Board of Military Bank (MBBank), estimated that there is currently about 7 billion USD "playing with" in Vietnam. wind power projects could not be put into commercial operation before November 1 to enjoy the FIT price, in which banks contributed USD 4 billion (loan 70% of total investment capital).

"Every day that goes by, 7 billion USD of investors and national assets are not profitable, banks also dare not disburse with projects that do not have COD. We do not know whether to extend or negotiate out. Covid-19 affects wind power projects for at least 4 months," he said.

Usually, before deciding to invest in a project, investment plans, scenarios and situations are calculated. However, there are situations where investors cannot predict, or calculate, what will happen to the new pricing mechanism after the end of the FIT price incentive. This is an inadequacy in the current investment policy when the mechanism for renewable energy is "broken".

"The policy should not stop suddenly. Before this decision expires, at least 3 months before, the regulatory agency needs to come up with a follow-up mechanism for investors to calculate. How to do it "on" - off" will be very difficult for investors", commented Mr. Pham Nhu Anh.

Not only wind power investors, solar power investors who have projects that cannot be operated before December 31, 2020 to enjoy the FIT price, are now "distorted" when it has been more than a year and there is still no subsequent pricing mechanism for this type of energy.

For example, in Ninh Thuan, there are currently 3 solar power plants with a total capacity of more than 216 MW, only a part of the project's capacity can be operated in time to enjoy the FIT price of 9.35 cents per kWh. The remaining part of the project has been confirmed by EVN for commercial operation, is delivered to the grid but has not yet been paid when the next policy for solar power after December 31, 2020 is not available.

Mr. Bui Trung Kien, Chairman of the Board of Directors of CME Group, acknowledged that for more than a year, the next policy for solar power was still "empty" which had a great influence on the investment decisions of enterprises.

"Investors have had to overcome many difficulties in the financial arrangement to implement the project, so the factor of policy stability is very important. In the near future, the preferential price reduction of 30-40% will be very difficult. towels for us," he worried.

This investor believes that, if you want to build and develop a long-term business, it is not possible to develop the current policy. Because businesses will not be able to negotiate with foreign partners.

Also recognizing that the next policy for solar or wind power is "shocking", Mr. Nguyen Van Vy, Vice President of Vietnam Energy Association, commented that policymakers need to come up with long-term policies, to ensure a stable investment environment and predictable revenue of projects. Decision 39 on the preferential mechanism for wind power mentioned the transition but it is not clear how or how.

FIT price or tender?

From 2011, wind power and solar power started to develop but only really exploded in 2017 thanks to the 20-year preferential FIT price mechanism for investors. Up to now, Vietnam has more than 16,000 MW of solar power, more than 4,100 MW of wind power. Total renewable energy capacity (solar, wind, biomass...) is about 22,000 MW, accounting for 25% of the power source structure.

Assoc. Tran Dinh Thien said that the story of bottlenecks in renewable energy is because the two sides do not have consensus. Therefore, in order to remove them, the policy approaches cannot be opposed to each other. "Currently, we only focus on discussing economic benefits. Thinking like that is not possible, then policies will not be able to help businesses," he said.

Former director of the Vietnam Institute of Economics said that the State must pay attention to the common interests of the whole market picture to discuss with businesses. Basically, the way to treat the market cannot follow the administrative and achievement mindset. Vietnam is changing its energy structure towards high technology and clean energy. During the conversion process, problems are not there.

"In short, stories about prices and incentives must be based on the spirit of shared benefits and mutual understanding. If we want businesses to stand firm after the crisis, we need to discuss policies and incentives. in the near future," emphasized Mr. Thien.

In terms of investors, Mr. Ho Ta Tin, Chairman of the Board of Directors of HBRE Group, suggested that the authorities consider still applying the FIT price to renewable energy investors who have not reached the finish line in time for objective reasons. Covid-19. He said that after 10 years, the investment cost of wind power has decreased by about 20%, so the preferential price reduction corresponding to this level is acceptable.

"The new FIT price is reduced by 20% compared to the previous one, equivalent to 6.8-6.9 cents a kWh in 10 years for investors to pay back. Then annually review and renegotiate the price", Mr. Tin state a point of view.

With this price, according to him, the profit of the business decreased much, but there is peace of mind because of the clear policy. Banks too, they themselves expect the business to pay evenly and stably. "Businesses do for profit, but also want to share and contribute benefits to the country," said the Chairman of HBRE Group.

Dr. Nguyen Duc Kien, Head of the Prime Minister's Advisory Group. Photo: Thang Quang

Dr. Nguyen Duc Kien, Head of the Prime Minister's Advisory Group, said that HBRE's proposals are similar to some plans submitted by the Ministry of Industry and Trade to the Government. However, Mr. Kien said that implementing this option is "very difficult", because countries only maintain the FIT price for 5 years.

"We understand that investment must be profitable but must harmonize the interests of the State, businesses and users. We always create conditions for businesses to break even and will absorb and submit to the Prime Minister." Mr. Kien emphasized.

On the other hand, the representative of the Ministry of Industry and Trade, Mr. Nguyen Tuan Anh, Deputy Director of the Department of Electricity and Renewable Energy, said that he shares the difficulties of renewable energy investors, especially the project that has not yet been able to operate. enjoy the FIT price.

This position acknowledged, when the scale of renewable energy capacity is already quite large, accounting for 25% of the total system capacity, this time it is necessary to switch to a newer and more modern mechanism to approach the market closer to the market. rapid changes in investment costs, ensuring benefits for investors and society.

With unfinished investment projects, Mr. Anh informed, there will be a mechanism to transfer and handle this number of projects. The Ministry of Industry and Trade is studying to issue an annual electricity price bracket for all types of energy, on this basis, investors negotiate electricity prices with buyers (EVN). It is expected that this electricity price bracket will be promulgated after the power planning VIII is approved by the Government.

As for investment projects after November 1, 2021, the Ministry of Industry and Trade is studying and submitting to competent authorities a mechanism towards selecting project investors through bidding, with localities in charge of selecting investors. Bidding and investor selection will be in accordance with the Laws: Price, Investment and Bidding.

With a geographical position located in the subtropical monsoon region and a coastline of more than 3,000 km, Vietnam is one of the countries with great potential for renewable energy development, especially wind energy. Sun.

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