Lao Dong Newspaper would like to quoted a speech by Dr. Nguyen Xuan Quang - Institute of Energy Technology (Hanoi University of Science and Technology), at the Workshop "Solutions for energy conversion towards Net Zero" organized by Lao Dong Newspaper in coordination with the Ministry of Industry and Trade on May 29, 2025.
Renewable energy (NLTT) is a pillar of Vietnam's sustainable development strategy, aiming for net zero emissions (Net-zero) by 2050. However, determining renewable electricity prices is a complex problem, requiring a balance of benefits between the government, electricity investors from the workforce, traditional electricity investors, electricity consumers and people. Challenges related to policies, finance, infrastructure, and especially emission reduction pressure as well as fluctuations in IT affecting traditional power sources are hindering this process. This article analyzes difficulties and proposes solutions to solve them.
1. Difficulties in policies and legal framework
Legal framework lacks synchronization and transparency is a big barrier. The Government has issued policies such as Decision 39/2018/QD-TTg (Wind power price: 8.5 USCENT/KWH on land, 9.8 USCENT/KWH) and Decision 08/2020/QD-TTg (biomass price), but these mechanisms are often short-term. The FIT price mechanism has promoted NLTT, but at the end of 2021, many transition projects (4,736.16 MW, including 8 solar power projects and 77 wind power projects) do not meet the conditions, causing investment stagnation. Switching to electric bidding mechanism requires transparency, but currently, these regulations have not been completed, making it difficult for investors of the NLTT in financial planning. The overlap between the Land Law, the Sea Law, and the Planning Law also increases the project costs, affecting electricity prices.
The government faces pressure to both promote labor and keep electricity prices low to support social security and attract industrial investment. This causes difficulties in designing a suitable price mechanism, especially when considering the benefits of traditional electricity investors, who are concerned about losing market share due to the development of labor relations.
2. Financial challenges and investment costs
The initial investment cost for IT, especially offshore wind power and biomass power, is 2-3 times higher than coal or gas power. Domestic IT investors have difficulty mobilizing capital due to large requirements for collateral from banks, while foreign borrowers (including ODA) face complicated procedures. The price of IT equipment such as wind turbines or storage batteries is still expensive, and the import tax incentive policy is not effective due to the lack of a separate tax table for high-performance equipment, pushing up investment costs and electricity prices.
Traditional electricity investors are also under financial pressure when they have to upgrade the plant to meet flexible operational requirements, compensating for fluctuations from labor relations. For example, coal-fired thermal power plants such as Vung Ang Thermal Power Plant must invest more in capacity adjustment systems, increasing operating costs.
3. Challenges in infrastructure and power system operation
Vietnam's power transmission system has not kept up with the pace of IT development. The "hot" development of solar power and wind power in the Central and Southern regions (accounting for 24.3% of total capacity, 44% of consumption capacity) causes overload of the power grid, leading to capacity cuts. The unstable characteristics of PV (soluble power depends on light, wind power depends on wind speed) require investment in storage batteries or pumped-storage hydropower, but Vietnam has almost no such infrastructure, increasing electricity prices.
Electrical system operators face technical and financial challenges as labor increases.
- Unstable calculation and difficulty in real-time adjustment.
- Increase storage and reserve costs.
- Inconsynchronization between power source and grid infrastructure.
- Financial risks if the electricity purchase price is higher than the average retail price.
4. Impact of labor market fluctuations on traditional power sources
The instability of IT industry forces traditional electricity investors to suddenly adjust capacity to compensate for fluctuations in supply from IT and consumption demand according to weather. Coal or gas thermal power plants are designed to operate stably, but when solar power is reduced (for example, in the evening or cloudy during the day) or wind power is stopped due to weak winds, these plants have to increase/ decrease capacity quickly, causing:
- Increase operating costs: Regular start-ups/shuts-off reduce equipment life and increase maintenance costs. For example, Vung Ang Thermal Power Plant (Ha Tinh) reported a 15% increase in maintenance costs in 2023 due to continuous capacity adjustments to compensate for the decline in solar power during the rainy season. Thermal power plants have had to increase the number of times their power generation systems are turned on/off from 21 times/year to 450 times/year.
- Low efficiency: Unoptimized operation increases fuel consumption and emissions, going against the emission reduction target.
- Risk of system instability: Sudden changes can cause grid imbalance. For example, in July 2023, some areas in the Central region cut 30% of solar power capacity due to overloaded power grids, forcing Hoa Binh Hydropower Plant to suddenly increase capacity, putting pressure on turbines and dams.
- Loss of competitive advantages: Employees have low margin costs, prioritized for mobilization in the power system, causing traditional power plants to reduce output and affect revenue.
- Must operate more flexibly: To compensate for the fluctuations in the source of labor, traditional power plants are forced to change the operating mode from continuous to flexible, causing equipment wear and tear and increasing maintenance costs.
- Carrying the cost of system replenishment: When the IT system is unstable, traditional power sources must maintain replenished capacity without being fully mobilized, increasing financial pressure.
- Lack of a fair mechanism for electricity prices: Many traditional electricity manufacturers believe that the price of PV does not fully reflect the hidden costs they have to bear, such as storage, stable frequency, and system regulation.
These factors increase the cost of traditional electricity production, indirectly affecting renewable electricity prices, because the national electricity system must maintain a sufficient tong price to cover the cost of the entire system. The rapid development of renewable energy poses many challenges for traditional power plants such as coal-fired thermal power, large hydropower plants, or liquefied gas.
5. Emission reduction needs and difficulties of businesses
Electricity consuming enterprises, especially in the textile, electronics, and export processing industries, are under pressure to reduce emissions from the international market (for example, the EU's CBAM regulations on border carbon tax). This increases the demand for renewable electricity, but they face difficulties:
- Limited DPPA mechanism: Decision 2355/QD-BCT (12.2023) allows a pilot pilot of direct power purchase and sale (DPPA) with a scale of 500 MW, but complicated procedures make it difficult for small and medium-sized enterprises to participate.
- High cost: Renewable electricity prices are higher than traditional electricity due to large investment costs, making it difficult for export enterprises to compete on prices.
- Lack of supply: The stagnation of IT projects after FIT prices expired and the power grid overloaded, causing supply to not meet demand. For example, some textile and garment enterprises in Binh Duong are willing to pay higher prices for green electricity but cannot find a suitable supplier.
6. Balancing interests between stakeholders
Renewable electricity prices must balance the benefits of all parties:
- Government: Want to keep electricity prices low to support social security and attract industrial investment, causing financial pressure on EVN, which suffered heavy losses due to electricity prices being lower than production costs.
- Labor and employment investors: Hopefully, the electricity price will be high enough to cover costs and ensure profits. The bidding mechanism reduces electricity prices but increases risks for domestic investors.
- Traditional power investors: Concerns about increased operating costs and loss of market share due to the development of IT, especially when having to flexibly adjust capacity.
- Consumption enterprises: Prioritize stable power sources and reasonable prices. Power outage or high prices reduce competitiveness.
- People: sensitive to increased electricity prices, especially low-income groups. The multi-level electricity price policy has not separated social security and market mechanisms.
7. Environmental and social challenges
Employment service projects require large areas of land, causing conflicts in land use in rural areas. Site clearance and compensation increase project costs. Treating waste from solar panels or wind turbines after their life cycle requires appropriate regulations and recycling technology.
8. Proposed solutions
- Completing the legal framework: Building a transparent bidding mechanism and expanding DPPA to make it easier for businesses to access renewable electricity.
- Infrastructure investment: Upgrading the power grid, developing an energy storage and renewable hydropower system to reduce pressure on traditional power sources.
- Financial support: Increase credit incentives and reduce taxes for IT investors and consuming enterprises, technical support to meet "green" standards.
- Separate electricity prices: marketize electricity prices, have separate support policies for low-income people.
- International cooperation: Learning from experience from China, Norway and attracting foreign capital and technology.
9. Conclusion
The decision on renewable electricity prices in Vietnam requires a balance of benefits between the government, employee investors, traditional electricity investors, consumer enterprises, and people. The fluctuations in IT work put pressure on traditional power sources, increasing operating costs, while businesses have difficulty accessing green electricity to meet international requirements. With great potential for IT and political determination, Vietnam can overcome challenges through synchronous solutions, ensuring sustainable development and meeting the needs of "greening" from the international market.
