Dozens of projects are "lined up" waiting for approval
Discussing at the Workshop "Enterprise solutions for energy conversion towards Net Zero" organized by Lao Dong Newspaper in coordination with the Ministry of Industry and Trade on the afternoon of May 29, Associate Professor, Dr. Dang Tran Tho - Director of the Institute of Energy Technology (Hanoi University of Science and Technology) assessed that Vietnam has had important changes in the energy sector in recent years, especially renewable energy.
"The 20182020 period witnessed the explosion of solar power, with more than 16.5 GW put into operation, making Vietnam the leading ASEAN country in terms of solar power capacity ( surpassing Thailand). Wind power will also reach about 4.3 GW by the end of 2023, most of which will be developed in Ninh Thuan, Binh Thuan and the Central Highlands provinces" - Associate Professor, Dr. Dang Tran Tho said.
However, according to Associate Professor, Dr. Dang Tran Tho, from 2021 onwards, this development trend will stagnate due to the end of the FIT price mechanism and no suitable replacement mechanism. More than 4,000 MW of solar and wind power have been completed but have not signed a power purchase agreement (PPA) or have had their capacity cut frequently due to failure to clear the grid.
"The lack of a transitional electricity price policy also causes dozens of GW projects to "row up" waiting for approval, causing great waste of social resources" - Associate Professor, Dr. Dang Tran Tho emphasized.
On the other hand, according to this expert, the energy structure still depends mainly on coal, accounting for about 45% of electricity output (2023). This puts great pressure on the goal of reducing greenhouse gas emissions and shifting to green. Clean power sources such as LNG, renewable hydropower, or new biomass are in the investment preparation stage and are not large enough to replace traditional sources.
In addition, models using energy efficiency, load-bearing reactors, digital electrical systems, and industrial rooftop voltages are still in the pilot phase, lacking a clear legal framework. The competitive retail electricity market has not yet been formed, the direct power purchase and sale mechanism (DPPA) has not been widely deployed, leading to a lack of flexibility in coordinating clean power sources to businesses in need.
"The electricity price mechanism after FIT has not been issued in a timely manner, causing investors to lose confidence and delay many projects. The transition from FIT mechanism to bidding or PPA at the ceiling price is not clear about the method of price determination, the risk sharing mechanism and the application roadmap" - Associate Professor, Dr. Dang Tran Tho commented.
The electricity market still relies on the single-buy model
One of the necessary conditions to promote successful energy conversion is to form a truly competitive electricity market and build a flexible electricity price policy, accurately reflecting costs, market signals and the economy's affordability.
However, Associate Professor, Dr. Dang Tran Tho said that the Vietnamese electricity market still mainly relies on the single-buyer (EVN) model, the wholesale electricity market, the competitive retail market have not been fully developed, as well as there is no real supporting market.
To unleash the potential of renewable energy, it is necessary to urgently issue a transitional electricity price mechanism, with a flexible ceiling - floor price framework by region, technology type and power generation time. This mechanism should take into account actual costs (LCOE), system value and avoid creating competition disturbance between early and late investment projects. For diverse IT sources, electricity prices can be adjusted over time (time-of-use pricing), to encourage investment in flexible storage, load system and optimal regulation.
In addition, it is necessary to build an auxiliary power market including: frequency, black start, and charging services, quick backup, frequency balance, etc. captive and BESS hydropower plants should be allowed to participate in this market, receiving payment according to market prices or periodic auxiliary service contracts. The issuance of a Circular with specific instructions on the supporting market is one of the priority tasks for the period 20252026.
"The direct power purchase and sale mechanism (DPPA) between IT investors and large customers (FDI, IP, multinational corporations) also needs to be widely deployed nationwide. This will promote green electricity consumption, reduce the regulatory burden for EVN and support businesses in fulfilling ESG commitments and carbon neutrality in the supply chain" - Associate Professor, Dr. Dang Tran Tho proposed.
