Brian Jeffrey
The Ministry of Industry and Trade (MOIT) has been tasked with addressing challenges faced by renewable energy projects to facilitate their swift operations.
In cases where wind and solar power projects benefited from the feed-in tariff (FIT) without the necessary approvals, the Electricity of Vietnam (EVN) will recognize their commercial operation dates (COD) and enter into power purchase agreements (PPAs). EVN will review each project and collaborate with investors to resolve issues based on inspection findings.
Consequently, projects may no longer be eligible for FIT benefits, and transitional pricing will apply. Developers will be required to reimburse the state for any financial discrepancies to maintain project continuity.
If wind or solar projects were set up on land designated for mining or irrigation, relevant ministries must collaborate with local governments to evaluate the economic advantages of these power projects and adjust plans accordingly to prevent resource wastage.
Regarding solar projects identified in Inspector’s Conclusion No. 1027 on April 28, 2023, as lacking legal endorsement in planning, MOIT and other ministries will revise strategies and update plans during the 2025 review period.
These projects were originally planned based on FIT, and if they are unable to realize this support, transitioning to significantly lower transitional prices could jeopardize their viability, potentially leading to severe implications, analysts caution.
First, there could be threats to power supply security. The renewable energy capacity stands at 21,664 MW, constituting 12.75% of the overall energy system capacity, with many projects lacking the necessary official acceptance prior to COD.
The implementation of this measure may adversely impact renewable energy initiatives, jeopardizing power security.
Second, the financial system could face repercussions. Independent power projects (IPP) in Vietnam typically do not meet all criteria for funding from international financial institutions.
As a result, most renewable energy initiatives are financed through domestic sources. If these power projects default on debt obligations, it could have repercussions for the domestic financial landscape.
Third, socioeconomic development could suffer. Financial failures and potential bankruptcies may disrupt local economies and lead to social issues by rendering numerous workers unemployed.
Fourth, this situation may culminate in inefficient use of social resources and threaten the investment climate.
The halt, closure, or failure of these projects could have detrimental effects on local economic growth, resulting in decreased tax revenues and gross regional domestic product (GRDP).
According to the 2014 Construction Law, all construction activities must receive approval from relevant authorities prior to commencing operation.
However, many energy facilities (including power generation and transmission lines) that became operational since 2014 did so without completing the requisite approval processes, similar to state-funded projects.
In practice, all power projects must pass tests and official assessments to confirm they meet standards for quality, operation, environmental impact, and safety prior to connecting to the national grid and commencing commercial activities. They are also subject to ongoing monitoring and periodic evaluations by relevant authorities.
It is essential for energy and renewable energy projects to fulfill stringent quality and technical criteria, making official acceptance an administrative requirement.
Nonetheless, administrative delays stemming from issues in land planning and changes in land usage have created significant obstacles.
Moreover, many renewable energy initiatives launched between 2019 and 2021 faced challenges in completing administrative tasks due to disruptions caused by the Covid-19 pandemic.
