A. NEW STANDARDS FOR COAL-FIRED AND GAS-TURBINE POWER PLANTS

From July 15, 2023, construction of new coal-fired and gas-turbined power plants that are unable to meet a specific energy efficiency rate will no longer be allowed. The minimum energy efficiency rate of each power generation unit must exceed the minimum efficiency rate set out in Decision 14/2023/QD-TTg of the Prime Minister dated May 24, 2023 ("Decision 14").

Subject to technology and capacity, the minimum efficiency rate may vary. Below are the mandated minimum efficiency rates under Decision 14:

No Power generation unit Minimum Efficiency Rate (%)
I. Coal fired plants
1 Capacity ≥ 50 MW and < 150 MW 34
2 Capacity ≥ 150 MW and < 300 MW 38
3 Capacity ≥ 300 MW and < 600 MW 39
4 Capacity ≥ 600 MW and < 800 MW 41
5 Capacity ≥ 800 MW 43
II. Simple cycle gas turbine
1 Capacity ≥ 100 MW and < 150 MW 33
2 Capacity ≥ 150 MW and < 200 MW 34
3 Capacity ≥ 200 MW and < 300 MW 37
4 Capacity ≥ 300 MW 39
III. Combined cycle gas turbine
1 Capacity ≥ 100 MW and < 150 MW 49.5
2 Capacity ≥ 150 MW and < 200 MW 51.0
3 Capacity ≥ 200 MW and < 300 MW 55.5
4 Capacity ≥ 300 MW 58.5


To meet these standards, new coal-fired power plants and new gas-turbine power plants must install energy efficient equipment when constructing a new power plant.

This requirement does not apply to existing power plants.

B. UPDATE ON PRICING FOR TRANSITIONAL PROJECTS

Due to Covid and for other reasons, several solar and wind power projects (about 85 projects) have failed to achieve the COD1 deadline ("Transitional Projects"). Consequently, those Transitional Projects are ineligible to enjoy the subsidized feed-in-tariff set out in power purchase agreements which have been signed with EVN.

In 2023, the Ministry of Industry and Trade ("MOIT") issued a number of new regulations (Circular 152 , Decision 213 and Circular 014 ). They contain provisions which are unfavorable to Transitional Projects: (i) ceiling prices at which EVN will purchase electricity generated by Transitional Projects are low; (ii) the electricity price of those Transitional Projects must be fixed and they can be denominated only in Vietnamese dong (not US dollars); and (iii) under Decision 21, the ceiling electricity price (exclusive of VAT) for each type of Transitional Project is as below:

No. Type Ceiling price (VND5/kWh)
1 Ground-mounted solar power plants 1,184.90
2 Floating solar power plants 1,508.27
3 Onshore wind power plants 1,587.12
4 Offshore wind power plants 1,815.95


Since these ceiling prices are lower than the subsidized tariffs that apply to previous solar and wind power projects, a large number of owners of Transitional Projects are unwilling to accept the ceiling prices. 23 owners of Transitional Projects have submitted a position paper to the Prime Minister, asking him to instruct the MOIT to amend Circular 15 and Decision 21.

On May 17, 2023, the Government Office issued a Notice (notice no. 182) that contains the Vice Prime Minister's instructions. The Vice Prime Minister has asked the MOIT urgently to: (1) amend its Circular 15 and Decision 21; (2) study a pricing mechanism similar to those that applied to BT6 transport projects taking into account the opinion of independent auditors and including reasonable profits for RE developers; (3) expedite the issuance of power generation licenses for ready-to-operate projects; (4) instruct EVN to negotiate with owners of Transitional Projects to: (i) adopt a temporary price which applies to electricity volumes being uploaded to the national grid; (ii) agree on the final price, and to settle payments for electricity volumes being uploaded to the national grid at the final price.

As of May 31, EVN and 40 owners of the Transitional Projects have reached an agreement. For the time being, a temporary price (equivalent to 50% of the ceiling price set out in Decision 217 ) will apply to these Transitional Projects. EVN and owners of these Transitional Projects will continue to negotiate in order to agree on a final price.

Footnotes

1. COD is an abbreviation of "commercial operation date"

2. Circular 05/2022/TT-BCT of the MOIT dated October 3, 2022 ("Circular 15").

3. Circular 01/2023/TT-BCT of the MOIT dated January 19, 2023 ("Circular 01").

4. Circular 01/2023/TT-BCT of the MOIT dated January 19, 2023 ("Circular 01").

5. USD1=VND23,500.

6. BT is an abbreviation of the term "Build-Transfer".

7. See the above table.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.