Experts say auctions could help reduce solar power prices by 30-40%

When the purchase prices of solar power are set through auction, prices are expected to fall by 30%-40% from the current levels, said experts at a seminar yesterday.

Experts say auctions could help reduce solar power prices by 30-40%
Technicians inspect solar panels at the Da Mi hydroelectric power station in the south-central province of Binh Thuan. Solar power prices are expected to fall 30%-40% when they are set via auction – PHOTO: EVN

At the seminar, entitled “Renewable energy in Vietnam-from policies to reality,” a representative of the International Finance Corporation said many countries have set power prices through auctions.

In Vietnam, two auction plans have been proposed: auctioning land lots for developing solar power farms, or auctioning the capacity of transformer stations.

According to experts, less risky electricity purchase contracts are needed to attract international investors to attend auctions.

In reality, electricity purchase contracts often include an article that Vietnam Electricity Group (EVN) can cancel such contracts while offering low compensation or cut power supplies due to technical reasons. Speakers noted that EVN should bear these risks, not investors.

A representative of the Asian Development Bank said the bank had cooperated with EVN and the Vietnamese Ministry of Industry and Trade to pilot an auction late next year to set the price of solar power generated from a 200-megawatt project, which requires an investment of over US$200 million.

As of June, Vietnam had had 89 wind and solar power plants, with a total capacity of more than 4,500 megawatts, accounting for 8.3% of the country’s total output. The capacity outpaced the planned figure of 850 megawatts by 2020, as stated in the adjusted National Power Development Planning VII.

It was noted during the seminar that the development of transformer stations and power transmission lines have not matched the recent boom in renewable energy projects, forcing many plants to reduce their capacities by up to 60%.

To meet the increasing demand for electricity, the country has plans in the future to develop the national grid. Accordingly, VND214 trillion will be poured into the 2016-2020 period, and VND610 trillion in the next decade.

EVN, however, will find it hard to raise the capital needed for such projects. Meanwhile, power transmission is still a State monopoly and specific conditions to make use of private resources have yet to be worked out.

According to Tran Viet Ngai, chairman of the Vietnam Energy Association, the risk of electricity shortages has been of concern for many years. Despite the development of coal-fired thermal power projects, these projects have lagged behind schedule and failed to generate the expected volume to the national grid.

Additionally, requirements on environmental protection have put pressure on the investors of coal-fired thermal power projects.

Power plants using coal and petroleum gas have met a huge demand for electricity, but supplies of these fuels are being exhausted, cause climate change and harm human health. Therefore, the study and use of renewable energy resources, such as wind, solar, hydro and biomass power, are an indispensable worldwide trend. SGT

Thuy Dung

3 thoughts on “Experts say auctions could help reduce solar power prices by 30-40%

  1. This is stupid and lying.

    The current solar price was set by the government to encourage solar investments, BECAUSE no one wanted to invest in solar.

    Only after one year they now change the policy from setting encouraging price for solar to auctioning. How the hell anyone in the world know anything after 1 single year? And that is not really one year. Only several new solar plants were installed and operated in the last SEVERAL MONTHS.

    The whole thing about stopping encouraging pricing and switching to auction is an entire stupid episode never seen in the real business world – you need a maximum of 5 years to know whether a policy decision works or not, and not after a couple of months.

    EVN simply wants to hang on to its monopoly and try to stop solar and wind power.

    And it looks like the government is run by EVN.

    Solar will reduce the price 20% to 30% with auctioning? Unreal and lying. No one will enter the auction, unless that’s is a corrupt scheme.

    Mark my words.

    Liked by 2 people

      1. I can imagine a deal happening. This is my imagination, just to demonstrate that how things may happen, if people want it to happen that way.

        I am the solar company. I make a bid (for auction) to to sell solar power to an electricity monopoly (not necessarily the EVN, any electricity monopoly of the world).

        I bid for a price much lower than the favorable prices other companies have got before me under a favorable policy of the government. And I give the leaders of the monopoly envelopes under the table to make sure I get the deal.

        I get the deal (and no one can compete with me) because I make sure my price is low enough (to take a loss) so no one can compete. And the monopoly of course “has to” give the deal to me.

        Then the monopoly start buys all electricity from me and starts to stop buying from other solar companies for the reasons that (1) the monopoly runs out of capacity to buy too much – the national grid can not take them all, and (2) I have the number-one priority to sell because I went through the “vigorous” bidding and auctioning process, and (2) my price is the lowest price in the country.

        So all other solar companies drop dead. Then I and the monopoly start to gradually increase my solar-electricity selling price, because … whatever reason you can imagine. You can lie all you want (now that I am một mình một chợ).

        This kind of game is very common. VN needs to be smart in dealing with monopoly. Anyone wants to know the game, ask me. I was an anti-monopoly prosecutor for the US government. I know all the games people have being playing around the world for a couple of thousands of years till today.

        Now, you the readers, your job is to figure out “I” am what company of VN that may have the power to play that game. I have some idea in mind already, but I am not going to say anything, out of respect for you.

        But our job (you and me) is not to let that scenario happen. We need to let the crooks and the world know that there is brain pơwer in VN. This is a civilized land, not the jungle.

        Liked by 1 person

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