ARTICLE
26 December 2024

Legal Alert On The Proposed Electricity Price Framework For The Year 2025

DM
Duane Morris LLP

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On 4 December 2024, Electricity Vietnam (EVN) submitted Statement No. 6967/TTr-EVN to the Ministry of Industry and Trade (MOIT) and the Electricity Regulatory Authority (ERA)...
Vietnam Energy and Natural Resources

On 4 December 2024, Electricity Vietnam (EVN) submitted Statement No. 6967/TTr-EVN to the Ministry of Industry and Trade (MOIT) and the Electricity Regulatory Authority (ERA) regarding the electricity price framework for onshore and nearshore wind power projects for 2025 (Statement 6967). The notable points of the Statement 6967 are as follows:

  • Basis: Statement 6967 was prepared based on Circular No. 19/2023/TT-BCT of the MOIT dated 1 November 2023 on methods for establishing annual electricity price frameworks for renewable energy power plants, effective from 19 December 2023 (Circular 19). Accordingly, the price framework proposed in Statement 6967 only applies to onshore and nearshore wind power projects while transitional projects and/or renewable power projects with already executed power purchase agreements are excluded from this document.

  • Input for calculation method: To come up with the calculation method, according to Circular 19 standard power projects must be chosen to calculate the electricity price framework. However, as EVN could not select standard power projects in accordance with Circular 19 and thus EVN opted to select from transitional wind power projects. Accordingly, Hai Anh (40 MW, FS approved in 2024) and Nexif Energy Ben Tre (30 MW) and Nexif Energy Ben Tre Phase 2, 3 (48 MW, FS approved in 2023) were chosen for onshore wind and nearshore wind respectively. Key inputs for calculation are (i) Economic lifespan: 20 years; (ii) Investment ratio: 30% equity, 70% loans (80% foreign, 20% local loans); (iii) Interest rates: 6.16% (foreign loans), 9.12% (local loans); (iv) Return on equity: 12%; (v) average loan term: 10 years; (vi) Average CIT rate: 8.25%.
  • Result of calculation:

Nearshore wind power plant (VND/kWh) Onshore wind power plant (VND/kWh)

Nexif Energy Ben Tre Nexif Ben Tre Phase 2, 3 Hai Anh

1,890.68 1,902.08 1,610.56

  • Recommendations: EVN requested the MOIT and the ERA to approve the 2025 electricity price framework as follows (i) Nearshore wind : 1.890,68 VNV/Kwh (~7.5 US Cent/Kwh); (ii) Onshore wind : 1.610,56 VND/Kwh (~6.39 US Cent/Kwh).

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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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