Prof. Dr. Hoang Xuan Co: Electricity Price Increase Goes Hand in Hand with Green Electricity Transition

At the "Energy Security for Sustainable Economic Development in Vietnam" forum, which was held on the afternoon of September 20, Pro. Dr. Hoang Xuan Co - Secretary General of the Vietnam Association for Environmental Economics (VIASEE) delivered a discursive essay on the topic " Green Energy Transition - An Inevitable Direction in Vietnam".

In his speech, Prof. Dr. Hoang Xuan Co also shared the mechanisms, policies, and purchase prices of wind and solar power. According to him, what businesses are concerned about is what scientific basis determines the purchase prices as stated in the decision documents. If there are comprehensive research surveys, the cost of developing wind and solar power for a project can be calculated.

The costs of purchasing turbines or solar cells, transportation, installation, operation, and the amount of electricity produced can all be estimated by using the model. When implementing the cost-benefit method, the price can be calculated. Thanks to this, the appropriate subsidy level can be determined to ensure the project is profitable while the electricity price remains reasonable for consumers.

Dr. Hoang Xuan Co also pointed out that in the process of the green energy transition, Vietnam will encounter a lot of obstacles, such as a lack of basic research and investigation, the inability to produce wind and solar power generation equipment, and the increase in production due to the need of conversion equipment and grid connection.

Therefore, he suggested that EVN and the Ministry of Industry and Trade (MOIT) calculate the wind and solar power prices in potential areas, find a value range for estimation, and propose reasonable government support (through the electricity purchase price).

At the same time, MOIT also needs to promptly outline a plan to increase electricity prices for consumers based on the increased purchase of high-priced wind and solar power in the coming period, initially by 2030.

Regarding households and businesses, experts believe that there needs to be an early plan to adjust the reasonable and efficient use of electricity towards saving. In the case of a reasonable increase in electricity prices, this should be considered as the price that consumers are willing to pay for clean energy consumption.

"When transitioning to green energy, the increase in electricity prices is inevitable, but the roadmap must be considered to avoid causing major disruptions in economic activities and people's lives," said Prof. Dr. Hoang Xuan Co.

 According to Nguyen Huu Thai Hoa, representative of the Strategic Committee of Petrol Vietnam (PVN), before October 30, 2021, many enterprises invested a lot in renewable energy thanks to good policies and favorable electricity purchase prices. When investing, what businesses care about is profit. However, at this time, businesses are hesitant because the electricity prices from current renewable energy projects are not attractive enough to draw investors into this field.

Mr. Nguyen raised the issue that our country wants green growth, and renewable energy development, so we also need to clarify who will bear the risk in entering a new field, new mechanisms, and policies, while the solution is not in the hands of the Vietnamese people.

Many projects that businesses want to undertake are hindered by mechanisms, so the representative of PVN's Strategic Committee believes that it is necessary to loosen the constraints for R&D FS mechanisms and invite international investors to jointly develop the sustainable energy sector with Vietnam.