GIZ Auctioning Study - EN PDF

List of presentations
Study on Auctioning Mechanism for Wind Power in Vietnam

Tobias Cossen, Head of Wind Project, MOIT/GIZ Energy Support Programme
Analysis and consideration of an auctioning system for wind power
in Vietnam (1)
Dr. David Jacobs, IET – International Energy Transition GmbH
Analysis and consideration of an auctioning system for wind power

in Vietnam (2)
Consultation Workshop
Hanoi, 14.03.2018
Thursday, March 15, 2018

Study on Auctioning Mechanism for
Wind Power in Vietnam
Tobias Cossen, Head of Wind Project, MOIT/GIZ Energy Support Programme
Hanoi, 14.03.2018
CONTENT
1. Vietnam wind market update
2. GIZ ESP to Wind Power Promotion in Vietnam
3. About the study
3
Vietnam’s Wind Power Sector Update
Targets Current Status
~ 189.2 MW installed
4
GIZ ESP to Wind Power Promotion in Vietnam
Sector-wide and multi-stakeholders approach to support

Wind power development
Transparent
investment procedure
and standardized
procedures (e.g., Env- Analyzing cost-
Knowledge and Socio Impact benefits of RE;
information Assessment) calculation of
sharing (e.g., Wind encouraging levels
data, research) of FITs for
investment Better preconditions
of the market
Attractive
Training and environment
capacity building for investment
for all kinds of in Vietnamese
stakeholders wind power
To Fully exploit potential of

Wind power in Vietnam
Thursday, March 15, 2018 5
Study on Analysis and Consideration of
an Auctioning system for Wind Power in Vietnam
Expected outcomes
Approach Overview of auctions’ benefits
International and risks on the Wind power
Mission expertise sector development
Assist the Vietnamese (international Consideration on suitable
Partners Government in consultants +
application of Auction
Lead: MOIT – EREA promoting the lesson learnt)
deployment of RE mechanism to Vietnamese
Local
Implement: generally and of Wind wind power context
participatory
MOIT/GIZ Support Energy particularly assessment Requirements and proposed
to the Up-Scaling of through an assessment of (interviews +
the potential of roadmap for a successful
Wind Power Project consultation
auctioning as an support implementation of an auction
workshop)
policy for Vietnamese mechanism for Wind power in
wind power projects Vietnam
6
Objectives of the Consultation Workshop
Reporting and Discussion and

Improving the
presenting results opinions from
report to submit to
of the study different
MOIT
stakeholders
General introduction on All comments integrated and

Auctioning mechanism as a
1 Openly discussion 1 considered
1 support policy to RE
Viewpoints from every
deployment 2 angle Final version for MOIT’s
Considerations focus on the 2 consideration
2 Vietnamese wind power
sector context
Roadmap for Auctions

3 application
7
Thank you!
Tobias Cossen
Head of “Support to the Up-
Scaling of Wind Power” Project
MOIT/GIZ Energy Support Programme
tobias.cossen@giz.de
MOIT/GIZ Energy Support Programme 8

Analysis and consideration of an auctioning system for
wind power in Vietnam (1)
Hanoi, 14.03.2018
CONTENT
Auction mechanisms in general

o Auctioning as an emerging support trend for RE deployment in the world
o Myths and dilemma of Auctions
o International examples and policy objectives
MoIT/GIZ Energy Support Programme 10

Auctions as an emerging
support trend for RE
deployment in the world

Auctions as an emerging trend in RE policies
Increasing number of countries use auctions to support large-scale RE projects
Number of countries with auctions:

6 in 2005
67 by mid-2016
Focus on large-scale RE projects

Increasing number of countries use auctions to support large-scale RE projects

Increasing number of countries COMBINE FITs and auctions
Using auctions to set feed-in tariff rates

Using auctions for emerging technologies (off-shore/near-shore wind) and
FITs for onshore wind (mature technologies)
Using auctions for large-scale projects and FITs for small scale projects

Definition, Myths and
Dilemma of Auction based
Mechanisms

Different Understanding of Term “Auction”
The term “auction” is differently used in Vietnam and internationally:
1. Auction in the Vietnam context:

o “auction” refers to the procurement of goods and services financed by the
public budget (e.g. equipment auctioning or BOT projects), internationally
referred to as public procurement.
2. Auction for renewables in the international context:

o “auction” is understood as a publicly held bidding at which the
highest/lowest bidders wins (usually based on price!); it usually results in a
20 year PPA
Currently, there is no common understanding of the term “auction” in Vietnam ;

This can lead to misunderstanding among stakeholders

Auctions for RE versus auctions as part of wholesale
markets
1. Auctions in wholesale electricity markets:

o IPP will market a share of the produced electricity himself on the wholesale
market
o Bidding based on marginal costs of power plants (i.e. operation and
maintenance costs)
o Hourly products
o Price will enable IPPs to recover small share of total project costs (e.g. 10%
need to be sold in wholesale market, 90% via fixed prices)
2. Auctions for RE:

o Bidding based on total installed costs of power plants (including capital
costs,
o Fixed kilowatt-hour payment over 20 year lifetime
o Price has to enable IPPs to recover entire project costs (plus rate of return)

Definition of renewable energy auctions
Auction in the international context visualised

Definition of renewable energy auctions
Projects proposals are ordered according the price offered until the
auctioned volume is reached
Source: Ecofys/Aures Project

International examples,
objectives

Policy Objectives related to RE Support Mechanisms
Policy Objectives related to Renewable Energy Support Mechanisms
1. Control of RE deployment and planning
2. Low cost procurement of electricity
3. Low risk for investors
4. Low administrative complexity and costs
5. Moving towards competitive markets
6. Actor diversity

Policy Objectives - FiT vs Auction
Policy Objectives related to FITs versus auction Implications for Vietnam

Renewable Energy Support
Mechanisms
1. Control of RE deployment Better control under auction Controlling the deployment of wind
and planning energy is currently not a primary
objective in Vietnam.
2. Low cost procurement of Lower cost under auctions Excessively high feed-in tariffs do not
electricity exist in the case of wind energy in
Vietnam.
3. Low risk for investors Lower risk under FITs Risk reduction is crucial in emerging
markets like Vietnam (FIT as
appropriate mechanism).

Policy Objectives - FiT vs Auction
Policy Objectives related to FITs versus auction Implications for Vietnam

Renewable Energy Support
Mechanisms
4. Low administrative Lower complexity under FITs Higher administrative complexity and
complexity and costs costs need preparation (training of
staff and employment of new staff).
5. Moving towards competitive More competition under Vietnamese electricity market is

markets auctions characterised by administratively
determined prices; Feed-in tariffs fit
into the overall policy framework.
6. Actor diversity More diversity under FITs Not a primary policy objective in
Vietnam and therefore less relevant.

Countries Analyzed (in-depth)
Germany, China, South Africa

Auction Design Elements
Designing auctions: Trade-offs and dilemmas
Pricing Determination: Pay-as-Bid versus Uniform Pricing

Auction Format: Sealed Bid versus Descending Clock
Auction Product
Pre-qualifications
Penalties and bid bonds
Evaluation criteria: Price only versus multi-criteria
Evaluation Process
Additional auction design elements

Thank you!
Dr. David Jacobs
Founder and CEO

International Energy Transition GmbH
Phone: +49 163 233 90 46
E-mail: jacobs@iet-consulting.com
Twitter: @InterEnerTrans

Analysis and consideration of an auctioning system for
wind power in Vietnam (2)
Hanoi, 14.03.2018
CONTENT
Presentation of draft report content

o Background, Motivation and Objectives
o Methodology and Approach
o Auction Design Considerations and Potential Roles of Actors
o Recommendations and proposed Roadmap

Background, Motivation
and Objective

Background
Wind energy and targets in Vietnam
National Power Development Plan VII (Decision No. 428/QD-TTg, dated 18

March 2016) has required the total wind power capacity to be increased
from the current negligible levels (190 MW) to around 6.000 MW by 2030.
Vietnamese Government has been applying the FIT of 7.8 USct/kWh for
wind power since 2011.
Tariff level seems to be unprofitable to project developers and investors,
resulted in very limited deployment of wind power in Vietnam until now

Background
Summary of Wind Power Project in Vietnam up to 2017

Motivation and Objective of Report
Spread of auctions and applicability for Vietnamese context
Motivation:
Many countries around the world have implemented auction in the recent
years
Objective:
Assist the Vietnamese Government in promoting wind power deployment,
assessing the implementation of auctions in the Vietnamese context

Methodology and Approach

Methodology and Approach
Interviews for report

Internationa
l Project
Developers
Local
Regulator Project
Developers
INPUT TO
REPORT
World
EVN
Bank
Provincial
Local Bank
Authorities

Auction Design and
Potential Roles of Actors

Location neutral versus location specific auctions
Location neutral auctions are standard design (most countries)
Lower complexity for government

Higher risk for investors
Project developers need to calculate the following cost components and the
related risks
Cost for wind measurements
Land acquisition costs
Grid connection or grid upgrade costs
Cost related to administrative procedures
Equipment costs (including capital costs for finance)
Operation and Maintenance costs
Decommissioning costs

Location specific auctions can lower prices further

Government or local authorities will predefine and then preselect the land on which
projects will be developed
Higher complexity for government (pre-development)
Lower risk for investors
Project developers need to calculate the following cost components and the related risks
Cost for wind measurements
Land acquisition costs
Grid connection or grid upgrade costs
Cost related to administrative procedures
Equipment costs (including capital costs for finance)
Operation and Maintenance costs
Decommissioning costs

Advantages of Location Neutral Disadvantages of Location Neutral

Auctions Auctions
Fast deployment: Large number of project Higher risk for project developer (especially
developers in less mature markets)

Advantages of Location Specific Auctions Disadvantages of Location Specific

Auctions
Risk reduction for project developers Delayed deployment (preparation of site by
government entities usually takes longer than
preparation by private sector)
Lower auction results since costs are partially High burden for administration (staff and budget
covered during site-preparation process required to pre-develop sites)
Advantageous in case that land is already owned Already privately developed sites can no longer
by the State be used

Overview of Market Actors, their Roles, Burden and Risks
under a future Auction Regime
The Future Role of MOIT, MOF, MPI

Required Changes, Burden & Risks through the
General Role
Introduction of an Auction Regime
Executive, providing for  Responsibility for decision when change of support
the promotional and scheme from FIT to auctions is most appropriate
administrative framework  Decision on design parameters of future auction regime
for the development of  Proposal for the selection of future competent auction
wind power in Vietnam body
 Responsibility for suggestions and partly for the
streamlining of existing administrative procedures for wind
power (Federal level)
 Management of National Power Development Plan
 Coordination with Provinces, grid operators & future
auction body
 Co-responsibility for grid planning (with EREA & EVN)

The Future Role of EVN

General Role
Unbundled, state-owned  Co-responsibility for grid planning (with EREA & MOIT),
utility & transmission grid reinforcement & grid enlargement, required for
system operator and location-specific and/or location-neutral auctions
through its subsidiaries  Signing of standardised PPA with future selected wind
power project of an auction regime
also distribution system
operator, off-taker  At the same time, beneficiary of the auction support scheme
as utility, operating renewable energy projects.

The Future Role of ERAV

General Role
Regulatory authority  Potential auction body
providing the technical  In case of selection as competent auction authority, take-
framework for the wind over of additional administrative functions, staff
power development. Also, increase & training requirements, performance of actual
action process, provision of standard PPA for auctions
responsible for the market
liberalisation in Vietnam.

The Future Role of Local Authorities (PPC, DOIT, DPI)

General Role
Responsible for the  Responsibility for the streamlining of existing
provincial administrative administrative procedures for wind power (Provincial
procedures and the level)
provincial (wind) power  Responsibility for project appraising and licensing
development plans. Also,  Management of Provincial Power Development Plans
cooperation with grid  Coordination with MOIT, grid operators & future auction
operators for the grid body
planning.  INCREASE INCENTIVES: Revenue taxes directed to local
level (e.g. 70%)

The Future Role of Project Developers

General Role
Development of wind  Higher development risks as under FIT, especially due to
power projects insecurity of auction selection process
 Management of existing challenges and barriers under the
selected financial model for auction regime
 Risk of an insufficient estimation of required time and
costs for project realisation, resulting in insufficient
financial means
 Risk of project realisation delays or even project abortion
due to delays in the administrative process or the grid
connection process or existing market barriers

The Future Role of Investors & Banks

General Role
Financing of wind power  Application of new business models for wind power projects
projects under an auction regime
 Reassessment of financing criteria under new support
scheme (risk assessment)

Recommendations and
proposed roadmap

Pre-Requisites for a Successful Shift to Auctions
1. A sufficiently large national  annual deployment (e.g. 1 GW or more)

market size  Size of projects (e.g. 100 MW-1GW)
1. A high level of competition  Number of actors

 Interest of international project
developers
1. A mature market and policy  stable and transparent policy framework
framework  Streamlined process and knowledge
about cost factors (e.g. wind resources,
grid connection, admin costs, etc.)
1. Clarity about long-term market  Long-term targets
development

Pre-Requisites for a Implications for Vietnam

Successful Shift to Auctions
A sufficiently large The wind market in Vietnam is still relatively small. Up to now, just slightly below 200 MW
national market size of capacity were installed under the FIT mechanism. Also, the average project size is
relatively small. A larger scale market in Vietnam would lead to more competition
and lower prices.
A high level of competition Due to several reasons, the wind power market in Vietnam is still dominated by a limited
number of actors. There is still limited interest from international investors, partially
because of the limited creditworthiness of EVN and the difficulty to make projects
bankable. A higher level of competition in Vietnam would lead to lower prices in
future auction rounds.
A mature market and In Vietnam, several wind project developers have stated that there are still no
policy framework standardised and streamlined processes when it comes to wind power development. It is
therefore highly recommended to streamline all administrative process (including
clear grid connection procedures) in Vietnam before the introduction of an auction-
based mechanism.
Clarity about long-term Vietnam has taken a first important step by defining wind energy deployment targets
market development until the year 2030. However, longer term targets up to 2050 would give an even
clearer sign to the international wind energy community and might also enable
Vietnam to harness socio-economic benefits

China South Germany Vietnam

Africa
1 National market size Large Large Large Small
2 The level of competition High High High Low
3 Maturity of market and High Medium High Low

policy framework
4 Long-term market Long-term Mid-term Long-term Mid-term

development

Central Action Complexes for Reducing the Cost of Wind
Power in Vietnam
Three primary ways to reduce cost of RE and wind energy in Vietnam
Streamlined administrative processes

Clear and transparent grid connection and grid infrastructure
Creditworthiness of EVN and PPA design

Power in Vietnam
Streamlined administrative processes

Identified Challenges Required Actions to address Barriers
 Insufficiently  Take advantage of the existing analysis of the “Wind Investment
standardized Guidelines” to identify existing shortages
development paths &
 Publish clear, easy to access and easy to perform development paths,
complexity of
including timelines and a list of authorities
administrative
process &  Promote the information nationally and internationally – e.g. through an
inexperience of official information portal
developers
 Power development  Reform of the current planning law
plans
 Government already initiated here reform plan, promising initiative
 Land securing  Change of the material pre-qualifications for developers under an
auction regime in regards to the land acquisition
 Memorandum of understanding as a sufficient requirement to

participate in the auction
 Prove of performance of the land acquisition within a delay of 12 months

after actual signing of the offtake-agreement
Power in Vietnam
Clear and transparent grid connection and grid infrastructure

 Grid capacity &  Re-assessment of the existing grid planning in regards to the targeted renewable
capacities
grid connection
 Provision of first hand online information on the grid situation, the available grid
connection points and the grid capacity
 Where detailed information cannot be shared, at least indication of the grid

situation through a traffic light system
 Grid planning  Close collaboration of MOIT and the grid operators for the introduction of an
auction system and the required grid capacity
 Start with location-specific auction model advised to limit reinforcement and

enlargement requirements for grid operators
 Parallel grid planning for location-neutral auction in the future
 Virtual saturation  Application of a milestone approach to identify genuine projects and adapt grid
planning to real conditions
of power
development plan
Power in Vietnam
Creditworthiness of EVN and PPA Design

 Improving the  Thorough analysis of factors for low credit rating of EVN to address shortcomings
creditworthiness  Assessment and potential implementation of measures to increase the financial

of offtaker health of EVN, thus improving its creditworthiness
 (a) including short term measures such as Escrow account arrangements to cover
payment risk, more transparency in EVNs accounting, etc.
 (b) including structural measures such as the implementation cost-reflective

electricity rates, reduction of subsidies in the electricity sector, improvement of
least-cost electricity system planning, etc).
 Evaluation is state warranty for the EVN PPA could be provided or alternatively
guarantees from international donors
 Adjustment of PPA  Indexing PPA payments to future inflation, e.g. consumer price index or CPI
Design  Currency risk mitigation through denominating renewable energy contracts in

international currencies

Roadmap for Wind Auction Implementation
The introduction of an auction regime for wind power projects in

Vietnam therefore appears only advised after an extension of the
operation period of the current FiT model to a horizon 2022/2023.

Preparation period
Steps Estimated implementing time
 Streamlining of administrative This is a longer-term process (approximately 3 years) and
procedures should be started as soon as possible. It can run in parallel to
addition steps of the preparation phase.
 Streamlining of grid connection This is a longer-term process (approximately 3 years) and

(clear and transparent grid should be started as soon as possible. It can run in parallel to
connection and infrastructure) addition steps of the preparation phase.
 Creditworthiness of the off- This is a longer-term process (approximately 6 years) and

taker and PPAs should be started as soon as possible. It can run in parallel to
addition steps of the preparation phase.
 Establishment of auction At least 1 year is required to first identify and establish the
agency and training of authorized agency then train its personnel.
personnel

Transition period
 Adjustment of FIT policy It is applied for projects approved to be developed in the end
of the existing FITs but need time to develop/ construct before
the auctions applied.
Implementation of Tariff Degression

Transition period
 Adjustment of FIT policy It is applied for projects approved to be developed in the end
of the existing FITs but need time to develop/ construct before
the auctions applied.
Implementation of Location-Specific Tariffs

Annual duration of Tariff for the first ten years Tariff for the following five
reference operating time of operation (€cent/kWh) years of operation
(€cent/kWh)
2400 hours and less 8.2 8.2
Between 2400 and 2800 8.2 Linear interpolation
hours
2800 hours 8.2 6.8
Between 2800 and 3600 8.2 Linear interpolation
hours
3600 hours and more 8.2 2.8
Transition period – Preparation for Location Specific Auctions

 Selection and prepare of Selecting and potentially buying the land can be rather time
consuming (typically 1 year or longer).
land
 Wind measurements In order to make a wind project bankable, on-site wind
measurements of at least 1 year are necessary.
 Grid extension to the Grid expansion can take place in parallel to on-site wind
measurements and might take 1 year or longer.
selected plot of land

Transition period
 Preparation of detailed Determination of all design features
auction design (including Publication of White Paper and consultation with Industry.
Preparing the detailed auction design and reaching agreement
white paper) between all involved agencies and ministries can take 1 year.

Auction Product
Pre-qualifications
Evaluation Process
Pilot period for location-specific auctions

 Publication of Auction The White Paper can be used as the basis for a consultation
process.
design white paper
The consultation process approximately takes 3 months.
 Feedback from industry on Feedback resulting from the public consultation process
should be included in the final auction design.
White paper and
For this step, approximately 3 months are required.
integration of comments
 Running a pilot auctions for Pilot auctions for testing purposes.
testing purposes Running one or two pilot auctions should take at least six
months (up to one year, depending on the timing of auctions
and institutional capacity to evaluate bids and select winning
bidders).
 Assessment of pilot Assessing auction, administrative handling;
auctions and potential Potentially reviewing auction design.
modifications For this step, approximately 6 months are required.

Transition Period Required
Hasty shift from one support mechanism to another can negatively

affect market development
The transition should reflect the time period required for project
development (avoid stranded costs for project developers that have
already started to develop a wind project )
during the transition period, the old FIT program will no longer be
available for “new” projects

Transition Period Required
Examples of transition periods: The UK and Germany

Auction Mechanism Implementation

 First auction round – Call The call for tenders can start with a Request for Qualification
(RfQ) process (interested bidders need to prove that certain
for proposals financial or material qualifications are fulfilled). The RfQ
window is usually open for one month.
Next, a Request for Proposals (RfP) is issued by the
responsible government agency. Interested project developers
usually have six months to submit their proposals.
 First auction round – Bids need to be carefully assessed, checking pre-qualification
criteria, price and potential other selection criteria.
Selection of bids
This step takes 3 to 6 months.
 First auction round – The off-taker will sign Power Purchase Agreements (PPA) with
the wind project developers (standardized PPA ).
signing of PPAs
After signing the PPA the project developers can bring the
project to financial closure and start building the wind park.
Typically, an additional 3-4 years pass between singing of the
PPA and connecting the completed wind park to the grid.

Proposed Roadmap for Auction Implementation in Vietnam

Thank you!
Dr. David Jacobs
Founder and CEO

International Energy Transition GmbH
Phone: +49 163 233 90 46
E-mail: jacobs@iet-consulting.com
Twitter: @InterEnerTrans

Backup Slides:
Auction Design Features

Auction Design Elements
Crucial Elements for the Detailed Design of Wind Auctions in Vietnam

Auction Product
Pre-qualifications
Evaluation Process

Core Auction Design Features
Pricing Methodology
Pay-as-Bid:
bidders obtain their actual bidding price
Minimize costs
Take resource variations into account
Uniform pricing:
price of the last bid accepted that was set
out by the auction agency so as to reach
the targeted capacity – called the
‘’clearing price’’ – defined the price for all
winning bidders
Avoid “winner’s curse”

Auction format
Sealed Bid
Simple design – ceiling price?
Each bidder writes down a single bid which is not disclosed to other
bidders and the most competitive bidders win (“pay as bid”).
Descending Clock
Multi-round bid
Auctioner starts with a high price and then calls out successively lower
prices until quantity offered and quantity required match!

Descending Clock Auctions

€/MWh
First round
Bidder 1
Second round
Bidder 2
Bidder 3
Third round
GWh
0 2 4 6 8 10 12
Auction Product
kilowatt-hour prices (€/kWh)

price for the installed capacity (€/kW)

Pre-qualifications
Prequalification requirements for auctions – important for project

realization rate!
Material pre-qualifications Financial pre-qualifications
Grid access and connection Bid bonds

Securitization of land Demonstrate financial strength
Contracts for equipment Project finance track-record
Permits


Central elements to ensuring a successful bidding process are penalties to
avoid underbidding and underbuilding.
Bid bonds can be thought of as an upfront deposit that is required prior to
the bidding stage to assure and confirm a developers’ means to actually go
through with the project should it be awarded.
It is usually refunded when a developer does not receive the contract, or
once the contracts are signed.


Bid Bonds and similar Penalties for Wind Energy in selected Countries
Brazil Denmark Germany Italy (lowest Netherlands
(offshore- (EEG 2017) bid auction)
Anholt)
Bid bonds as part of Yes Yes Yes Yes No
pre-qualification First: 1% of project Between €13.4 30€/kW 5% of estimate
requirements? costs and 53.7 million investment costs
Second: 5% depending on upon application;
timing of delay 10% thereafter
Other Penalties Termination of Support No FIP will be Exclusion from

contract after 12 reduction reduced by 0.5% SDE+ for three
months delay. Other per month of years, or a
penalties for delay. After 24 financial penalty
deficient or months, the FIP is of 10% project
overproduction withdrawn and value for projects
once plant is the bid bond is >400M€
connected. withheld.

Penalties for failure to fulfil awarded contracts

No (or only partial) payback of bid bonds or construction bonds;
Completion bonds
Reduction of tariff payment levels/payment period
Exclusion from next auction round
Define maximum lead times for each project phase

Evaluation criteria: versus
Price only
Lowest bids/prices
Primary objective of auctions
Multi-criteria
Additional selection criteria usually reflect additional policy objectives:
Job creation
Local content
Locational incentives
Etc.

Evaluation Process
Committees for selecting projects to avoid fraud and corruption

selection committee has considerable discretion in selecting one project or
another in multi-criteria auctions (establish point-based criteria)

Other Design Considerations
Clear determination of typical realization period and milestone

Frequency of auction rounds?
Technology neutral versus technology-specific auctions?
Upper or lower limit on project size?
Upper or lower limit on prices?

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List of presentations

Study on Auctioning Mechanism for Wind Power in Vietnam

Analysis and consideration of an auctioning system for wind power

Thursday, March 15, 2018

1. Vietnam wind market update

2. GIZ ESP to Wind Power Promotion in Vietnam

3. About the study

Targets Current Status

Sector-wide and multi-stakeholders approach to support

To Fully exploit potential of

Reporting and Discussion and

General introduction on All comments integrated and

Roadmap for Auctions

MOIT/GIZ Energy Support Programme 8

Auction mechanisms in general

MoIT/GIZ Energy Support Programme 10

MoIT/GIZ Energy Support Programme 11

Increasing number of countries use auctions to support large-scale RE projects

Number of countries with auctions:

MoIT/GIZ Energy Support Programme 12

Increasing number of countries use auctions to support large-scale RE projects

MoIT/GIZ Energy Support Programme 13

Increasing number of countries COMBINE FITs and auctions

Using auctions to set feed-in tariff rates

MoIT/GIZ Energy Support Programme 14

MoIT/GIZ Energy Support Programme 15

The term “auction” is differently used in Vietnam and internationally:

1. Auction in the Vietnam context:

2. Auction for renewables in the international context:

Currently, there is no common understanding of the term “auction” in Vietnam ;

MoIT/GIZ Energy Support Programme 16

1. Auctions in wholesale electricity markets:

2. Auctions for RE:

MoIT/GIZ Energy Support Programme 17

Auction in the international context visualised

MoIT/GIZ Energy Support Programme 18

Source: Ecofys/Aures Project

MoIT/GIZ Energy Support Programme 19

MoIT/GIZ Energy Support Programme 20

Policy Objectives related to Renewable Energy Support Mechanisms

1. Control of RE deployment and planning

2. Low cost procurement of electricity

3. Low risk for investors

4. Low administrative complexity and costs

5. Moving towards competitive markets

MoIT/GIZ Energy Support Programme 21

Policy Objectives related to FITs versus auction Implications for Vietnam

MoIT/GIZ Energy Support Programme 22

Policy Objectives related to FITs versus auction Implications for Vietnam

5. Moving towards competitive More competition under Vietnamese electricity market is

MoIT/GIZ Energy Support Programme 23

Germany, China, South Africa

MoIT/GIZ Energy Support Programme 24

Designing auctions: Trade-offs and dilemmas

Pricing Determination: Pay-as-Bid versus Uniform Pricing

MoIT/GIZ Energy Support Programme 25

Dr. David Jacobs

Founder and CEO

MoIT/GIZ Energy Support Programme 26

Presentation of draft report content

MoIT/GIZ Energy Support Programme 28

MoIT/GIZ Energy Support Programme 29

Wind energy and targets in Vietnam