For that reason, even though PPA term can be long-term (10-15 years), the standard PPA provides a clause stating that: every year, EVN and the power company shall confirm the output of the contract for the following year. (Article 3.3 (b) in the sample PPA attached)
That means, EVN will negotiate with individual plant to buy a committed amount of output for the year at the flat price. The currency used in this PPA is VND. Pls refer to Appendix 5 for a sample of price setting for PPA.
The remaining output will be sold by the plant on the CGM at floating price. Individual plant will decide when to sell their excess output and how much to sell based on their view of the demand-supply situation. If the market is undersupplied at a particular time (during the dry season for hydro producers, for example), market price will spike, encouraging generators to sell more volume and vice versa.
There is currently a VND1,280/kwh (6¢/kwh) ceiling to the “market price” for electricity produced by hydro-based plants while thermal-based plants are assigned “market price” ceilings on a firm-by-firm basis that are typically higher than the VND1,280/kwh maximum for hydro plants.
All in all, plants will enter negotiation with EVN to determine their suitable output to sell at flat price, and the remaining output to sell at higher market price in order to improve their performance.
Overall, the percentage of industry participation of output sold through CGM has increased from about 20% in 2014 to 25% in 2015, and this figure is expected to reach 40% within 2-3 years.
3. How's investment currency? Can it be USD deal rather than VND?
The investment amount will be used to pay EVN for the sale of stake. The contract will be VND-denominated by Government contract standard. They will not use USD as deal currency.
Investor can find hedging solutions for USD with banks.