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Prime Minister Decision 13/2020/QĐ-TTg

Vietnam solar feed in tariff price 2020

Mechanisms to Promote the Development of Solar Energy in Viet Nam

Time:

  • Signed: 2020.04.06
  • Valid: 2020.05.22.

Replaces document:

Decision 11/2017/QD-TTg – Mechanisms to Promote the Development of Solar Energy in Viet Nam

Related Document:

MOIT Circular 18/2020/TT-BCT Stipulating Project Development and Standardized Power Purchasing Agreements for Solar Energy Projects

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Introduction:

Decision No. 13/2020/QD-TTg was signed on 6 April 2020 which details the mechanisms for encouraging the development of solar energy projects in Vietnam including the new feed in tariff (FiT2) of 8.38c, 7.69c and 7.09c UScent/ kWh for rooftop, floating and ground mount solar respectively. Decision 13 replaces the previously successful Decision 11 that within 2 years positioned Vietnam as the leading solar market in ASEAN. Furthermore, Decision 13 also opens up the solar market by allowing power purchase agreement (solar PPA) not only with EVN but also for private investors.

Decision 13 announcement is seen as the solar light at the end of the tunnel for investors who could not reach COD before Decision 11 deadline June 2019. The uncertainty that was exacerbated by a difficult business environment due to the recent outbreak of COVID-19 worldwide this year (2020).

While relieved of the new solar policy, the investors are concerned the policy deadline of 31 December 2020 poses a challenge in the Corona virus period. They need to evaluate the technical and operational risks (including the overburdened national grid system), navigate the legal framework, mobilize enough capital, procure the equipment and construct the solar energy system and so forth, all within 8 months. Refer to the main solar policy page for Decision 13 results.

However, Vietnam has attracted renewable investments in recent years. This due to the country’s capability to safeguard the interests of all parties and has proven to be the safe and ideal destination for investment in the world. So, maybe the above challenges will not hold back solar development but rather hustle the investors over the finish line before the end of the year to win the attractive FiT2 rate (that is higher than most in ASEAN area).

If not possible to achieve COD before end of this year, Decision 13 hints at the competitive solar auction to replace the FiT2 (hopefully in 2021).

Solar rooftop business models under Decision 13:
Business Model for Rooftop Solar in Decision 13 - self invest and EVN PPA
01/ Own invest and Public PPA with EVN.

Facility owner (FO) invests in rooftop solar power system. FO use the generated solar electricity for self-consumption and sell the excess electricity to EVN via the public PPA in accordance with Circular 18.

Private PPA - Business Model for Rooftop Solar in Decision 13
02/ Solar investor and private PPA

Solar investor (SSC) invests in and install the rooftop solar energy systems on the owner’s facility (FO). Agreements in place are:

  • Lease/ license to occupy the rooftop required.
  • Private PPA between the solar investor and facility owner. It does not have to follow Circular 18 PPA sample.
  • Public PPA between the solar investor and EVN to sell the excess electricity. This have to follow Circular 18 sample.
03-Solar Lease - Business Model for Rooftop Solar in Decision 13
03 PV system lease agreement

This arrangement is not specifically provided in Decision 13 but is possible under Vietnam law.

  • Solar investor (SSC) invest and install rooftop solar on the owner facility (FO).
  • Solar investor leases the rooftop solar system to FO. FO pay rent to solar investor.
  • FO consumes the solar electricity.
  • FO enter into Public PPA contract with EVN for sales of excess electricity.
04 - Solar Lease and 100pct sales - Business Model for Rooftop Solar in Decision 13
04/ Rooftop area lease and 100% sale to EVN:

Facility owner issue a lease/ license for the solar investor to use the rooftop. Solar investor:

  • Installs the solar energy system.
  • Signs public PPA with EVN for 100% sales of electricity.
  • Pay facility owner for use of rooftop (fixed rent, part of revenue or any other compensation)
Key takeaways:

1/ Time Frame:

  • Solar power projects:
    • Prioritized for investment by competent authorities before 2019.11.23.
    • COD: 2019.07.01 – 2020.12.31
  • Rooftop projects:
    • COD: 2019.07.01 – 2020.12.31 (“Electric meter confirmation dates within COD”)

2/ Maintain 20 Years PPA duration. Allow direct PPA between consumer and seller OTHER than EVN.

3/ Updated project definitions:

  • Rooftop solar power RTS is a solar energy system with photovoltaic (PV) solar panels installed on the rooftop and a capacity not exceeding 1.0 MW (or not more than 1.2 MWp), directly or indirectly connected to a power grid of 35kV or lower. “or no more than 1.2 MWp” comes from EVN press release.
  • Floating solar power project: a grid-connected solar power project with solar energy panels installed on a floating structure on water.
  • Ground mounted solar power project: all grid-connected solar power projects other than the above.

4/ Updated feed-in-tariff prices, called FiT 2 (replaces FiT 1 of 11/2017/QD-TTg):

  • Rooftop solar: 1,913 VND/ kWh (8.38 UScents)
  • Floating solar: 1,783 VND/ kWh (7.69 UScents)
  • Ground mount solar: 1,644 VND/ kWh (7.09 UScents)

Excluding VAT. The electricity purchase price (excl. VAT) is determined every year in Vietnam Dong equivalent to 8.38 UScents / kWh multiplied by the exchange rate announced by the State Bank of Vietnam for the last day of the previous year.

Is it possible to install multiple 1MW RTS on the same rooftop and receive multiple EVN PPA?

Answer: MOIT Letter No.7088: Rooftop Solar Regulations

Based on MOIT Letter No. 7088/BCT-DL, VEPG legal advises that that more than one RTS system on same rooftop/ location with a combined capacity of greater than 1MW is allowed provided these have separate meters and separate EVN PPAs.

Analysis/ Links:
  1. Solar energy projects outside of Decision 13 will be determined by “competition mechanism” (or price auction). The wording raises uncertainties into the market and investors since the policy does not specify exactly what competition mechanism is. MOIT will undertake studies to determine this in Q1-2021. 
  2. EVN is no longer the sole buyer of electricity in Vietnam (monopoly). This development is in line with Vietnam’s wholesale and retail electricity market plans to open up in 2019 and 2025 respectively. (Source: Lexcomm)
  3. Floating solar is defined.
  4. FiT2 applies for all locations except Ninh Thuan. This region continues to enjoy previous FiT1.
  5. According to WFW, FiT2 prices are higher than other countries.
  6. EVN Press Release interpret Decision 13 as “a push to create momentum for the RSP development” (RSP = Rooftop Solar Projects).
  7. According to Vietnam Investment Review article (VIR),
    • the FiT2 rate is profitable for most of the projects located in central and southern Vietnam but may pose a headache for those in the north.
    • The direct PPA is the only choice to fulfill multinational companies’ green energy proportion instead of depending on the limit of 1 MW capacity of rooftop solar systems
    • Related to solar rooftops, installation seems not to be solely impacted by the FiT thanks to its self-consumption capability.
    • “The new points from Decision 13 involve offering a gross metering scheme (rooftop solar projects can sell 100 per cent of electricity to EVN at FiT2 through their own distribution lines and transformers); specifying the rated capacity of a project’s 1MW limit (the rated capacity of inverters and/or transformers instead of rated capacity of solar modules in MWp); and legally enabling developers to sell surplus energy to EVN by issuing their invoices instead of EVN buyers, thereby allowing industrial developers who are selling electricity to factories to purchase electricity from rooftop solar systems from the factories at an agreed price.” 
    • “Carefully studying the statistics released by EVN, it is surprising that the percentage of kWh fed back to the grid to enjoy the FiT varies from 50-60 per cent of total generation.”

Please do not hesitate to contact us if you need:

– Support with proposal for upcoming solar auction.

– Opportunities/ challenges in developing solar energy projects in Vietnam.

DECISION

 

INCENTIVES FOR DEVELOPMENT OF SOLAR ENERGY IN VIETNAM

Pursuant to Law on Governmental Organization dated June 19, 2015;

 

Pursuant to Electricity Law dated December 3, 2004; Law on Amendments to Electricity Law dated November 20, 2012;

 

Pursuant to Law on Investment dated November 26, 2014; Law on Amendments to Law on Investment dated November 22, 2016;

 

Pursuant to Law on Construction dated June 18, 2014;

 

In implementation of Resolution No. 115/NQ-CP dated August 31, 2018 of Government on implementing specific policies to assist Ninh Thuan Province in socio-economic development and maintenance of manufacture and livelihood stability of the people during 2018 – 2023;

 

At the request of Minister of Industry and Trade;

 

Prime Minister promulgates Decision on incentives for development of solar energy in Vietnam.

 

Chapter I

 

GENERAL PROVISIONS

 

Article 1. Scope

 

This Decision prescribes incentives for development in Vietnam.

Article 2. Regulated entities

 

This Decision applies to organizations and individuals participating in developing solar energy in Vietnam and other relevant organizations and individuals.

Article 3. Interpretation

 

In this Decision, terms below are construed as follows:

  1. “Buyer” refers to Vietnam Electricity Group (EVN), member entities authorized by the EVN, other organizations and individuals that buy electricity from the Seller or other organizations assigned with rights and obligations of organizations above as per the
  1. “Seller” refers to organizations participating in development sector in solar plants or systems, organizations and individuals assigned with rights and obligations of organizations and individuals mentioned above as per the
  1. “Electricity distributor or retailer not affiliated to EVN” refers to an entity that is not affiliated to EVN licensed for operation in distributing, retailing and buying electricity from distributors to sell for
  1. “Solar energy” refers to electricity produced by solar panels using the method of converting light energy into electrical
  1. “Rooftop solar system” refers solar system in which solar panels are installed on the roof of the construction with no more than 1 MW in power and directly or indirectly connected to power grid with up to 35kV of the
  1. “Grid-connected solar power project” refers to the project in which solar electricity is connected to national grid, except for regulations specified in Clause 5 of this
  1. “Floating solar energy project” refers a grid-connected solar power project with solar panels installed on constructions floating on water
  1. “Terrestrial solar energy project” refers to a grid-connected solar power project other than projects specified in Clause 7 of this
  1. “Commercial operation date of the whole or part of grid-connected solar power system” refers to the date on which the whole or part of solar power structures is ready to sell electricity to the Buyer and must satisfy following requirements:
  1. Completed initial tests with respect to the whole or part of the construction as per the law;
  1. Licensed by competent authorities to operate in electricity generation;
  1. The Seller and the Buyer have both agreed on electricity figures for payment

Chapter II

 

GRID-CONNECTED SOLAR POWER

 

Article 4. Responsibilities of the Buyer in grid-connected solar power projects

 

  1. The Buyer is responsible for purchasing the entire electricity produced from solar power projects connected to national grid satisfactory to regulations on operating electricity systems

and electricity technical regulations and standards; prioritizing balancing to fully utilize power generation capacity of solar power projects.

  1. Use of power purchase agreement from for grid-connected solar power energy projects shall be compulsory in electricity sale between the Seller and the Buyer which is the EVN or member entity authorized by the
  1. Period of a power purchase agreement for grid-connected solar power projects shall be 20 years from the commercial operation After the period mentioned above, contract extension or signing of new contracts shall comply with regulations and law at the time of extending or signing the contracts anew.

Article 5. Electricity price for grid-connected solar power projects

 

  1. Grid-connected solar power projects prioritized for investment by competent authorities before November 23, 2019 whose commercial operation date lies within July 1, 2019 to December 31, 2020 inclusively may apply electricity purchase price schedule for grid-connected solar power under Annex of this
  1. Electricity purchase price under the electricity purchase price schedule does not include VAT and shall be adjusted according to the central rate of VND to USD dollar publicized by the State Bank of Vietnam on the date the Seller produces The electricity purchase price shall be applied for 20 years from the commercial operation date.
  1. With respect to Ninh Thuan Province, purchase price of electricity in grid-connected solar power projects in electricity development planning of all levels whose commercial operation date precedes January 1, 2021 with total capacity no more than 2,000 MW is VND 2,086/kWh (VAT excluded, equals USD 35 cent/kWh, according to central conversion rate of VND to USD publicized by the State Bank of Vietnam in April 10, 2017 is VND 22,316/USD) and applied for 20 years from the commercial operation date. Electricity purchase price shall be adjusted depending on VND/USD conversion rate. The applied conversion rate shall be the central conversion rate of VND to USD publicized by the State Bank of Vietnam at the time on which the Seller produces invoices.
  1. Purchase price of electricity from grid-connected solar power projects that fail to satisfy requirements specified in Clauses 1 and 3 of this Article shall be determined based on
  1. Electricity purchase prices under Clauses 1 and 3 of this Article shall be applied to projects in which capacity of solar cells exceed 16% or module exceeds 15%.
  1. Purchase price of electricity from grid-connected solar power projects specified in Clauses 1 and 3 of this Article shall be accounted and fully provided in input figures of annual electricity sale and retail price scheme of the

Article 6. Development of grid-connected solar power projects

  1. Primary equipment of grid-connected solar power projects must satisfy Vietnamese technical standards and regulations or international standards (IEC) or similar standards. Electricity quality of grid-connected solar power projects must satisfy requirements regarding voltage, frequency and requirements in terms of operating national electricity system according to applicable regulations and
  1. Investment for construction of grid-connected solar power projects shall be conducted according to regulations and law on investment, construction, electricity safety, land, fire safety, environmental protection and other relevant law
  1. Preferential treatment regarding tax, land use and water surface use with respect to grid- connected solar power projects shall comply with relevant applicable regulations and

Article 7. Connecting grid-connected solar power projects to electric systems

 

  1. The Seller shall be responsible for investing, installing, operating and maintaining electricity measuring instruments, power lines and transformers (if any) from power plants of the Seller to the location where the power is connected to power grid of the Buyer; organizing accrediting, calibrating and testing electricity measuring instruments according to regulations and law on
  1. The location of connection shall be agreed by the Seller and the Buyer according to approved In case locations of connection are different than where measuring instruments are located, the Seller shall be responsible for loss of electricity along the power line and depreciation of transformers of power plants.

Chapter III

 

ROOFTOP SOLAR POWER SYSTEM

 

Article 8. Electricity purchase price power purchase agreement form

 

  1. Rooftop solar power systems may sell the entire or part of electricity produced to the Buyer which is the EVN or other organizations and individuals in case of not using power grids of
  1. The EVN or authorized member entities shall pay for the electricity transmitted to the national grid from rooftop solar power systems according to electricity purchase price under the Annex attached to this The price does not include VAT and shall be adjusted according to conversion rate of VND to USD (translates to US cents/kWh), conversion rate to be applied shall be central conversion rate of the VND to USD publicized by State Bank of Vietnam at the end of the previous year to calculate electricity bill for the following year. Parties are responsible for complying with regulations and law on tax and charges.
  1. In case the Buyer is not the EVN or authorized member entity thereof, electricity purchase price and power purchase agreement shall be agreed upon by parties satisfactory to applicable regulations and
  1. Electricity purchase price under Clause 2 of this Article is applied to rooftop solar power systems whose power generate and electricity meter reading confirmation dates range from July 1, 2019 to December 31, 2020 and shall be applied for 20 years from the initial date of electricity Purchase price for electricity of rooftop solar power systems specified in Clause 2 of this Article shall be accounted and fully provided in the inputs figures of annual electricity sale and retail price scheme of the EVN. Invoices shall be made separately for distributed electricity and received electricity.
  1. Buyer which is EVN or authorized member entity thereof must conform to power purchase agreement Power purchase agreement in case of rooftop solar power systems shall remain for a maximum of 20 years from the date of initial electricity generation. After the period mentioned above, extending or signing new contracts shall comply with applicable regulations and law.

Article 9. Development of rooftop solar power systems, electricity connection and measurement

 

  1. Rooftop solar power systems directly or indirectly connected to the national grid shall be invested for development after applying to be connected with the EVN or authorized member entity
  1. The EVN shall invest, install and maintain electricity measuring instruments of rooftop solar power systems signing power purchase agreements with the EVN or authorized member entity
  1. Rooftop solar power systems must have capacity of solar cells larger than 16% or module larger than 15%.
  1. Organizations and individuals investing for installation of rooftop solar power systems must fulfill electricity safety, construction safety, environment and fire safety requirements according applicable regulations and

Chapter IV

 

IMPLEMENTATION

 

Article 10. Responsibilities of regulatory agencies

 

  1. Ministry of Industry and Trade
  1. Take charge and cooperate with People’s Committee of Ninh Thuan Province and EVN in monitoring grid-connected solar power systems whose commercial operation date satisfies

preferential electricity purchase price under Clause 3 Article 5 of this Article and conforms to Resolution No. 115/NQ-CP dated August 31, 2018 of Government on implementation of specific policies to assist Ninh Thuan Province in socio-economic development and maintenance of manufacture and livelihood stability during 2018 – 2023;

  1. Organize, guide and cooperate with People’s Committees of provinces and central-affiliated cities in examining and monitoring implementation of this Decision;
  1. Issue power purchase agreement forms to be applied in grid-connected solar power supply and power purchase agreement forms to be applied in rooftop solar power systems in case the Buyer is the EVN or authorized member entity thereof;
  1. Promulgate regulations on measurement and record of produced electricity and payment with respect to rooftop solar power systems involving electricity distributors and retailers not affiliated to the EVN;
  1. dd) Cooperate with ministries and local governments in mobilizing resources to promote rooftop solar power programs;
  1. Conduct research to develop bidding mechanism regarding solar power projects and implementation progress and report to Prime Minister for approval for nationwide
  1. People’s Committees of provinces and central-affiliated cities
  1. Cooperate and assist investors in terms of compensation, land clearance, infrastructure and personnel to invest, implement and develop solar power projects on a provincial scale;
  1. Monitor and examine implementation of local solar power projects within their competence;
  1. Perform state management regarding activities related to solar power on a provincial scale according to applicable regulations and
  1. Report to Ministry of Industry and Trade about application and investment for development of solar power on a provincial

Article 11. Vietnam Electricity Group

 

  1. The EVN is responsible for fully accounting all electricity purchase expenses of solar power projects entering to contracts with the EVN or authorized member entity thereof and putting input figures in annual electricity sale and retail price scheme of the
  1. Conduct research to invest in energy saving solutions to ensure functional operation of electric systems upon integrating renewable
  1. Develop information system to manage grid-connected solar power and rooftop solar power development on a nationwide
  1. Examine progress of electricity projects which are to relieve capacity of grid-connected solar power projects and rooftop solar power systems, do not cause the national grid to
  1. On a yearly basis, report to Ministry of Industry and Trade on connection of solar power, total capacity of electricity purchased from grid-connected solar power projects and rooftop solar power

Article 12. Validity

 

  1. This Decision comes into effect from May 22,
  1. Ministers, heads of ministerial agencies, heads of governmental agencies, Chairpersons of People’s Committees of provinces and central-affiliated cities; heads of agencies and entities related to development of solar power projects in Vietnam are responsible for implementation of this /.

PP. PRIME MINISTER DEPUTY MINISTER

 

 

 

 

Trinh Dinh Dung

 

 

ANNEX

 

SOLAR POWER PURCHASE PRICE SCHEDULE

(Attached to Decision No. 13/2020/QD-TTg dated April 6, 2020 of Prime Minister)