VIETNAM: Draft Decision 3 and Vietnam’s Solar Future from July 2019

Reading Time: 3 minutes

Reading Time: 3 minutes

On 12 April 2019, the Ministry of Industry and Trade of Vietnam (the “MOIT”) released a new draft Decision (the “Draft Decision 3”) that will replace Decision No. 11/2017/QD-TTg issued by the Prime Minister of Vietnam dated 11 April 2017 (“Decision 11”) on mechanisms to encourage the development of solar power projects in Vietnam. Introducing a number of changes, Draft Decision 3 modifies the previously issued draft dated 22 February 2019. Subject to final approval by the Prime Minister, the Draft Decision 3 is expected to be in full force from 1 July 2019.

KEY CHANGES

Direct power purchase agreements (“DPPAs”) will be permissible and the parties will be free to use their own PPA terms and tariff, etc., however the PPA template and feed-in solar tariff are mandatory for any generation sold to Vietnam Electricity (“EVN”);
The feed-in tariff (“FiT“) for “floating solar power projects” is increased;
Eliminates the prior draft’s FiT for solar with a storage component;
The policy mechanism for encouraging the development of solar power projects (including by stipulating a FiT) has been extended by a further two-and-a half years, from 1 July 2019 until 31 December 2021; and
Allowing solar power projects in Ninh Thuan Province that have an actual commercial operation date by the end of 2020 to be eligible for the current FiT of 9.35 US cents per kWh.

Future of energy storage:

EVN is required to research and invest into energy storage solutions for the power systems to ensure stable operation when connecting and integrating power from renewable energy resources; and
The MOIT is required to develop regulations and standards on energy storage.

FiTs per type and region:

The following FiT schedule is intended to be applied from 1 July 2019 to 31 December 2021:

Type of solar project	Region 1 FiT		Region 2 FiT		Region 3 FiT		Region 4 FiT
Type of solar project	VND / kWh	US cent / kWh*	VND / kWh	US cent / kWh*	VND / kWh	US cent / kWh*	VND / kWh	US cent / kWh*
Floating solar power project	2,281	9.98	1,963	8.59	1,758	7.69	1,655	7.24
Ground-mounted solar power project	2,102	9.20	1,809	7.91	1,620	7.09	1,525	6.67
Rooftop solar power project	2,486	10.87	2,139	9.36	1,916	8.38	1,803	7.89

(Note: Exchange rate based on the central exchange rate of Vietnam Dong against US Dollar announced by the State Bank of Vietnam on 09 December, 2018. We understand the VND/kWh exchange rate will be updated annually.)

Rooftop solar structures:

Rooftop projects, having 1 MW or less of capacity, will be classified under the following structures:

Structure 1: The rooftop owner develops the solar project for self-consumption and any excess generation can be sold to EVN (via connection to the national transmission system);
Structure 2: A facility owner leases its rooftop to an investor. This investor develops the solar project to sell electricity to the consumer and to EVN (via connection to the national transmission system);
Structure 3: An investor develops the solar project to sell electricity wholly to EVN (via connection to the national transmission system); and
Structure 4: The rooftop owner or the investor develops the solar project to sell electricity solely to a private consumer (without connection to the national transmission system).

Need legal advice?

If you are in need of legal advice, you can request a quote with DFDL lawyers or get a Quick consult with experienced lawyers. With Quick Consult, from a transparent, flat fee of $49, the lawyers will call you back on the phone within 1-2 days to answer your questions and give you legal advice.

This article is written by DFDL Lawyers.

This article was first published on the DFDL website.

This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.

DFDL Lawyers

In 1994, DFDL was built on the foundation of a unique vision: to build an integrated international standard law firm, with in-depth knowledge of the Mekong Region, while providing specialized and personalized advisory services to the international business community. DFDL Expertise Integrated international law firm providing technical excellence across our core areas of expertise; In-depth local and cross-border experience in complex and sophisticated transactions across a wide geographical front; A practical knowledge of local business cultures and practices; and Our areas of expertise: Banking and Finance, Corporate and Commercial, Energy, Mining and Infrastructure, Mergers and Acquisitions, Real Estate and Construction, and Taxation. As the Mekong Region and other emerging markets continue to thrive, DFDL is uniquely positioned to secure your access to promising international growth opportunities.