Vietnam Legal Update: New Solar FiT and Rooftop Solar Power Development Acceleration Program

NEW FiT FOR SOLAR ENERGY PROJECTS

The Ministry of Industry and Trade of Vietnam (“MOIT”) announced it would submit by 15 September 2019 the final draft Decision of the Prime Minister, on the mechanism for encouraging the development of solar power projects in Vietnam, (the “Final Draft Decision”) to the Prime Minister and Office of Government. The Final Draft Decision is intended to replace Decision No. 11/2017/QD-TTg dated 11 April 2017 of the Prime Minister, on the mechanism for encouraging the development of solar power projects in Vietnam (“Decision 11”).

The MOIT stated that the Final Draft Decision would implement a two-region feed-in-tariff (“FiT”) structure, as follows:

Type of solar project	Region 1 (57 provinces) US cents/kWh	Region 2 (6 provinces) US cents/kWh
Ground-mounted solar power project	7.09	6.67
Rooftop solar power project	8.38	7.89

Previous iterations of the draft decision have included a FiT for floating solar projects and/or solar projects with an integrated storage system. However the MOIT did not at this time indicate potential mechanisms for either scheme. Although the FiT was announced in United States dollars, we expect that the Final Draft Decision’s FiT would be issued in Vietnam dong with a component of foreign exchange.

ROOFTOP SOLAR POWER DEVELOPMENT ACCELERATION PROGRAM

The MOIT recently issued Decision No. 2023/QĐ-BCT dated 5 July 2019 on rooftop solar power (“RTS”) development acceleration program (“RTS Acceleration Program”) in Vietnam for the period of 2019 – 2025 (“Decision 2023”).

RTS ACCELERATION PROGRAM OBJECTIVES

General objective: to implement the National Strategy on Renewable Energy Development via developing market solutions for RTS.
Specific objective: by the end of 2025, 100,000 RTS systems installed and operating with an installed capacity of up to 1,000 MW.

In its official letter No. 3832/EVN-KD dated 23 July 2019 on accelerating the development of rooftop solar power, Vietnam Electricity (“EVN”) stated that it intends to strengthen its coordination regarding RTS projects, connect customers and RTS providers, and facilitate best practices for customers in synchronizing RTS with the electricity grid.

Based on the official letter No. 3832/EVN-KD, EVN’s goal is to double the planned RTS by the end of 2019. As of 30 June 2019, the total capacity of RTS installed under power purchase agreements with EVN was 154.6 MW.

RTS ACCELERATION PROGRAM CONSTITUENTS

The RTS Acceleration Program includes five major constituents, as follows:

Policy and regulation program: the program aims to research and finalize policies and regulations in support of the development of RTS, in order to readily adapt to market conditions.
Standards, inspection and testing program: the program is directed to establish standards and guidance for installing and operating RTS systems, quality testing procedures, and specialization of management authorities.
Market condition promotion and pilot sponsoring program: this constituent conducts market research, determines market demand, and supports potential pilot programs.
RTS certificate program: EVN intends to implement a training program for the purpose of strengthening the capacity of relevant ministries, investors, RTS service providers, RTS installers, and specialized universities.
Communication and information management program: this constituent specifies the strategies to establish and maintain an online database which would manage, supervise, and report on the status of the RTS market.

The projected sources of funds for the RTS Acceleration Program include the MOIT, the World Bank, the European Union, Viet Nam Energy Partnership Group, USAID, KfW, and GIZ.

The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.

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