On 10 September 2018, the Prime Minister issued Decision No. 39/2018/QD-TTg (“Decision 39”), amending Decision No. 37/2011/QD-TTg of the Prime Minister dated 29 June 2011 on mechanisms to support the development of wind power projects in Vietnam.
Under Decision 39, the wind FIT (excluding VAT) will be VND 1,928 per kWh (equivalent to US cents 8.5 per kWh) for onshore wind power projects and VND 2,223 per kWh (equivalent to US cents 9.8 per kWh) for offshore wind power projects. This replaces the previous wind FIT of US cents 7.8 per kWh.
This new FIT will be applicable to wind power projects that achieve commercial operations before 1 November 2021 and will be valid for 20 years from the commercial operations date. This new FIT is also applicable to wind power projects operating before the issuance of Decision 39, for the remaining term of their signed PPAs. Decision 39 also overrides Article 9 of Decision 37, which states that if the wind power project developer doesn’t begin its main construction activities within 12 months after receiving its investment registration certificate, the relevant provincial People’s Committee shall consider withdrawing that investment registration certificate. This is in recognition of the reality that project developers were encountering financing and other project development challenges that require more time before construction can commence.
Decision 39 follows a recent FIT extension in the solar power sector. The Prime Minister’s Decision No. 11/2017/QD-TTg, dated 11 April 2017 (“Decision 11”) stipulates that the feed-in-tariff (the “Solar FIT”) for grid connected solar power projects in Vietnam is 2,086 Vietnamese dong/kWh (equivalent to 9.35 US cents/kWh), excluding VAT. This Solar FIT applies to projects which achieve commercial operations before 30 June 2019, and is valid for 20 years from the commercial operation date. On 8 August 2018 the Vietnamese Government issued resolution No. 104/NQ-CP, stating that the Ministry of Planning and Investment must coordinate with other relevant ministries and agencies to finalize a draft governmental resolution in order to authorize the extension of the application of Decision 11 to the approved 2,000 MW of solar power projects located in Ninh Thuan province until the end of 2020. Assuming that resolution is finalized and takes effect, those projects will benefit from the Solar FIT of 9.35 US cents / kWh if their commercial operation date occurs prior to the end of 2020.
DFDL Contacts
Hoang Phong Anh
Partner, DFDL Vietnam
phonganh.hoang@dfdl.com
Angus Mitchell
Partner, DFDL Vietnam
angus.mitchell@dfdl.com
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
