DFDL Vietnam Legal Update: Decision 13 & Vietnam’s Solar Future from 22 May 2020

After consideration of multiple drafts, the Prime Minister of Vietnam issued Decision No. 13/2020/QD-TTg dated 6 April 2020 (“Decision 13”) on mechanisms to encourage the development of solar power projects in Vietnam. Decision 13 replaces Decision No. 11/2017/QD-TTg of the Prime Minister of Vietnam dated 11 April 2017 (“Decision 11”), which successfully promoted the development of solar energy projects in Vietnam during its effective period of 1 June 2017 to 30 June 2019. Decision 13 will take effect from 22 May 2020.

KEY PROVISIONS

Vietnam Electricity (“EVN”) and its authorized member companies no longer remain the exclusive purchasers of electricity from solar power projects in Vietnam. The definition of “electricity purchasers” now includes private organizations and individuals. Similarly, the definition of “electricity sellers” now also encompasses private organizations and individuals that generate solar power. Decision 13 also creates opportunities for the private retail and distribution of electricity thus forming the basis for direct power purchase agreements.
Decision 13 distinguishes between the following types of solar projects:
1. Rooftop Solar Power Systems: directly or indirectly grid-connected solar power systems installed on rooftops with up to 1 MW capacity and voltage of up to 35 kV;
2. Floating Solar Power Projects: grid-connected solar panel arrays floating on a body of water (such as a lake, dam reservoir or river); and
3. Ground-Mounted Solar Power Projects: all other forms of grid-connected solar power projects.
Feed-in tariffs applicable to the various types of grid-connected solar power projects:
1. For grid-connected solar power projects which (i) received an investment policy decision before 23 November 2019, and (ii) reach commercial operation between 1 July 2019 and 31 December 2020, the new feed-in tariff (“FiT2”) rates will apply:
  - Rooftop Solar Power Projects: VND 1,943/kWh, equivalent to 8.38 US cents/kWh
  - Floating Solar Power Projects: VND 1,783/kWh, equivalent to 7.69 US cents/kWh
  - Ground-Mounted Solar Power Projects: VND 1,644/kWh, equivalent to 7.09 US cents/kWh

(Note: based on the central exchange rate announced by the State Bank of Vietnam on 10 March 2020)

The FiT2 tariff rates do not include VAT and may be adjusted based on the exchange rate announced by the State Bank Vietnam at the time of invoicing;

1. In Ninh Thuan Province, for grid-connected solar power projects with a total cumulative capacity not exceeding 2,000 MW, which (i) are in the power development plan, and (ii) reach commercial operation before 1 January 2021, the applicable purchase price of electricity will be VND 2,086/kWh (excluding VAT) equivalent to 9.35 US cents/KWh based on the central exchange rate announced by the State Bank of Vietnam on 10 March 2020; and
2. For grid-connected solar power projects that do not fall under (a) or (b) above, the applicable purchase prices of electricity shall be determined based on the competition mechanism.

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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