Summary Of New Regulations On Solar Power Projects In Vietnam
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On 17 July 2020, the Ministry of Industry and Trade (“MOIT”) issued a new regulation on solar power projects (Circular 18). It provides new power purchase agreement (“PPA”) templates, guidance, and regulations on Feed-in Tariffs (“FiT”). Circular 18 will become effective on 31 August 2020. It has made several notable changes:
- Now, non-EVN buyers and power plants are free to negotiate electricity prices (for rooftop solar power projects);
- Circular 18 introduces new PPA templates: one for solar farms, and one for rooftop solar projects. Among other changes, there are notable changes in the PPA template (for solar farms): (i) EVN’s offtake obligations have been removed; (ii) deadline for EVN to pay monthly bills has been extended to 33 working days (instead of 15); (iii) new requirements and regulations on measuring equipment have been incorporated into the PPA; (iv) EVN and the power plant need to record the volume of electricity generated in the preceding month at 24:00 hours of the first day of each calendar month (instead of an agreed date); (v) a force majeure event will not release payment obligations of a contracting party to the PPA; (vi) EVN and the power plant may extend the PPA or sign a new PPA once its term expires; (vii) in the event of default by EVN, the power plant may opt to terminate the PPA in one of the circumstances specified in the PPA. In such case, the power plant is entitled to claim actual damages up to the expiry date of the PPA (instead of only one-year income for the previous year);
- Circular 18 provides detailed procedures to register rooftop solar power projects;
- Provisions and regulations on planning matters have been removed because these matters are stipulated in a separate new law (Planning Law);
- A number of definitions and concepts have been: (i) re-defined in a clearer manner (eg, Wp, kWp, MWp, COD, land area and water area used for solar power projects, etc.) or (ii) removed (eg, technical solar power potential, economic solar power potential, etc.);
- The concept of “permanent land” has been changed to “definite term land”. There are two possible consequences of this change: (i) exemption from land rental may occur for a definite term (instead of permanently); and (ii) once the term of the land lease agreement expires, the project company needs to extend its term;
- The applicable FiT for grid-connected generation, floating solar power projects, and rooftop solar power projects is: US cents 7.09/kWh1, US cents 7.69/kWh2, and US cents 8.38/kWh, respectively;
- Circular 18 introduces new requirements for technical design of a solar farm;
- A number of matters, that were previously stipulated in the PPA, are now part of the language of Circular 18 (eg, removal and clearance after a project subsequently terminates, concept of force majeure, etc.) and vice versa; and
- PPAs that were signed after 30 June 2019 and before 31 August 2020 must be amended in accordance with the new PPA templates (under Circular 18).
Source : lexology
