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

After consideration of multiple draft decisions, 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 (the “Decision 11”), which efficiently promoted the development of solar energy projects in Vietnam during its effective period from 1 June 2017 to 30 June 2019. The Decision 13 shall be effective from 22 May 2020.

KEY PROVISIONS

Vietnam Electricity (“EVN”), and its authorized member companies, is no longer the sole purchaser of electricity from solar power projects in Vietnam, as the definition of “electricity purchasers” includes private organizations and individuals. “Electricity sellers” now include private organizations and individuals, which generate solar electricity. Decision 13 also creates an opportunity for the privately-held retail and distribution of electricity. This forms the basis for the facilitation of direct power purchase agreements.
Decision 13 has distinguished between the following types of solar projects:
1. Rooftop Solar Power System: a directly or indirectly grid-connected solar power system, installed on rooftops, having a capacity of 1 MW or less, with a voltage of 35 kV or less;
2. Floating Solar Power Project: a grid-connected solar power project, installed on a water surface; and
3. Ground-Mounted Solar Power Project: all other grid-connected solar power projects.
The feed-in tariff applicable to grid-connected solar power projects shall be as follows:
1. For grid-connected solar power projects which (i) have received an investment policy decision before 23 November 2019, and (ii) reach commercial operation from 1 July 2019 to 31 December 2020, the new feed-in tariff (“FiT2”) shall be applied based on the type of solar project:
  - 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 Project: 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;
2. 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 shall be VND 2,086/kWh (not including 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
3. For grid-connected solar power projects that do not fall into the above (a) or (b), 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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