NEW DEVELOPMENT INCENTIVES FOR SOLAR ENERGY IN VIETNAM

On April 6^th, 2020, the Prime Minister issued Decision No. 13/2020/QD-TTg on incentives for the development of solar energy in Vietnam (“Decision 13”), replacing Decision No. 11/2017/QD-TTg (“Decision 11”) which has expired since June 30^th, 2019. Decision 13 applies to organizations and individuals participating in developing solar energy in Vietnam, including Grid-connected solar power projects and Rooftop solar power systems, with incentives mainly involving in electricity prices. In specific:

1. For Grid-connected solar power projects

Decision 13 provides a new Solar Power Purchase Price Schedule, dividing the applicable electricity purchase price of Grid-connected solar power projects into the floating solar power projects (grid-connected solar power projects with solar panels installed on constructions floating on water surface) and Terrestrial solar energy project (grid-connected solar power projects but not floating ones); however, the electricity purchase price schedule is lower than the previous one (general price for all grid-connected projects specified in Article 12 of Decision 11). Specific Price Schedule in Decision 13 are as follows:

The above price does not include VAT and shall be applied for 20 years commencing the commercial operation date.

With respect to Ninh Thuan Province, the purchase price of electricity in grid-connected solar power projects in the electricity development planning of all levels whose commercial operation date precedes January 1^st, 2021 with a total capacity no more than 2,000 MW is VND 2,086/kWh (VAT excluded, equals USD 9.35 cent/kWh) and applied for 20 years from the commercial operation date.

In addition to electricity purchase price incentives, grid-connected solar power projects are also entitled to tax, land use and water surface incentives for grid-connected solar power projects in accordance with relevant applicable regulations and law.

To apply the above Price Schedule, grid-connected solar power projects need to satisfy the following conditions:

1. The projects prioritized for investment by competent authorities before November 23^th 2019 whose commercial operation date lies within July 1^st 2019 to December 31^st, 2020.
2. The projects in which capacity of solar cells exceed 16% or module exceeds 15%.
3. Primary equipment of grid-connected solar power projects must satisfy Vietnamese technical standards and regulations or international standards (IEC) or similar standards. Electricity quality of grid-connected solar power projects must satisfy requirements regarding voltage, frequency and requirements in terms of operating a national electricity system according to applicable regulations and law. 

For other grid-connected solar power projects that fail to satisfy the above requirements, the electricity purchase price shall be determined based on competition.

Besides, Decision 13 also outlines the responsibilities of the parties involved in the grid-connected solar power project, such as:

1. Investment for construction of grid-connected solar power projects shall be conducted according to regulations and law on investment, construction, electricity safety, land, fire safety, environmental protection and other relevant law provisions.
2. The Buyer is responsible for purchasing the entire electricity produced from solar power projects connected to national grid satisfactory to regulations on operating electrical systems and electricity technical regulations and standards; prioritizing balancing to fully utilize power generation capacity of solar power projects;
3. The use of power purchase agreement form for grid-connected solar power energy projects shall be compulsory in electricity sale between the Seller and the Buyer which is the Vietnam Electricity (EVN) or member entity authorized by the EVN. The period of a power purchase agreement for grid-connected solar power projects shall be 20 years from the commercial operation date. After the period mentioned above, contract extension or signing of new contracts shall comply with regulations and law at the time of extending or signing the contracts anew.
4. The purchase price of electricity for grid-connected solar power projects specified in Decision 13 shall be accounted for and fully provided in input figures of annual electricity sale and retail price scheme of the EVN.
5. The Seller shall be responsible for investing, installing, operating and maintaining electricity measuring instruments, power lines and transformers (if any) from power plants of the Seller to the location where the power is connected to power grid of the Buyer; organizing accrediting, calibrating and testing electricity measuring instruments according to regulations and law on measurement.

2. For Rooftop solar power systems

Rooftop solar power system refers solar system in which solar panels are installed on the roof of the construction with no more than 1 MW in power and directly or indirectly connected to power grid with up to 35kV of the Buyers. It may sell the entire or part of electricity produced to the Buyer which is the EVN or other organizations and individuals in case of not using power grids of EVN.

The EVN or authorized member entities shall pay for the electricity transmitted to the national grid from rooftop solar power systems according to the electricity purchase price which is VND 1,943/kWh, equivalent to 8,38 UScent/kWh (In case the Buyer is not the EVN or authorized member entity thereof, electricity purchase price and power purchase agreement shall be agreed upon by parties satisfactory to applicable regulations and law). The price does not include VAT and shall apply for 20 years from the date of initial electricity generation

To apply the above price, the Rooftop solar power system must have:

1. power generate and electricity meter reading confirmation dates range from July 1^st, 2019 to December 31^st, 2020;
2. the capacity of solar cells larger than 16% or module larger than 15%.

Responsibilities of related parties are recognized as follows:

1. Buyer which is EVN or authorized member entity thereof must conform to power purchase agreement form.
2. The purchase price for electricity of rooftop solar power shall be accounted for and fully provided in the inputs figures of annual electricity sale and retail price scheme of the EVN. Invoices shall be made separately for distributed electricity and received electricity.
3. Rooftop solar power systems directly or indirectly connected to the national grid shall be invested for development after applying to be connected with the EVN or authorized member entity thereof.
4. The EVN shall invest, install and maintain electricity measuring instruments of rooftop solar power systems signing power purchase agreements with the EVN or authorized member entity thereof.
5. Organizations and individuals investing in the installation of rooftop solar power systems must fulfill electricity safety, construction safety, environment and fire safety requirements according to applicable regulations and law.

Decision 13 comes into effect from May 22^nd, 2020.