VIETNAM – SOLAR POWER – LATEST NEWS ON FEED IN TARIFF AND FIT-ELIGIBILITY – WHAT YOU MUST KNOW:

After the Government Office’s notification No. 402/TB-VPCP dated 22 November 2019 on solar power FiT2 and auction scheme, the MOIT has coordinated and consulted with EVN, MOF and MOJ to finalize its draft solar power FIT2. On 31 December 2019, a final draft submission letter from MOIT (with signature but no stamp) (NB: no draft FiT2 PM Decision attached also) for FiT2 PM Decision has been internally circulated. To our knowledge, this submission letter and the draft FiT2 PM Decision would be duly executed and submitted to the Prime Minister no later than COB next week. Please kindly find below our highlights of this draft submission letter of MOIT.

1. FIT2 Eligibility

The MOIT insisted that in order to be eligible for FiT2, solar power projects must (i) have been in principle approved, and added in the relevant power development planning, (ii) have signed PPAs with EVN, (iii) be “under construction” prior to 23 November 2019, and (iv) reach COD by end of 2020.

The MOIT document defined what “under construction” means for this purpose. It takes a narrow view, referring to Article 6.1.b of Decree 59/2015/ND-CP dated 18 June 2015 re management of construction projects to suggest that for a project to be considered “under construction” the project must have completed appraisal of either detailed or technical construction design (as the case may be) prior to 22 November 2019. Based on the reports of EVN dated 2&12 December 2019, MOIT determined there are only 7 solar power projects of 320 MW which are currently eligible for FiT2. The list of FiT2 eligible solar power projects is attached at Schedule 1 of the draft FiT2 PM Decision which has not yet been disclosed.

The MOIT also mentioned (i) Schedule 2 for solar power projects have been in principle approved, and added in power development planning, signing PPA, (ii) Schedule 3 for list of 30 solar power projects in Ninh Thuan province of 1,933 MW, and (iv) Schedule 4 for list of 22 projects that have been appraised for master plan addition and reported to the Prime Minister. The foregoing schedules have not yet been disclosed.

As reported before, EVN sent letter no. 6774/EVN-TTD dated 12/12/2019 to MOIT to suggested FiT2 to be applied to the projects which have construction contracts before 22 November 2019 (of any part of the project) and have evidence on the implementation of the project. In addition, EVN suggested that MOIT may consider decreasing the FiT2 in proportion to the construction delay status of relevant projects (e.g., 5% of FIT2 for any quarter failing to meet construction deadline). However, the MOIT did not agree with this proposal from EVN.

2. FIT2 Price for Solar Power Projects / Rooftop Solar (RTS) Projects

The submission letter is not very clear on the FiT2 price but very likely MOIT will keep the last draft FiT2 price structure i.e., (i) 7.06 UScent per Kwh for ground-mounted solar power projects and (ii) 7.69 UScent per Kwh for floating solar power projects.

In terms of RTS projects, MOIT proposed the price to be 8.38 UScent per Kwh. The MOIT did not agree with EVN’s proposal to remain 9.35 UScent per Kwh for RTS projects during 2020.

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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com or any other lawyer in our office listing if you have any questions or want to know more details on the above topic. Dr. Oliver Massmann is General Director of Duane Morris Vietnam LLC.