VIETNAM: DIRECT POWER PURCHASE AGREEMENTS (DPPA) AND SOLAR ROOFTOP- UPDATING DEVELOPMENT OF NEW REGULATIONS ON DPPA AND C&I ROOFTOP IN VIETNAM

Both draft regulations for the Direct Power Purchase Agreement (DPPA) pilot program and the C&I Rooftop Solar are now still under review by the competent authorities. Below are some key updates in these two sectors in Vietnam up to June 2021:

1. Key updates on the Direct Power Purchase Agreement (DPPA) pilot pro-gram:

· MOIT is still reviewing the 2nd draft Circular on the pilot implementation of the direct power purchase between RE GENCO and the consumer (“Draft DPPA Circular”). The Circular will then be circulated throughout the rest of the gov-ernment before being legally approved and going into effect, ideally by the end of 2021;

· The Draft DPPA Circular maintains a target size of 1 GW for PDP-approved wind and solar projects above 30 MWac;

· RE Generation Companies (RE GENCO) and industrial Consumer(s) must apply together for participation in the DPPA Pilot Program through the DPPA online application portal;

· The RE GENCO must commit to reaching commercial operation date (COD) within 270 working days from the date of selection announcement;

· The DPPA Mechanism per the Draft Circular dated 8 April 2021 remains un-changed.

· DPPA Pilot Program Timeline:

– Pilot Project Planning (May-December 2019): MOIT Public Consulta-tion; First Action Plan agreed with ERAV; Market Preparation;

– Legal Approval/Invitation to Participate (Q2-Q4/2021): MOIT Circular draft published for public comment; MOIT Circular goes into effect; Pilot Program launched;

– Project Selection (Q1-Q2/2022): Applications to MOIT submitted and evaluated; Transaction documents executed; Operational capacity devel-oped.

(Source: DPPA Pilot Program Update (V-LEEP II, June 2021))

2. Key updates on the C&I Rooftop Solar:

· In 2020, Vietnam recorded 102,000 rooftop systems and reached 9.58 GW in capacity;

· The FIT 2 scheme expired at the end of 2020 and now the market is still waiting for the new Government’s new regulations on FIT 3;

· The draft regulations on FIT 3 for rooftop solar projects are still under re-view with the proposed FIT 3 as below:

ℴ For projects that achieve commercial operation in 2021, the FIT-3 in-centive will depend on project size:

– Less than 20kWp system: 6.84 UScent/kWh
– 20kWp to less than 100kWp: 6.35 UScent/kWh
– 100kWp to 1,250kWp: 5.89 UScent/kWh

ℴ For projects COD in 2022 and onward: MOIT to review and propose new tariff on annual basis;

ℴ Rooftop solar systems will be required to have a minimum self-consumption rate of 20% or a maximum excess power sale of 80% gener-ation;

ℴ Rooftop solar systems over 100kWp in size may be required to install mini-SCADA systems to support remote monitoring and system controls.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Di-rector of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.