On 28 October 2020, the Ministry of Industry and Trade (MOIT) issued Official Letter No.8159/BCT-DL to collect comments from other Ministries and relevant agencies on solutions for difficulties in wind energy project development. The comments were combined into a Draft report for the Prime Minister’s review and approval.
A notable provision of the Draft report is for wind power projects that have been supplemented into the power development planning and do not meet the COD deadline for current wind FiT rate of November 2021, the new applicable FiT rate shall be:
No. Category FiT rate for onshore projects (Uscent/kWh) FiT rate for offshore projects (Uscent/kWh)
1 Projects reaching COD from November 2021 to December 2022 7,02 8,47
2 Projects reaching COD in 2023 6,81 8,21
In addition, the Draft report also proposes to extend the current FiT rate deadline to 31 December 2023, instead of November 2021.
As stated in our previous articles on FiT rate for wind power projects, the need to extend the deadline for current FiT rate is essential because the projects waiting to be included in the Revised PDP VIII is unlikely to have commercial operation date before November 2021, because:
• The supplement into PDP for new wind power sources was suspended for more than 1 year (from October 2018) because there were no guidelines to implement the Planning Law;
• The construction of wind power projects takes more time than that of solar power projects. For feasibility study reports, investors must carry out wind measurement for at least 12 months. Moreover, wind turbines are mostly imported from abroad, which costs investors extra time, especially when there is unexpected delay of equipment delivery (e.g. due to Covid-19).
Please do not hesitate to contact the author Dr. Oliver Massmann under firstname.lastname@example.org. Dr. Oliver Massmann is the General Director 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.
On 19 September 2019, the Ministry of Industry and Trade of Vietnam (“MOIT”) submitted to the Government the final draft decision of the Prime Minister on the mechanism for encouraging the development of solar power projects in Vietnam from 1 July 2019 to 31 December 2021 (“FIT2”). It is expected that the new solar FiT2 decision will be issued soon this month.
Notably, the final FiT2 draft aims mostly at encouraging solar power project development in southern area as the MOIT estimated an addition capacity of approx. 6-8 GW need to be realized to satisfy major power demand of this area up to 2021.
New FITs for Solar Power Projects – from 1 July 2019 to 31 December 2021
Compared to the previous drafts, the final FIT2 draft does not determine FiT prices based on regions but only on technology types. The final FIT2 draft classified solar power projects into three groups as follows:
• Ground-mounted solar energy project: VND 1,620/kWh (USD 7.09 cent/kWh);
• Floating solar energy project: VND 1,758/kWh (USD 7.69 cent/kWh)
• Rooftop solar energy project: VND 2,156/kWh (USD 9.35 cent/kWh)
The above FIT2 price shall be applied for solar power projects reaching COD within the period from 1 July 2019 to 31 December 2021 and applied for 20 years from the COD date.
For Ninh Thuan province, solar power projects that reach COD before 1 January 2021 (within the capacity of 2,000 MW as already approved by the Government) still enjoy the FIT price of 9.35 cent/kWh.
Please do not hesitate to contact Dr. Oliver Massmann under email@example.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Decision No. 37 of the Prime Minister on supporting regime for wind power projects provides an FIT of 7.8 UScent/ kWh. This FIT applies to two current projects in operation in Binh Thuan, namely Phu Lac and Binh Thuan No. 1. For Bac Lieu near shore wind project, the FIT follows a special financial regime, being 9.8 UScent/kWh. However, with the current FIT, the Ministry of Industry and Trade (MOIT) opines that it will be difficult for these plants to recover their investment capital.
Thus, the MOIT has recently proposed the Government to increase wind FIT for inland wind power plants to 8.77 UScent/ kWh and to 9.97 UScent/kWh for near shore wind projects. This proposal is expected to attract more investors in the market as well as create incentive for current projects whose pre-feasibility reports have been approved by the MOIT to come into real operation.
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under firstname.lastname@example.org. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Thank you very much!