Tag Archives: Rooftop Solar

New Rooftop Solar Guidance – MOIT Official Letter 7088  

Further to the recent publication of Circular 18, the Ministry of Industry of Trade (“MOIT”) has issued Official Letter 7088 dated 22 September 2020 to provide further guidance on development of rooftop solar power projects.

The following important points are worth considering for developers and prospective investors alike:

  1. Combining multiple projects into a single PPA

Where a group of rooftop solar projects (e.g. a portfolio of 5 rooftop solar installations in separate locations) exceeds a total combined capacity of 1MW, it is not permitted for the producer to combine several distinct PPAs into a single PPA for the entire portfolio.

Rather, separate PPAs must be executed with offtakers for each individual rooftop solar power project.  If not, the project will not qualify as a “rooftop solar system” and will be considered something else, presumably a solar project subject to additional licensing requirements including power masterplan approval and need to obtain relevant electricity operation license(s).  Though whether a system actually mounted on a roof can be treated as a ‘ground-mounted’ system for procedural purposes remains a matter open to debate.

While this is logical and previously largely presumed, it does potentially expose investors to additional contractual risk and contract management issues.  Ideally investors would secure guarantees from a single source for a string of rooftop PPAs.

  1. Genuine rooftop purpose

In order to be characterized as a valid rooftop solar project for the purposes of attracting FiT 2 under Decision 13, a rooftop solar project must only be installed on a rooftop which has a genuine construction purpose beyond that of merely existing to hold solar equipment.

In other words, rooftops which have no other function than to hold solar installations will not be characterized as a valid rooftop, and thus ineligible to receive FiT.

The Official Letter specifically references agricultural land on this point, suggesting that solar systems would need to be installed on a rooftop which has a genuine pre-existing agricultural or farming function.

This was something that was foreshadowed by previous unofficial comments from various authorities.  With the FiT 2 regime due to expire at end of December 2020, it remains open whether and how private rooftop PPA arrangements can proceed on structures that don’t otherwise meet FiT criteria.

  1. Eligibility under FiT 2

Rooftop solar projects of a voltage level of more than 35kV are not eligible to receive FiT 2 under Decision 13.

Further, rooftop solar installations on agricultural farm land with a capacity of more than 1MW or 1.25 MWp are now also ineligible to receive FiT 2. 

  1. Recent info on fire prevention requirements for rooftop solar project

Separate from the above Official Letter, we have also seen recently some regulations on providing additional information in regards to fire prevention obligations for ground-mounted and rooftop solar power developments.

Specifically, projects listed in Appendix IV of Decree 79/2014/ND-CP must have a design for fire prevention approved prior to the construction phase.

Appendix IV includes residential areas, apartment buildings, industrial zones, hospitals, educational facilities, and shopping malls, amongst several other specific development sites.

Relative to the current uncertainty over application of construction permit regulations for rooftop solar project around the country, this at least seems a reasonably clear and consistent requirement.

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Should you have any further queries on rooftop solar power regulations or investment opportunities in Vietnam, please do not hesitate to contact us.

For more information, please contact Giles Cooper at GTCooper@duanemorris.com or Daniel Haberfield at DHaberfield@duanemorris.com. Giles is Chairman of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office. Daniel is an Australian qualified lawyer and associate in Duane Morris’ HCMC office.

VIETNAM – ROOFTOP SOLAR POWER PROJECTS – NEW POLICY TO ADDRESS NET-METERING ISSUE

On 8 January 2019, the Prime Minister has issued Decision No. 02/2019/QD-TTg (“Decision 02”) to amend certain articles of Decision 11/2017/QD-TTg dated 11 April 2017 of the Prime Minister on mechanism for encouragement of development of solar power in Vietnam (“Decision 11”). Decision 02, became effective on 8 January 2019, promulgates new payment scheme to address the net-metering issue of the rooftop solar power projects under Decision 11. We elaborate the above topic further as below:

In 2017, Decision 11 introduced the net-metering scheme for rooftop solar power projects. In brief, rooftop projects must be implemented in net-metering with two-way electricity meters. In a trading cycle, if the amount of electricity generated from rooftop projects is greater than the consumed amount, the surplus will be carry forward to the next trading cycle. At the end of the year or when the contract is terminated, the surplus amount of energy will be sold to EVN at the rate mentioned in the power purchase agreement signed by the seller and EVN either at the end of the relevant year or upon termination of the agreement. Circular 16/2017/TT-BCT (“Circular 16”) dated 12 September 2017 of the Ministry of Industry and Trade (“MOIT”), requires a solar power generator, as the seller, to enter into a model power purchase agreement (in the form attached to Circular 16) with EVN or its authorized subsidiary. However, in practice, the model power purchase agreement has not been applied by EVN since the MOIT and the MOF had no guidance on the finalization, payment scheme and invoicing mechanism for such net-metering purposes. Other words, EVN claimed that it is very challenging for them to calculate and invoice the power based on net-metering scheme.

In order to address the net-metering issue, Decision 02 now has introduced a new payment scheme for rooftop solar power projects. In brief, the power generated by rooftop solar power project will be metered independently and paid by EVN to the seller. The power sold by EVN or its power company to consumers being rooftop solar power investors will be metered as usual like other households / consumers.

All rooftop solar power projects having their commercial operation date (operation and metering confirmation) prior to 1 July 2019 will enjoy FIT of US$9.35 / KWh under Decision 11. The price of rooftop solar power for following years must be adjusted according to the last year exchange rate between Vietnamese Dong and USD issued by the State Bank of Vietnam.
The MOIT shall promulgate technical regulations on solar power, regulations on measurement of energy of solar power projects and provide instructions on the connection, installation of electricity meters and the calculation of rooftop solar power project.

We will keep you informed with any new guidance from the MOIT for rooftop solar power projects.

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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.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.