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Client Update: New Developments in Vietnam's Renewable Energy Sector

14 September 2018

In brief: Vietnam has revised certain aspects of its laws around wind and solar power. The Prime Minister's Decision 39 increases the feed-in tariff for wind power projects to the equivalent of 8.5 US cents per kWh for onshore and 9.8 US cents per kWh for offshore, and sets the commercial operation date deadline of 1 November 2021 for new projects to secure this feed-in tariff. The Government also approved an extension of the commercial operation date deadline to secure the feed-in tariff for certain solar power projects in Ninh Thuan province. We report on the key development.

the revisions

The legal framework for renewable energy projects in Vietnam continues to develop rapidly, with the Government making some welcome revisions in the past few weeks to address certain issues deemed as impeding development of this important sector:

  1. the perceived unattractive Feed-in Tariff (FiT) for wind power projects, and
  2. the glut of proposed solar power projects approved for Ninh Thuan province with the resultant rush to meet the commercial operation date (COD) deadline of 30 June 2019 and potential knock-on effects on an unprepared grid.

We set out below a summary of these key developments.

Wind power: new FiT

On 10 September 2018, the Prime Minister of Vietnam issued Decision 39 revising certain aspects of the legal framework for wind power. Most importantly, the FiT for wind power projects will be increased from the VND equivalent of 7.8 US cents per kWh (the rate in place since 2011) to the equivalent of 8.5 US cents per kWh (onshore) and 9.8 US cents per kWh (offshore). The new FiT will be applicable for:

  • any wind power plant (or relevant part of it) that achieves a commercial operation date before 1 November 2021, in which case it will stand for 20 years from the COD; and
  • existing wind power projects that have generated power before the issuance of Decision 39, in which case it will stand from the effective date of Decision 39 for the remaining term of the relevant PPA.

Decision 39 will be effective from 1 November 2018.

Solar power: extension of COD deadline in Ninh Thuan province

A significant issue in the development of solar power projects is the COD deadline of 30 June 2019, which must be met to secure the FiT rate of 9.35 US cents per KWh.

After much anticipation, on 31 August 2018, the Government officially approved an important carve-out of this policy for Ninh Thuan province, where many projects are proposed to be located. Under the Government's Resolution 115, which generally introduces various social-economic incentives for Ninh Thuan province, the current FiT policy is to be extended in Ninh Thuan province until the end of 2020 for solar power and interconnection facility projects with designed capacity of 2,000MW that have been approved by the Prime Minister.

Sources have indicated that dozens of projects already approved within the 2,000MW capacity pool may benefit from this extension, although an official list of eligible projects is yet to be announced. The Ministry of Industry and Trade is tasked with cooperating with EVN and the Ninh Thuan Provincial People's Committee to implement this resolution.

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