Circular No. 02/2019/TT-BCT dated January 15, 2019 of the Ministry of Industry and Trade on providing the development of wind power projects and the model power purchase agreement applicable to wind power projects

CIRCULAR

Providing the development of wind power projects and the model power purchase agreement applicable to wind power projects^[1]

Pursuant to Electricity Law No. 28/2004/QH11 of December 3, 2004; and the November 20, 2012 Law Amending and Supplementing a Number of Articles of the Electricity Law;

Pursuant to the Government’s Decree No. 98/2017/ND-CP of August 18, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Prime Minister’s Decision No. 37/2011/QD-TTg of June 29, 2011, on the mechanism to support the development of wind power projects in Vietnam; and Decision No. 39/2018/QD-TTg of September 10, 2018, amending and supplementing a number of articles of the Prime Minister’s Decision No. 37/2011/QD-TTg of June 29, 2011, on the mechanism to support the development of wind power projects in Vietnam;

At the proposal of the Director of the Electricity and Renewable Energy Authority,

The Minister of Industry and Trade promulgates the Circular providing  the development of wind power projects and the model power purchase agreement applicable to wind power projects.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation and subjects of application

1. This Circular provides the development of wind power projects and the model power purchase agreement applicable to wind power projects in Vietnam (below referred to as model power purchase agreement).

2. This Circular applies to:

a/ Owners of wind power projects;

b/ Wind power facility-managing and -operating units;

c/ Electricity buyers;

d/ Other related organizations and individuals.

Article 2.Interpretation of terms

In this Circular, the terms below are construed as follows:

1.Electricity buyermeans the Vietnam Electricity Group or an attached unit authorized by the Vietnam Electricity Group or an organization receiving the rights and obligations of the Vietnam Electricity Group in accordance with law.

2.Electricity sellermeans an enterprise operating a wind power plant and producing and selling electricity from such plant or an organization receiving the rights and obligations to operate the wind power plant and produce and sell electricity from such enterprise in accordance with law.

3.Synchronous wind turbine systemcomprises a generator, a converter, a rotor, a tower, a synchronous transformer, connection lines, and other equipment and structures serving the production of electricity from wind energy. The foundation of the tower, transformer station, cable trench, and other related construction works are not included in the synchronous wind turbine system.

4.Onshore wind turbinemeans a turbine having the center of its foundation lying in the mainland or in a coastal area with the outer limit being the mean low tide line over a period of many years. The mean low tide line over a period of many years shall be determined and announced under the Government’s Decree No. 40/2016/ND-CP of May 15, 2016, detailing a number of articles of the Law on Marine and Island Resources and Environment, or provisions of the law on marine and island resources and environment amending, supplementing or replacing such regulation.

5.Offshore wind turbinemeans a turbine having the center of its foundation lying in a sea area with the inner limit being the mean low tide line over a period of many years. The mean low tide line over a period of many years is defined in Clause 4 of this Article.

6.Area of land for wind power project investment survey and researchmeans the area delimited within the geographical boundary specified by the People’s Committee of a province or centrally run city in the document permitting an investor to survey, research and evaluate wind energy potential serving the formulation of a wind power investment project within a time period. This area may be used only for survey and research activities such as building wind measuring masts and conducting geological and topographical surveys.

7.Area of land for use for a definite term of a wind power projectmeans the total area of wind turbine tower foundations, including also the foundation protection area, the area for installing synchronous equipment at the foot of wind turbine towers, grid-connecting underground cable and utility poles; transformer stations; and the area for construction of internal roads and executive office. The area of land for use for a definite term shall be allocated by competent agencies to project owners for use throughout the life of projects.

8.Area of land for temporary use of a wind power projectmeans the area which the project owner is allowed to temporarily use for implementation of the wind power project, covering temporary roads serving the construction, supplies and equipment gathering sites, construction sites, makeshift camps for workers, and other auxiliary sites. When the work is completed and put into use, the area of land for temporary use which is not included in the area of land for use for a definite term shall be recovered by competent agencies for use for other purposes.

9.Safety corridor of a wind power facilitymeans the safety corridor of wind turbine towers, electricity transmission lines, transformer stations and auxiliary items.

10.Safety corridor of a wind turbine towermeans a half-circle with the center being the center of the tower foundation and a radius equaling the height of the tower plus the radius of the turbine rotor blade.

11.IEC standardsmeans electrical technical standards promulgated by the International Electrotechnical Commission.

Chapter II

DEVELOPMENT OF WIND POWER PROJECTS

Article 3.Planning and listing wind power projects for development

1. The development of wind power projects must comply with electricity development master plans which must identify the potential and areas for wind power development for each locality. Wind power projects not yet included in electricity development master plans shall be appraised and submitted to competent authorities for approval and addition to such master plans.

2. The implementation of projects already included in electricity development master plans at all levels and provincial-level wind power development master plans already approved must comply with the transitional provisions prescribed at Point c, Clause 1, and Clause 3, Article 59 of the Planning Law.

3. The operation progress and capacity of a project in each phase must comply with the approved relevant electricity development master plan and wind power development master plan. In case the project implementation progress is adjusted by more than 6 (six) months or phased in a way that differs from the approved relevant master plan, the project owner shall report such to the agency competent to approve such master plan for consideration and approval.

4. When developing a wind power project approved under the local wind power development master plan for 2011-2020, the concerned provincial-level People’s Committee shall update the plan on connecting the wind power project to the power system so as to ensure power transmission at the project’s capacity and power absorption capacity of the power system in the project area. In case the connection plan is adjusted, the provincial-level People’s Committee shall report the adjusted plan to the Ministry of Industry and Trade for appraisal and approval or subsequent submission to competent authorities for approval according to competence.

Article 4.Addition of wind power projects to electricity development master plans

1. Potential wind power projects not yet included in electricity development master plans may be researched for development and shall be formulated, appraised and submitted for addition to electricity development master plans.

2. A dossier of proposal of addition of a wind power project to a electricity development master plan must comprise:

a/ A planning scheme with the following principal contents:

- The necessity to invest in the project and conditions for construction investment.

- The tentative objectives, scale and site of the project (stating its location and angular coordinate) and form of project implementation.

- Demand for land and resources: To clearly state the area for survey, area of land for temporary use, area of land for use for a definite term, and area of land affected by the safety corridor; to list types of land and sea areas and analyze the current status and use effectiveness of land, resources and sea areas; to assess the project’s conformity with the relevant land use master plan and plan, and marine space master plan as well as the overlap with other master plans.

- Report on assessment of wind potential in the project area.

- Preliminary explanation about technological solutions: To analyze and select technologies based on characteristics of wind in the project area, and the turbine arrangement plan.

- Preliminary design plan, specifying the construction site and type and grade of the main work and including a preliminary design of the overall site plan, a drawing of and preliminary explanation about the selected plan on construction of the foundation of the main work.

- Report on selection of the plan on connecting the wind power plant to the power system, clearly stating the current situation of power sources and grids, plan on development of power sources and grids, comparison between different options for selection, calculation of the project’s impacts on the power sources and grid in the project area, and evaluation of the absorption capacity of the power grid when the project is put into operation.

- Preliminary explanation about implementation solutions: transport of oversized and overweight equipment; implementation progress, and technical solutions for construction.

- Total investment level.

- Preliminary assessment of the project’s economic and financial efficiency, socio-economic effectiveness and impacts.

b/ A document of the provincial-level People’s Committee on the conformity of the  planned site and land area with the relevant land use master plan and plan and its overlap with other master plans; competent agencies’ opinions on the use of natural resources and sea areas proposed by the project (if the project is implemented at sea);

c/ Opinions of the concerned regional electricity corporation (if the project is connected to the power distribution system) or the National Power Transmission Corporation (if the project is connected to the power transmission system), and opinions of the Vietnam Electricity Group on the absorption capacity of the regional power grid and the dossier of proposal of addition of the project to the master plan.

3. Order and procedures for approval of the addition of a wind power project to the electricity development master plan

a/ The provincial-level People’s Committee shall send a proposal for addition of a wind power project to the electricity development master plan, enclosed with the dossier prescribed in Clause 2,  Article 4 of this Circular, to the Ministry of Industry and Trade;

b/ Within 45 working days after receiving a complete and valid dossier, the Ministry of Industry and Trade shall gather opinions of related ministries and sectors on the dossier’s contents to serve as the basis for reviewing the dossier. Based on the review result, the Ministry of Industry and Trade shall send an official letter to the provincial-level People’s Committee to request dossier completion in accordance with law;

c/ Within 15 working days after receiving the dossier, which have been completed, the Electricity and Renewable Energy Authority shall make and submit to the Ministry of Industry and Trade a dossier of proposal for appraisal. The consideration and approval of addition of the project to the master plan must comply with the current law on planning.

Article 5.Requirements on wind measurement

Wind power projects must obtain reports on the result of measurement of wind in project areas before their feasibility study reports are made and approved. Wind measurement shall be carried out for at least 12 (twelve) consecutive months at representative typical positions. The number of wind measuring masts must suit topographical changes in project areas. Wind measurement methods, equipment and results must conform with IEC standards or equivalent international standards.

Article 6.Feasibility study reports of wind power projects

The feasibility study report of a wind power project must comply with the law on construction investment management and have the following principal contents:

1. The wind measurement result as prescribed in Article 5 of this Circular.

2. The position and angular coordinate of the project; area of land for use for a definite term and area of land for temporary use; acreage of the sea area of the project (if the project is also implemented at sea).

3. The plan on connecting the project to the regional power system and evaluation of impacts of such plan on the regional power system and the release of capacity of the project.

4. Technical plans and expenses for dismounting and handling of equipment of the wind power plant after the project terminates.

5. The grid connection agreement; written agreement of a competent authority on the position of the project; route direction; area of land (for projects to be implemented in the mainland); area for exploitation of resources and sea area (for projects to be implemented at sea); the project’s layout plan; a document issued by the competent agency confirming the position of offshore wind power turbines (for projects with offshore turbines); and a competent agency’s written approval of the clearance height.

Article 7.Conditions for commencement of construction and construction of wind power facilities

The construction of a wind power project may be commenced and implemented only when the project meets the conditions prescribed in the law on construction investment management, environmental protection requirements, and the following conditions:

1. Having its construction design dossier appraised and approved under current regulations;

2. Having signed a power purchase agreement with the electricity buyer;

3. Having obtained a financing contract and commitments on funding sources so as to ensure compliance with the approved construction schedule in the work construction investment project.

Article 8.Acceptance test of wind power facilities

1. Works or work items may be put into use after being tested and having the testing inspected under current regulations.

2. The Electricity and Renewable Energy Authority shall assume the prime responsibility for conducting inspection of the acceptance test of wind power facilities decentralized to it according to the Ministry of Industry and Trade’s competence.

3. Provincial-level Departments of Industry and Trade are authorized to assume the prime responsibility for conducting inspection of the acceptance test of wind power facilities decentralized to them according to their competence under current regulations.

Article 9.Reporting regime and operation management

1. Within 10 (ten) working days after granting an investment policy decision and investment registration certificate, a provincial-level People’s Committee shall send the certified copies of the decision and certificate to the Electricity and Renewable Energy Authority for monitoring and management.

2. Within 10 (ten) working days after signing a power purchase agreement with a project owner, the concerned electricity seller shall send 1 (one) valid copy of the agreement to the Electricity and Renewable Energy Authority for monitoring and management.

3. Annually, before January 15 and July 15, provincial-level People’s Committees where wind power projects are implemented shall send to the Ministry of Industry and Trade reports on investment registration and implementation of wind power projects in their localities in 6 preceding months for management and monitoring. The report form is provided in Appendix 1 to this Circular.

4. After wind power projects are completed and put into commercial operation, project owners shall comply with current regulations on operation management of electricity works and environmental protection.

Article 10.Equipment of wind power projects

1. Wind power equipment must meet Vietnam’s standards and technical regulations, IEC standards, or equivalent standards.

2. Wind power equipment must be brand-new, have been delivered from factory for less than 5 (five) years, and be accompanied by appropriate certificates of origin and certificates of manufacture. Cases of using second-hand wind power equipment or equipment which have been delivered from factory for more than 5 years shall be reported to the Ministry of Industry and Trade for the latter to coordinate with related agencies in making consideration and decision.

Article 11.Work safety

1. The scope of a wind power facility covers the areas of wind turbine towers, electricity transmission lines, transformer stations, and other auxiliary items. The safety corridors of wind power facilities, transmission lines and transformer stations must comply with the standards and technical regulations on electric equipment, regulations on safety of high-voltage power grids, and the law on power work safety.

2. A wind power facility shall be located at least 300 meters away from residential areas.

3. Wind power turbines and turbine towers must be bright in color and non-reflective.

Article 12.Land use areas

1. Land used for development of a wind power project covers the land area for investment survey and study; land area for use for a definite term; and land area for temporary use.

2. The land area used for a wind power project must suit the output scale of the project. The ratios of land area for use for a definite term and land for temporary use of a wind power project must not exceed 0.35 ha/MW and 0.3 ha/MW, respectively.

Article 13.Management of use of land within the premises of wind power facilities

1. The land area for use for a definite period of a wind power project must be conformable with relevant land use master plan and plan and not overlap other approved master plans.

2. To prioritize the development of wind power facilities in barren and rocky land areas which have little agricultural or aquacultural value and are sparsely populated or uninhabited.

3. After a wind power facility is put into operation, its owner shall restore the temporarily occupied area to the original state and hand it over to the local administration for management.

4. Provincial-level People’s Committees may permit the use of land areas under wind power projects for appropriate purposes (small-scale cultivation and farming) and shall ensure the safe operation of wind power facilities.

Chapter III

MODEL POWER PURCHASE AGREEMENTS APPLICABLE TO GRID-CONNECTED WIND POWER PROJECTS

Article 14.Application of wind power tariffs to wind power projects

In case a grid-connected wind power project has both onshore and offshore wind power turbines, the electricity seller shall agree with the electricity buyer on the plan for installment of electricity meters and methods for measuring and calculating electricity output of onshore and offshore turbines for use as a basis for application of appropriate power tariffs.

Article 15.Application of the model power purchase agreement to wind power projects

1. The use of the model power purchase agreement applicable to wind power projects is compulsory in purchase and sale of electricity between electricity sellers and electricity buyers.

2. The model power purchase agreement shall be applied only to the volume of electricity generated from wind energy.

3. The model power purchase agreement applicable to wind power projects is provided in Appendix II to this Circular

4. Electricity sellers and electricity buyers may only supplement the model power purchase agreement in order to clarify the responsibilities and powers of the parties without changing its basic contents.

Article 16.Order and procedures for signing power purchase agreements for wind power projects

1. Order of requesting the signing of a wind power purchase agreement

a/ The owner of a wind power project shall make a dossier of request for signing a power purchase agreement and send it to the electricity buyer for carrying out procedures for appraisal and approval before signing the agreement;

b/ Within 15 working days after receiving a valid dossier from the project owner, the electricity buyer shall review and sign a power purchase agreement with the electricity seller.

2. A dossier of request for signing a power purchase agreement must comprise:

a/ The electricity seller’s official letter requesting the signing of a power purchase agreement;

b/ The project’s legal documents, including a competent authority’s decision approving power source and grid planning; the investment policy decision or investment registration certificate; and the decision approving the investment project;

c/ The draft power purchase agreement made according to the model agreement provided in Appendix II to this Circular;

d/ A written agreement on connection of the wind power plant to the national power system, enclosed with the connection plan; agreement on the SCADA/EMS and instruction dispatch management system; and agreement on automatic and protective relay system;

dd/ Documents on calculation of output and electrical energy loss of transformers and electricity transmission lines from wind power plants to the connection points with the national power system, and documents on calculation of electricity for internal use within the power plants.

Chapter IV

ORGANIZATION OF IMPLEMENTATION

Article 17. Organization of implementation

1. The Electricity and Renewable Energy Authority shall:

a/ Disseminate, guide and inspect the implementation of this Circular. If any problems arise in the course of implementation of this Circular, coordinate with related units and localities in considering and proposing them to the Minister of Industry and Trade to amend and supplement this Circular;

b/ Organize the evaluation of theoretical, technical and economic wind power potential nationwide and identify the distribution of wind power potential by region in order to input such data in a database serving the formulation of a master plan on wind power project development under the electricity development master plan;

c/ Assume the prime responsibility for studying and proposing a mechanism on auction for wind power development for application from November 1, 2021, and report it to the Minister of Industry and Trade for subsequent submission to the Prime Minister for consideration and decision.

2. The Industry Department shall assume the prime responsibility for studying and proposing regulations on mechanisms to encourage domestic production of wind power equipment and raise the localization rate of wind power projects and report them to the Minister of Industry and Trade for subsequent submission to the Prime Minister for consideration and decision.

3. Provincial-level People’s Committees shall:

a/ Monitor, supervise, inspect and report activities of developing wind power projects in their localities according to the approved electricity development master plans and this Circular;

b/ Coordinate with the Ministry of Industry and Trade in identifying areas for wind power development in their localities, ensuring conformity with the national land-use master plan, the national marine space master plan and other technical and specialized master plans.

Article 18.Transitional provisions

For wind power projects which have been put into operation before November 1, 2018, power purchase agreements may be re-signed with the electricity buyer so as to enjoy the power tariffs prescribed in Clause 7, Article 1 of the Prime Minister’s Decision No. 39/2018/QD-TTg of November 1, 2018, until the signed agreements expire.

Article 19.Effect

This Circular takes effect on February 28, 2019. The Ministry of Industry and Trade’s Circular No. 32/2012/TT-BCT of November 12, 2012,providing the development of wind power projects and the model power purchase agreement applicable to wind power projects, and Circular No. 06/2013/TT-BCT of March 8, 2013, on contents of, and order and procedures for formulation, appraisal and approval of, wind power development master plans, cease to be effective on the effective date of this Circular.-

Minister of Industry and Trade
TRAN TUAN ANH

* The appendices to this Circular are not translated.