Circular No. 32/2012/TT-BCT dated November 12, 2012 of the Ministry of Industry and Trade regulation on implementation of wind power project development and power purchase and sale contract form for wind power projects

CIRCULAR

REGULATION ON IMPLEMENTATION OF WIND POWER PROJECT DEVELOPMENT AND POWER PURCHASE AND SALE CONTRACT FORM FOR WIND POWER PROJECTS

Pursuant to the Decree No. 189/2007/ND-CP dated December 27, 2007 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade and Decree No. 44/2011/ND-CP dated June 14, 2011 of the Government amending and supplementing Article 3 of Decree No. 189/2007/ND-CP;

Pursuant to the Electricity Law No. 28/2004/QH11 dated December 3, 2004;

Pursuant to Decision No. 37/2011/QD-TTg dated June 29, 2011 of the Prime Minister on mechanisms to support the development of wind power projects in Vietnam;

The Minister of Industry and Trade issues the Circular stipulating the implementation of wind power development and power purchase contract form for the wind power projects as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment and subject of application

1.This Circular provides for the implementation of wind power project development and power purchase contract form for wind power projects in Vietnam (hereinafter referred to as the power purchase contract form).

2. This Circular applies to the following subjects:

a)Wind power project investor;

b)Organizations developingwind power projects for purchase and sale of power;

c) Unit managing and operatingwind power works

d) Power buyer;

e) Other relevant organizations and individuals.

Article 2. Explanation of terms

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

1.Power buyer is the Vietnam Electricity Group or authorized units.

2.Power seller is the enterprise producing and operating and selling power from wind power projects.

3.Unit managing and operating wind power project is an organization directly engaged in the management and operation of thegrid-connected or off-grid wind power projects.This organization can be an investor or unit leased or assigned to perform the management and operation of wind power projects by the investor.

4.Land for survey, study for ent in wind power project is the area limited to geographical boundaries regulated by the People s Committees of centrally-affiliated provinces and cities in the written approval for the investors to conduct surveys, studies and assessment of the wind potential to develop wind power investment projects in a permitted time limit. This area is only permitted for use in survey and study activities such as building wind measuring column, geological and topographical survey (if any).

5.Area of land use with term of the wind power project is the total area offoundation and pier of wind turbine, area of protection corridor of wind turbine foundation and pier, corridor of the transmission lines, substations and area of substation protection corridor, construction area of​​the internal road system and operation management house. The area of land use with term shall be assigned to the project investor by the competent authority in the entire life of the project.

6.Area of temporary land use of wind power project is a part of the area which the investor is allowed to use temporarily for the construction of wind power project, including: temporary road for construction, yard for supplies and equipment storage, construction site, worker camps and other ancillary locations. After completion of project, the temporary area of land use which does not belong to the area of land use with term shall be withdrawn by the People s Committees of centrally-affiliated provinces and cities to be used for other purposes.

7.Safety corridor of wind power project is the corridor of wind tower column, power transmission lines; substation and ancillary items.

8.Safety corridor of wind turbine is a circle with the center as foot of wind tower, the minimum radius equal to the height of the wind tower plus radius of wind turbinerotor.

ChapterII

DEVELOPMENT OF WIND POWER PROJECT

Article 3. List of of wind power projects

1.Prior to November 30 annually, the General Department of Energy shall establish and report to the Minister of Industry and Trade for approving and issuing list of wind power projects which shall be allowed for development in the following year and expected in the five (05) following years.

2. Thewind power project in thelist of wind power projects put into operation annually and in the circle of planning must be consistent with the Planning of national and provincial power development approved in each stage.

3. The list of wind power projects which are made and classified based on the potential of wind power development locally and nation-wide. The number of projects registered must follow the principle of priority to mobilize projects with high economic and financial efficiency, having good plan of connection and capacity clearance into the system, clean surface, project registeredbeforehand shall be considered for development beforehand.

4.The list of wind power projects include the relevant information as: project name, location and area boundaries of wind power project development, the capacity scale of each wind power project, expected plan of connection wind power projects into the national power system, expected progress and timing to put the project into operation.

5.On the basis of Planning of provincial wind power development approved, the list of wind power projects must be updated into the list of power projects in the Planning of provincial power development and must specify the specific connection plan of wind power projects into the national power system.

Article 4. Proposing newwind power project to planning of wind power development

1.The wind power project permitted to be proposed for the project areas and regions not in the list of wind power projects approved.The scale of the proposed wind power projects must be consistent with the approved potential area of national wind power planning or provincial-level wind power planning where there are proposed projects.

2.The investor shall prepare dossier to propose wind power project in accordance with regulations of the law on the works construction investment and sent it to the People s Committees of centrally-affiliated provinces and cities (hereinafter referred to as provincial-level People s Committees) where the project is located. On the basis of the project proposal, the provincial-level People s Committees shall preparedossier to suggest the additional projects in the wind power development plan (hereinafter referred to asDossier of additional planning proposal) as specified in clause 5 of this Article and make report to the Ministry of Industry and Trade.

3.The General Department of Energy is responsible for organizing assessment ofDossier of additional planning proposal within thirty (30) working days after receiving complete and valid dossier. In case of necessity, the General Department of Energy may hire assessing consultants,opponencyconsultant to serve theassessment. On the basis of the assessment results, the General Department of Energy shall make report to the Minister of Industry and Trade for consideration and decision.

4.Based on the scale of the project, the Minister of Industry and Trade shall consider and approve additional projects in the planning of wind power development and approve the policy of investment project under the authority or submit it to the Prime Minister for approval, adjustment and addition of the planning of wind power development and approval of policy of project investment.

5. Dossier to suggest the additional project in the wind power development plan

The dossier includes:

a) Report of the Chairman of the provincial People s Committee to request the additional project to the planning of wind power project;

b)Basic information about the investor: documents of legal capacity, business registration, key personnel, project implementation experience, financial and technical capacity including lists of the project carried out (including industrial projects and power projects) in the last five years and the enterprise’s audited financial statements of the last three years;

c) Information on the proposed wind power project

- Need to invest in building projects, the advantageous and difficult conditions and mode to exploit and use national resources (if any);

-Project Description: location, scale and project construction area, the work items of the project; contents on industry planning and locality planning;

- Report on wind measurement result at positions within the scope of the project for at least 12 consecutive months as specified in Clause 4, Article 5 of this Circular;

- Preliminary implementation solutions, including: technical plans, technology and capacity; connection and equipment installation plan; implementation progress and mode of project management; common plan on resettlement compensation and plans to support technical infrastructure, if any; plans and cost plans;

- Environmental impact assessment, fire prevention and fire fighting solutions and requirements on security and national defense;

- Total investment of the project; capital arrangement capability, capital resources and the ability to finance capital by progress; analysis and assessment of the social, financial and economic efficiency of the project.

d)Opinion of the area Electric Corporation or power transmission unit (if connected to the power transmission system) onDossier of additional planning proposal.

Article 5. Requirement on wind measurement and report on wind measurement result

1.Wind measurement is made at the representative typical position, within the scope of the project area for at least twelve (12) consecutive months. The number of wind measuring columns must be consistent with the change oftopography of the project area. For projects with expected capacity of more than fifty (50) MW ( area of land used for study and assessment of wind potential is greater than one thousand (1,000) hectares. Investors must install and operate at least two (02) wind measuring columns in the project area.

2.For wind power projects in the list of power projects of the planning of power development or planning of provincial wind power development have been approved, the investor must have the result of study and assessment of wind potential before preparation and approval of investment project. In case of planning of wind power development at all levels with the complete data of wind measurement at the project location, the investor can use this data for the preparation and approval of investment project. In case the planning of wind power development at all levels do not have the complete wind measurement data, the investor must carry out study and assessment of the potential of wind as prescribed.

3.For the newly- proposed wind power projects not included in the list of projects of provincial wind power development planning approved, investors carries out wind measurement as prescribed after obtaining the permission of the provincial People s Committee as the basis for preparation of Dossier of additional planning proposal, approval of policy of investment in wind power projects and preparation of wind power investment project.

4.Report on wind measurementresultincluding the contents of the implementation methodology,time forwind measurementimplementation,mode ofimplementation, equipment description, dataof windmeasurementresultand analysis of wind measurementresult.Thedataof wind measurement up to thestandard andadequate number ofrepresentatives, sufficientinformation on wind speed statistics, wind frequency, wind flower, energy distribution map,airhumidity, solar radiation atmospheric pressure.The data ofwindmeasurementmust be collected from thewind measuringcolumnwith theheight at least sixty (60) m, the frequency of collection of ten (10) minutes /time. The minimum collectioncycle of twelve (12) monthsat the measurement locationswithin the project area at the location of the project.

5.Investor shall submit the Department of Industry and Trade and the General Department of Energy the report on wind measurement result (including original data) within eighteen (18) months from the date permitted by the competent authority to conduct studies and assessment of wind potential at the project location.

Article 6. Project of wind power development investment

1.Investor only prepares wind power investment projects in the list of the wind power projects approved by the Minister of Industry and Trade. The content of wind power investment project in accordance with the current regulations on themanagement of works construction investment and in accordance with provisions in clause 4 of this Article.

2.For wind power projects to be invested in different phases and the total capacity of each phase with the time to be put into operation of power generation in different years, the investor shall prepare investment projects at each stage of the project. Where the time of the operation of the proposed project with expected deviation of over six (6) months compared with the progress specified in the planning of wind power development, the investor shall make report to the General Department of Energy for consideration and approval.

3.The owner’s equity ratio of the wind power projects shall not be less than twenty percent (20%) of the total investment.

4.The content of wind power investment project in accordance with the law on the management of project investment and construction, including the following contents:

a) Report of wind measurement result as prescribed in Clause 4, Article 5 of this Circular;

b) Area of land use for wind power project;

c) Assessment of the effect of the plan on connecting wind power projects for regional power system

d)Plans and cost plans and techniques for dismantling and processing equipment of wind power plant after the completion of the project.

5.Provincial People s Committee shall grant investment certificate to investor after obtaining the written consent from the Ministry of Industry and Trade on the compatibility of wind power project for wind power development planning at all levels and the list of wind power projects approved.

Article 7. Conditions of construction commencement of wind power project

Wind power projects are built only when they meet the conditions prescribed by law on the management of works construction investment and ensure the following conditions:

1. Having investment certificate.

2. Having power purchase contract signed with the buyer.

3.Having connection agreement with power distribution unit or transmission unit

4.Having contract to finance and making capital commitments to ensure the progress of works construction correctly with the approved progress in the works construction investment projects.

Article 8.Termination of wind power project

Termination of wind power project implementation applies to one of the following cases:

1.Within twelve (12) months from the date of issuance of the investment certificate, if the investor does not start the construction of the main items of the works, the provincial-level People s Committee shall consider revoking the investment certificate and make report to the Ministry of Industry and Trade.Where there areplausible reasons, the project can be approved to prolong the progress but not more than twelve (12) months from the progress specified in the investment certificate.

2.A maximum of twenty-four (24) months from the date of commitment of operation in the investment certificate, if the project is not put into operation of power generation, the provincial-level People s Committee shall consider the decision to terminate the investment project, and revoke investment certificate and not take responsibility for compensation for damages to investors and make report to the Ministry of Industry and Trade on the decision to terminate the investment project.

Article 9. Regulation on report and management of operation.

1.Within ten (10) working days from the time the investment project is approved, the investor shall submit a dossier on the complete wind power investment project (including one (01) printing copy and one (01) electronic copy) to the General Department of Energy and the Department of Trade and Industry for management and monitoring of implementation.

2.Within ten (10) working days from the date of issuance of the investment certificate, the provincial-level People s Committee shall send one (01) copy of the investment certificate to the General Department of Energy to monitor management.

3.Within ten (10) working days from the date of signing the power purchase contract with the investor, the seller is responsible for sending one (01) a valid copy of the power purchase contract to the General Department of Energy and the Ministry of Industry and Trade for monitoring and management.

4.During the construction of wind power project, before the 15thdateof the first monthof quarter, the investor must have report on the implementation of projectof the previous quarter, the plan forimplementation ofthe subsequent quarter. Each year, beforeJanuary15,theinvestor musthavereport on the implementation of the project in the previous year and plans for the deployment of next year. Thesereportsof the investor must be sent simultaneously to the General Department of Energy and the Department of IndustryandTradeformanagementand monitoring ofthe implementation.

5.In the operation phase, before May 31 annually, the investor shall make report on the power output generated from wind power plant in the previous year and estimate the power output in the subsequent year and send it to the General Department of Energy for registration of fund to support wind power price for the subsequent year from the Vietnam Environment Protection Fund.

6.After the wind power project is completed and put into commercial operation, the investor must comply with current regulations on management and operation of power projects and environmental protection.

Article 10. Equipment and productivity of wind power farm

1.Anemometer and equipment of wind power project must meet the Vietnamese standards and technical regulations orIEC standardor equivalent standards.

2.Turbine wind is the one which is brand-new, the shipping time is not over five (05) years with appropriate certificate of origin and certificate of production. In case the wind power project uses second hand turbines, it is necessary to make report to the Ministry of Industry and Trade in collaboration with the relevant agencies for consideration and decision.

3. Productivity of wind farm (wind turbine layout) is not lower than ninety percent (90%)

Article 11. Works safety

1.Scope of wind power work includes area of wind tower columns, power transmission lines, substations and other ancillary items.

2.Safety corridor of wind power works, safety corridor of wind turbine and safety corridor of the lines and transformers must comply with standards, technical regulations on electrical equipment, and regulations on high-voltage power grid and laws on power work safety.

3.Strictly prohibiting construction of work items (residential areas, industrial facilities, technical infrastructure, housing, schools, roads, railways, power lines, signal and communication lines…..) which violate safety corridors of wind power work.

Article 12. Land occupancy area

1.Land used in the process of developing wind power projects includes: land area for survey, study and investment in wind power projects; land use area with term of wind power projects; temporary land use area of wind power projects.

2.Land use area for wind power projects must be consistent with the scale of work capacity. The rate of land use with term of wind power projects shall not exceed zero point five (0.5) ha / MW. The temporary land use area of wind power projects is less than zero point seven (0.7 ha / MW). Where the road leading to the project has complex topography and needs widened to facilitate the transportation of turbine and wind column in the construction and operation phase, the provincial People s Committee shall consider and allow rate of land use with term of the wind power projects of up to one (01) ha / MW.

Article 13. Management and use of land in the area of wind power works

1.Land used in the area of wind power works must be consistent with land use planning and does not overlap with the other plannings already approved by competent agencies.

2.Priority is given to the development of wind power projects in thearid and rocky land location with little value of agriculture, aquaculture, sparsely populated or inhabited.

3. Land used with term of wind power projects do not fall into the following categories:

a)Land for inhabitation and land used by agencies;

b) Area of security and national defence;

c) Industrial park and business and production facilities;

d)Area of transportation infrastructure, including airway, railway, road and waterway and other transportation works.

4.After the wind power project is put into operation, the investor must restore the status quo of temporarily occupied area and hand it over to the local government for management.

5. The Provincial-level People’s Committee can allow the land use in the area of wind power project for appropriate purposes (small-scale farming and cultivation) and must ensure the safety of the operation of wind power works.

Article 14. Requirement on environmental protection

1.Wind power works must not violate the archaeological, historical relics and cultural, religious sites, sensitive ecological areas, natural conservation areas.

2. Wind power works must be 300m away from the residential area.

3. The activities of development investment of wind power projects must comply with the current environmental regulations.

4.Wind power projects must not affect the air traffic, radio waves, electronic communications of residential and surrounding works.

5.Turbine and power tower column have bright and non-reflective color. No advertising is done on wind power turbines.

6.Investors are responsible for environmental restoration after the dismantling of the wind power works.

Chapter III

SUPPORT FOR WIND POWER DEVELOPMENT

Article 15. Register to support the annual power price for the grid-connected wind power plant

1.Prior to May 31 each year, the buyer is responsible for report to the General Department of Energy:

a)Generalizing information on the wind power plants which have signed power purchase constracts for the subsequent year (name of the plant, investor, capacity, output, location, size, number of contract, date of signing the contract);

b)The power output purchased from the wind power plant in the previous year;

c)The power output is expected to buy from the wind power plants in the current year and subsequent years of each plant and the expected total amount of money for price support as prescribed.

2.The General Department of Energy shall review, synthesize and report to the Minister of Industry and Trade for consideration and to the Ministry of Natural Resources and Environment and the Ministry of Finance for funding registration to support the power price from the central budget.

Article 16. Adjustment of wind power rate

Prior to October 30 annually, based on the general cost and price of the system, the General Department of Energy shall propose a plan to adjust the rate of preferential power purchase from the wind power projects at the power delivery locations and the level of power price support in order to report to the Minister of Industry and Trade for submission to the Prime Minister for consideration and decision.

Article 17. Support for off-grid wind power projects

1. Principles and conditions to consider support of off-grid wind power projects:

a)Ensuring economic, social and environmental efficiency.

b) Project completed investment and put into operation;

c)A number of key input data to calculate the power price and the unit price supporting the wind power projects are considered on the following principles:

-Where the installed capacity of the project is greater than the actually required capacity of the area power grid, the actual power output of the previous year and the expected output in the subsequent years are used as the basis for determining the unit price for support. For other projects, the power output shall be taken by the actual or expected output in the approved investment projects, taking larger numbers;

-Total investment in the project shall be taken by the total investment in projects approved but not greater than fifty one (51) million dong / kW (equivalent to two thousand five hundred (2,500) dollars / kW);

-Depreciation cost in accordance with current legislation.

2. Order to register support of power price for off-grid wind power project:

a)Investor of off-grid wind power projects up shall prepare dossier to request support of power price off-grid wind power projects submitted directly or sent by post to the General Department of Energy. The number of records required: ten (10) sets and one (01) CD / DVD / USB containing the file of dossier and the attached documents.

b)Within thirty (30) days after receiving complete and valid dossier, the General Department of Energy is responsible for organizing the appraisal of dossier to make report to the Minister of Industry and Trade for submission to the Prime Minister for consideration and approval.In case of necessity, the General Department of Energy may hireconsultants for appraisal and opponency consultants to serve the appraisal work.

In case the dossier is invalid, within ten (10) working days from the date of receipt of dossier to request support of power price for off-grid wind power projects, the General Department of Energy must notify in writing to the investors to require dossier addition orrepreparation

3. Dossier to request support of power price for off-grid wind power projects includes:

a)Investment projects, including interpretation of the power price plan and the main contents of the necessity and assessment of the effectiveness of supporting plan;

b)Report on the result of study and assessment of wind potential for at least 12 consecutive months at the position within the scope of project;

c) Operation and business plan

d)Plans and cost plans, techniques for dismantling and processing equipment of wind power plant after the project finishing;

dd)Opinion of the provincial People s Committee concerning the content of the dossierto request support;

e)Opinion of the General Electric Company where the projects are possessed on the content of Dossier to request support of project development investment.

Chapter IV

POWER PURCHASE AND SALE CONTRACT FORM FOR GRID-CONNECTED WIND POWER PROJECTS

Article 18. Conditions for application ofpower purchase and sale contract form for wind power projects

1.The use ofpower purchase and sale contract formfor wind power projects is required in the purchase and sale of power between the grid-connected wind power projects and the buyer.

2.The wind power projects with the entire electric power produced from wind energy.

Article 19.Contents of power purchase and sale contract formfor wind power projects

1. The contents ofpower purchase and sale contract form for wind power projects are specified in the Annex issued together with this Circular.

2.The seller and the buyer may only add content of the power purchase and sale contract form to clarify the responsibilities and powers of the parties without changing the basic content of the power purchase and sale contract form.

Chapter V

IMPLEMENTATION ORGANIZATION

Article 20.Implementation organization

1.The General Department of Energy is responsible for dissemination, guidance and inspection of the implementation of this Circular. In the course of implementation, if any problems arise, the General Department of Energy in collaboration with the relevant units of locality shall review and make proposal to the Minister of Industry and Trade for amending and supplementing this Circular.

2.Provincial-level People’s Committees shall monitor, supervise and inspect the operation of the development of wind power projects in accordance with the wind power development plan approved in conformity with the provisions of this Circular.

Article 21. Effect

This Circular takes effect from December 27, 2012.