Circular 10/2025/TT-BCT method of determining and the principles of applying avoidable cost tariffs for small renewable energy power plants; main contents of the power purchase agreement

CIRCULAR

On method of determining and the principles of applying avoidable cost tariffs for small renewable energy power plants; main contents of the power purchase agreement

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Pursuant to the Electricity Law dated November 30, 2024;

Pursuant to the Government's Decree No. 96/2022/ND-CP dated November 29, 2022, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade; Decree No. 105/2024/ND-CP dated August 1, 2024, of the Government, amending and supplementing a number of articles of Decree No. 96/2022/ND-CP and Decree No. 26/2018/ND-CP, on the Charter of organization and operation of the Vietnam Electricity;

At the proposal of the Director of the Electricity Regulatory Authority of Vietnam;

The Minister of Industry and Trade promulgates the Circular on method of determining and the principles of applying avoidable cost tariffs for small renewable energy power plants; main contents of the power purchase agreement.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of application

1. This Circular provides detailed guidance for Clause 5, Article 44, Point g, Clause 1, Article 51, Point e, Clause 1, Article 51 of the Electricity Law No. 61/2024/QH15 on the method of determining and the principles of applying avoidable cost tariffs for small renewable energy power plants; main contents of the power purchase agreement.

2. This Circular applies to the following subjects:

a) Organizations and individuals buying and selling electricity from small renewable energy power plants;

b) The Electricity system and electricity market operator, other related agencies, organizations and individuals.

Article 2. Interpretation of terms

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

1. Electricity seller means an organization or individual holding an electricity operation license or being exempt from an electricity operation license in accordance with the law on electricity generation, owning a small renewable energy power plant.

2. Electricity buyer means Vietnam Electricity or an electricity distribution unit holding an electricity operation license in the field of electricity distribution and retail, having an electricity grid to which small renewable energy power plants will be connected to purchase electricity from the electricity seller.

3. Surplus electricity means the total amount of electricity generated during the rainy season that exceeds the electricity amount with a load factor of 0.85 in the rainy season.

4. Electricity on the busbar means the total amount of electricity generated minus the amount of self-consumed electricity within the power plant.

5. Electricity system and electricity market operator means the unit that performs the functions of the National Electricity System Dispatch Unit and the Electricity Market Transaction Administering Unit as prescribed in the Electricity Law (currently the National Electricity System and Market Operation Company - NSMO).

6. Load factor means the ratio between the actual amount of electricity generated and the amount of electricity that can be generated at 100% rated capacity operation mode within a certain period of time (year, season, month, day).

7. Rainy season shall be calculated from July 1 to October 31.

8. Dry season shall be calculated from November 1 to June 30 of the following year.

9. Year for data collection to calculate tariff applicable to year N shall be calculated from July 1 of year (N-2) to June 30 of year (N-1).

10. Small renewable energy power plant means a hydropower plant with an installed capacity of 30 MW or less as specified in Decision No. 2394/QD-BCN dated September 1, 2006, of the Ministry of Industry.

Chapter II

DEVELOPMENT, APPROVAL, IMPLEMENTATION OF AVOIDED COST TARIFFS

Article 3. Structure of avoidable cost tariffs

1. The avoidable cost tariff (excluding water royalty, forest environmental service fees, water resource exploitation licensing fees, value-added tax and other fees, taxes and charges if any, as prescribed by competent state authorities) shall be calculated according to the time of use during the day and seasons of the year, as detailed in Appendix I issued with this Circular, including 07 (seven) components as follows:

a) Dry season peak hours;

b) Dry season normal hours;

c) Dry season off-peak hours;

d) Rainy season peak hours;

dd) Rainy season normal hours;

e) Rainy season off-peak hours;

g) Surplus electricity.

2. Costs corresponding to 07 (seven) tariff components include:

a) Avoidable electricity generation costs;

b) Avoidable transmission loss costs;

c) Avoidable electricity generation capacity costs (only applicable during dry season peak hours).

3. Electricity usage time during the day applied to avoidable cost tariffs shall comply with the provisions of the current retail electricity tariff or other replacement regulations.

For areas with overloaded electricity transmission lines, surplus electricity confirmed or announced by the Electricity system and electricity market operator; hydropower plants on the same cascade; hydropower plants supplying water to the downstream area at the request of the provincial-level People’s Committee; based on the load demand of the electricity system in each area, taking into account loads already self-supplied by rooftop solar power for calculation, to determine small renewable energy power plants required to shift peak electricity generation hours (not shifting peak electricity generation hours for individual generating units), the electricity buyer and the electricity seller shall agree on the time to apply peak hour prices in principle to ensure sufficient peak hours as prescribed.

Article 4. Avoidable cost tariffs

1. Avoidable cost tariffs shall be developed and announced annually.

2. Before October 31 every year, the electricity system and electricity market operator shall be responsible for presiding over, coordinating with Vietnam Electricity and related units to update the database, perform calculations, and prepare avoidable cost tariffs for the following year according to the method specified in Appendix II issued with this Circular, and submit them to the state management agency for electricity at the Ministry of Industry and Trade.

3. Within 05 working days from the date of receiving the avoidable cost tariff dossier mentioned in Clause 2 of this Article, the state management agency for electricity at the Ministry of Industry and Trade shall be responsible for checking the contents of the submission dossier. If necessary, the state management agency for electricity at the Ministry of Industry and Trade shall issue a written request to the electricity system and electricity market operator to amend, supplement or clarify the contents of the dossier. No later than 15 working days from the date of receiving the request for amendment, supplement or clarification of the contents in the dossier of the state management agency for electricity at the Ministry of Industry and Trade, the electricity system and electricity market operator shall be responsible for sending a written report clarifying the contents of the dossier as requested.

4. Within 30 working days from the date of receiving the complete avoidable cost tariff dossier and the report clarifying the contents of the dossier of the electricity system and electricity market operator, the state management agency for electricity at the Ministry of Industry and Trade shall be responsible for:

a) Evaluating input parameters, annual avoidable cost tariff calculation results prepared by the electricity system and electricity market operator. If necessary, related organizations and individuals may be invited to participate in the evaluation;

b) Researching, proposing and submitting to the Minister of Industry and Trade for consideration and decision on avoidable cost tariffs at a reasonable level to encourage electricity production from renewable energy, while ensuring avoidable cost tariffs are suitable to the socio-economic conditions of the country in each period;

5. Within 02 working days from the date the avoidable cost tariff is promulgated, the state management agency for electricity at the Ministry of Industry and Trade shall be responsible for announcing the avoidable cost tariff for the following year on the websites of the state management agency for electricity at the Ministry of Industry and Trade and the Ministry of Industry and Trade.

6. In case the avoidable cost tariff is not announced on time, the avoidable cost tariff of the previous year may be temporarily applied until the new avoidable cost tariff is announced. The difference payment under the previous avoidable cost tariff compared to the new avoidable cost tariff will be refunded by the parties in the first payment applying the new avoidable cost tariff.

Article 5. Connection responsibility

1. The electricity seller shall be responsible for investing, operating, and maintaining the lines and step-up substations (if any) from the electricity seller's power plant to the connection point with the electricity buyer's grid.

2. The connection point shall be agreed upon by the electricity seller and the electricity buyer in principle as the nearest connection point to the electricity buyer's existing grid (unless the two parties agree otherwise), ensuring the transmission of the electricity seller's power plant capacity, in accordance with the approved electricity grid planning.

3. In case the connection point is different from the metering equipment location, the electricity seller shall bear the electricity loss on the connection line and the step-up transformer loss of the power plant. The method of calculating losses on the connection line shall be carried out in accordance with the Appendix III issued with this Circular.

Article 6. Power purchase agreement

1. The main contents of the power purchase agreement specified in Appendix IV issued with this Circular shall serve as the basis for the electricity seller and the electricity buyer to negotiate and sign. The electricity seller and the electricity buyer have the right to agree and unify to supplement specific provisions in the power purchase agreement in accordance with Vietnamese law.

2. The agreement language used shall be Vietnamese. The electricity seller and the electricity buyer may agree to supplement the agreement with the language used in English.

3. The term of application of avoidable cost tariffs in the power purchase agreement shall be 20 years from the commercial operation date of the power plant or the commercial operation date of each generating unit for power plants with multiple generating units.

Chapter III

IMPLEMENTATION PROVISIONS

Article 7. Responsibilities of the state management agency for electricity at the Ministry of Industry and Trade

1. Directing the electricity system and electricity market operator to prepare annual avoidable cost tariffs in accordance with the Appendix II issued with this Circular.

2. Designating power plants to provide necessary data to serve the request for preparing avoidable cost tariffs for the electricity system and electricity market operator (if necessary).

3. Appraising, submitting to the Ministry of Industry and Trade for consideration and decision on annual avoidable cost tariffs; announcing annual avoidable cost tariffs.

4. Protecting the confidentiality of information related to the costs of power plants used to calculate avoidable cost tariffs.

5. Providing guidance on the implementation of this Circular.

Article 8. Responsibilities of the electricity seller

1. Agreeing and signing an agreement with the electricity buyer according to the avoidable cost tariff based on the main contents of the power purchase agreement specified in Appendix IV issued with this Circular.

2. Installing 03-rate meters and accompanying equipment in accordance with current regulations to measure electricity consumption used for electricity billing.

3. Selling the entire amount of electricity on the plant's busbar to the electricity buyer when applying the avoidable cost tariff. In case for the purpose of supplying electricity to unelectrified areas adjacent to the power plant at the request of the local authorities, the electricity seller may sell a portion of the output at an agreed price in accordance with the law to the local electricity distribution unit, provided that a prior written agreement is made with the electricity buyer.

4. Complying with the electricity system operation regulations, electricity transmission system regulations, and electricity distribution system regulations issued by the Ministry of Industry and Trade.

Article 9. Responsibilities of the electricity buyer

1. Agreeing and signing an agreement with the electricity seller according to the avoidable cost tariff based on the main contents of the power purchase agreement specified in Appendix IV issued with this Circular.

2. Purchasing the entire amount of electricity that the electricity seller generates to the grid according to the grid's transmission capacity, except for the amount of electricity sold to the local electricity distribution unit as prescribed in Clause 3, Article 8 of this Circular.

3. Complying with the electricity system operation regulations, electricity transmission system regulations, and electricity distribution system regulations issued by the Ministry of Industry and Trade.

4. Sending a report on the results of the agreement with the electricity seller to the state management agency for electricity at the Ministry of Industry and Trade in case of changing the time of application of peak hour prices as prescribed in Clause 3, Article 3 of this Circular within 15 days from the date of agreement with the electricity seller.

5. Vietnam Electricity and Power Corporations shall be responsible for developing plans to handle the situation of overloaded electricity transmission lines for the cases specified in Clause 3, Article 3 of this Circular.

Article 10. Responsibilities of other electricity units

1. The electricity system and electricity market operator shall be responsible for preparing annual avoidable cost tariffs and protecting the confidentiality of information related to the costs of power plants used to calculate avoidable cost tariffs.

2. Power plants and other electricity units designated by the state management agency for electricity at the Ministry of Industry and Trade shall be responsible for providing necessary data to serve the request for calculating avoidable cost tariffs for the electricity system and electricity market operator.

Article 11. Effect

1. This Circular takes effect from February 1, 2025.

2. To annul Circular No. 32/2014/TT-BCT dated October 9, 2014 of the Minister of Industry and Trade providing for the order of developing, applying avoidable cost tariffs and issuing model power purchase agreements for small hydropower plants, and Circular No. 29/2019/TT-BCT dated November 14, 2019 of the Minister of Industry and Trade amending and supplementing a number of articles of Circular No. 32/2014/TT-BCT dated October 9, 2014 of the Minister of Industry and Trade providing for the order of developing, applying avoidable cost tariffs and issuing model power purchase agreements for small hydropower plants, and to annul Circular No. 06/2016/TT-BCT dated June 14, 2019 of the Minister of Industry and Trade amending and supplementing a number of articles of Circular No. 32/2014/TT-BCT dated October 9, 2014 of the Minister of Industry and Trade.

3. For small hydropower plants and cascade hydropower clusters with hydropower plants in the cluster put into operation and have signed power purchase agreements with avoidable cost tariffs remaining valid before the effective date of this Circular, the signed power purchase agreements shall continue to be implemented.

4. For small renewable energy power plants upon the expiration of the power purchase agreement with avoidable cost tariffs, the electricity seller shall negotiate the power purchase agreement with the electricity buyer in accordance with Clause 2, Article 51 of the Electricity Law.

5. The electricity seller owning a small renewable energy power plant within the scope and subjects of application of this Circular has the right to choose for the plant to participate in the electricity market when complying with the following conditions:

a) Fully equipping the infrastructure to participate in the electricity market as prescribed;

b) Committing to fully comply with the regulations of the electricity market, signing a power purchase agreement in accordance with the regulations of the electricity market;

c) When choosing to participate in the electricity market, the electricity seller shall be not allowed to re-select the application of avoidable cost tariffs;

d) In case where the electricity seller is applying avoidable cost tariffs and has signed a power purchase agreement, the electricity seller shall sign an agreement with the electricity buyer to terminate and liquidate the agreement ahead of time in accordance with the agreement signed between the two parties and related regulations promulgated by competent state authorities.

6. Any issues arising during the process of developing and calculating avoidable cost tariffs should be reported to the Ministry of Industry and Trade for supplementation and amendment accordingly./.

For the Minister

Deputy Minister

TRUONG THANH HOAI

* All Appendices are not translated herein.