Decision No. 13/2020/QD-TTg mechanisms to promote development of solar power in Vietnam

DECISION

On mechanisms to promote development of solar power in Vietnam^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the December 3, 2004 Law on Electricity; and the November 20, 2012 Law Amending and Supplementing a Number of Articles of the Law on Electricity;

Pursuant to the November 26, 2014 Law on Investment; and the November 22, 2016 Law Amending and Supplementing the Law on Investment;

Pursuant to the June 18, 2014 Law on Construction;

In furtherance of the Government’s Resolution No. 115/NQ-CP of August 31, 2018, on implementation of a number of special mechanisms and policies to support Ninh Thuan province in socio-economic development and stabilization of production and people’s life during the 2018-2023 period;

At the proposal of the Minister of Industry and Trade;

The Prime Minister promulgates the Decision on mechanisms to promote development of solar power in Vietnam.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Decision provides mechanisms to promote development of solar power in Vietnam.

Article 2.Subjects of application

This Decision applies to organizations and individuals that participate in developing solar power in Vietnam and other related organizations and individuals.

Article 3.Interpretation of terms

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

1. Power purchaser means the Vietnam Electricity Group or one of its authorized member units or another organization or individual that purchases power from a power seller or an organization that takes over the former’s rights and obligations in accordance with law.

2. Power seller means an organization or individual that participates in power generation activities at a power plant or solar power system or an organization or individual that takes over the former’s rights and obligations in accordance with law.

3. Power distribution and retail unit outside the Vietnam Electricity Group means a power unit not attached to the Vietnam Electricity Group, licensed for power distribution and retail, and purchasing power at wholesale prices from a power distribution unit for retail to power consumers.

4. Solar power means power generated through conversion of the sun’s rays into electricity using photovoltaic (solar) panels.

5. Rooftop solar power system means a solar power system that has its solar panels mounted on the rooftop of a construction work and an output not exceeding 1 MW and is directly or indirectly connected to a power grid with a voltage not exceeding 35 kV of a power purchaser.

6. Grid-connected solar power project means a solar power project that is directly connected to the national power grid, except the case specified in Clause 5 of this Article.

7. Floating solar power project means a grid-connected solar power project that has its solar panels mounted on floating structures.

8. Ground-mounted solar power project means a grid-connected solar power project other than the projects specified in Clause 7 of this Article.

9. Date of commercial operation of a grid-connected solar power project or part thereof means a date when such project is wholly or partially ready for sale of power to a power purchaser and satisfies the following conditions:

a/ Initial tests for the whole or part of the project’s works have been completed under regulations;

b/ A competent agency has granted a power activity license for power generation;

c/ The power seller and purchaser have officially recorded power-meter figures for commencement of payment.

Chapter II

GRID-CONNECTED SOLAR POWER

Article 4.Responsibility to purchase power from grid-connected solar power projects

1. The power purchaser shall purchase the whole power output generated from grid-connected solar power projects and transmitted to the national power grid in accordance with regulations on operation of power systems and standards and technical regulations applicable in the power sector; priority shall be given to load dispatch so as to wholly exploit power capacity and output of such projects.

2. The use of the model power purchase and sale contract for grid-connected solar power projects is compulsory in power purchase and sale between a power seller and the power purchaser being the Vietnam Electricity Group or one of its authorized member units.

3. The term of a power purchase and sale contract for a grid-connected solar power project is 20 years from the date of its commercial operation. Upon the expiration of this term, the extension of such contract or signing of a new contract must comply with relevant regulations effective at the time of signing an extended contract or a new contract.

Article 5.Power purchase prices for grid-connected solar power projects

1. The owner of a grid-connected solar power project for which investment policy is decided by a competent agency before November 23, 2019, and is wholly or partially put into commercial operation between July 1, 2019, and December 31, 2020, may apply the power purchase price tariff applicable to grid-connected solar power projects at power delivery points specified in the Appendix to this Decision.

2. A power purchase price in the power purchase price tariff is exclusive of value-added tax and shall be adjusted according to fluctuations of Vietnam dong (VND)/US dollar (USD) exchange rate (calculated in UScent/kWh), with the applicable exchange rate being the VND/ USD official exchange rate announced by the State Bank of Vietnam on the date when the power seller issues a payment invoice. Such price may be applied for 20 years from the date of commercial operation.

3. For Ninh Thuan province, the price for purchase of power from grid-connected solar power projects included in power development master plans at all levels and to be commercially operated before January 1, 2021, with an accumulated total output not exceeding 2,000 MW, is VND 2,086/kWh (exclusive of value-added tax, equivalent to 9.35 UScents/kWh, according to the official exchange rate of VND 22,316 = 1USD announced by the State Bank of Vietnam on April 10, 2017), to be applied for 20 years from the date of commercial operation. Such power purchase price shall be adjusted according to fluctuations of the VND/USD exchange rate. The applicable exchange rate is the VND/USD official exchange rate announced by the State Bank of Vietnam on the date when the power seller issues a payment invoice.

4. Prices for purchase of power from grid-connected solar power projects not satisfying the conditions prescribed in Clauses 1 and 3 of this Article shall be determined through the competition mechanism.

5. The power purchase prices specified in Clauses 1 and 3 of this Article are applicable to projects with a performance ratio of solar cells exceeding 16% or of modules exceeding 15%.

6. Expenses for purchase of power from grid-connected solar power projects specified in Clauses 1 and 3 of this Article shall be fully accounted into inputs of annual power wholesale and retail price plans of the Vietnam Electricity Group.

Article 6.Development of grid-connected solar power projects

1. Main equipment of grid-connected solar power projects must conform with Vietnam’s standards or technical regulations or international standards of the International Electrotechnical Commission (IEC) or equivalent standards. Power quality of grid-connected solar power projects must satisfy technical requirements on voltage, frequency and operation of the national power grid under current regulations.

2. Investment in building grid-connected solar power projects must comply with the laws on investment, construction, power safety, land, fire prevention and fighting, and environmental protection, and other relevant regulations.

3. Tax and land and water surface use incentives for grid-connected solar power projects shall be provided in accordance with current relevant regulations.

Article 7.Connection of solar power projects to power grids

1. The power seller shall invest in, install, operate and maintain power metering devices, transmission lines and high-voltage transformer stations (if any) from its power plant to points of connection to the power grid of the power purchaser; and organize inspection, calibration and testing of power metering devices in accordance with the law on measurement.

2. Connection points shall be agreed upon by the power seller and purchaser under the approved master plan. In case connection points are not points of installation of power metering devices, the power seller shall bear power wastage on connection lines and wastage caused by high-voltage transformers of its power plant.

Chapter III

ROOFTOP SOLAR POWER SYSTEMS

Article 8.Power purchase prices and model power purchase and sale contract

1. Owners of rooftop solar power systems may sell the whole or part of generated power output to the power purchaser being the Vietnam Electricity Group or another organization or individual in case the power grid of the Vietnam Electricity Group is not used.

2. The Vietnam Electricity Group or its authorized member units shall pay for power output generated and transmitted from rooftop solar power systems to the national power grid at purchase prices in the power purchase price tariff for rooftop solar power systems provided in the Appendix to this Decision. These power purchase prices are exclusive of value-added tax and shall be adjusted according to fluctuations of VND/USD exchange rate (calculated in UScent/kWh). The applicable exchange rate is the VND/USD official exchange rate announced by the State Bank of Vietnam on the final day of a year for calculation of power charge for the subsequent year. Related parties shall comply with current regulations on taxes and charges.

3. In case the power purchaser is not the Vietnam Electricity Group or its member units authorized to purchase power, power purchase contracts shall be agreed upon by related parties in accordance with current relevant regulations.

4. The power purchase prices specified in Clause 2 of this Article are applicable to rooftop solar power systems with dates of commencement of power generation and certification of power meter figures falling in the period from July 1, 2019, to December 31, 2020, for 20 years from the date of commencement of power generation. Expenses for purchase of power from the rooftop solar power projects specified in Clause 2 of this Article shall be fully accounted and included in inputs of annual power wholesale and retail price plans of the Vietnam Electricity Group. Payment invoices shall be made on the basis of delivered and received power outputs separately.

5. Power purchase and sale contracts with the power purchaser being the Vietnam Electricity Group or its authorized member units must follow the model power purchase and sale contract. The term of power purchase and sale contracts for rooftop solar power systems is up to 20 years from the date of commencement of power generation. Upon the expiration of this duration, the extension of such contracts or signing of new contracts shall be carried out in accordance with current regulations.

Article 9.Development of rooftop solar power systems, connection and power metering

1. Rooftop solar power systems directly or indirectly connected to the national power grid shall be invested for development after their connection is registered with the Vietnam Electricity Group or one of its authorized member units.

2. The Vietnam Electricity Group shall invest in, install and maintain power metering devices for rooftop solar power systems whose owners have signed power purchase and sale contracts with the Group or one of its authorized member units.

3. Rooftop solar power systems must have the performance ratio of their solar cells exceeding 16% or of their modules exceeding 15%.

4. Organizations and individuals that invest in and install rooftop solar power systems shall satisfy requirements on power and construction work safety, environmental protection, and fire and explosion prevention and fighting under current regulations.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 10.Responsibilities of state management agencies

1. The Ministry of Industry and Trade:

a/ To assume the prime responsibility for, and coordinate with the People’s Committee of Ninh Thuan province and the Vietnam Electricity Group in, monitoring grid-connected solar power projects with dates of commercial operation meeting requirements for enjoying subsidized power purchase prices specified in Clause 3, Article 5 of this Decision and complying with the Government’s Resolution No. 115/NQ-CP of August 31, 2018, on implementation of a number of special mechanisms and policies to support Ninh Thuan province in socio-economic development and stabilization of production and people’s life during the 2018-2023 period;

b/ To organize and guide, and coordinate with provincial-level People’s Committees in inspecting and supervising, the implementation of this Decision;

c/ To issue the model power purchase and sale contract applicable to grid-connected solar power projects and the model power purchase and sale contract applicable to rooftop solar power systems in case the power purchaser is the Vietnam Electricity Group or one of its authorized member units;

d/ To promulgate regulations on metering, counting and recording power outputs and payment applicable to rooftop solar power systems with participation of power distribution and retail units outside the Vietnam Electricity Group;

dd/ To coordinate with ministries, sectors and localities in mobilizing resources for promoting the development of the rooftop solar power program;

e/ To study and finalize the bidding mechanism for solar power projects and its implementation roadmap, then report it to the Prime Minister for approval and implementation nationwide.

2. Provincial-level People’s Committees:

a/ To coordinate with and support investors in terms of compensation, ground clearance, infrastructure facilities and human resources for investment in, implementation and development of, solar power projects in their localities;

b/ To monitor and inspect the implementation of solar power projects in their localities according to their competence;

c/ To perform the state management of solar power-related activities in their localities in accordance with current regulations;

d/ To report to the Ministry of Industry and Trade on registration and investment in development of solar power projects in their localities.

Article 11.The Vietnam Electricity Group

1. To fully account expenses for purchasing power from solar power projects whose owners have signed power purchase and sale contracts with the Vietnam Electricity Group or one of its authorized member units and include them in inputs in its annual power wholesale and retail price plans.

2. To study and implement solutions for storing power for systems in order to ensure stable operation of power systems when integrating renewable energy sources.

3. To build the system of management information about development of grid-connected solar power and rooftop solar power nationwide.

4. To review progress of power grid projects to ensure transmission of power output of grid-connected solar power projects and rooftop solar power systems, avoiding overload of the national power grid.

5. To annually report to the Ministry of Industry and Trade on actual connection of solar power, total installation capacity and power output purchased from grid-connected solar power projects and rooftop solar power systems.

Article 12.Effect

1. This Decision takes effect on May 22, 2020.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and heads of agencies, units and organizations involved in the development of solar power projects in Vietnam shall implement this Decision.-

For the Prime Minister
Deputy Prime Minister
TRINH DINH DUNG

APPENDIX

SOLAR POWER PURCHASE PRICE TARIFF

(To the Prime Minister’s Decision No. 13/2020/QD-TTg of April 6, 2020)

Note: The applicable exchange rate is the VND/USD official exchange rate announced by the State Bank of Vietnam on March 10, 2020.