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January 14, 2019

Vietnam Updates Regulations on Encouraging Solar Power Development

On January 8, 2019, the government of Vietnam issued Decision No. 02/2019/QD-TTg (Decision 02) amending and annulling some regulations of Decision No. 11/2017/QD-TTg (Decision 11) on the mechanism for encouraging the development of solar power in Vietnam. Decision 02 took immediate effect upon its issuance. Below are some notable points of Decision 02.

Change in trading method for rooftop solar projects

Under Article 12.2 of Decision 11, sellers of electricity from rooftop solar projects were required to sell electricity to buyers based on the net-metering method, with two-way electricity meters. If the amount of electricity generated from rooftop projects was greater than the amount consumed by the seller, the surplus would be carried forward to the next trading cycle. At the end of the year or upon termination of the contract, any surplus electricity would be sold to the buyer at a specified price.

However, under Decision 02, the net-metering method has been replaced with the direct consumption – direct supply method. Buyers will now have to directly/separately pay for the amount of electricity they receive from rooftop project sellers, while sellers must directly/separately pay for the electricity they receive/consume from the power grid.

It is worth noting that Decision 02 also removes the condition that the electricity is sold to the buyer once a year, at the end of the year, or when the contract is terminated.

Change in responsibilities of government agencies

  1. Ministry of Industry and Trade
    In addition to its tasks prescribed under Article 13.1(d) of Decision 11, under Decision 02, the Ministry of Industry and Trade must also promulgate regulations on connection of solar power projects. However, it is no longer required to provide instructions on the calculation of the net-metering mechanism, as such mechanism has been removed.

    Under Decision 02, instead of imposing adjusted purchase prices for solar power projects for the following year based on the VND-USD exchange rate, the Ministry of Industry and Trade is required to provide instructions on calculating purchase prices for solar projects in accordance with the VND-USD exchange rate.

  2. Ministry of Finance
    Decision 02 removed Article 13.3 of Decision 11. Consequently, the Ministry of Finance is no longer required to consider amending regulations on exemption of rooftop projects from taxes and fees.

For more details on Decision 02, please contact us at [email protected].

The author would like to thank Tung Anh Nguyen for his valuable contribution to producing this article.

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