Vietnam adopts long-awaited policy on solar energy, but number of issues unresolved

April 18, 2017

HANOI - The Government of Vietnam has released its new official policy for the development of solar power projects in Vietnam. It is aimed at enabling the private sector to invest in clean energy sources that can help meet Vietnam’s surging demand for electricity, but lawyers Baker McKenzie warn that it leaves a number of issues unresolved, and these may have an impact on the bankability of solar projects, especially for large utility-scale solar power plants.

Among other things, the new policy provides for a Feed-in-Tariff (FiT) of 9.35 US cents per kWh for grid-connected projects, as well as a net-metering scheme for rooftop projects.

In a Client Alert, BM says the Prime Minister and the Government have instructed the Ministry of Trade and Industry to:

a) Issue detailed regulations on the contents, order, procedure for formation, assessment and approval of solar power development master plans;

b) Regulate in detail the method for calculation of losses on grid connection lines in the case where the metering point and the connection point are not the same;

c) Issue a standardised power purchase agreement template for on-grid and rooftop solar power projects and guidelines for implementation;

d) Issue technical standards on solar power, metering for solar power projects and provide guidelines on the procedures for connection, metering instalment and net-metering mechanism for rooftop solar projects;

e) Conduct a study on and propose support mechanisms for solar power projects for the period after June 30, 2019;

f) Issue FIT for solar power projects according to the fluctuations of the VND/USD exchange rate for the coming year.

BM says the Ministry of Planning and Investment has been told to co-ordinate with other Ministries to formulate mechanisms to encourage development of enterprises manufacturing solar power equipment in Vietnam for the Prime Minister's issuance.

In addition, the Ministry of Finance is required to take the lead in researching and supplementing fee and tax exemption regulations for rooftop solar power projects (with capacity up to 50KW). www.bakermckenzie.com (ATI).