Out-Law News 1 min. read

Vietnam drafts onshore renewables feed-in tariff transitional rules

Vietnam’s Ministry of Industry and Trade (MOIT) has submitted to the country’s prime minister a transitional mechanism for onshore wind and solar projects which missed the feed-in tariff (FiT) application deadline.

The MOIT made the move as it seeks to have certain implemented wind and solar power projects switch to the proposed mechanism.

Transitional projects may choose to participate in the competitive electricity market. If a plant chooses to participate, it is responsible for performing its obligations and responsibilities as a generating unit in accordance with regulations on electricity market issued by the Ministry of Industry and Trade (MOIT).

Renewables expert John Yeap of Pinsent Masons said: “It is encouraging to see MOIT taking pro-active steps to try to address projects that have missed the FiT deadline.  However, investors may need more details on the proposed programme before they are able to make a call on whether they could proceed with their projects. Issues around curtailment risks, currency risks, and the limited period covered by the auction tariff, will likely be issues that will have to be addressed.”

According to the draft document, the transitional power purchase agreement and applied electricity price will apply until 2025. After 2025, projects to which the transitional arrangements apply will be able to participating in auctions in accordance with regulations issued by the government or the MOIT.

Prices under the transitional arrangements are listed in Vietnamese Dong (VND/kWh), and will not be adjusted due to fluctuations in the VND/USD exchange rate. Vietnam Electricity (EVN) mobilises power plants according to demand on the power system and is required to ensure the national power system’s security of supply.

The expected submission date for the prime minister’s decision on the transitional bidding mechanism for purchasing electricity from wind and solar power projects is May 2022. The country’s government expects to make the decision effective once the prime minister’s approval is obtained. The MOIT also intends to issue a notice which sets out the price range applicable to transitional projects, effective on the same date as the prime minister’s decision.

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