Circular No. 16/2017/TT-BCT stipulates on the development of solar power projects and model Power Purchase Agreements applicable to solar power projects.

CIRCULAR

Provisions on the development of projects and model power purchase agreements for solar energy projects

applicable to solar power projects

___________________

WHEREAS, Law on Electricity No. 28/2004/QH11 dated December 3, 2004; Law Amending and Supplementing Certain Provisions of the Law on Electricity dated November 20, 2012;

Pursuant to Decree No. 98/2017/NĐ-CP dated August 18, 2017, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

Pursuant to Decision No. 11/2017/QĐ-TTg dated April 11, 2017 of the Government Prime Minister on mechanisms to encourage the development of solar power projects in Vietnam;

At the proposal of the Director of the Electricity and Renewable Energy Department,

The Minister of Industry and Trade issues this Circular stipulating provisions on the development of projects and model power purchase agreements applicable to solar power projects.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the development of grid-connected solar power projects, rooftop solar power projects, and promulgates model power purchase agreements applicable to grid-connected solar power projects and model power purchase agreements applicable to rooftop solar power projects in Vietnam (hereinafter referred to as model power purchase agreements).

Article 2. Applicability     

This Circular applies to organizations and individuals participating in the development of solar power projects in Vietnam and other organizations and individuals related thereto.

Article 3. Explanation of Terms

1.  The electricity purchaser is the Vietnam Electricity Corporation or its authorized member units.

2.  The electricity seller is an organization or individual with a license to operate in the field of power generation from grid-connected solar power plants; an organization or individual with a rooftop solar power project selling excess electricity to the electricity purchaser.

3.  Commercial operation date is the date when part or all of the solar power plant is ready to sell electricity to the electricity purchaser and meets the following conditions: (i) The solar power plant has completed initial tests for part or all of the grid-connected solar power plant and associated equipment; (ii) The grid-connected solar power plant has been granted a license to operate in the field of power generation; (iii) The electricity seller and the electricity purchaser have settled meter readings to commence payment.

4.  Wp, KWp, MWp are units of measurement for the direct current power output of photovoltaic panels produced under standard conditions and published by the manufacturer.

5.  Theoretical solar potential is the solar potential determined based on theoretical solar radiation.

6.  Technical solar potential is the solar potential that can be developed and operated in solar power projects based on current technical and technological conditions.

7.  Economic solar potential is the solar potential that can be effectively exploited in projects to generate reasonable profits for investors.

Chapter II

PLANNING AND DEVELOPMENT OF SOLAR ENERGY

Article 4. National planning for the development of solar energy

National Solar Energy Planning: established only once, subsequent updates and adjustments are made when revising and supplementing the national power planning. The procedures for establishing, approving, and announcing the national solar energy development plan are stipulated in Article 5 of Decision No. 11/2017/QĐ-TTg dated April 11, 2017 of the Government Prime Minister issuing mechanisms to encourage the development of solar power projects in Vietnam (Decision No. 11).

Article 5. Provincial planning for the development of solar energy

Provincial solar energy development planning (hereinafter referred to as provincial solar energy planning): established only for provinces with significant solar potential and done only once, subsequent updates and adjustments are made when revising and supplementing provincial power planning. Provincial solar energy planning is a planning proposal aimed at determining the total theoretical, technical, and economic solar potential, distribution of solar potential in various areas within the province, and during each investment construction phase up to 2020, with a vision to 2030. Provincial solar energy planning is established once and supplemented together with provincial power planning.

Article 6. Content of provincial solar energy development planning

The framework for provincial solar energy development planning (hereinafter referred to as the planning proposal) is stipulated in Appendix 1 issued along with this Circular.

3. Amend Clause 3 Article 2 as follows:Article 7. Procedures and formalities for establishing and submitting provincial solar energy development planning

1.  Preparing detailed outlines and selecting consultants

a) Based on the budget allocated for planning work, the Department of Industry and Trade is responsible for preparing detailed outlines and budget estimates to submit to the People's Committee of the province or centrally governed city (hereinafter referred to as the provincial People's Committee) for approval;

b) The Department of Industry and Trade selects a consultant with sufficient capacity to prepare the planning based on the approved outline and budget estimate and submits it to the provincial People's Committee for approval.

2.  Establishing and submitting provincial solar energy development planning

a) The selected consultant is responsible for preparing the planning proposal according to the approved outline and within the assigned timeframe;

b) During the preparation of the planning proposal, the consultant must conduct intermediate reports to seek opinions from relevant agencies and complete the planning proposal;

c) The Department of Industry and Trade is responsible for seeking opinions from relevant agencies, provincial electricity companies, and regional electricity corporations related to the planning proposal. Within fifteen (15) working days from receiving the opinion solicitation letter, the agencies and units solicited for opinions are responsible for studying and providing written comments sent to the Department of Industry and Trade and the consultant preparing the planning proposal;

d) The Department of Industry and Trade submits the planning proposal to the provincial People's Committee for approval and submission to the Ministry of Industry and Trade;

e) The dossier for the Ministry of Industry and Trade to approve the provincial solar energy development planning includes:

- The provincial People's Committee's report requesting approval of the planning;

- Ten (10) copies of the completed planning proposal and one (01) CD/USB containing the planning proposal report and accompanying documents (explanatory notes, appendices, data, figures, opinions from relevant agencies, and other reference materials);

- Ten (10) copies of the summary report of the planning proposal;

- Written opinions and recommendations from relevant agencies;

- Responses and incorporation of opinions from relevant agencies.

Article 8. Reviewing, approving, and announcing provincial solar energy development planning

1.  Reviewing and approving provincial solar energy development planning.

a) The Directorate of Electricity and Renewable Energy reviews the planning proposal. If necessary, the Directorate of Electricity and Renewable Energy may hire consultants to review and provide feedback to assist in the review process;

b) Within five (05) working days from the date of receiving complete and valid files, the Electricity and Renewable Energy Department must send a document to solicit opinions from relevant agencies and localities regarding the content of the planning proposal (if necessary);

c) The agencies and localities solicited for their opinions shall be responsible for studying and providing written responses to the Electricity and Renewable Energy Department within fifteen (15) working days from the date they receive the document soliciting opinions on the planning proposal;

d) After receiving formal written opinions from relevant agencies and units, within ten (10) working days, the Electricity and Renewable Energy Department shall complete the review report and submit it to the Minister of Industry and Trade for consideration and approval;

đ) In cases where the planning proposal needs supplementation or modification according to the review opinion (if any), within five (05) working days, the Electricity and Renewable Energy Department shall issue a document directing the consulting organization to modify and supplement the planning proposal to the People's Committee of the province;

e) Within fifteen (15) working days from the date of receiving the completed planning proposal, the Electricity and Renewable Energy Department shall complete the review report and submit it to the Minister of Industry and Trade for approval of the planning proposal;

2.  The People's Committee of the province shall be responsible for publishing the Provincial Solar Power Development Plan on the provincial electronic information portal;

3.  The costs for reviewing and publishing the provincial solar power development plan shall be implemented in accordance with relevant laws;

Article 9. Supplementing and adjusting solar power projects into the power development plan;

1.  For solar power projects not included in the list of any of the following plans: Provincial Solar Power Development Plan; National Solar Power Development Plan; Provincial Power Development Plan; National Power Development Plan that have been approved, the Ministry of Industry and Trade shall consider and approve the supplementation of the solar power project planning with a capacity of less than or equal to 50 MW; submit to the Prime Minister for approval the supplementation of the solar power project planning with a capacity greater than 50 MW;

2.  The procedures for supplementing solar power projects into the provincial or national solar power development plan shall be carried out according to the procedures for supplementing projects into the provincial or national power development plan;

3.  In addition to the contents stipulated for the supplementary power planning file at the provincial or national level, the following contents shall also be supplemented:

a) Solar radiation potential at the project location;

b) Project description: Location, scale, and construction area, components of the project; contents related to industry planning and local construction planning;

c) The necessity of investing in the project, favorable conditions and difficulties;

d) Preliminary implementation solutions, including: Technical and technological schemes and capacity; infrastructure connection scheme; equipment installation scheme; implementation schedule and project management form; general resettlement compensation and infrastructure construction support scheme (if any);

đ) Total investment of the project; capital arrangement capability, sources of funds and funding capacity according to the schedule; economic and financial effectiveness analysis and social impact assessment of the project;

e) Basic information about the investor: Legal status documents, Business Registration Certificate, key personnel, project implementation experience, financial and technical capabilities, including a list of projects already implemented (including industrial projects and power projects), if any;

Article 10. Grid-connected solar power investment project

1.  The investor may only establish grid-connected solar power projects included in the following plans: Provincial Solar Power Development Plan, National Solar Power Development Plan; Provincial Power Development Plan, National Power Development Plan that have been approved;

2.  The content of the grid-connected solar power investment project must comply with regulations on construction project management and the following requirements:

a) Assessment of the impact of the project interconnection scheme on the power system in the region;

b) Equip with SCADA or dispatch information systems to provide hourly power generation forecast information to the dispatch authority;

3.  The equity ratio of grid-connected solar power projects shall not be lower than twenty percent (20%) of the total investment cost;

4.  The long-term land use area shall not exceed 1.2 hectares per 1 MWp.

Article 11. Investment in rooftop solar power projects electronic media in Vietnam roof

1\. For rooftop solar power projects with a capacity less than 01 (one) MW

The investor shall register to connect to the provincial electricity company (referred to as the provincial electricity company) the main information: expected capacity, technical specifications of photovoltaic panels, parameters of the AC inverter. To ensure safety for the power grid system, the AC inverter must have the function of preventing grid connection when there is no power in the grid and must meet the standards on voltage and frequency as prescribed.

2\. For rooftop solar power projects with a capacity equal to or greater than 01 (one) MW, the investor of the rooftop solar power project shall implement additional procedures for planning the development of solar power and power development as stipulated in Article 9 of this Circular.

3\. The provincial electricity company shall cooperate with the investor to install bidirectional meters and record monthly consumption and production volumes of solar power. The cost of installing bidirectional meters shall be borne by the provincial electricity company.

4\. All rooftop solar power projects must apply the model power purchase agreement prescribed in Appendix 3 issued together with this Circular.

Article 12. Amend Clause 1 of Article 41 of Circular No. 39/2015/TT-BCT as follows:

"1\. Connection capacity

a) The total installed capacity of solar power systems connected to the low-voltage level of the substation shall not exceed the installed capacity of that substation;

b) Solar power systems with a capacity of up to 03 kWp can be connected to the low-voltage single-phase or three-phase grid;

c) Solar power systems with a capacity of 03 kWp or more can be connected to the low-voltage three-phase grid."

Article 13Requirements for power operation license

Grid-connected solar power projects and rooftop solar power projects with a capacity equal to or greater than 01 (one) MW must obtain a power operation license and comply with the provisions of Circular No. 12/2017/TT-BCT dated July 31, 2017 of the Ministry of Industry and Trade.

Article 14Requirements for construction safety and environmental protection

1\. Investment activities in developing solar power projects must comply with current regulations and standards on construction safety and environmental protection.

2\. The seller of electricity has the responsibility to dismantle, restore the land surface, and clean up the solar power plant after the completion of the solar power project according to current regulations and standards on construction safety and environmental protection.

PART III

PRICES OF SOLAR POWER PROJECTS

Article 15For grid-connected projects

1\. The buyer of electricity shall be responsible for purchasing the entire production volume from grid-connected solar power projects at the price of electricity at the point of delivery (excluding value-added tax) as stipulated in Clause 1 of Article 12 of Decision No. 11.

2\. The price of electricity specified in Clause 1 shall only apply to parts of grid-connected solar power plants that commenced commercial operation before June 30, 2019 and shall be applied for 20 years from the date of commercial operation.

3\. Solar power projects applying the selling price of electricity as stipulated in Clause 1 of this Article shall not be eligible for support mechanisms for the production volume of the project under other current regulations.

4\. The cost of purchasing electricity from the solar power projects mentioned in Clause 1 of this Article shall be fully calculated in the input parameters of the annual selling price plan of Vietnam Electricity Corporation.

Article 16. Regarding solar power projects solar roof

1.  Solar rooftop power projects shall implement the net metering mechanism using a two-way meter system. In a billing cycle, if the amount of electricity generated from solar rooftop power projects exceeds the amount of electricity consumed, it will be carried over to the next billing cycle. At the end of the year or at the end of the power purchase agreement, excess generated electricity will be sold to the electricity buyer at the price specified in Clause 2 of this Article.

2.  The electricity purchase price at the point of delivery (excluding value-added tax) is 2,086 VND/kWh (equivalent to 9.35 US cents/kWh, according to the central exchange rate of the Vietnamese dong with the US dollar published by the State Bank of Vietnam on April 10, 2017, which is 22,316 VND/USD).

3.  The electricity price for the following year shall be adjusted based on the central exchange rate of the Vietnamese dong with the US dollar published by the State Bank of Vietnam on the last working day of the previous year.

4.  The electricity purchase price stipulated in Clauses 2 and 3 shall only apply to rooftop solar power plants that have commercial operation days before June 30, 2019, and shall be applied for 20 years from the date of commercial operation.

5.  Solar rooftop power projects applying the electricity selling price as prescribed in this Article shall not be eligible for the pricing support mechanism for project electricity production under other regulations.

6.  The cost of purchasing electricity from solar rooftop power projects as prescribed in this Article shall be fully calculated in the input parameters of the annual electricity selling price plan of the Vietnam Electricity Corporation.

7.  Tax and fee regulations for solar rooftop power projects under the net metering mechanism shall be implemented in accordance with the guidance of the Ministry of Finance.

Chapter IV

MODEL POWER PURCHASE AGREEMENT

FOR SOLAR POWER PROJECTS

Article 17. Model power purchase agreement for grid-connected solar power projects and rooftop solar power projects is mandatory in electricity purchases between the seller and the buyer.

. Content of the model power purchase agreement for solar power projects

Article 181.  The content of the model power purchase agreement for grid-connected solar power projects is prescribed in Appendix 2 issued together with this Circular.

2.  The content of the model power purchase agreement for rooftop solar power projects is prescribed in Appendix 3 issued together with this Circular. The model power purchase agreement according to Appendix 3.1 applies to project investors who are electricity consumers for non-commercial purposes or commercial purposes using a single-rate meter; the model power purchase agreement according to Appendix 3.2 applies to project investors who are electricity consumers for production or business purposes using a three-rate meter based on time-of-use.

3.  The seller and the buyer may supplement the content of the model power purchase agreement to clarify the responsibilities and rights of each party but shall not change the basic content of the model power purchase agreement issued together with this Circular.

. Responsibilities of state management agencies

Chapter V

IMPLEMENTATION

Article 191.  The Directorate of Electricity and Renewable Energy shall be responsible for:

a) Supporting the buyer and the seller in resolving issues related to the model power purchase agreement upon request of one or both parties;

b) Promoting, guiding, and supervising the implementation of this Circular.

2.  Provincial People's Committees shall be responsible for monitoring and supervising the development of solar power projects in their localities in accordance with approved provincial and national solar power development plans, in compliance with the provisions of this Circular.

. Responsibilities of relevant organizations and individuals

Article 201.  The Vietnam Electricity Corporation shall be responsible for:

a) Fully calculating the costs of purchasing electricity from solar power projects and incorporating them into the input parameters of the annual electricity selling price plan of the Vietnam Electricity Corporation, and submitting them to the competent authority for approval;

b) Issuing procedures for registration and acceptance of applications for installing rooftop solar power systems; procedures for final inspection and signing of the model power purchase agreement applicable to rooftop solar power projects;

c) Agreeing, signing, and implementing contracts with the seller in accordance with the model power purchase agreement prescribed in Article 18 and the electricity purchase prices applicable to solar power projects as stipulated in Articles 15 and 16 of this Circular;

d) Adhering to the dispatching regulations of the power system, transmission system regulations, and distribution system regulations issued by the Ministry of Industry and Trade.

2.  The seller shall be responsible for:

a) Agreeing, signing, and implementing contracts with the buyer in accordance with the model power purchase agreement prescribed in Article 18 and the electricity purchase prices applicable to solar power projects as stipulated in Articles 15 and 16 of this Circular;

b) Installing electricity meters for measuring electricity consumption for billing purposes in accordance with regulations;

c) Adhering to the dispatching regulations of the power system, transmission system regulations, and distribution system regulations issued by the Ministry of Industry and Trade.

1.  For solar power projects that were operational before June 1, 2017, the seller and the buyer shall be responsible for negotiating and signing supplementary agreements in accordance with this Circular, effective from June 1, 2017.

Article 211. For applications and files received by competent authorities before the date this Circular takes effect but not yet resolved, such authorities shall continue to process them according to the laws applicable at the time of receipt.

2.  In cases where solar power projects have commercial operation dates within the period from June 1, 2017, to the date this Circular takes effect, the projects shall sign power purchase agreements according to the model power purchase agreement from the date the projects commence commercial operation.

1.  This Circular shall take effect from October 26, 2017.

Article 22. Effective date

2.  During the implementation process, in case of difficulties or obstacles, the Directorate of Electricity and Renewable Energy shall coordinate with relevant agencies and units to report to the Minister of Industry and Trade for consideration and amendment of this Circular./.

2. During the implementation process, in cases where difficulties or obstacles arise, the Renewable Energy Agency shall coordinate with relevant agencies and units to report to the Minister of Industry and Trade for consideration and amendment of this Circular./.