Decree No. 20/2026/TT-BCT Amending and Supplementing Certain Articles of Decree No. 10/2025/TT-BCT dated February 1, 2025, on Methods for Determining and Applying Avoided Cost Tariffs for Small Renewable Energy Power Plants; Main Content of Electricity Purchase Contracts

CIRCULAR

Amending and Supplementing Certain Articles of Circular Number 10/2025/2025/TT-BCT dated 01 February 2025 on the Method for Determination and Application Principles of Avoided Cost Tariff for Small Renewable Energy Power Plants; Main Content of Electricity Purchase and Sale Contract

Based on the Law on Electric Power No. 61/2024/QH15 amended and supplemented by Law No. 94/2025/QH15;

Based on Decree No. 40/2025/NĐ-CP dated 26 February 2025 of the Government on the Functions, Powers, Tasks, Authority, and Organizational Structure of the Ministry of Industry and Trade;

In accordance with the proposal by the Director of the Department of ELECTRICITY;The Minister of Industry and Trade promulgates this Circular amending and supplementing certain articles of Circular No. 10/2025/TT-BCT dated 01 February 2025 of the Minister of Industry and Trade on the Method for Determination and Application Principles of Avoided Cost Tariff for Small Renewable Energy Power Plants; Main Content of Electricity Purchase and Sale Contract.

Article 1. Amend and Supplement Certain Articles of

Circular No./2025/TT-BCT 10dated 01 February 2025 of the Minister of Industry and Trade on the Method for Determination and Application Principles of Avoided Cost Tariff for Small Renewable Energy Power Plants; Main Content of Electricity Purchase and Sale Contract

1. Amend and Supplement, some clauses of Article 2 as follows:a) Amend and Supplement Clause 7, Clause 8

and Clause 1 as follows: Rainy Season:0 a)

“7. Northern Region is calculated from the date of:

MONTH to end 01 of 7 DATE in the following month b) Central Region is calculated from 1 August to 31 end 10;

of DATE in the following year 15 c) Southern Region is calculated from 1 August to end of 15 DATE in the following year.;

Dry Season: a) Northern Region is calculated from 1 November to 01 end.

8. of

DATE in the following year b) Central Region is calculated from the date of MONTH to end;

of 16 DATE in the following year 12 c) Southern Region is calculated from the date of MONTH to end 14 of 8 DATE in the following year.;

Small Renewable Energy Power Plant 02 refers to 12 a power plant generating electricity from renewable energy sources with a capacity scale as specified in a Decision issued by the Ministry of Industry and Trade, adapted to the socio-economic conditions of the country at each stage. b) Supplement Clause 11 after Clause 10 as follows: The Northern Region, Central Region, Southern Region 31 stipulated in this Circular are determined according to the boundaries 7 of the power system under the control of the System Dispatch Authority for each region as per the Regulations on Dispatching, Operation, Control, Handling of Incidents, Startup Blackout and Restoration of the National Power System issued by the Minister of Industry and Trade.

10. Amend and Supplement point b Clause 4 Article 4 as follows: “b) To conduct research, propose, and submit to the Minister of Industry and Trade for consideration and decision on the avoided cost tariff applicable to each type of small renewable energy power plant at a reasonable level in accordance with the socio-economic conditions of the country at each stage;”., Amend and Supplement.”.

Article 3 of the Electricity Purchase and Sale Contract in Appendix IV

“11. accompanying Circular No. 10/2025/TT-BCT as follows: Article 3. Term of the Contract This contract becomes effective from the date of DATE.”.

2. and terminates after twenty (20) years from the date of commercial operation. Upon termination of the contract, the parties shall continue to perform the final invoice issuance,, adjustment of invoices, settlement, and completion of all rights and obligations under this contract. Replace the phrase

State Electricity Regulatory Authority within the Ministry of Industry and Trade with Department of Electricity under the Ministry of Industry and Trade in Clauses 2, 3, 4, 5 of Article 4; Article 7; Clause 4 of Article 9; Clause 2 of Article 10, of Circular No. 10/2025/TT-BCT

3and Article 1of the Electricity Purchase and Sale Contract in Appendix IV accompanying Circular No. 10/2025/TT-BCT. Attached to this Circular is a Supplemental Appendix replacing Appendix II issued with Circular No. 10/2025/TT-BCT, which specifies the method for calculating the Avoided Cost Tariff. As follows:

“Article 3. Term of the Contract The term of this

Contract shall be effective from the date and terminate after 20 (twenty) years from the commencement of commercial operation. After termination of the Contract, the parties shall have the obligation to continue performing the final invoice issuance, ... adjustment of invoices, payment, settlement, and completion of rights and obligations under this Contract.The reference to "Management Authority for Electricity of the Ministry of Industry and Trade" in Clause 2, Clauses 3, 4, and 5 of Article 4; Article 7; Clause 4 of Article 9; and Clause 2 of Article 10of Decree No. 10/2025/TT-BCT shall be replaced by "Electricity Subsidiary of the Ministry of Industry and Trade" … in the aforementioned clauses. Attached to this Decree is Appendix IV, which replaces Appendix II attached to Decree No. 10/2025/TT-BCT and stipulates the method for calculating the Avoided Cost Price. axP, withF a being the adjustment coefficient for the marginal energy load curve, proposed by the System Operator and Market Operator of Electricity and selected within the range ; FN N: The ratio between the electricity production of thermal power plants (based on the list of power plants included in the price calculation at point aof this Appendix) and the total electricity production of the entire system for the year used in the price calculation..”.

4. b) For each hour “/trading cycle” of the year used in the price calculation, the electricity energy price “c” Mj is calculated based on the cost of thermal power plants with average fuel costs per month and according to a reference capacity P* (excluding those specified at point a of this Appendix). For example, if.

5. P*

Article 2. Transitional Provisions

1. For small hydropower plants and cascades of hydropower plants where some units have already been put into operation, signed power purchase agreements (PPAs) based on avoided cost pricing before the merger or administrative boundary adjustment at the provincial level, such PPAs shall continue to apply the avoided cost pricing schedule determined in the existing PPA.

2. In case there are new regulations regarding the scale of capacity for small hydropower plants issued by the Ministry of Industry and Trade that differ from Decision No. 2394/QĐ-BCN dated September 1, 2006, issued by the Ministry of Industry, leading to such plants no longer falling within the scope and subject of this Circular; Small hydropower plant/projects as defined in Decision No. 2394/QĐ-BCN that have been approved for investment and included in the national power development plan or provincial power supply scheme approved by competent authorities, may choose to enter into a PPA based on the avoided cost pricing schedule set forth in this Circular or participate in the electricity market according to relevant regulations after being commercially operated no later than five years from the date of the new capacity scale regulation issued by the Ministry of Industry and Trade (replacing Decision No. 2394/QĐ-BCN). Once choosing to enter the electricity market, the seller shall not reapply for avoided cost pricing.

3. For small renewable energy power plants during the period of executing a PPA based on avoided cost pricing, if the seller stops/generates due to an irresistible force event (typhoon, flood, earthquake, landslide) affecting the operation of the small renewable energy plant, the seller and buyer may negotiate to extend the term of the PPA ensuring that the execution time of the PPA is consistent with the shutdown period for repairing the incident, provided that the total generation time does not exceed 20 years from the date of commercial operation of the power plant or from the date of commercial operation per unit for multi-unit plants. The electricity price during the extended term shall be based on the avoided cost pricing schedule at the time of shutdown/stoppage. The seller shall bear legal responsibility for the accuracy and transparency in confirming the event of shutdown/stoppage due to an irresistible force (typhoon, flood, earthquake, landslide).

4. For small hydropower plants and cascades where some units have already been put into operation, signed power purchase agreements based on avoided cost pricing before this Circular comes into effect shall continue to apply the seasonal provisions as stipulated in the existing PPA.

Article 3. Implementation Provisions

1. This Circular takes effect from June 2, 2026.

2. In case of any difficulties or ambiguities during implementation, organizations and individuals shall report to the Ministry of Industry and Trade for review and appropriate amendments.

 

TT

-BCT

of the Ministry of Industry and Trade) 1. Avoided Cost Electricity Price a) Average monthly fuel cost (VND/kWh) for each thermal power plant that has signed an electricity purchase agreement in the system, excluding those with fuel supply obligations; 20/2026/b) Physical production quantity of electricity from domestic natural gas used to its maximum extent according to the gas supply capacity and fuel constraints;c) Committed minimum long-term contract output; surplus sales; provision of auxiliary services for BOT power plants. Total cost of main fuel (including transportation costs) and corresponding electricity generation in the month, as recorded in the monthly electricity payment settlement documents.

b) For each hour/transaction cycle of the year used to calculate the avoided cost pricing schedule, rank according to the descending order of variable cost for thermal power plants specified at 17 Point a of this Clause. Variable costs are determined based on average monthly fuel costs of thermal power plants. 4 c) Maximum peak system capacity in the year used to calculate the avoided cost pricing schedule denoted as (Pd) Reference capacity 2026 P*is calculated byFax

 

P

, with: F a being the adjustment factor for marginal energy on the load curve, proposed by the System Operator and Market Operator and selected within the range of ; F; N F N : Ratio between the output of thermal power plants ( as per the list of plants used in avoided cost pricing calculation at Point a of this Clause) and total system electricity generation for the year used to calculate the avoided cost pricing schedule.; d) For each hour/transaction cycle of the year used to calculate the avoided cost pricing schedule, the electricity price c

Mjis calculated based on the costs of plants with average monthly fuel costs and according to reference capacity P* (excluding plants atPoint a of this Clause). For example, ifP* = 1000MW and during some hours/transaction cycles j, the plant with the highest cost is operated at 600MW with variable costs ofc

, and the second-highest cost plant operates at00MW with variable costs of);

c , the average marginal avoided cost for that hour/transaction cycle, based on reference capacity P*, is c .=1000MW and during some hours /trading cycle jthe highest cost power plant is operated at 600MW with a variable cost of cand the second-highest cost power plant is operated at 00MW with a variable cost of (0c, the average marginal avoided cost for that hour);

/trading cycle, with reference capacity P*,cMj is calculated based on the fuel price dependency on global fuel prices, and the avoided transmission loss costs determined by the Ministry of Industry and Trade as 1 + λT 1 ± λC;

MTr ough the combined operation of power plants connected to the grid in the southern region:TN = CM (1 + λN) 1 ± λ - CM C M The average fuel cost per month for the base thermal power plant running at peak load ( based on the list of power plants specified in point aof this Appendix)

is đồng/kWh.λ B, λ T,1 λ 4N are respectively the transmission loss rate in the northern region, central region, and southern region to a voltage level of 220kV, including substation losses.2λT is the average transmission loss rate on the 500kV system (including substation losses). T B,T Calculated according to the formula:

e) The transformed price based on the main fuel is adjusted according to the corresponding increase rate of the cost of the main fuel in the calculation year. The increase rate of the main fuel price per năm được xác định theo thứ tự ưu tiên sau:

- According to supply contracts for fuels provided to thermal power plants in the system; - According to market prices, with clear reference sources and reliable information (such as those published by the World Bank),

đư ợcCục Điện lực thuộc Bộ Công Thươ ng approved for application; power plants with fuel prices dependent on world fuel prices, the increase rate of the main fuel price used to calculate the transformed price based on the main fuel in the calculation year shall not exceed 110%;- Proposed by the System Operation and Market Entities and approved by the Cục Điện lực thuộcBộ Công Th ươ ngT, g) For each time period t corresponding to six distinct seasonal components and usage times of the price schedule, the annual average price is calculated as the average ofc

Mj within each such period.The avoided electricity price used for issuing Price ScheduleAvoided Cost Year Ncalculated by k* cMjwith k

being the adjustment coefficient for the avoided electricity price determined by the Ministry of Industry and Trade but not exceeding a certain level to encourage production of electricity from small renewable energy sources,simultaneouslyin line with the socio-economic conditions of the country during each phase, as follows: - When issuing the avoided cost price schedule for each type of small renewable energy power plant according to Article 1, Paragraph 10 of Circular No. 10/2025/TT-BCT, which is amended and supplemented by Paragraph 1 of this Circular.In case The average avoided electricity price for Year N calculated in accordance with the above provisions exceedsthe average avoided electricity price for Year N-1 already issued by the Ministry of Industry and Trade,.

then The average avoided electricity price for Year N is issued not lower than the average avoided electricity price for Year N-1. The excess electricity price is calculated as 50% of the price during off-peak hours in the rainy season. 2. Avoided Transmission Losses The method of calculating avoided transmission losses is as follows: For each hour in a year, the operating conditions of the system are determined based on the flow of power on the 500kV line crossing the boundary between the three regions (North-South and Central). Since there is always some power flow transmission on the 500kV line, "balance" does not mean zero but a certain flow of power (regardless of direction) above a threshold. This threshold is determined based on voltage regulation conditions and system stability. When the power flow on the 500kV line crossing the boundary between regions is less than this threshold,it is considered balanced. The balance threshold value is determined bythe System Operation Unit and the Electricity Market. For power plants connected to the North grid, a transmission loss reward payment is made when the North receives electricity from the Central region via the 500kV line. For power plants connected to the Central grid, they receive a transmission loss reward payment simultaneously receiving electricity from both the North and South regions through the 500kV line. T e) 1,0 In all other cases, power plants are penalized for transmission losses. For each hour in a year, the avoided transmission loss price Tis calculated as follows: For power plants connected to the North grid:T

B C.

- M 1 + λ B 1 ± λ C M For power plants connected to the Central grid: T T C M 1 + λ T 1 ± λ C M For power plants connected to the South grid: TN = CM (1 + λN).

1 ± λ - CMis the average fuel cost for the month of the peak thermal power plant in the list specified at Point a, Paragraph 1 of this Appendix, đ ồng/kWh.

λ

B,

λT, λ.

N are respectively the loss rates on the Northern, Central, and Southern transmission systems to 220kV voltage level, including substation losses.λ T is the average loss rate on the 500kV line system (including substation losses). T B,.

T T,T Nare respectively the avoided transmission loss price in the Northern, Central, and Southern regions (.

đ ồng/kWh).g) The sign in the expression 1 ± λ: Positive is "reward", negative is "penalty". The values of T are averaged for all relevant hours in the price schedule. 3. Avoided Capacity Price of the Price Schedule.

The avoided capacity price is determined by the capacity price of the thermal power plant replaced by small renewable energy sources. The thermal power plant to be replaced isa combined cycle gas turbine (CCGT) power plant. The following parameters are used for calculating the avoided capacity cost: - The base year investment cost of a CCGT unit with 720 MW capacity in 2019 was 15,880,852.61 đồng/kW (equivalent to 600 USD/kW based on the average exchange ratefrom July 1, 2017, to June 30, 2018, as published by the Vietnam Joint Stock Commercial Bank for Foreign Trade of Vietnam)..

- The base year investment cost of a CCGT unit is adjusted according to the fluctuation in the US dollar exchange rate used for data calculation;- The economic life of the CCGT power plant is taken as per the method of determining generation prices prescribed by the Ministry of Industry and Trade; - The discount factor i (%) applied to the average cost of capital (WACC) is determined according to the formula i = D x r d

+ E xre(but not exceeding 10%/year), where: + D, Eare respectively the debt and equity ratio in total investment as defined to be 70:30; + r

 

dis the weighted average interest rate of various sources of both domestic and foreign currency loans, calculated by the formula r = d= D (Fx r)(d,F500) - + DD

 

x rd,DwithD F, D D :

 

being respectively the foreign and domestic currency loan ratio in total loans as defined to be 80:20;r = d,Fis the interest rate on foreign currency loans, determined by the average SOFR (Secured Overnight Financing Rate) for an average term of 180 days over a period of 36 consecutive months from the nearest March, June, September or December month before the year in which the price schedule was established, as published by the Fed (Website: www.newyorkfed.org), plus the annual average fee rate for arranging loans from banks. (N are respectively the avoided transmission loss cost in the northern region and southern region (đ)(ồng/kWh).500) - g) The sign in the expression1 ± λ

 

: A positive value is a "bonus", a negative value is a "penalty".The values ofT are averaged for all relevant hours in the price calculation.3. Avoided Capacity Price in the Price Table The avoided capacity price is determined by the capacity price of the thermal power plant replaced by renewable energy small-scale sources.The replaced thermal power plant is a combined cycle gas turbine (CCGT) power plant. The parameters for calculating the avoided capacity cost are as follows:

 

- The base year investment cost in 2019 of the CCGT unit with a capacity of 720 MW(is 15,880,852.61 đồng/kW (equivalent to 600 USD/kW, based on the average exchange rate500) per day

of the Vietnamese Dong against the US Dollar as announced by the Vietnam Joint Stock Commercial Bank for Foreign Trade from July 1, 2017, to June 30, 2018, which is 22,779.70 đồng/USD.:

b VND /kW/year500The Consumer Price Index for the calculation year as announced by the central statistical agency..

C af = O&M b (1+CPI), if CPI is less than 2.5%;

 

C

af = O&M. b (1+2.5%), if CPI is greater than or equal to . Taxes on resource use, environmental protection fees for pollution, and other related taxes and fees (

C (VND/kW/year.) L is taken from the data of the CCGT power plant that has been in operation with a capacity closest to 720 MW. The fixed O&M cost per year (O&M N) does not include taxes on resource use, environmental protection fees for pollution,);

and other related taxes and fees ( C VND/kW/year. L

is the fixed O&M cost per year (O&M N) divided by the capacity of the CCGT power plant used to determine the taxes on resource use for surface water, environmental protection fees for wastewater, rights to exploit water resources and other related taxes and fees.

Total annual costs (C) VND/kW/yearC = Ca + C af Substation loss factor (SL)FOR)(1-SL) λ

λ The cost of generating capacity.30;

rd is the weighted average interest rate of borrowed funds (%) calculated by the formula rd = DF x rd,F + DD x rd,D with DF, DD being the foreign currency and domestic currency borrowing ratios in total borrowed funds respectively set at 80:20; rd,F is the foreign currency borrowing interest rate determined by the average SOFR (Secured Overnight Financing Rate) of a 180-day period from the nearest March, June, September or December month of the preceding year to the pricing date, averaged over 36 consecutive months, plus the annual average fee for arranging loans as a percentage of the loan amount per annum a VND/kW/year C a =C is 3% or as proposed by the Ministry of Industry and Trade to ensure that the Cost Avoidance Price Index aligns with the economic and social conditions of the country in each phase (%/year); rd, is the interest rate on domestic currency loans determined by the average of the 12-month time deposit interest rates for individual customers at four commercial banks (Vietcombank, Vietinbank, BIDV, Agribank or their lawful successors) as of the first day of the 60 months preceding the period immediately prior to the year in which the cost avoidance price index is built, but not exceeding 3.5% per annum or as proposed by the Ministry of Industry and Trade to ensure that the Cost Avoidance Price Index aligns with the economic and social conditions of the country in each phase (%/year); of year, for the four commercial banks (Vietcombank, Vietinbank, BIDV, Agribank or their lawful successors) plus an average annual service fee rate of 3.5% or as proposed by the Ministry of Industry and Trade to ensure that the Cost Avoidance Price Index aligns with the economic and social conditions of the country in each phase (%/year); + r

eis the pre-tax profit margin on equity capital (%) determined according to the formula: re,pt = r e,pt / (1 - t) withre,pt is the post-tax profit margin on equity capital at 12%; tis the average corporate income tax rate in the economic life of the CCGT thermal power plant that has been operational and has a capacity closest to 720 MW (%); - Fixed operating and maintenance costs for the base year 2019 of the CCGT unit are 678,284.63 Vietnamese dong per kilowatt-year; - Fixed operating and maintenance costs for the calculation period adjusted according to Consumer Price Index (CPI) of the preceding year immediately prior to the year in which the cost avoidance price index is built as announced by the central statistical agency, but not exceeding 2.5% per annum;

- Fixed operating and maintenance costs for the year in which the cost avoidance price index is built taken from the data of the previous year immediately preceding the year in which the cost avoidance price index is built for a CCGT power plant that has been operational and has a capacity closest to 720 MW (excluding water resource tax, forest environmental service fees, rights to exploit water resources, value-added tax, and other amounts, taxes, or fees as prescribed by competent state agencies);- Transformer losses taken from the data of the most recent year immediately preceding the year in which the cost avoidance price index is built for a CCGT power plant that has been operational and has a capacity closest to 720 MW;

- Accident rate taken from the data of the most recent year immediately preceding the year in which the cost avoidance price index is built for a CCGT power plant that has been operational and has a capacity closest to 720 MW; - Exchange rate of US dollarper year, taken from the average exchange rate calculated on a daily basis and according to the selling price of US dollars at the closing time of the headquarters of Vietcombank; The steps for calculating the avoided cost are as follows: UnitValue

Note

Investment cost base year, C Vietnamese dong per kilowatt

Base year exchange rate (TG Vietnamese dong/US dollar

Calculation period exchange rate N (TG N Vietnamese dong/US dollar Average daily exchange rate of US dollars from July 1st, year N-2 to June 30th, year N-1 and according to the selling price of US dollars at closing time announced by Vietcombank's headquarters; Adjusted investment cost for base year 2019, C N Vietnamese dong per kilowatt.

C:

Adjusted Avoided Capacity Cost Taking into Account Transmission Losses as follows:

AGC* = AGC * λ (1+λ220) (1-λ500)

Where: đAGC*

 

 

The value of AGC* is calculated and applied to peak hours during the dry season (hs).

Generation Avoided Capacity Cost (per kWh) determined by the following formula:

Avoided generation cost per kWh [dong] = AGC*/hd.