Decision No. 37/2011/QD-TTg On Mechanism to Support the Development of Wind Power Projects in Vietnam

 

Pursuant to …;

ON THE MECHANISM TO SUPPORT THE DEVELOPMENT OF WIND POWER PROJECTS IN VIETNAM

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;
Pursuant to the Electricity Law dated December 3, 2004;
Based on the Investment Law dated November 29, 2005;
Pursuant to the Construction Law dated November 26, 2003;
Pursuant to the Law on State Budget dated December 16, 2002;
Considering the proposal of the Minister of Industry and Trade,

DECISION:

Chapter 1.
GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Decision stipulates the mechanism to support the development of wind power projects in Vietnam.

2. The objects regulated by this Decision include organizations participating in electricity-related activities related to the development of wind power projects in Vietnam.

Article 2. Interpretation of Terms

In this Decision, the following terms shall be understood as follows:

1. The buyer of electricity is the Vietnam Electricity Corporation or its affiliated units authorized.

2. The seller of electricity is the enterprise producing, operating, and selling electricity from wind power projects.

3. Wind power facility is a synchronized complex of wind turbines, generators, synchronous equipment, and other construction structures using wind energy to generate electricity.

4. Wind power project includes one or more wind power facilities.

5. Grid-connected wind power project is a wind power project constructed to be connected to the national grid for supplying part or all of the generated electricity.

6. Connection point Point of interconnection

7. Point of electricity delivery is the point where the seller's transmission line connects to the buyer's electrical system.

8. Point of measurement is the point where the quantity of electricity sold by the seller is measured.

9. Non-grid-connected wind power project is a wind power project built to supply all electricity to users within a specific area without connecting to the national grid.

10. Investor of wind power project is an organization implementing investment activities in wind power projects according to Vietnamese laws.

11. Model power purchase agreement for wind power projects is a power purchase agreement issued by the Ministry of Industry and Trade for application in transactions of electricity produced from grid-connected wind power projects between the seller and the buyer.

Chapter II.
PLANNING AND DEVELOPMENT OF WIND POWER

Article 3. Planning for wind power development

1. Wind power development planning includes national wind power development planning and provincial wind power development planning. Wind power development planning serves as the basis for wind power development investment activities and is adjusted appropriately based on research and evaluation of wind potential in each period.

2. National wind power development planning and local wind power development planning are established once for the period from 2011 to 2020 with a vision to 2030 and are revised and supplemented when necessary. From subsequent planning periods, wind power development planning is integrated into provincial electricity development planning and national electricity development planning.

Article 4. Establishment, approval, and publication of wind power development planning

1. The Ministry of Industry and Trade organizes the establishment of national wind power development planning, submits it to the Prime Minister for approval; publishes and guides, monitors, and inspects the implementation of the approved national wind power development planning.

2. Provincial People's Committees (hereinafter referred to as Provincial People's Committee) in areas with wind power development potential organize the establishment of provincial wind power development planning, submit it to the Minister of Industry and Trade for approval.

3. The announcement and adjustment of planning shall be carried out in accordance with current regulations.

4. Main contents of wind power development planning:

a) The main contents of the national wind power development planning include:

- Wind potential of localities;

- List of wind power projects;

- Interconnection orientation of wind power projects with the national power system.

b) The main contents of provincial wind power development planning include:

- Wind power potential of the province;

- Area and boundaries of zones for developing wind power projects;

- List of wind power projects;

- Capacity scale of each wind power project and interconnection plan with the national power system.

5. During the period when wind power planning has not been approved, wind power projects need the Prime Minister's approval regarding the investment policy.

6. The Ministry of Industry and Trade specifies the contents, procedures, and formalities for establishing, reviewing, and approving wind power development planning.

Article 5. Funding for wind power development planning work

1. The central budget shall provide funding to carry out tasks related to establishing, reviewing, announcing, and adjusting the national wind power development plan.

2. The provincial and centrally-administered city budgets shall provide funding to carry out tasks related to establishing, reviewing, announcing, and adjusting the local wind power development plan.

3. Encouragement is given to mobilize other legitimate sources of funding for wind power development planning work.

Article 6. Investment in Wind Power Projects

1. Investment in wind power projects must be consistent with the approved wind power development plan and the power development plan at various levels.

2. For wind power projects not included in the list of the national wind power development plan and the national power development plan that have been approved, the investor shall be responsible for preparing a supplementary planning proposal, submitting it to the Ministry of Industry and Trade for review, and presenting it to the Prime Minister for consideration and decision.

3. Investment in wind power projects shall be carried out in accordance with the laws on construction project investment management.

Article 7. Connecting Wind Power Projects to the Grid and Scheduling Operation of Wind Power Plants

1. Connecting wind power projects to the national grid must comply with the approved power development plan. The connection point shall be agreed upon between the seller and buyer of electricity based on the principle that the electricity seller is responsible for investing in transmission lines to the nearest connection point within the provincial power development plan. In cases where the connection point involves new grid investment projects yet to be implemented, the electricity seller must coordinate with the electricity buyer to synchronize the progress of wind power project investment and grid development projects. If agreement on the connection point cannot be reached, the electricity seller shall be responsible for submitting the matter to the Ministry of Industry and Trade for examination and decision.

2. The investor of the wind power project shall be responsible for investing in, operating, and maintaining the transmission lines and the step-up substation (if any) from the wind power plant to the agreed connection point with the electricity buyer.

3. Depending on the voltage level of the connection point, the distribution company or transmission company shall be responsible for investing in transmission lines from the connection point to the national grid according to the approved power development plan and signing a connection agreement with investors of wind power projects.

4. After completing investment and passing commercial operation acceptance, the system dispatching unit and electricity market operation unit shall be responsible for mobilizing wind power plants to operate at full capacity and generate electricity in accordance with the prevailing wind conditions in the area.

Article 8. Commencement of Construction of Wind Power Projects

Investors may only commence construction of wind power projects when they have obtained an Investment Certificate; signed a power purchase agreement with the electricity buyer; reached an interconnection agreement with the distribution company or transmission company; and submitted wind measurement data for at least a continuous period of 12 months.

Article 9. Termination of Project Implementation

Within 12 months from the date of issuance of the Investment Certificate, if the investor does not start construction of the main components of the project, the provincial People's Committee shall be responsible for considering the revocation of the Investment Certificate and reporting to the competent state agency to assign the project to another investor. Except in cases of valid reasons accepted by the competent authority for temporarily suspending or delaying the implementation of the project.

Article 10. Reporting System

1. Within five working days from the date of issuance of the Investment Certificate, the investor shall be responsible for sending a certified copy of the Investment Certificate to the Ministry of Industry and Trade for monitoring and management.

2. During the construction period of the wind power project, before the 15th day of the first month of each quarter, the investor must submit a report on the implementation status of the previous quarter and the plan for the next quarter. Annually, before January 15, the investor must submit a report on the implementation status of the previous year and the plan for the next year to the Ministry of Industry and Trade for management and monitoring.

Chapter III.
SUPPORT MECHANISMS FOR WIND POWER PROJECT DEVELOPMENT

Article 11. Obligation to Purchase Electricity from Wind Power Projects

1. The electricity purchaser shall be responsible for purchasing the entire amount of electricity generated from wind power plants connected to the grid within the area under its management.

2. The purchase and sale of electricity shall be carried out through a power purchase agreement established according to the model power purchase agreement applicable to on-grid wind power projects issued by the Ministry of Industry and Trade. The model power purchase agreement includes the following main contents:

a) The term of the contract is twenty (20) years from the date of commercial operation. The seller of electricity may extend the term of the contract or sign a new contract with the electricity purchaser in accordance with current regulations.

b) The base price of purchased electricity and the principles for adjusting the selling price during the contract period.

c) Agreements regarding interconnection, metering, and operation of wind power plants.

d) Agreements regarding billing and payment.

Article 12. Investment Capital Incentives, Tax, and Fees

1. Mobilizing Investment Capital:

a) Investors are allowed to raise capital in various forms permitted by law from organizations and individuals both domestically and internationally to invest in wind power projects.

b) Wind power projects shall enjoy investment credit incentives in accordance with current regulations on state investment credit.

2. Import tax: wind power projects shall be exempted from import tax on goods imported to form fixed assets of the project, and on raw materials, components, and semi-finished products that cannot be produced domestically and are imported for the production of the project, in accordance with the provisions of the Law on Export Duties and Import Duties and other current laws and regulations on export duties and import duties.

3. Corporate Income Tax: the corporate income tax rate and exemptions or reductions of corporate income tax for wind power projects shall be implemented in accordance with the provisions of the Law on Investment and the Law on Corporate Income Tax and the guiding documents for implementing these laws.

Article 13. Infrastructure Land Incentives

1. Wind power projects and transmission lines and substations for interconnection with the national grid shall be exempted or reduced from land use fees and land lease fees in accordance with current laws applicable to projects in special investment priority areas.

2. Based on the approved master plan, the provincial People's Committee shall be responsible for allocating land for investors to implement wind power projects. Compensation and support for land clearance shall be carried out in accordance with current laws on land.

Article 14. Electricity Price Support for On-Grid Wind Power Projects

1. The electricity purchaser shall be responsible for purchasing the entire electricity output from wind power projects at a purchase price at the point of delivery of 1,614 VND/kWh (excluding VAT, equivalent to 7.8 US cents/kWh). The purchase price shall be adjusted based on fluctuations in the exchange rate of VND/USD.

2. The State shall provide electricity price support to the electricity purchaser for the entire electricity output purchased from wind power plants at 207 VND/kWh (equivalent to 1.0 US cent/kWh) through the Vietnam Environmental Protection Fund.

3. The Ministry of Industry and Trade shall monitor and propose adjustments to the purchase price at the point of delivery and the level of electricity price support to be submitted to the Prime Minister for consideration and decision on the principle of gradually reducing and eventually eliminating subsidies when electricity sales prices are implemented according to market prices.

4. Wind power projects receiving support under this provision shall not be subject to other existing subsidy mechanisms for electricity output of the project.

5. Wind power projects shall apply clean development mechanisms in accordance with current state regulations.

Article 15. Incentives and support for off-grid wind power projects

1. Off-grid wind power projects shall enjoy incentives and support as prescribed in Articles 12 and 13 of this Decision.

2. The project investor shall prepare a proposal on electricity prices and determine the total level of support from the State budget to submit to the Ministry of Industry and Trade for review and report to the Prime Minister for approval.

Chapter IV.
IMPLEMENTATION

Article 16. Responsibilities of Ministries and localities regarding wind power projects

1. Ministry of Industry and Trade

a) Shall be responsible for organizing, guiding, and coordinating with People's Committees of provinces and centrally governed cities to inspect and supervise the implementation of this Decision.

b) Shall issue model Power Purchase Agreements for wind power projects.

c) Shall develop and promulgate technical standards related to wind power technology.

2. Ministry of Finance

Shall take the lead and coordinate with the Ministry of Industry and Trade and the Ministry of Natural Resources and Environment to establish financial mechanisms for support from the Vietnam Environmental Protection Fund in accordance with the provisions of the State Budget Law.

3. People's Committees of provinces and centrally governed cities

a) Shall have mechanisms to support and encourage investors in land clearance, infrastructure, human resources for investment in and implementation of wind power projects.

b) Shall perform state management functions at the local level for wind power projects.

c) Shall monitor, supervise, and inspect the implementation of wind power projects in their locality within their authority.

Article 17. Effective Date

This Decision shall take effect from August 20, 2011.

Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of People's Committees of provinces and centrally governed cities; Heads of relevant agencies, units, and organizations involved in the development of wind power projects in Vietnam shall be responsible for implementing this Decision./.