VIETNAM – POWER SECTOR - NEW FEED-IN-TARIFFS FOR WIND ENERGY PROJECTS

1. VIETNAM – POWER SECTOR
NEW FEED-IN-TARIFFS FOR WIND ENERGY PROJECTS
THE PRIME MINISTER’S IN-PRINCIPLE APPROVAL
On 11 September 2018, the Prime Minister has approved a draft decision on new feed-in tariffs (FITs)
applicable to wind power projects in Vietnam. This FITs decision will become effective 1 November 2018
(the “PM Decision”). The PM Decision will amend and revise certain articles of the Prime Minister’s
Decision No. 37/2011/QD-TTg on the mechanisms supporting the development of wind power projects in
Vietnam.
FITS PRICE FOR WIND ENERGY PROJECTS
FITs price for wind power projects will be increased from the current 7.8 US cents / kWh to (i) 8.5 US
cents / kWh applicable to onshore wind power projects, and (ii) 9.8 US cents / kWh applicable to offshore
wind power projects.
Onshore and offshore wind power projects are roughly defined in the PM Decision as follows: (i) onshore
wind power project means on-grid wind power project that having its wind turbines to be built and operated
on inland areas and coastal zones (NB: boundary of such inland areas and coastal zones is the average low
water line for 18.6 years), and (ii) offshore wind-power project means on-grid wind power project that
having its wind turbines to be built and operated outside inland areas and coastal zones to the sea.
We believe that the MOIT should provide further guidelines for a better definition of onshore and offshore
wind power projects.
COD FOR NEW FITS - WIND POWER PROJECTS
The new FITs price must apply to a part or the whole of a wind power project that achieves commercial
operation date (“COD”) before 1 November 2021, and such new FITs will apply for 20 years from the
COD of such wind power project.
For wind power projects that have achieved COD prior to the effective date of the PM Decision (i.e., 1
November 2018), the new FITs price may apply for the remaining term of the relevant signed wind power
purchase agreement (PPA). However, it is not crystal clear if the new FITs price will automatically apply
to the current operating wind power projects, or it is still required to re-negotiate and revise the current
signed wind PPA with EVN. In case of the latter, it will be very challenging to re-negotiate and revise the
current signed wind PPA with EVN.
AUCTION MECHANISM AFTER 1 NOVEMBER 2021
According to the PM Decision, MOIT must prepare and submit a policy on auction for selection of new
wind power projects and wind power prices since 1 November 2021 onward.
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2. Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com or any lawyer
in our office listing if you have any questions or want to know more details on the above. Dr. Oliver
Massmann is the General Director of Duane Morris Vietnam LLC.