Recent developments

On 19 September 2019, the Ministry of Industry and Trade ("MOIT") submitted Report No. 119 ("Report No. 119") outlining its proposal to the Government on a new draft Decision on the policy on mechanisms for solar power projects in Vietnam ("New Draft").

Unlike previous versions, the New Draft proposes a single national FiT for each of the three solar technologies (floating solar power projects, ground mounted solar power projects, and rooftop solar power systems) without tariff classifications into two or four solar irradiance zones of Vietnam. In relation to energy storage, the New Draft also excludes an additional incentive of applying a higher tariff on solar projects with integrated energy storage systems, but proposes promoting energy storage systems only from 2022 - 2023.

Compared to the previous draft, the reduced FiT rates under the New Draft have a significant impact on 28 northern provinces (previously under zone 1) and 6 central provinces (previously under zone 2). For 6 central highlands and southern provinces of Vietnam, including Phu Yen, Gia Lai, Dak Lak, Khanh Hoa, Ninh Thuan, and Binh Thuan (previously within zone 4), the New Draft:

  • slightly increases the FiT rate from 6.67 US cent per kWh to 7.09 US cent per kWh for ground-mounted solar farms; and
  • slightly increases the FiT rate from 7.24 US cent per kWh to 7.69 US cent per kWh for floating solar farms, as compared to the previous draft.

There will be an overall reduction on the proposed new FiT rates for solar farms under the second program, post-June 2019, compared to the first program of FiT, with an exception to Ninh Thuan Province (only certain solar power projects with a total combined capacity cap of 2,000 MW achieving actual commercial operation date (COD) before 1 January 2021 will be eligible for the extended FiT 1 of 9.35 US cent per kWh).

To find out more about the revised rates, the potential implications to private investors, and policy explanations from the Government, you can download our client alert here.