Vietnam’s Prime Minister Decision 31/2014/QÐ-TTg on solid waste-to-energy projects becomes effective as of today (20 June 2014). Article 14 of the Decision provides a ground-breaking feed-in tariff for power suppliers of up to “VND 2,114/kWh (equivalent to 10.05 US cents/kWh)”. This is more than 25 percent higher than the 7.8 cent applicable to wind power projects in Article 14 of Decision 37/2011/QÐ-TTg from 2011. 10 cent per kWh was long considered the minimum threshold for investments into renewable energy projects.
Although, Decision 31 is effective now, the Ministry of Industry and Trade (MOIT) still has to issue the required “Standardized Power Purchasing Agreement” (SPPA). MOIT has not responded to inquiries on when it would release such SPPA. Pending issuance of the new SPPA specifically for energy-from-waste projects, investors may look to the existing SPPAs for small renewable power plants as well as wind power as a basis.
Investors in the energy sector will need creative legal solutions to work around regulatory limitations and take advantage of the new higher fee-in tariff.