Nine months after its feed-in-tariff (FIT) rates for solar expired, Vietnam has finally announced the new rate list for various categories. The government's Decision 13/2020/QD-TTg has laid down $0.0709 per kWh as the FIT for ground mounted solar power projects, $0.0838 per kWh for rooftop solar projects and $0.0769 per kWh for floating solar power projects.
To avail of these new rates, eligible solar projects need to have been commissioned between July 1, 2019 and December 31, 2020. New rates will be applicable for eligible projects for a period of 20 years.
For the Ninh Thuan province alone, up to 2 GW of planned PV capacity that comes online before January 1, 2021 will receive $0.0935 per kWh as the FIT for 20-year period.
Projects that do not fulfil the eligibility criteria of FITs will have the option to enter a competitive auction mechanism.
The national utility Electricity of Vietnam (EVN) will enter into power purchase agreements (PPA) with developers and will also be responsible to clear projects depending on grid-capacity availabilities.
The official version of Decision 13/2020/QD-TTg is available in Vietnamese language on EVN's website. The decision will come into effect on May 22, 2020.
Background
Vietnam first introduced solar FITs in 2017 offering an attractive $0.09 per kWh expiring on June 30, 2019 under Decision 11/2017/QD-TTg. This led to a deluge of solar projects commissioned by due date representing an overwhelming 4.46 GW in the form of 82 projects, most of these in Ninh Thuan, Binh Thuan and Dak Lak provinces. Finally, new solar FITs have been announced in the country.
However, international law firm Duane Morris LLP terms the new decision as 'both a blessing and a curse'. Giles T. Cooper of Duane Morris says the good news is finally there is some certainty over revenue streams with the new tariffs, but the commissioning deadline of December 31, 2020, with most part of the world under a lockdown due to COVID-19 pandemic, is like a 'bad joke' and 'almost seems cruel'.
"Module production facilities in Vietnam usually carry one or two months of supplementary materials inventory on-site. If production interruptions lasts longer than one month, factories in Vietnam will start to see supply shortages that will reduce their production output," explains Cooper. "Developers waiting for module delivery from mainland China in the second quarter of 2020 will very likely not see the orders delivered on time. Late module delivery will affect project construction schedules around the world, and projects with Q3 and Q4 2020 targets are likely to be hit particularly hard."
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