Vietnam Solar Market Update

new Decision 13 and life after FiTs

EuroCham Webinar, 15 April 2020
Giles T. Cooper
Partner, Chairman
Duane Morris Vietnam LLC
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 Agenda
•  The story so far
•  Where we are now: the
good, bad and unclear
•  Rooftop focus
•  The post-FiT world for
solar in Vietnam

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The story so far
•  PM Decision 11 issued April 2017, amended January 2019
•  MOIT Circular 16 issued September 2017, amended March 2019
•  FiT1 expired 30 June 2019
•  Prevarication and mixed signals ensues:
–  MOIT Letter dated 29 January 2019
–  Letter No. 3061 dated 3 May 2019
–  Report No. 65 dated 18 June 2019
–  Report No. 119 dated 19 September 2019
–  Letter No. 10170 dated 31 December 2019
•  PM Decision 13 issued April 2020.
•  New Circular to come before 22 May 2020 ??
The story so far: last draft vs. Decision 13
•  Substantially very similar but some notable differences:

Last Draft: Letter No. 10170 Decision 13

Must have “started construction” by Only need to have obtained Decision on

23 November 2019 Investment Policy by 23 November 2019

No COD timeline for RTS projects FiT2 for RTS projects only applies to those that
COD by 31 December 2020.

No particular voltage reference for RTS projects are those connected to a buyer
RTS projects. grid of 35kV or less.
Where we are now. Decision 13 vs. Decision 11
•  The Good:
–  Renewed policy support for solar: certainty if not joy
–  Express recognition and greater benefit for floating solar projects
–  More preferable FOREX indexation terms
–  Tentatively opens the door for direct PPAs
•  The Bad:
–  Terrible timing
–  Lower FiTs with same risk allocation?
–  31 December 2020 COD deadline retained
–  No differentiation for Northern climes
Where we are now. Decision 13 vs. Decision 11
•  The Uncertain:
–  Will there be new PPA(s)?
–  Will other technical or regulatory rules/ procedures be introduced?
–  How to classify/ license RTS projects >1MW?
–  Is the door really open for RTS direct PPA <1MW?
–  How and when will post-FiT competitive system work?
Rooftop Solar Focus
•  Clearly a thriving sector with huge potential
•  Riven by lack of clarity and patchwork approach (to lease, to sell, to supply
services? domestic vs. foreign investor market access)
•  Self-consumption market driver to date puts immense pressure on developers
•  Does Decision 13 open the door wider? Article 8.3:
“If the power purchaser is not EVN or a member entity of EVN authorized by EVN, then the
power purchase price and the PPA shall be as agreed between the parties in conformity
with current provisions of law.”
•  But, Article 10.1(d):
“[MOIT will] issue regulations on metering and recording power volumes and payment
applicable to roof solar power models for which the power distributor and retailer is not a
unit under EVN.”
The Post-FiT world
•  “The power purchase price from grid-connected solar projects that do not [qualify for FiT2] shall
be determined via the competitive mechanism.” (Article 5.4, Decision 13)

•  MOIT Letter No. 1968 dated 19 March 2020 sets the stage:
–  Option 1: Project-based auctions
Ø  transition phase to June 2021: already-approved projects
Ø  improved PPA?
–  Option 2: Substation-based auctions
Ø  wide application from July 2021 for 10-100MW projects
Ø  prioritize optimizing existing grid infrastructure
The Post-FiT world, cont’d
•  Option 3: bidding for specific projects (solar park basis)
Ø  intended for large and floating solar projects >100MW
Ø  State authorities take responsibility for land clearance and access and
connection infrastructure (akin to PPP)
Ø  higher likelihood of international standard PPA/ project risk allocation
Outlook: Corporate PPAs
Direct Power Purchase
Agreements
•  Key to unlocking private
financing?
•  1,174 large power consumers
interested (13 RE100
companies)
•  Synthetic model via the
wholesale market Source: BloombergNEF

•  c1GW Pilot project expected in

2020
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 DPPA: the mechanism selected for
Vietnam
Price Support in form of Contract for Differences

RE GENCO Reimbursement (if PFMP ≥ Pstrike) Consumer

Support Payments (if PFMP ≤ Pstrike)

Pay (cFMP plus

DPPA charge)
Renewable Energy Certificates
Pay Full Marker

Market
Production
RE Power

Retail Power
Power
Price (FMP)

Buyer

Deliveries
Purchase Purchase
Agreement
And Sale
(no Cfd)
Agreement

EVN/NPT network Power

VWEM Corporation (PC)

Financial Arrangements
EVN/PC Pays Customer Full Market Price (cFMP) Operational Arrangements
Environmental Attributes
Transaction Agreements

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Contact
Duane Morris Vietnam LLC
Ho Chi Minh City Office
Suite 1503/04, Saigon Tower
29 Le Duan, District 1
Ho Chi Minh City
Vietnam

Hanoi Office
Pacific Place, Unit V1307/1308
83B Ly Thuong Kiet Street
Hoan Kiem District, Hanoi
Vietnam

Giles Cooper
Partner, Chairman
Tel: +84 24 3946 2210
Email: gtcooper@duanemorris.com

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