Vietnam’s draft solar PPA template leaves key issues ‘unresolved’

Facebook
Twitter
LinkedIn
Reddit
Email
Baker McKenzie partners said draft solar PPA neglects issues that would be key for investors. Flickr: Intel Free Press

The Ministry of Industry and Trade of Vietnam (MOIT) has released a draft circular containing guidelines on how to develop solar PV in the country, but failed to address a range of issues that could impact large-scale project bankability, according to analysis from multinational law firm Baker McKenzie.

In mid-April, MOIT finally announced its feed-in tariff (FiT) scheme for utility-scale solar projects along with a net metering scheme for rooftop PV systems, but it has now also released a draft power purchase agreement (PPA) template for solar.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Baker McKenzie partners Fred Burke and Chi Lieu Dang noted that MOIT has proposed this Draft PPA as a ‘non-negotiable’ template for all grid-connected solar PPAs, despite leaving certain key issues “unresolved”.

As previously announced, the FiT for utility-scale solar PV of VND2.086/kWh (US$0.0935) would be subject to fluctuations in the VND/USD exchange rate.

The partners said: “Though the price is converted in USD based on a current exchange rate, the Draft PPA does not include any indexation of the FiT by way of escalation in accordance with the Consumer Price Index (CPI) or the exchange rate, or any other provision to address inflation risks.”

They noted that under the draft PPA, the monopoly utility Vietnam Electricity Corporation (EVN), which will be the sole off-taker of solar generation, will have the right to curtail solar power in a range of circumstances beyond the reasonable control of the seller, without any compensation or payments to the project developer. Moreover, if the developer has the whole plant or a section of the plant ready for injecting power to the grid, EVN still has no obligation to make payments if th utility has not built the grid connections on time.

The Baker McKenzie partners also cited limited protection of the project developer’s outstanding debts if the PPA was terminated as a result of EVN defaulting.

Meanwhile, in terms of dispute resolution, the partners noted that the draft PPA fails to provide for offshore (international) arbitration, which they claimed is an essential part any of large-scale PPA. Instead the draft only lists a range of domestic actions on disputes, with the possibility of bringing them to Vietnamese courts for litigation.

They also listed the absence of various support policies that most investors would expect to be included, such as: no government guarantee or support to enhance the creditworthiness of EVN; no provision addressing the risk of changes in law or tax after the PPA signing; nor provision for payment protection in the case of unexpected events such as war or natural disasters.

The Draft PPA even puts liabilities on the developer for grid connection costs and associated risks, without accounting for the balance of cheaper land costs, versus higher costs of transmission in more remote areas.

The partners concluded: “Obviously a more pragmatic and flexible approach will be needed for the Draft PPA to accomplish its objective of mobilizing investment into clean solar power.”

The MOIT release also contains guidelines listing various requirements for solar projects.

EVN plans 350MW of PV plants

In related news, EVN announced on its website that its subsidiary Power Generation Corp 3 (Genco 3) is looking to develop two solar plants in the Phuoc Minh Thuan Nam district, Ninh Thuan province, with a combined capacity of 350MW over 554 hectares of land.

The projects would require 9.57 trillion (US$421 million) investment and would be implemented from Q2 2018 to Q1 2021. It has been known for some time the power giant has been considering various PV project developments, but it has rarely provided significant detail.

23 April 2025
Dallas, Texas USA
To bring buyers and sellers of power together, the Renewable Energy Revenues Summit USA will cover strategies to optimize renewable energy trading, procurement, and offtake structures across U.S. markets.

Read Next

February 11, 2025
Located in the solar hotbed region of Atacama in northern Chile, the Domeyko project will have an 83MW solar PV capacity and 660MWh battery energy storage system (BESS) capacity.
February 11, 2025
US technology giant Microsoft has signed virtual power purchase agreements (VPPAs) for 389MW of solar capacity with EDP Renewables.
February 5, 2025
The Ministry of Energy and Natural Resources of Turkey has awarded 800MW of solar PV in its latest auction.
January 31, 2025
JA Solar has unveiled its DeepBlue 5.0 series of modules, its latest n-type tunnel oxide passivated contact (TOPCon) product.
January 30, 2025
Two reports published today show the political and corporate factors which have affected Europe's PPA market over 2024.
January 30, 2025
The average solar power purchase agreement (PPA) price remained constant between the third and fourth quarters of 2024 in North America.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 17, 2025
London, UK
Solar Media Events
February 19, 2025
Tokyo, Japan
Solar Media Events
March 11, 2025
Frankfurt, Germany