Draft Rooftop Solar Decree Overview

With the Power Development Plan 8 approved, the next step is to develop supporting legislation. With this in mind, a draft decree on rooftop solar has been disseminated. Here are the details.

In early December, the Ministry of Industry and Trade (MoIT) released a draft decree that would, if enacted, govern the development of Vietnam’s solar industry. The decree lists several important changes for the sector.

Who does it apply to?

The decree would apply to individuals and businesses installing solar panels on their premises for their own needs as opposed to selling excess power for profit.

Decree development guidelines

Vietnam’s electricity demand is growing rapidly and as a result, its power generation sector is very dynamic. With this in mind, the draft decree provides guidelines that will connect the new decree with other key power generation legislation. These include:

• Rooftop solar development needs to be in line with the Power Development Plan 8 (PDP8);
• The amount of rooftop solar that is connected to the grid must not be more than what is outlined in the PDP8;
• The development of rooftop solar must be safe, with consideration given to the impact on the environment and fire safety regulations; and
• Ultimately it needs to make it easier for businesses and individuals to develop rooftop solar in line with the goal of ensuring energy security through clean and environmentally friendly power production.

Specific policies

It’s within the aforementioned guidelines that the MoIT has developed several key policies to guide rooftop solar development.

Rooftop solar connected to the grid.

Firms and individuals who develop rooftop solar will not be able to sell excess electricity to other businesses. This includes selling electricity to the state power provider. Should a grid-connected rooftop solar system produce more power than it consumes this can be delivered to the grid but will not be paid for. Firms that choose not to take up this option will be responsible for managing their excess power. That said, the approved capacity of rooftop solar must be commensurate with the size of the land or project.

Rooftop solar not connected to the grid.

In the event a firm or individual wishes to develop a solar power system that they do not want to connect to the grid the capacity is at the discretion of the developer.

Rooftop solar power development guidelines

All rooftop solar projects that are grid-connected need to be in line with the PDP8. This means ensuring that the rooftop solar quota outlined in the plan–an additional 2,400 megawatts by 2030–is not exceeded.

Rooftop solar installations on homes do not need approval from the authorities if they do not intend to sell their excess power.

Implementation

Per the draft decree, firms and individuals required to submit a development application will need to do so to the local power utility. In theory, the local power utility would then provide the outcome of their assessment in seven days. This would then be forwarded to the provincial People’s Committee to approve after soliciting opinions from other relevant departments in things like fire prevention, environment, and construction.

The decree is slated to be effective from its approval to December 2030.

Context

Vietnam’s solar sector has experienced a number of challenges in its development.

Specifically, over 2020 and 2021 Vietnam experienced a rapid explosion in renewable energy generation. Most notably solar power. Favorable policies, specifically generous feed-in-tariffs for new solar projects in Vietnam’s central region, drove investment sky-high. In 2018 Vietnam had just 105 MW of installed solar power capacity but by the end of 2020 that number had ballooned to 16 GW.

But there was a problem. Too many projects had been approved without consulting the electricity regulators, leading to an increasingly overloaded grid, Tran Dinh Long, Vice President of the Vietnam Electricity Association remarked in May of 2021.

In recent months, further light has been shed on this challenge with the Government Inspectorate releasing a report that revealed an additional 168 solar projects had been approved outside of the Power Development Plan 7 (PDP7). This resulted in an extra 8,600 MW beyond what had been outlined in the PDP7.

It’s with this in mind that there appears to be some trepidation with respect to allowing excess power to be sold to the grid.

For more information on Vietnam’s solar power industry, contact the business advisory experts at Dezan Shira and Associates.

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