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Vietnam's new rooftop solar decree is seen as having multiple loopholes. (Photo: EVN)
The Vietnamese government’s new decree, announced at the end of October, encourages the development of self-consumption rooftop solar power systems. However, many investors feel that the regulatory details are unclear, making the application process much more difficult.
Some foreign investment fund representatives have even complained that review bodies are questioning the legal validity of documents from other government departments, which has caused considerable confusion.
Following the release of Decree 135/2024/ND-CP, Vietnam’s Investment Newspaper interviewed stakeholders from the renewable energy sector to gather opinions, and RECCESSARY summarized three major flaws in the new regulation.
1. Unclear responsibilities between local, central authorities
The new decree stipulates that the Ministry of Industry and Trade (MoIT) must collaborate with local power companies to review plans and allocate capacity in line with the Eighth National Power Development Plan (PDP8). However, when an electricity provider in Quang Nam province inquired about the criteria for capacity allocation, the response from MoIT was that the decision would be made by the provincial People's Committee.
Energy expert Manh Tuan noted that power development planning is costly, and many provincial-level power plans are only detailed up to the 110kV level, leaving smaller levels less defined for flexibility. This has resulted in delays in reviewing smaller rooftop solar projects, which require more time to approve.
2. New decree poses challenges to national power planning
According to the new regulation, rooftop solar systems with a capacity under 100kW for households and standalone homes are exempt from requiring an electricity operation license and face no capacity limit. However, if 30,000 households apply to install systems, the total installed capacity could exceed the 2,600 MW limit specified in PDP8, and it remains unclear how this issue will be addressed.
Additionally, many households and businesses that missed the 20-year preferential Feed-in Tariff (FIT) under previous regulations will now have the opportunity to sell excess electricity to the national grid. This increase in available capacity could easily surpass the limits set by PDP8, potentially leading to competition for grid connection.
Energy expert warns that the new rooftop solar regulation allowing excess electricity sales to the national grid could lead to total installed capacity exceeding PDP8’s limits. (Photo: EVN)
3. Uncertainty over 20% excess electricity sales cap
Investors are particularly concerned about the new provision allowing the sale of excess electricity to the national grid, with a cap set at 20% of the system’s actual installed capacity. However, there is little clarity on how this will be implemented, and even power companies are unsure of the process. Le Quang Vinh, a representative from renewable energy developer BayWa r.e. in Vietnam, explained that even the energy sector is waiting for further guidance from MoIT.
For instance, the sale price of excess electricity is to be based on the average market price from the previous year. If energy prices spike in that year, leading to a general increase in market prices, the fairness of this arrangement for other solar power sellers comes into question. Moreover, if the national grid experiences a power shortage, will the 20% cap be lifted? How should the price be calculated under these circumstances? These questions remain unanswered.
Additionally, EVN is exploring methods to control the amount of excess solar electricity fed into the grid through special devices. However, it is unclear who will bear the cost of the required metering and monitoring equipment. If EVN takes on these expenses, the additional costs will likely be reflected in electricity prices.
Regarding the vague provisions in the new decree, Le Quang Vinh commented that the law addresses only part of the issues, and in practice, no one knows how to implement it. A representative from a foreign investment fund remarked that they would prefer the Vietnamese government to issue 1,000 specific regulations rather than a vague phrase like "according to the law."
Source: Investment Newspaper、Baker McKenzie
