Vietnam: Decree No. 135/2024/ND-CP introduces new mechanisms to promote the development of self-generated and self-consumed rooftop solar power

31 Oct 2024    4 minute read
Decree 135 Rooftop Solar Power Sustainability Energy Transition

In brief

On 22 October 2024, the Government of Vietnam issued Decree No. 135/2024/ND-CP ("Decree 135"), which aims to promote the development of self-generated and self-consumed rooftop solar (RTS) power (i.e., RTS power generated and consumed by an organization or individual to serve their own demand). The Decree takes effect immediately upon its issuance.

Decree 135 enables power consumers to self-generate their own RTS power systems for self-consumption. While power consumers, especially those in specialized zones and clusters, may prefer to purchase electricity from power developers under the direct power purchase agreement (DPPA) mechanism regulated in Decree No. 80/2024/ND-CP, they may consider this mechanism of self-generation and self-consumption under Decree 135 in future, when it is possible for them to operate their own RTS power systems.

Decree 135 also opens up new opportunities for power developers to support the growth of RTS power through their services as contractors for power consumers, besides their role as power sellers in power generation and sale under the DPPA mechanism.

Contents

Key takeaways

We have summarized the key points of Decree 135 below for your reference:

  1. Application of Decree 135: Decree 135 provides mechanisms for the development of self-generated and self-consumed RTS power on the roofs of construction works, including, among others, industrial parks, industrial clusters, export processing zones, high-tech zones, economic zones, manufacturing facilities and business facilities.
  2. Development principles: Decree 135 requires the development of a self-generated and self-consumed RTS power system to comply with the following principles:
  • The construction work on which the RTS power system is installed must have complied with applicable laws on investment, construction, land, environment, safety, firefighting, and prevention beforehand.
  • The RTS power system must comply with applicable laws on power safety, investment, construction, environment, firefighting and prevention.
  • Imported and used photovoltaic panels and DC-to-AC inverters must not be used during the investment and construction process of the RTS power system.
  1. General incentives of development: Self-generated and self-consumed RTS power is entitled to tax incentives under relevant tax regulations and benefits from a shortened administrative procedure for development. Decree 135 also clarifies that the owner of the construction works bearing the RTS power system is not required to adjust or supplement the energy land master plan and functions. Additionally, the installation of power storage systems (BESS) is also encouraged to ensure the safe and stable operation of the power system.
  2. Development models: The self-generated and self-consumed RTS power system can be either connected or not connected to the national power system. If the excess power output of the RTS power system connected to the national power system is sold to Vietnam Electricity (EVN), such sale must involve no more than 20% of the actual installed capacity of this RTS power system. There are different requirements for the development of RTS power systems, depending on whether they are connected or not connected to the national power system, and whether they have excess power output to be sold to EVN.
  3. Self-generated and self-consumed RTS power system not connected to national power system: The RTS power system not connected to the national power system is exempt from power operation license and subject to unlimited capacity. Before installation, the developer shall notify the installed capacity and location of the RTS power system to the provincial Department of Industry and Trade (DOIT) and the relevant power units, and notify the installation of the RTS power system to the provincial authorities in charge of construction, and fire prevention and fighting.
  4. Self-generated and self-consumed RTS power system connected to national power system
  • Decree 135 requires that the installed capacity of the RTS power system to be developed must be less than or equal to the total installed capacity of the existing load (in accordance with the power consumption output in the most recent 12 months).
  • If the installed capacity of the RTS power system is below 100kW, the developer shall notify the installation to the provincial DOIT and relevant power units, and the provincial authorities in charge of construction and fire prevention and fighting.
  • If the installed capacity of the RTS power is 100kW or more, the developer shall ensure the equipment and devices connect to the collection, monitoring and control system in accordance with technical requirements publicly announced by the EVN.
  • If the installed capacity of the RTS power is between 100kW and 1,000kW, the developer shall notify the installation (and submit a design dossier) to the provincial DOIT, the provincial authorities in charge of construction and fire prevention and fighting, and the relevant power units. If this RTS power system is within the provincial capacity allocation under the power development master plan (PDP8) and the implementation plan of the power development master plan, no more than 20% of the actual installed capacity of this RTS power system can be sold to the EVN.
  • If the installed capacity of the RTS power is ≥ 1,000kW, the developer shall apply to obtain a Self-Generated and Self-Consumed RTS Power Development Registration Certificate issued by the provincial Department of Industry and Trade.
  • If the installed capacity of the RTS power is ≥ 1,000kW and there is a sale of no more than 20% of the excess power output onto the national power system, the developer must carry out master power plan procedures to have the RTS power system approved under the master power plan (except for the cases that fall within the capacity scale under the provincial capacity allocation of the power development master plan (PDP8) and the implementation plan of the power development master plan), and apply for a power operation license in accordance with the laws.
  1. Unlimited capacity and power operation license exemption: The development of self-generated and self-consumed RTS power is exempt from a power operation license and subject to unlimited capacity if the RTS power system is installed with a reverse current prevention device to prevent electricity from being exported onto the national power system or is not connected to the national power system.
Contact Information
Oanh Nguyen
Managing Partner at BakerMcKenzie
Ho Chi Minh City
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oanh.nguyen@bakermckenzie.com
Thi Yen Ly Le
Associate at BakerMcKenzie
Hanoi
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thiyenly.le@bakermckenzie.com

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