Brian Jeffrey
New Draft Decree for Renewable Energy Development
The Ministry of Industry and Trade is currently working on a new decree that outlines key aspects of the Electricity Law aimed at promoting renewable and new energy initiatives. The proposed regulations include various incentives and support mechanisms for projects in these fields.
According to the draft, solar and wind energy projects equipped with energy storage systems that connect to the national grid will benefit from several favorable policies.
Such projects will be granted priority in electricity dispatch, in line with current power system regulations and electricity market standards.
Furthermore, the energy storage systems linked to solar and wind projects will be classified as eligible for tax breaks under existing laws, while these projects will also receive additional advantages as outlined by current legal frameworks.
Incentives for Offshore Wind Projects
The draft specifically outlines additional incentives for offshore wind energy initiatives, recognizing them as renewable energy ventures eligible for enhanced investment benefits.
These incentives include waivers on sea area usage fees during the project’s construction phase and a substantial 50% fee reduction for the first 12 years of operation.
Projects will also be exempt from land rental and usage fees. Moreover, a minimum power purchase agreement of 50% is guaranteed over the project’s lifetime.
State-owned enterprises with full charter capital can avoid investment recovery regulations under the Investment Law and have the potential to receive Prime Ministerial approval for credit limits exceeding normal statutory requirements under the Law on Credit Institutions.
For foreign investors, the draft emphasizes the need to adhere to market access regulations, allowing for a maximum ownership of 65% in collaboration with local partners.
Investors are required to prove their experience with similar projects, demonstrate financial capability, and provide audited evidence of their net assets exceeding the proposed investment amount.
Additionally, projects must be consistent with the stipulations from the Ministries of National Defense, Public Security, and Foreign Affairs.
Support for Research and Development
The draft encourages advancements in technology related to solar and wind energy in Vietnam, promoting government-supported initiatives for producing photovoltaic panels, wind turbines, and energy conversion technologies.
Initiatives in the new energy sector must fulfill specific criteria to qualify for incentives, including generating power exclusively from green hydrogen, green ammonia, or similar mixtures; supplying electricity to the national grid; and being the inaugural project in any new energy category.
Eligible clean energy enterprises will receive substantial advantages, including exemptions from sea area usage fees during construction and a 50% reduction in these fees for nine years of operations.
They will also benefit from exemptions or reductions in land rental fees during construction, compliant with investment and land use laws.
A long-term power purchase agreement for 80% will be guaranteed for up to 12 years, provided the generated electricity is sold to the national grid.
The Electricity Law defines new energy as electricity generated from sources like green hydrogen, green ammonia, or other innovative energy options.
Renewable energy encompasses electricity derived from fundamental sources such as solar, wind, ocean, hydropower, biomass, and waste energy, but excludes hazardous waste derived from fossil fuels.
