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MINISTRY OF
INDUSTRY AND TRADE OF VIETNAM
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SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom – Happiness
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No. 10/2025/TT-BCT
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Hanoi, February
1, 2025
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CIRCULAR
ON
METHODS FOR DETERMINING AND PRINCIPLES FOR APPLYING AVOIDED COST TARIFFS FOR
SMALL RENEWABLE ENERGY POWER PLANTS; KEY CONTENTS OF POWER PURCHASE AGREEMENTS
Pursuant to the Law on Electricity dated
November 30, 2024;
Pursuant to Decree No. 96/2022/ND-CP dated
November 29, 2022 of the Government defining the functions, tasks, powers, and
organizational structure of the Ministry of Industry and Trade; Decree No.
105/2024/ND-CP dated August 1, 2024 on amendments to Decree No. 96/2022/ND-CP
and Decree No. 26/2018/ND-CP dated February 28, 2018 of the Government on the
Charter for the Organization and Operation of Vietnam Electricity Group;
At the request of the Director General of the
Electricity Regulatory Authority;
The Minister of Industry and Trade hereby
promulgates this Circular on methods for determining and principles for
applying avoided cost tariffs for small renewable energy power plants; key
contents of power purchase agreements.
Chapter I
GENERAL PROVISIONS
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1. This Circular provides detailed guidance on
Clause 5 Article 44, Point g Clause 1 Article 51, and Point e Clause 1 Article
51 of the Law on Electricity No. 61/2024/QH15 on methods for determining and
principles for applying avoided cost tariffs for small renewable energy power
plants, and on key contents of power purchase agreements.
2. This Circular applies to the following regulated
entities:
a) Organizations and individuals purchasing or
selling electricity from small renewable energy power plants;
b) The power system and electricity market
operator, and other relevant agencies, organizations, and individuals.
Article 2. Interpretation of
terms
For the purposes of this Circular, the following
terms are defined as follows:
1. Seller means an organization or
individual holding an electricity operation license or exempted from obtaining
an electricity operation license in accordance with the law in the field of
power generation, owning a small renewable energy power plant.
2. Buyer means Vietnam Electricity (EVN) or
a power distribution entity holding an electricity operation license in the
field of power distribution and retail, with the grid to which small renewable
energy power plants will be connected for electricity purchase from the Seller.
3. Surplus electricity means the total
electricity output generated during the rainy season exceeding the amount of
electricity corresponding to a load factor of 0.85 during the rainy season.
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5. Power system and electricity market operator means
the entity performing the functions of the National Load Dispatch Center and
the Electricity Market Operator as prescribed under the Law on Electricity
(currently the National Power System and Market Operation Company – NSMO).
6. Load factor means the ratio of actual
electricity generation to the electricity generation possible at 100% rated
capacity operation over a specific period (year, season, month, day).
7. Rainy season is defined as the period
from July 1 to October 31.
8. Dry season is defined as the period from
November 1 to June 30 of the following year.
9. Data year for tariff calculation for year N means
the period from July 1 of year (N-2) to June 30 of year (N-1).
10. Small renewable energy power plant means
a hydropower plant with an installed capacity of less than or equal to 30 MW,
as defined under Decision No. 2394/QD-BCN dated September 1, 2006, of the
Ministry of Industry.
Chapter II
FORMULATION, APPROVAL,
AND IMPLEMENTATION OF AVOIDED COST TARIFFS
Article 3. Structure of the
avoided cost tariff
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a) Peak hours during the dry season;
b) Normal hours during the dry season;
c) Off-peak hours during the dry season;
d) Peak hours during the rainy season;
dd) Normal hours during the rainy season;
e) Off-peak hours during the rainy season;
g) Excess energy.
2. The costs corresponding to the seven (07) tariff
components include:
a) Avoided generation energy cost;
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c) Avoided generation capacity cost (applicable only
during peak hours of the dry season).
3. The time-of-use schedule applied to the avoided
cost tariff shall conform to the provisions in the current retail electricity
tariff or any replacement regulations.
For areas with transmission line overloads or
electricity surplus as confirmed or announced by the power system and
electricity market operator; for cascade hydropower plants; and for hydropower
plants providing water discharge for downstream areas as requested by the
provincial-level People's Committee; based on the load demand of each regional
power system, taking into account self-consumption from rooftop solar power,
the need to reschedule peak generation hours for small renewable energy power
plants shall be considered (without rescheduling peak generation hours for
individual generating units). The buyer and the seller shall negotiate the
applicable peak generation hours in accordance with the principle of ensuring
sufficient peak hours as prescribed.
Article 4. Avoided cost tariff
1. The avoided cost tariff shall be formulated and
published annually.
2. By October 31 each year, the power system and
electricity market operator shall take the lead and coordinate with Vietnam
Electricity (EVN) and other relevant entities to update the database, calculate,
and develop the avoided cost tariff for the following year using the
methodology specified in Appendix II enclosed with this Circular, and submit it
to the electricity regulatory authority under the Ministry of Industry and
Trade.
3. Within five (05) working days from the date of
receipt of the avoided cost tariff dossier as specified in Clause 2 of this
Article, the electricity regulatory authority under the Ministry of Industry
and Trade shall be responsible for verifying the contents of the submitted
dossier. If necessary, the electricity regulatory authority shall issue a
written request for the power system and electricity market operator to revise,
supplement, or clarify the dossier. No later than fifteen (15) working days
from the date of receipt of such a request, the power system and electricity
market operator shall be responsible for submitting a written explanation and
revised dossier as requested.
4. Within thirty (30) working days from the date of
receipt of the complete avoided cost tariff dossier and the written explanation
from the power system and electricity market operator, the electricity
regulatory authority under the Ministry of Industry and Trade shall:
a) Appraise the input parameters and calculation
results of the annual avoided cost tariff prepared by the power system and
electricity market operator. If necessary, relevant organizations and
individuals may be invited to participate in the appraisal;
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5. Within two (02) working days from the date the
avoided cost tariff is issued, the electricity regulatory authority under the
Ministry of Industry and Trade shall be responsible for announcing the avoided
cost tariff for the following year on the websites of the electricity
regulatory authority and the Ministry of Industry and Trade.
6. In the event that the avoided cost tariff is not
published on time, the avoided cost tariff of the previous year may be
temporarily applied until the new avoided cost tariff is officially published.
The difference arising from payments made under the old tariff and the
new tariff shall be settled between the parties in the first payment period
applying the new avoided cost tariff.
Article 5. Responsibility for
grid connection
1. The Seller shall be responsible for investing
in, operating, and maintaining the transmission lines and step-up substations
(if any) from the Seller’s power plant to the connection point with the Buyer's
power grid.
2. The connection point shall be mutually agreed
upon by the Seller and the Buyer based on the principle of selecting the
nearest connection point to the Buyer’s existing grid (unless otherwise agreed
by both parties), ensuring the transmission capacity of the Seller’s power
plant and in accordance with the approved power grid planning.
3. If the connection point differs from the
metering point, the Seller shall bear the power losses along the connecting
transmission line and the losses of the plant’s step-up transformer. The method
for calculating the losses along the connecting transmission line shall be
implemented in accordance with Appendix III enclosed with this Circular.
Article 6. Power purchase
agreement
1. The principal contents of the power purchase
agreement stipulated in Appendix IV enclosed with this Circular shall serve as
the basis for the Seller and the Buyer to negotiate and sign the agreement. The
Seller and the Buyer have the right to agree and supplement specific clauses in
the power purchase agreement, provided that they comply with the laws of
Vietnam.
2. The language of the agreement shall be
Vietnamese. The Seller and the Buyer may agree to supplement the agreement with
an English version.
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Chapter III
IMPLEMENTATION
Article 7. Responsibilities of
the electricity regulatory authority under the Ministry of Industry and Trade
1. To instruct the power system and electricity
market operator to develop the annual avoided cost tariff as prescribed in
Appendix II enclosed with this Circular.
2. To designate power plants to provide necessary
data for the development of the avoided cost tariff to the power system and
electricity market operator (if necessary).
3. To appraise and submit to the Ministry of
Industry and Trade for consideration and decision on the annual avoided cost
tariff; to publish the annual avoided cost tariff.
4. To ensure confidentiality of cost-related
information of power plants used in the calculation of the avoided cost tariff.
5. To provide guidance on the implementation of
this Circular.
Article 8. Responsibilities of
the Seller
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2. To install a three-rate meter and associated
devices in accordance with prevailing regulations for the measurement of
electricity for payment purposes.
3. To sell all electricity output measured at the
plant’s busbar to the Buyer under the avoided cost tariff. In case of supplying
electricity to nearby areas without access to the national grid upon request
from local authorities, the Seller may sell a portion of the electricity output
to the local distribution unit at a mutually agreed price in accordance with
applicable laws, provided that prior written agreement with the Buyer is
obtained.
4. To comply with regulations on power system
operation, transmission system operation, and distribution system operation
issued by the Ministry of Industry and Trade.
Article 9. Responsibilities of
the Buyer
1. To negotiate and sign the power purchase
agreement with the Seller based on the avoided cost tariff and the principal
contents of the power purchase agreement specified in Appendix IV enclosed with
this Circular.
2. To purchase the entire electricity output
delivered to the grid by the Seller according to the transmission capacity of
the power grid, except for the electricity sold to local distribution units as
prescribed in Clause 3 Article 8 of this Circular.
3. To comply with regulations on power system
operation, transmission system operation, and distribution system operation
issued by the Ministry of Industry and Trade.
4. To submit a report to the electricity regulatory
authority under the Ministry of Industry and Trade on the outcome of the
agreement with the Seller in the event of a change in the peak hour pricing
period as prescribed in Clause 3 Article 3 of this Circular, within fifteen
(15) days from the date of agreement with the Seller.
5. Vietnam Electricity (EVN) and its power
corporations shall be responsible for developing plans to address transmission
line overloads in cases specified in Clause 3 Article 3 of this Circular.
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1. The power system and electricity market operator
shall be responsible for developing the annual avoided cost tariff and ensuring
the confidentiality of cost-related information of power plants used for tariff
calculation purposes.
2. Power plants and other power entities designated
by the electricity regulatory authority under the Ministry of Industry and
Trade shall be responsible for providing necessary data for the calculation of
the avoided cost tariff to the power system and electricity market operator.
Article 11. Entry into force
1. This Circular shall come into force on February
1, 2025.
2. The following documents are hereby repealed:
Circular No. 32/2014/TT-BCT dated October 9, 2014 of the Minister of Industry
and Trade stipulating the procedures for formulating and applying the avoided
cost tariff and promulgating the model power purchase agreement for small
hydropower plants; Circular No. 29/2019/TT-BCT dated November 14, 2019 of the
Minister of Industry and Trade on amendments to Circular No. 32/2014/TT-BCT
dated October 9, 2014 of the Minister of Industry and Trade stipulating the
procedures for formulating and applying the avoided cost tariff and
promulgating the model power purchase agreement for small hydropower plants;
and Circular No. 06/2016/TT-BCT dated June 14, 2016 of the Minister of Industry
and Trade on amendments to Circular No. 32/2014/TT-BCT dated October 9, 2014 of
the Minister of Industry and Trade.
3. For small hydropower plants and cascaded
hydropower clusters that have been commissioned and have signed power purchase
agreements under effective avoided cost tariffs prior to the effective date of
this Circular, the parties shall continue to perform under the signed agreements.
4. For small renewable energy power plants, upon
expiration of the avoided cost tariff-based power purchase agreement, the
Seller shall negotiate a new power purchase agreement with the Buyer in
accordance with Clause 2 Article 51 of the Law on Electricity.
5. A Seller owning a small renewable energy power
plant within the scope and applicability of this Circular shall have the right
to opt for participation in the electricity market provided that the following
conditions are met:
a) Full infrastructure for participation in the
electricity market is equipped as required;
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c) Once opting to participate in the electricity
market, the Seller shall not revert to applying the avoided cost tariff;
d) In cases where the Seller is currently applying
the avoided cost tariff and has already signed a power purchase agreement, the
Seller shall enter into an agreement with the Buyer to terminate and liquidate
the agreement in advance in accordance with the provisions of the signed
agreement and the applicable regulations issued by competent state authorities.
6. During the process of developing and calculating
the avoided cost tariff, if any issues arise, the relevant entities shall
report them to the Ministry of Industry and Trade for timely amendment and
supplementation./.
PP. MINISTER
DEPUTY MINISTER
Truong Thanh Hoai