On 3 March 2025, the Government issued Decree No. 58/2025/ND-CP providing guidance on the Law on Electricity pertaining to development of renewable energy power and new energy power ("Decree 58"), replacing Decree No. 135/2024/ND-CP regulating policies and mechanisms to encourage the development of self-production and self-consumption rooftop solar power ("Decree 135"). Decree 58 focuses on incentives for new energy projects, mechanisms for self-production and self-consumption rooftop solar ("RTS") power projects, and development of offshore wind power projects.
I. Mechanisms for self-production and self-consumption RTS power projects
1. Self-production and self-consumption: Similar to Decree 135, mechanisms and policies under Decree 58 are provided for the development of self-production and self-consumption RTS power installed on the roofs of various constructions including individual residences, offices, industrial zones, clusters, export processing zones, high-tech parks, economic zones, production facilities, and business establishment. Self-production and self-consumption RTS power, according to Decree 58, refers to electricity produced and consumed by an organization or individual to meet their demands.
2. Principles for development of self-production and self-consumption RTS power systems:
- The implementation of the construction and project development must be in compliance with all applicable regulations on investment, construction, land, environment, safey, firefighting and prevention;
- During the RTS power system's investment and construction phase, imported and used solar panels and DC-to-AC converters are strictly prohibited.
3. Models: According to Decree 58, developers of self-production and self-consumption RTS power systems can opt to either connect or not to connect their RTS power system to the grid. In the case of connection to the grid, no more than 20% of the RTS power system's installed capacity may be sold to Vietnam Electricity (EVN) in exchange for the surplus power produced. Depending on whether or not they are connected to the national power grid and whether or not they have extra power production that they may sell to EVN, RTS power systems must meet a variety of standards as set out in Decree 58.
4. Mechanism for RTS power system not being connected to the grid: RTS power system in this case is not subject to the requirement of the electricity operation permit and is able to be developed without any limitation regarding its capacity. Prior to installation, the developer must inform the relevant power units and the provincial Department of Industry and Trade (DOIT) of the RTS power system's installed capacity and location. They must also notify the provincial authorities responsible for construction, fire safety, and firefighting of the RTS power system's installation.
5. Grid-connected RTS power system:
- RTS power systems with a capacity of less than 100kW: Developers must notify the DOIT and local construction and fire prevention and firefighting competent authorities. Developers can choose whether surplus electricity is imported into the national grid. A zero-export device must be installed if surplus electricity is not fed into the national grid.
- RTS power systems with a capacity from 100 kW to under 1,000 kW: Apart from the procedures as set out for RTS power system being less than 100kW, developers must further notify EVN and may sell the surplus electricity of no more than 20% of its actual installed capacity if the capacity has not exceeded the total capacity allocated to its local province/city under the national power development plan and its detailed implementation plan.
- RTS power systems with a capacity of 1,000 kW or more: Developers must register with the DOIT to obtain the development registration certificate. The electricity operation permit is required if the developers sell the surplus electricity to the grid. When the total capacity exceeds the capacity allocated to such province/city under the national power development plan and its detailed implementation plan, the developer must additionally follow the regulated procedure for supplementing its project to the national power planning. A zero-export device must be installed if surplus electricity is not fed into the national grid.
6. Batter energy storage system ("BESS"): According to Decree 135, installing BESS is advised for developers in order to guarantee reliable and secure power system operations.
II. Incentives for new energy power projects
1. Incentives provided for new energy projects:
- Exemption from sea area usage fees during the basic construction period but not exceeding 03 years from the date of commencement of construction. 50% reduction in sea area usage fees for a period of 09 years after the exemption period of the basic construction period;
- Exemption from land use fees and land rent during the basic construction period but not exceeding 03 years from the date of commencement of construction. After the exemption period of the basic construction period, the exemption and reduction of land use fees and land rent shall be implemented in accordance with the provisions of law on investment and land;
- The minimum long-term contracted electricity output is 70% within the loan principal repayment period but not exceeding 12 years unless the investor and the electricity buyer have another agreement. This mechanism shall not be applied in cases where the project fails to generate the minimum committed output due to reasons from the project side or due to load demand or technical conditions of the power system that cannot consume all the output;
2. New energy projects qualified for incentives:
- New energy projects produced from 100% green hydrogen, 100% green ammonia, or 100% mixture of green hydrogen and green ammonia;
- Projects supplying electricity to the national power system;
- The first project for each type of new energy.
III. Development of offshore wind power projects:
- Applicable projects: Offshore wind power projects with in-principle investment policy approval issued by competent authorities before 1 January 2031.
- Conditions applied to foreign investors:
Experience: Foreign investors must have at least invested and developed one offshore wind power project that is operating and generating power in Vietnam or elsewhere;
Financial capability: Foreign investors must have their capital in the project accounting for at least 15% of the project's total estimated investment capital, and their equity ratio on the capital contribution to the project being at least 20%;
- Participation of domestic enterprises: Domestic enterprises must hold at least 5% of the charter capital or total voting shares in the economic organization implementing the offshore wind power project. The domestic enterprises can be State-owned enterprises or enterprises in which a State-owned enterprise with 100% of the charter capital holds more than 50% of the charter capital or total voting shares. Additionally, for offshore wind power projects that export electricity without using the national power system, the domestic enterprises must hold more than 50% of the charter capital;
- Authorities' consensus: Foreign investors must obtain written consensus from the Ministry of National Defense, the Ministry of Public Security, and the Ministry of Foreign Affairs; and
- Commitment to using domestic resources: They must commit to using domestic human resources, goods, and services from domestic suppliers, ensuring fair competition in terms of price, quality, progress, and availability.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
