Environment Permits Under The Environment Protection Law 2020 in Vietnam

The Environment Permit (Giấy phép môi trường) is a new concept under the Environment Protection Law 2020. In essence, an Environment Permit consolidates most of the environment permits or licences under the previous environment laws into a single document which would help the relevant authorities and businesses to monitor and record all the environmental aspects of an investment project. 

Projects subject to Environment Permit

Except for some certain emergency public investment projects, an Environment Permit is required for all investment projects which have potential adverse effect on the environment and which generate wastewater, dust and emissions or hazardous waste which must be treated or managed (the Regulated Projects).

Timing

Regulated Projects which have not started commercial operation by 1 January 2022, and which have an approved Environment Impact Assessment Report must obtain the Environment Permit before commissioning the environmental protection works of the Regulated Project.

Regulated Projects which have not started commercial operation by 1 January 2022, and which do not have an approved Environment Impact Assessment Report must obtain the Environment Permit before issuance of the mining licence (for mining project), the approval of the field development plan (for oil exploration project), the approval of the feasibility study (for PPP project or construction project), and the investment decision for other projects.

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Written by Nguyen Quang Vu On In ,

Direct Power Purchase Agreement in Vietnam – The basics

In the newly issued Power Development Plan VIII (PDP VIII), the direct power purchase agreement (DPPA) mechanism is said to be implemented on a pilot basis. The DPPA mechanism could offer an alternative for renewable energy projects to sell electric energy. However, PDP VIII stops short of providing broad strokes of what the DPPA mechanism will look like. That said, before the PDP VIII was issued, in 2022, a draft decision of the Prime Minister (Draft Decision) on a pilot scheme (Pilot Scheme) for the DPPA mechanism was circulated for public opinion collection. Such a scheme offers a look into the possible structure of the DPPA mechanism under PDP VIII. In this article, we will discuss the basic structure of the DPPA mechanism and some key points in a DPPA.

Under the Pilot Scheme, the DPPA mechanism is financial/synthetic DPPA and works as follows:

1.         the renewable energy generator will enter into a DPPA in the form of a forward contract (hợp đồng kỳ hạn) with a customer, under which the customer will guarantee a fixed price for the energy produced by the renewable energy project (see 3) and in return, the generator will transfer the “environmental attributes” created by the project to the customer;

2.         though the name DPPA suggests there is a sale of electric energy between the generator and the customer, under the DPPA mechanism, the generator won’t physically deliver electric energy to the customer; that is why it is called financial/synthetic DPPA. Instead, the generator will sell all of the generated electric energy to EVN in the wholesale electricity market under a template power purchase agreement provided in the Draft Decision. The power companies of EVN will then sell electric energy to the customer at retail prices. Such electric energy may not necessarily come from the project.

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Written by Nguyen Quang Vu On In ,

Mechanism for Calculation of Electricity Generation Price Bracket and Its Implication for Transitory Solar/Wind Energy Investors

On 3 October 2022, the Ministry of Industry and Trade (MOIT) issued Circular 15 on the mechanism for setting up an electricity generation price (EGP) bracket applicable to transitory (chuyển tiếp) solar and wind power plants (Circular 15/2022), which took effect from 25 November 2022.

Determining EGP bracket under Circular 15/2022 will cause significant impact to the selling price of the transitory solar and wind energy projects in Vietnam. To be specific:

  • Circular 15/2022 only applies to solar and wind power plant developers (Developers) who have entered into PPAs with Vietnam Electricity (EVN) before 1 January 2021 (for solar power Developers) or 1 November 2021 (for wind power Developers) but failed to meet the requirements to apply the preferential EGP administered by the Prime Minister under Decision 13/2020 (for solar powers) and Decision 39/2018 (for wind powers) (Transitory Projects);

  • Circular 15/2022 requires the Developers of the Transitory Projects to provide Feasibility Study Reports or Engineering Designs of their power projects to EVN.

  • Based on data submitted by the relevant power plants, EVN will calculate and build up an EGP bracket of a standard solar and wind power plant (Maximum EGP Bracket), and obtain an approval from the MOIT for such Maximum EGP Bracket. The approved Maximum EGP bracket will be published on the website of the MOIT and the Electricity Regulatory Authority. The mechanism for calculation of the Maximum EGP Bracket is illustrated in the diagrams at the end of this post. Details on this mechanism are discussed in this document.

  • The price for selling generated power by the Developers of Transitory Projects to EVN cannot exceed the approved Maximum EGP Bracket. Accordingly, the data provided by the Developers may affect their profit in the future.

On 7 January 2023, the MOIT already issued Decision 21 which approves the Maximum EGP Bracket calculated in accordance with the mechanism specified in Circular 15/2022 (see the bar chart below) which will serve as a basis for EVN to agree on the selling price with the Developers of Transitory Projects:

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Written by Lawyers VNLaw On In