Key takeways for investors who desire to develop a rooftop solar project
As for the production of electricity for usage:
For the time being, there is no regulation prohibiting an enterprise (the Investor) from installing solar power panel at its farms (particularly on roof of construction works) so that it can use electricity generated from such solar power system. Therefore, the Investor can install solar power system on the construction works’ roof at its farms for generating electricity for usage by itself, provided that the following conditions need to be met for ensuring the legality:
- Construction Permit: the Investor should work with the Department of Construction where the relevant farm locates to be sure if a new/amended Contruction Permit is required for the installation of solar power panel on the construction works’ roof. According to Article 89.2(d) of the Construction Law 2014 (as amended), it’s not required to obtain a Construction Permit if “the repair or renovation of construction works does not change its use functions and load-bearing structure, and must be in line with the construction planning approved by competent state agencies; satisfies requirements on fire prevention and environmental protection”; however, it’s unable to affirm whether the installation of solar power panel on the construction works’ roof by the Investor cause changes in use function and load-bearing structure of the construction works or not. Furthermore, to date, there is no particular guideline of the Ministry of Construction on whether or not a rooftop solar power system needs a separate Construction Permit that is different with the one required for building the construction works which roof the solar power panel is installed thereon.
- Fire Prevention Certificates: the Investor has in full the Fire Prevention Certificates separately with regard to the solar power system in the event that the construction works which roof the solar power system is installed thereon are required to have the Fire Prevention Certificates (c.f. the Offcial Letter No. 3288/CP07-P4 dated 08 September 2020 of the Ministry of Public Security). For your information, the full Fire Prevention Certificates comprise (i) Certificate of Fire Prevention Design Inspection (in Vietnamese: “Giấy chứng nhận thẩm duyệt thiết kế PCCC”), (ii) Minutes of Inspection for Fire Prevention Acceptance (in Vietnamese: “Biên bản kiểm tra nghiệm thu PCCC”), and (iii) Certificate of Fire Prevention Acceptance (in Vietnamese: “Chứng nhận nghiệm thu PCCC”).
- DTM: the Investor should work with the Department of Natural Resources and Environment and the People’s Committee of Ward/Commune where the relevant farm locates to be sure if an approval for DTM or any other licensing procedures in relation to environment is required. On 1 January 2022, the Environment Protection Law 2020 took effect in place of the Environment Protection Law 2014. The Environment Protection Law 2020 has many changes compared with the former one. Under the Environment Protection Law 2020, the solar power system would not be subject to any licensing procedures related to environment. However, due to the availability of the new Environment Protection Law, the consultation with the said authorities should be taken.
Of note, for the electricity planning, it’s not so quite clear by law to identify if the solar power system of the Investor which electricity produced is for usage by itself must be in line with the electricity planning. Logically, the compliance with the electricity planning is not applicable to such the solar power system of the Investor, unless there would be residual electricity unused by the Investor and the Investor desires to sell to others.
In case the Investor wants to sell, what license the Investor needs and can the Investor sell to other individual and entity, or just sell to government?
- Currently, solar power developers sell electricity to EVN and individuals/entities who own and lease out their roofs to the solar power developers. For the time being, there is no solar power developer selling electricity to other individuals and entities. That is because, the Electricity Law 2004 prescribes that only EVN has the right to electricity tranmission. However, since 1 March 2022 when the Law on Amending 9 Laws No. 03/2022/QH15 dated 11 January 2022 comes into effect, that provision was revoked; put differently, nowadays, non-state entities are allowed to invest and operate their own tranmission grids. With this new provision, solar power developers can sell electricity to any individuals/entities not through EVN on the condition that it doesn’t use the transmission grids of EVN. Nevertheless, cautiously, it’s advisable that the Investor should not sell electricity produced by the solar power system at its farms to individuals/entities (not EVN) until there is availability of a more detailed guideline by the Government or the Ministry of Industry and Trade in that regard.
- On the assumption that the solar power system of the Investor satisfies the conditions (being, among others, the capacity of each solar power system is not more than 1 MW and 1.25 MWp) as stipulated in Article 3.5 of Decision 13/2020/QD-TTg dated 6 April 2020 of the Prime Minister (“Decree 13”) and Article 5.2(a) of Circular 18/2020/TT-BCT dated 17 July 2020 of the Ministry of Industry and Trade, the Investor mainly needs the following licenses to be able to sell electricity to others:
- To add the following business lines to its scope of business on the National Business Registration Portal:
- Electricity production (VSIC 3511), and
- Electricity transmission and distribution (VSIC 3512);
- An Investment Registration Certificate(s) for each solar power system;
- The Construction Permit, Fire Prevention Certificates and DTM as pointed out in Item 1 above;
- The written confirmation on compliance with the electricity planning to be issued by the Department of Industry and Trade where the relevant farm locates; and
- To enter into the following arrangements with EVN in the case of selling electricity to EVN:
- Grid Connection Agreement (in Vietnamese: “Thỏa thuận đấu nối”),
- Minutes on Energizing Acceptance (in Vietnamese: “Biên bản Nghiệm thu đóng điện vận hành”), and
- Power Purchase Agreement (in Vietnamese: “Hợp đồng mua bán điện”).
Of note, the Grid Connection Agreement should be singed before the Investor installs solar power panel given that Article 9.1 of Decision 13 stipulates that “rooftop solar power systems which are to be connected directly or indirectly to the national transmission grid of EVN are invested and developed after completing the registration of connection to the national transmission grid with EVN”.