DPPA Decree 80 2024 N CP 1720506501

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Vietnam Renewable Energy

Corporate DPPA
Decree No. 80/2024/ND-CP
Thanh-Hai Nguyen, Partner | 9 July 2024
Agenda

01 Officially issued DPPA Decree No. 80


02 Model 1: Physical corporate DPPA
mechanism
03 Model 2: Synthetic/Virtual corporate DPPA
mechanism
04 Implementation of DPPA mechanisms
05 Q&A
01 Officially Issued DPPA
Decree No. 80
Finally Issued DPPA Decree No. 80
1) On 6 June 2024, MOIT issued Report 131 to DPM Ha to prepare for the GoV meeting of 7
June 2024.
2) On 7 June 2024, GoV/OOG held meeting on draft DPPA Decree.
3) On 12 June 2024, ERAV held meeting at ERAV on draft DPPA Decree.
4) On 13 June 2024, MOIT issued Report 138 to DPM Ha to provide explanations per DPM
Ha’s suggestions.
5) On 18 June 2024, MOIT ERAV issued Report 189 to MOIT Minister to prepare for the GoV
meeting of 19 June 2024 together with 18 June 2024 updated draft of DPPA Decree.
6) On 19 June 2024, GoV/OOG held meeting on 18 June draft DPPA Decree (together with
draft Self-consumption RTS Decree).
7) On 3 July 2024, DPM Ha officially signed for issuance of Decree No. 80/2024/ND-CP on
DPPA mechanisms for renewable energy.
8) On 5 July 2024, MOIT organized a meeting on the implementation of DPPA Decree 80.
© 2024 Baker & McKenzie (Vietnam) Ltd.
DPPA Decree No. 80
Models of Corporate DPPAs

Model 1: Physical DPPA Model 2: Virtual/Synthetic DPPA (via


(via private wire) national grid)

◼ Physical DPPA: Sale, purchase and delivery of power Sale and purchase of power via a Forward Contract
via direct private wire between RE GENCO and between RE GENCO and Consumer (or authorized
Consumer. IP/EZ/EPZ power retailer/utility), particularly:
◼ Existing retail PPA of Consumer with EVN PCs: Any ◼ RE GENCO sells entire power output via the spot
demand not met by the onsite project is serviced via market of Vietnam Competitive Wholesale Electricity
separate retail PPA of Consumer with EVN Power Market (VWEM) under a VWEM PPA with EVN.
Corporations under existing regulations. ◼ Consumer (or authorized IP/EZ/EPZ power
◼ Excess PPA with EVN: Excess power may be retailer/utility) buys electricity from grid via a power
exported to the grid (subject to new regulations to be purchase agreement with EVN Power Corporation to
issued). meet its power demands.
◼ RE GENCO and Consumer (or authorized IP/EZ/EPZ
power retailer/utility) enters a Forward Contract as a
virtual/synthetic PPA (or also known as Contract for
Differences (CfD))

(Decree No. 80, Articles 4 and 6) © 2024 Baker & McKenzie (Vietnam) Ltd.
02 Model 1: Physical corporate
DPPA mechanism
Model 1: Physical corporate DPPA mechanism

RE GENCO

Private wire PPA electricity


Physical corporate DPPA
The power price is determined by mutual
agreement by parties

tariff x output (Decree No. 80, Articles 6.1(b))

Financial transactions Large Consumer


Electricity flows
© 2024 Baker & McKenzie (Vietnam) Ltd.
Model 1: Physical corporate DPPA mechanism
Scope of GENCO: “Renewable Energy Generation Companies”
Criteria required to qualify as a “Renewable Energy Generation Companies” for DPPA mechanisms

◼ Electricity entities owning solar, wind, small hydropower, biomass,


geothermal energy, wave power, tidal, ocean current, other forms of
renewable energy sources and rooftop solar systems; and
◼ Being granted or exempted from the electricity operation license
according to the laws.
Renewable energy generation companies
Takeaways:
("RE GENCO")
◼ In previous drafts, electricity entities owning rooftop solar systems are
not explicitly set forth as to whether they are a qualified RE GENCO
under Decree No. 80 or not. The definition under Decree No. 80
makes it clear by adding “rooftop solar systems” thereto; and
◼ Model 1 (Physical DPPA) does not set a cap on the capacity of power
plants.
(Decree No. 80, Articles 2.1(a) and 3.6) © 2024 Baker & McKenzie (Vietnam) Ltd.
Model 1: Physical corporate DPPA mechanism
Scope of Consumers: “Large Power Consumers”
Key criteria required to qualify as a “Large Power Consumer” for DPPA mechanisms

(i) In case of an existing power consumer: (ii) In case of a new power consumer or a
power consumer consuming electricity for
Having an average consumption output of less than 12 months:
≥ 200,000 kWh (averaged over the most
recent 12 months) Registered output of ≥ 200,000 kWh

a Large Power Consumer under Decree


No. 80

(Decree No. 80, Articles 2.1(b) and 3.12) © 2024 Baker & McKenzie (Vietnam) Ltd.
Physical DPPA – Key Regulations
The PPA between RE GENCO and Consumer must be in accordance with the Electricity Law and relevant
01 laws, and must contain the following key provisions:

Contracting parties Rights and obligations of Term and termination


the parties

Purpose of use Electricity price Defaults and remedies

Standards and quality Terms on private wire


Payment methods and terms
of services

02 Generally, the electricity price shall be determined by mutual agreement between contracting parties

RE GENCO must negotiate, agree and sign PPA with EVN (or its authorized units) on capacity, output, and
03 price for excess electricity output in accordance with regulations.

(Decree No. 80, Articles 6.1 and 6.2) © 2024 Baker & McKenzie (Vietnam) Ltd.
Physical DPPA – Key Regulations

The retail power price shall be determined according to the MOIT's regulations on electricity tariffs [i.e.,
subject to appraisal by DOIT and approved by PPC on an annual basis] if a power entity:

▪ performs both the power generation and retail functions in an industrial park (IP), EZ, EPZ, and similar
04 park; and

▪ purchases power from both the national grid/power system and other on-site power sources to sell power
to customers inside IP, EZ, EPZ, and similar park.

(Decree No. 80, Articles 3.7 and 6.4) © 2024 Baker & McKenzie (Vietnam) Ltd.
Physical DPPA – Steps required

RE GENCOs / project investors shall conduct procedures on master planning,


Step 1 Licensing investment, construction, power operation license for projects, works and grids
for entering into physical DPPAs with Consumers

Step 2 Contracting RE GENCOs and Consumers shall negotiate, agree and sign physical DPPAs

Consumers must prepare a written report on the signing of the DPPA with RE
GENCO and send it to the local PPC and notify the EVN's in-charge power
Step 3 Reporting corporation and SMO in writing; the report and notification must include a copy
of the DPPA.

Contents of (i) notification on the signing of the DPPA, (ii) Consumer's information and (iii)
the report the current status of RE GENCO and the RE project.

(Decree No. 80, Article 25) © 2024 Baker & McKenzie (Vietnam) Ltd.
Physical DPPA
Reporting requirements

Larger Power Consumers must make and submit the following reports:

Report on commencement of Physical DPPA Report on the results of Physical DPPA for
◼ Recipients: MOIT and in-charge provincial Year N-1
People's Committee ◼ Recipients: MOIT and in-charge provincial
◼ Deadline: Within 10 days from the date of People's Committee
signing the physical DPPA ◼ Deadline: Before 30 January of Year N
◼ Frequency: On an annual basis

(Decree No. 80, Article 28.1) © 2024 Baker & McKenzie (Vietnam) Ltd.
03 Synthetic/Virtual Corporate
DPPA mechanism
Model 2: Synthetic corporate DPPA
mechanism
Forward Contract as a virtual PPA (CfD) for
a scheduled portion of GENCO production
Connecting to the national grid

RE GENCO DPPA fixed price payments Consumer or IP Authorized


Contract allowing
(solar or wind power plant) CfD VWEM price swaps Power Retailer (“APR”)
consumer access to VWEM
spot pricing for all
consumption; payment of
VWEM PPA Spot market power DPPA charges
PPA electricity purchases

VWEM spot price Spot Market Rate x Pricing mechanism subject


Load; DPPA charges to the consumption quantity
Spot market of Consumer in a trading
payments + fees interval compared to the
EVN VWEM wholesale price generation quantity of RE
Power corporation (PC) GENCO in that interval
(EPTC/NLDC) Bulk power at VWEM rate
(Decree No. 80, Article 14)
Financial transactions

Electricity flows
© 2024 Baker & McKenzie (Vietnam) Ltd.
Model 2: Synthetic corporate DPPA mechanism
Scope of Consumer: “Renewable Energy Generation Companies”
Criteria required to qualify as a “RE GENCO” for Synthetic DPPA

◼ Being the power generation company owning a grid-connected wind


or solar power plant with an installed capacity of ≥ 10 MW;
◼ Being granted or exempted from the electricity operation license
according to the laws; and
◼ Directly participating in VWEM.

Renewable energy generation companies


("RE GENCO")
Takeaways:
◼ Synthetic DPPA only applies to grid-connected wind or solar power
plants;
◼ Capacity cap: ≥ 10 MW (such plant must have sufficient infrastructure
and facilities to operate in the mechanism, i.e., information system
(Decree No. 80, Articles 2.2(a) and 3.6) and SCADA system).
© 2024 Baker & McKenzie (Vietnam) Ltd.
Model 2: Synthetic corporate DPPA mechanism
Scope of Consumers: “Large Power Consumers”
Criteria required to qualify as a “Large Power Consumers” for Synthetic DPPA

◼ Being manufacturing consumers;


◼ Purchasing power at ≥ 22 kV of voltage level from EVN’s Power
Corporations or power retailers;
◼ For cases of existing power consumers, having an average
consumption output of ≥ 200,000 kWh (averaged over the most recent
Large Power Consumers 12 months);
◼ For cases of new power consumers or a power consumer consuming
electricity for less than 12 months, registered output of ≥ 200,000 kWh

(Decree No. 80, Articles 2.2(b) and 3.12)


© 2024 Baker & McKenzie (Vietnam) Ltd.
Model 2: Synthetic corporate DPPA mechanism
Scope of Power Retailers: “Power Retailers in IP, EZ, EPZ”
Criteria required to qualify as a “Power Retailers in IP, EZ, EPZ” for authorized off-taker for Synthetic DPPA

◼ Being a power retailer inside IP, EZ, EPZ, and similar park;
◼ Being granted a power operation license for power retail in such park;
◼ Electricity output purchased ≥ 200,000 kWh per month at ≥ 22 kV of
voltage level; and
◼ Being authorized (by large power consumers) to purchase electricity
IP Power Retailer/Utility from PC.

Additional documents required for IP Power Retailers/Utility when applying for participation in the Synthetic DPPA

◼ Written agreement with EVN PC on authorized IP Power Retailer’s responsibility for the installation of meters
satisfying technical conditions under regulations, and expected electricity purchase charges/prices; and
◼ Agreement of consumers with IP's power retailer on expected termination of the existing retail PPA(s) when consumer(s) (i.e., IP
tenants) select to participate in Synthetic DPPA, and retail costs within the IP, EZ, and EPZ; OR authorization agreement by
consumers to IP power retailer to participate in Synthetic DPPA and amendments to existing retail PPA(s).

(Decree No. 80, Articles 2.2(c), 3.7 and 26.2) © 2024 Baker & McKenzie (Vietnam) Ltd.
Model 2: Synthetic corporate DPPA mechanism
Scope of Power Retailers: “Power Retailers in IP, EZ, EPZ” (Decree No. 80, Article 23)

Responsibility of IP Power Retailers

To negotiate and agree with Large Consumer(s) on retail costs within the IP, EZ, EPZ and similar parks in
01 accordance with regulations of the MOIT within 30 days from the date of receiving the written request and all
attached documents from Large Consumer(s).

02 To terminate the PPA signed with Large Consumer within 07 working days from the date of agreement with Large
Consumer on retail costs within the IP, EZ, EPZ and similar parks.

Responsibility of IP Power Retailer in cases of being authorized by Large Consumers

01 To enter into the PPA (on behalf of authorizing Large Consumer(s)) with the PC

02 To amend and sign the PPA with authorizing Large Consumer(s) to fulfil commitments under the PPA with PC

03 To agree on retail tariff in the IP, EZ, EPZ or similar parks and costs arising from signed CfD with RE GENCO
© 2024 Baker & McKenzie (Vietnam) Ltd.
Synthetic DPPA – Steps required

Consumers must submit a registration dossier for participating in the DPPA mechanism
Dossier
Step 1 to SMO. For (i) off-takers inside IP, EZ and EPZ, and (ii) IP Authorized Power Retailer,
submission some additional documents are required.

Further Within five working days from receipt of the dossier, SMO must send the dossier to EVN
Step 2 submission and Power Corporations (and any relevant IP power retailer). At the same time, SMO must
review review the satisfaction of the dossier.

Confirmation by Within five working days from receipt of the dossier from SMO, EVN's relevant power corporation
(and any relevant IP relevant Power Retailer) must issue a written response confirming the
Step 3 PC and IP Power readiness and expected time to convert Consumer (or IP Authorized Power Retailer)’s existing
Retailer retail PPA.

Within five working days from receipt of the dossier from SMO, EVN must issue a
Confirmation by
document confirming the readiness and expected time to sign the VWEM PPA with RE
EVN GENCO.

(Decree No. 80, Article 26) © 2024 Baker & McKenzie (Vietnam) Ltd.
Synthetic DPPA – Steps required

Within five working days from receipt of the written confirmation from PC, IP’s power retailer
and EVN, SMO must issue a written response to the Consumer regarding the expected date
SMO's response
Step 4 for: (i) signing the VWEM PPA between EVN and RE GENCO; (ii) converting the existing
to Consumer retail PPA between EVN PC/IP Power Retailer and Consumer; and (iii) applying the DPPA
mechanism.

EVN, PC, RE GENCO and Consumer (or IP Power Retailer) shall proactively
Negotiation of
Step 5 negotiate and sign respective PPAs in accordance with regulations of the DPPA
DPPA Agreements decree.

Submission of RE GENCO, Consumer (or IP Power Retailer) and related entities shall submit
Step 6 requirement documents to SMO confirming that they meet the requirements for participating in
satisfaction the DPPA mechanism.

SMO shall review the documents submitted in Step 6 and notify related entities in
Step 7 Final notification writing of the official date of the DPPA between RE GENCO and Consumer (or IP
Authorized Power Retailer).

(Decree No. 80, Article 26) © 2024 Baker & McKenzie (Vietnam) Ltd.
Synthetic DPPA - Application Documents required

01 04 For (i) consumers inside IP, EZ and EPZ and (ii)


Written request for Consumer's information IP’s authorized power retailer, the following
participating in the and its consumption additional documents are required:
DPPA mechanism
06
Written agreement with EVN PC on responsibility for
the installation of meters for consumers that
02 05 participate in DPPA mechanism, satisfying technical
In-principle CfD In-principle agreement conditions under regulations, and expected
agreement (forward on the allocation of electricity purchase charges/prices.
contract) between RE actual power output of
GENCO and Consumer RE GENCO for large 07
consumers in each (i) Agreement of consumers with IP's power retailer
trading interval (Qm(i)) on expected termination of the existing retail PPA(s)
03 when consumer(s) select to participate in DPPA
Report on the current mechanism, and retail costs within the IP, EZ, and
EPZ; OR
status of RE GENCO
(ii) authorization agreement by consumers to IP
and power plant power retailer to participate in DPPA mechanism
and amendments to retail PPA(s).

(Decree No. 80, Articles 26.1 and 26.2) © 2024 Baker & McKenzie (Vietnam) Ltd.
1. RE GENCO & EVN’s VWEM Power Purchase Agreement
a. Payment Mechanism

𝐈
01
𝐑 𝐠 = ෍ 𝐐𝒎𝒒(𝐢) × 𝐅𝐌𝐏(𝐢) RE GENCO must make a day-ahead
𝐢=𝟏 projection of power output of the power plant
for each trading cycle and make offerings in
Total amount of market energy payments in the payment accordance with MOIT’s VWEM operation
Rg:
cycle (VND) regulations.
Metered quantity/output of RE GENCO in trading cycle (i)
Q mq(i) :
(kWh)
02
RE GENCO, Electricity System and Market
Full spot market electricity price in trading cycle (i) (VND Operator (SMO) and EVN shall prepare,
FMP(i) : publish, compare, and confirm spot market
per kWh)
payment statements in accordance with
𝐅𝐌𝐏(𝐢) = 𝐒𝐌𝐏(𝐢) + 𝐂𝐀𝐍(𝐢) MOIT’s VWEM operation regulations.

SMP(i) :
Spot market electricity price in trading cycle (i) (VND per 03
kWh) RE GENCO and EVN shall perform
procedures and works for payments in
CAN(i) : Market capacity price in trading cycle (i) (VND per kWh)
accordance with the executed PPA.

(Decree No. 80, Articles 10 - 13); (Amended Circular 45/2018/TT-BCT, Article 80) © 2024 Baker & McKenzie (Vietnam) Ltd.
1. RE GENCO & EVN’s VWEM Power Purchase Agreement
b. Model Key Terms (Appendix I to Decree No. 80) (1/2)
RE GENCO and EVN have the rights to negotiate and agree provisions in accordance with Vietnamese laws

Key terms Provision under Decree No. 80

COD The date on which the entire or a part of the grid-connected solar power plant (i) is ready to sell power to
the EVN and (ii) satisfy conditions as prescribed by the laws.
Contract term ◼ Effective date: from the execution date, unless otherwise agreed upon by the parties
◼ Term: [x] years from the COD (to be negotiated)
◼ Survival clauses: After the termination of this contracts, the provisions remain effective within [x]
years so that the party can make final invoices, adjusted invoices, make payments and implement
contract rights and obligations (to be negotiated).
Output Metered power output

Price The spot market price announced by EVN/NLDC(A0) to be determined according to VWEM regulations

Monthly payment ◼ VWEM's payments based on monthly payment statement provided by EVN/NLDC(A0) (including
market energy payments and market capacity payments)
◼ Other payments arising from late payment interest and adjusted payments (if any)
◼ Regulatory taxes and fees, including related taxes and fees arising from changes of laws
(if any)
© 2024 Baker & McKenzie (Vietnam) Ltd.
1. RE GENCO & EVN’s VWEM Power Purchase Agreement
b. Model Key Terms (Appendix I to Decree No. 80) (2/2)

Key terms Provision under Decree No. 80

Responsibility for Responsibility for interconnection and metering system are in accordance with regulations on
connection and transmission power system, standards and regulations on power metering in the power system, and
metering system relevant technical standards.

Power plant dispatch Operations of power plant and power grid are in accordance with regulations on operation of power
and operation systems, transmission power systems, dispatch of power systems, operation of competitive electricity
market standards and relevant technical standards.
Invoicing and payment Invoicing and payment of power prices are in accordance with laws on invoicing.
Breach of contract, ◼ In the event of a contractual default, the non-defaulting party will send a written notice to the
compensation for defaulting party for cooperation to resolve.
damages and ◼ The defaulting party is liable for payments of compensation for damages for the default. The value
termination includes: (i) actual and direct loss and (ii) benefits the non-defaulting party would have been entitled
if there was no default by the defaulting party.
◼ The parties may mutually or unilaterally terminate the agreement.
RECs, carbon credits Renewable energy certificates (RECs) and/or carbon credits shall belong to RE GENCO.

© 2024 Baker & McKenzie (Vietnam) Ltd.


2. Consumer & EVN PC’s Power Supply Agreement
a. Payment mechanism (1/5)

𝐂𝐊𝐇 = 𝐂𝐓𝐓𝐃 + 𝐂𝐁𝐋 𝐈

𝐂𝐃𝐍 = ෍ 𝑸𝑲𝑯𝒉𝒄(𝒊) × 𝐂𝐅𝐌𝐏(𝐢) × 𝐊 𝐩𝐩


𝒊=𝟏
= ( 𝐂𝐃𝐍 +𝐂𝐃𝐏𝐏𝐀 + 𝐂𝐂𝐋 ) + 𝐂𝐁𝐋

Total electricity purchase charges of Consumer from Adjusted electricity consumption/output of Consumer
CKH : Q KHhc(i) :
EVN PC (VND) in trading cycle (i) (kWh)

Energy charge paid based on the electricity market Electricity purchase price from EVN PC in the spot
CDN : CFMP(i) :
price (VND) market in trading cycle (i) under VWEM (VND/kWh)

DPPA charge (for use of services and grids of the Power distribution loss coefficient in trading cycle (i)
CDPPA :
power system) applicable to EVN PC in year N (varying between
K PP :
Consumers with a voltage level less than 110 kV and
CCL : Difference clearing charge (VND) those with a level equal to or more than 110 kV)

Electricity charge paid based on the electricity retail


CBL :
tariff in each trading cycle (VND)

(Decree No. 80, Articles 16.1 and 16.2) © 2024 Baker & McKenzie (Vietnam) Ltd.
2. Consumer & EVN PC’s Power Supply Agreement
a. Payment mechanism (2/5)

𝐂𝐅𝐌𝐏(𝐢) = 𝐂𝐒𝐌𝐏(𝐢) + 𝐂𝐂𝐀𝐍(𝐢)


𝐅𝐌𝐏(𝐢) = 𝐒𝐌𝐏(𝐢) + 𝐂𝐀𝐍(𝐢)
= 𝐅𝐌𝐏(𝐢) × 𝐤 (𝐢)

Spot market price for wholesale electricity buyers Full market electricity price in trading cycle (i) (VND
CFMP i : FMP(i) :
(PC) in trading cycle (i) (VND per kWh) per kWh)

Market electricity price for wholesale electricity


CSMP(i) : Market electricity price in trading cycle (i) (VND per
buyers (PC) in trading cycle (i) (VND per kWh) SMP(i) :
kWh)

Market capacity price for wholesale electricity buyers


CCAN i : Market capacity price in trading cycle (i) (VND per
(PC) in trading cycle (i) (VND per kWh) CAN(i) :
kWh)

k (i) : Power transmission loss coefficient in trading cycle (i)

(Decree No. 80, Article 16.2(d)); (Amended Circular 45/2018/TT-BCT, Articles 82.2, 83 and 84)
© 2024 Baker & McKenzie (Vietnam) Ltd.
2. Consumer & EVN PC’s Power Supply Agreement
a. Payment mechanism (3/5): DPPA charges
01
𝐈
DPPA charges consist of the following charges: (i)
transmission charge, (ii) distribution charge and retail
𝐂𝐃𝐏𝐏𝐀 = ෍ 𝐐𝐊𝐇𝐡𝐜(𝐢) × 𝐂𝐃𝐏𝐏𝐀𝐝𝐯 charge, and (iii) SMO charge)
𝐢 =𝟏

i: Trading cycle (i) in the payment period 02


DPPA charges are determined by adding the total cost and
estimated profit of the above services, which is then divided
I: Total number of trading cycles in the payment period by total domestic commercial generation quantities of EVN
PCs
Adjusted power consumption of Consumers (or
Q KHhc(i) : authorized IP Power Retailers) in the trading cycle (i)
(kWh) 03
Charges used to calculate DPPA charges are based on
DPPA charges per unit of power of year N
CDPPAdv : approved data of year N. Otherwise, data from year N-2
(VND/kWh)
is used. In cases of using data from year N-2, the
estimated profit of the above services determined by
multiplying owner's equity with the return on equity
presented in the current average retail electricity price
plan in year N-2
(Decree No. 80, Articles 16.1(b) and 16.4(d))
© 2024 Baker & McKenzie (Vietnam) Ltd.
2. Consumer & EVN PC’s Power Supply Agreement
a. Payment mechanism (4/5): Difference clearing charge
𝐈

𝐂𝐂𝐋 = ෍ 𝐐𝐊𝐇𝐡𝐜(𝐢) × 𝐏𝐂𝐋 𝐏𝐂𝐋 = 𝐏𝐂𝐋𝐓𝐓𝐁𝐎𝐓 + 𝐏𝐂𝐂𝐋𝐓𝐓𝐆𝐓 + 𝐏𝐂𝐋𝐓𝐓𝐒𝐌𝐇𝐏 + 𝐏𝐃𝐕𝐏𝐓 + 𝐏𝐂𝐋𝐓𝐓𝐊


𝐢 =𝟏

CCL : Difference clearing charge The difference in BOT components payment related to
PCLTTBOT :
BOT power plants (VND/kWh) for month M-2
i: Trading cycle (i) in the payment period
The difference in component payments to power plants
indirectly participating in VWEM, including RE GENCO,
PCCLTTGT :
I: Total number of trading cycles in the payment period power plants selling surplus power and power importing
[from other countries] (VND/kWh)
Adjusted power consumption of Large Power The difference in component payment for strategic multi-
Q KHhc(i) :
Consumers in the trading cycle (i) (kWh) PCLTTSMHP : purpose hydropower plants (SMHPs) in the month
(VND/kWh)
Cost of clearing differences for month M per unit of
PCL :
power for Large Power Consumers (VND/kWh) PDVPT : Ancillary service charge per unit of power (VND/kWh)

The additional payment difference per unit of power


(VND/kWh) arising from costs that are allowed to be
PCLTTK :
(Decree No. 80, Articles 16.1(b) and Appendix IV) included in the electricity price but have yet to be
incorporated
© 2024 Baker & McKenzie (Vietnam) Ltd.
2. Consumer & EVN PC’s Power Supply Agreement
a. Payment mechanism (5/5): Retail tariff (CBL):

Actual consumption ≤ Generation output CBL = 0

Actual consumption > Generation output 𝐈

𝐂𝐁𝐋 = ෍ (𝐐𝐊𝐇 𝐢 − 𝐐𝐊𝐇𝐡𝐜(𝐢) ) × 𝐏𝐁𝐋(𝐢)


Retail tariff for remaining power supply (CBL): 𝐢 =𝟏

In cases where Consumer's actual consumption (or


IP Authorized Power Retailer’s purchasing output if Current retail electricity tariff in trading cycle (i) issued
applicable) is higher than RE GENCO's generation PBL(i) :
by the MOIT (VND/kWh)
output in a trading cycle,
Actual consumption quantity of Consumer in trading
the Consumer (or IP Authorized Power Retailer if Q KH(i) :
cycle (i) (kWh)
applicable) shall pay for the difference (between
Consumer’s actual consumption and RE GENCO’s
Adjusted power consumption of Consumer in trading
generation output) [as additionally supplied by EVN Q KHhc(i) :
cycle (i) (kWh)
PC] at the electricity retail tariff.
(Decree No. 80, Articles 14.2, 14.3 and 16.1(c)) © 2024 Baker & McKenzie (Vietnam) Ltd.
2. Consumer & EVN PC’s Power Supply Agreement
b. Model Key Terms (Appendix II to Decree No. 80) (1/2)
Consumer and EVN PC have the rights to negotiate and agree provisions in accordance with Vietnamese laws

Key terms Provision under Decree No. 80

Electricity The PC and consumer are entitled to agree on the contents of this term in accordance with relevant legal regulations.
purchase
Performance Applicable in cases where the two parties have an agreement on contract guarantees in accordance with applicable
guarantee regulations.

Contract term ◼ Effective date: To be negotiated between the parties. If the parties agree to choose the application of the performance
guarantee, the effective date of the contract is determined to be: (i) the guaranteed confirmation date; or (ii) the
energized acceptance date, depending on which date occurs earlier.
◼ Contract term: To be agreed upon by the parties, but not exceeding the period during which the consumer has the
right to legally own and/or use the electricity usage location.

Standards and To comply with requirements on electricity quality and customer service quality according to the laws.
quality of services
Electricity ◼ Electricity metering activities are agreed upon by the parties in accordance with the law.
metering ◼ The consumed electricity is determined by the meter reading and the multiplier factor of the electricity metering device.
◼ The multiplier factor of electricity metering device is agreed and recorded in the minutes of installation or removal of
the electricity metering device.
© 2024 Baker & McKenzie (Vietnam) Ltd.
2. Consumer & EVN PC’s Power Supply Agreement
b. Model Key Terms (Appendix II to Decree No. 80) (2/2)
Key terms Provision under Decree No. 80

PPA electricity Subject to the consumption quantity of consumers in a trading cycle compared to the generation quantity
payment formula of RE GENCO in that cycle.

Payment ◼ Electricity bills and reactive power purchase invoices are made according to the cycle of meter
reading cycle.
◼ Payment currency: Vietnamese Dong.
Suspension, PC reserves the right to temporarily suspend, discontinue or reduce electricity supply to the consumer in
discontinuation or cases where: (i) the consumer breaches its payment obligations as specified under payment clauses; or
reduction of power (ii) events arise according to laws.
supply
Breach, penalty, ◼ If a party breaches its obligations, commitments or warranties under this agreement, it must cease all
compensation for violating acts and remedy the consequences of the violation within a reasonable period of time upon
damages, termination notification by the non-defaulting party.
◼ Violation penalty: [x] % of the value of breached obligations (to be negotiated).
◼ The parties may mutually or unilaterally terminate the agreement.

Governing law Vietnamese law

© 2024 Baker & McKenzie (Vietnam) Ltd.


3. RE GENCO & Consumer’s Forward Contract (or CfD)
a. Payment Mechanism

𝐑 𝐜 = ෍[𝐏𝐜 𝐢 − 𝐅𝐌𝐏 𝐢 ] 𝐱 𝐐𝐜(𝐢)


𝐢=𝟏

The revenue of RE GENCO under Forward Contract in the


Rc:
payment cycle (VND)

Committed contract (strike) price under Forward Contract


Pc(i) :
(VND per kWh)

Spot market electricity price in trading interval (i) (VND per


FMP(i) :
kWh)

Q c(i) : Committed power quantity/output under Forward Contract


in trading interval (i) (kWh)

(Decree No. 80, Article 18.3)

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3. RE GENCO & Consumer’s Forward Contract (or CfD)
b. Key Terms (Appendix III to Decree No. 80) (1/2)
RE GENCO and Consumer (or authorized IP/EZ/EPZ) have the rights to negotiate and agree provisions in accordance with
Vietnamese laws

Key terms Provision under Decree No. 80

COD The date on which the entire or a part of the grid-connected solar power plant (i) is ready to sell power to
the EVN and (ii) satisfy conditions as prescribed by the laws.
Contract price Consumer undertakes to pay the GENCO for contract output at an agreed contract price (strike price) for
interval i, day D, month T, year N in the future.
Contract quantity To be agreed/negotiated for interval i, day D, month T, year N in the future.

Payment method Payments for the difference in prices between the contract price and the spot market price.

Contract term ◼ Effective date: execution date.


◼ Term: [x] years from COD (to be negotiated).
◼ Survival clauses: After the termination of this contracts, the provisions remain effective within [x]
years so that the party can make final invoices, adjusted invoices, make payments and implement
contract rights and obligations (to be negotiated).
© 2024 Baker & McKenzie (Vietnam) Ltd.
3. RE GENCO & Consumer’s Forward Contract (or CfD)
b. Key Terms (Appendix III to Decree No. 80) (2/2)

Key terms Provision under Decree No. 80

Rights and RE GENCO and consumer are entitled to agree on the contents of this term in accordance with relevant
obligations of legal regulations.
parties
Liability due to RE GENCO and consumer are entitled to agree on the contents of this term in accordance with relevant
the breach of legal regulations.
contract
Dispute RE GENCO and consumer are entitled to agree on the contents of this term in accordance with relevant
resolution legal regulations.

RECs, carbon Renewable energy certificates (RECs) and/or carbon credits shall be transferred from RE GENCO to
credits Large Power Consumer(s).

© 2024 Baker & McKenzie (Vietnam) Ltd.


Synthetic DPPA
Reporting requirements

1. Monthly report on results of 2. Quarterly report on deployment 3. Annual report on implementation


Synthetic DPPAs of Month M-1 and results of Synthetic DPPAs results of Synthetic DPPAs
◼ Reporter: SMO & EVN PCs nationwide for Quarter Q-1 nationwide for Year N-1
◼ Recipients: MOIT & in-charge ◼ Reporter: EVN ◼ Reporter: EVN, SMO and PCs
provincial People's Committees ◼ Recipient: MOIT ◼ Recipients: MOIT and in-charge
◼ Deadline: Before the 20th day of ◼ Deadline: Before the 30th day of provincial People's Committees
Month M the first month of Quarter Q ◼ Deadline: Before 30 January of
◼ Frequency: On a monthly basis ◼ Frequency: On a quarterly basis Year N
◼ Frequency: On an annual basis
(Decree No. 80, Article 28.2)
© 2024 Baker & McKenzie (Vietnam) Ltd.
04 Implementation of DPPA
Mechanisms
Events of suspension or termination of DPPA operations
Scenario 1: Suspension of the DPPA Scenario 2: Termination of the DPPA
operation operation

◼ Events of suspension: ◼ Events of suspension:


1) The electricity market is suspended pursuant to the MOIT's 1) Voluntary termination at the request of participating parties;
regulations on VWEM operations;
2) Exploitation of the mechanism or policies for profiteering
2) One of the agreements under the DPPA mechanism is and consequences cannot be remedied.
suspended or expires, affecting relevant parties' interests;
3) Exploitation of mechanism or policies for profiteering;
◼ Consequential payment mechanism: RE GENCO,
Consumer/IP Authorized Power Retailer, and EVN PC shall
4) Participating Consumer has an average power consumption less
than 200,000 kWh (average in 12 consecutive months) negotiate and sign PPAs in accordance with current
regulations.
◼ Consequential payment mechanism:
a) The retail tariff, as prescribed by MOIT, will be applied to ◼ Competent authority: MOIT Minister shall decide on
Consumer/IP Authorized Power Retailer. termination of the DPPA operation after having obtained
b) RE GENCO and EVN shall negotiate and agree on the generation written opinions of relevant agencies.
price within the applicable renewable energy price bracket or any
other applicable pricing mechanisms.
◼ Competent authority: MOIT Minister shall decide on
suspension of the DPPA operation based on reports and
proposals of EVN, SMO and relevant agencies and organizations.

(Decree No. 80, Article 27)


© 2024 Baker & McKenzie (Vietnam) Ltd.
Resumption of the DPPA operations
Events of resumption of the DPPA operations [after suspension]

Events of Resumption

(i) The violation [causing suspension] have (ii) Authorized State agencies decide on
been remedied and [such remedy has resumption of the operations of the
been] confirmed by competent authorities. electricity market.

Consequence: In the event of resumption, the Competent authority: MOIT Minister shall decide on
relevant entities shall be responsible for resumption of the DPPA operations of Consumer/IP
resuming/continuing to implement the agreements Authorized Power Retailer/RE GENCO based on
in the signed PPAs. reports and proposals of EVN, SMO and relevant
agencies and organizations.

(Decree No. 80, Articles 27.3 and 27.4)


© 2024 Baker & McKenzie (Vietnam) Ltd.
Responsibilities of State authorities and EVN

The main regulator for the operation of DPPA mechanisms, responsible for
MOIT coordinating with other relevant agencies and entities to implement the DPPA
mechanisms and resolving issues arising during the implementation period.

Provincial Inspecting, monitoring and resolving complaints, as well as handling violations


People's during the implementation of the DPPA mechanisms within the scope of its own
Committees management/jurisdiction.

Guiding its PCs and dependent units on drafting PPAs between PCs and
EVN
Consumers, and calculating payments, DPPA charges and loss coefficients.

Responsible for guiding participants in Synthetic DPPA mechanism (via the


SMO national grid); ensuring that total renewable energy capacity will not exceed such
capacity for each type of power source specified in the approved PDP

(Decree No. 80, Article 29) © 2024 Baker & McKenzie (Vietnam) Ltd.
Key Next Steps for Implementation
Key Items Implementation Works
Power distribution loss ◼ Calculation made by Power Corporation (EVNPC) before 15 November of Year N-1.
coefficient in a trading cycle ◼ Calculation results to be approved by EVN.
in year N (K PP ) ◼ Calculation results to be published by EVN before 30 November of Year N-1.

DPPA charges per unit of ◼ Calculation made by EVN.


power of year N (VND/kWh) ◼ Calculation results to be notified to and approved by the MOIT.
(CDPPAdv) ◼ Calculation results to be published by EVN before 15 December of Year N-1.

Cost of clearing differences ◼ Calculation made by EVN regarding the PCL of Month M-2.
for month M per unit of ◼ Calculation results to be published by EVN before the 30th of Month M-1.
power (PCL )

PDP8 and PDP8 ◼ MOIT is responsible for assessing the market operations and reporting to the Prime Minister for
Implementation Plan considering to adjust and update to the master plan (PDP8 and PDP8 implementation plan)
(Article 29.1(a).

Distribution charge, SMO ◼ Separate updates to relevant regulations of MOIT for implementing DPPAs.
charge, VWEM regulations

© 2024 Baker & McKenzie (Vietnam) Ltd.


Q&A
Contact

Thanh Hai Nguyen


Partner
Energy and Infrastructure / Major Projects / Environmental /
Climate Change
Baker McKenzie
thanhhai.nguyen@bakermckenzie.com
+84 24 3936 9606
Hanoi Ho Chi Minh City

10th floor, Indochina Plaza Hanoi 15th Floor, Vietcombank Tower


241 Xuan Thuy Street Cau Giay District, 5 Me Linh Square, Ben Nghe Ward
Hanoi 100000, Vietnam District 1, Ho Chi Minh City 700000
Tel: +84 24 3825 1428 Vietnam
Fax: +84 24 3825 1428 Tel: +84 28 3820 5585
Fax: +84 28 3829 5618

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the area of law discussed and no responsibility for any loss occasioned to any person acting or refraining from action as a result of material in this presentation is accepted by Baker & McKenzie.
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