Circular No. 32/2012/TT-BTC providing for the development of wind power projects and the model electricity trading contract for wind power projects

Article 2. Interpretation of terms supplementing Article 3 of Decree No. 189/ 2007/ND-CP; In this Circular, the terms below are construed as follows: Pursuant to Electricity Law No. 28/2004/ QH 11 of December 3, 2004; 1. Electricity buyer means the Vietnam Pursuant to the Prime Minister's Decision Electricity Group or its authorized units. No. 37/2011/QD-TTg of June 29, 2011, on 2. Electricity seller means an enterprise the mechanism to support the development of producing and selling electricity from a wind wind power projects in Vietnam; power project. The Minister of Industry and Trade pro- 3. Wind farm-managing and -operating unit mulgates the Circular providing wind power means an organization directly managing and development and the model electricity trading operating a wind farm connected or not contract for wind power projects as follows: connected to the electricity grid. This organization may be the investor or a unit hired Chapter I or assigned by the investor to manage and GENERAL PROVISIONS operate the wind farm.

Article 1. Scope of regulation and subjects 4. Land area for wind power project , C VIE'tNAM IA & LEGAL 8 OHICIAL GAZE1 rE Issue nos 10-12/Novcmhcr 2012 (Cong Bao110.1 (JU1HiSIN01 ·011hcr?7 ?I J!?) investment survey and research mean the area means the safety corridor of the wind tm,er. delimited within the geographical boundaries by elecaicity o·ansmission lines. transformn stalil lll\ the People's Committee of a province or and auxiliary items. centrally run city (provincial-level People's 8. Safety corridor of a wind turbine i" a circle Committee) determined in a document permitting with the center being the wind tower foot and the investor to survey and research into the wind the radius at least equal to the height of the wind potential to formulate a wind power investment tower pl us the radius of the turhi ne rotor black project within a pennitted duration. This area can be used only for survey and research activities Chapter II such as constructing wind-gauging masts and geological and topographical surveys (if any). DEVELOPMENT OF WIND POWER PROJECTS 5. Termed-use land area of a wind power project is the total area of wind turbine tower Article 3. List of wind power projects foundations, the protection corridor of wind turbine tower foundations, the corridor of I. Before November 30 annually. the ( ieneral electricity transmission lines and transformer Department of Energy shall draw up and repmt stations and the protection corridor of to the Minister of Industry and Trade for transformer stations, construction of internal promulgation and approval a list of wind power roads and management and operation houses. projects allowed for development in the The te1med-use land area is assigned by a subsequent year and projected for fi vc competent agency to the project investor for use subsequent years. throughout the life of the project. 2. Wind power projects in the list of wind 6. Temporary-use land area of a wind power power project5. to he put into operation every project means the area which an investor is year and in the planning cycle must conform to allowed to temporarily use for the construction the national electricity development master plan of the wind fann, including temporary roads for and provincial electricity development master construction, area for rallying supplies and plans already approved for each period. equipment. construction area, makeshifts for 3. The list of wind power projects must he workers and other supporting locations. When drawn up and classified on the basis of the local the work is completed, the temporary-use land and national wind power development potentials: area outside the termed-use land area will be the number of registered projects must abide by recovered by the provincial-level People's the principle of prioritizing projects with high Committee for use for other purposes. economic and financial efficiency, with good 7. Safety corridor of a wind power project plans for connection and output feeding into the Issue nos 10-12/November 2012 OFFICIAL GAZETTE 9 (Cong Ba.0110.1fil7-fJ6'1/Novl'l11her27, 20 I2) system and clean grounds; and projects centrally run cities (below referred to as registered first will be considered for provincial-level People's Committees) in which development first. the projects arc located. On the basis of the proposal, the provincial-level People ·s Committee 4. The list of wind power projects has such shall compile a dossier to propose addition of relevant information as project name. location. the project to the wind power development master area and boundary of wind power project plan (below referred to as dossier of pr~posal of development area. capacity scope of each project, master plan addition, as prescribed irfC!ausc 5 tentative plan for connection of wind fam1s to the of this Article for reporting to the Ministry nf national electricity system, projected schedule and Industry and Trade. time of putting projects into operation. 3. The General Department of Energy shall 5. On the basis of approved provincial wind organize the appraisal of the dossier of proposal power development master plans, the list of wind of master plan addition within 30 (thirty days) power projects must be updated into the list of working days after receiving a completeand valid electricity projects in provincial electricity dossier. If necessary. the General I)epartmcnt development master plans and must have specific of Energy may hire appraisal or counter- plans for connection of wind fanns to the national electricity system. argument consultants for the appraisal. On the basis of the appraii,al results. the General

Article 4. Proposal of new wind power Department of Energy shall report it to the projects for inclusion in the wind power Minister of Industry and Trade for consideration development master plan and decision. I. Wind power projects can be proposed for 4. Based on the scale of the project, the project areas or zones not yet in the approved Minister of Industry and Trade shal I consider and list of wind power projects. The scales of approve the addition of the project to the wind proposed wind power projects must conform to power development m:1ster plan and approve the the approved potential areas under the national project investment policy according to its wind power master plan or provincial-level wind competence or submit to the Prime Minister for power master plans of the localities in which the approval the adjustment or addition to the wind proposed projects are located. power development master plan and the project investment policy. 2. Investors shall compile dossiers of proposal of wind power projects as prcsc1ibed by the work 5. A dossier of proposal of addition of a construction investment law and send them to project to the wind power dcvclopmcnt master the People's Committees of provinces or plan comprises: ,' , • . i o.-rNAML.AW 1 10 OFFICIAL GAZETl E Issue nos 10-12/Novcmher 2012 (Cong Ba.0110.1ff>7-66&Nm ·mi/x.,,27, 21 !12) a/ The provincial-level People's Committee -Assessment of environmental impacts. fire chairman's report proposing the addition of the prevention and fighting solutions and security and project to the wind power development master defense requirements: plan; - The total investment amount of the project: b/ Basic information on the investor: capital mobilization ability. capital soLtrCL'S and documents on legal status, business registration, capital allocation ability according tu key pe~;~_pnnel, project implementation implementation schedule; analysis and experienc~. financial and technical capabilities. assessmcnt of financial-ecunomic efficiency and declaring ilie list of projects (including industrial social effects of the project. projects1in'd wind power projects) implemented '•"•' di Opinions of the regional power corporation within t~tst five years and the audited financial or electricity transmission unit ( if connected tu statemc~of the enterprise within the last three the elcct1icity transmission system) on the cit l'.sier of proposal for master plan addition. c/ Inft'5rmation on the proposed wind power project: ""'" Article 5. Requirements on wind gauging and report on wind gauging results - Th~"l1ecessity to invest 111 the project constr-~c.Lion. favorable and unfavorable I. Wind gauging must be carried out at condition; the regime of exploitation and use of representative typical locations within the project national te'sources ( if any): area for at lea~.t 12 consecutive months. The - Projut description: location, scale and number of wind-gauging masts must suit the construct'ten area, project items: contents on tenain differerces of the project area. For a sectoral~ local planning; project with an estimated capacity exceeding 50 - Report on wind gauging results at the MW (with the land area used for wind potential locations ~ithin the project area in the period of research and assessment exceeding LOO() ha). ;;,/11,,, at least !2consecutive months as prescribed in the investor shall install and operate at least two Clause 4,.,Article 5 of this Circular: wind gauging masts in the project area. - Projected implementation solutions, 2. For wind power projects in the list of pown including technical plan, technology and capacity; projects of the anproved electricity development connection and equipment installation plan; master plan or provincial wind power implementation schedule and form of project development master plan. investors shall ohtain management; general plan on compensation and the result of wind potential research and resettlement and plan to support the construction assessment prior to the formulation and approval of technical infrastructure (if any): cost plan; of investment projects. If the wind power - @ VIETNAM LAW &LEGAL Issue nos 10-12/Novcmbcr 2012 OFFICIAL GAZETTE 11 (C6ngBa.011os(iJ7.fho/November27,2012) development master plans at different levels the project area at the locations of the project. contain complete wind gauging data at the 5. Investors shall send to provincial-level project locations, investors may use these data Departments of Industry and Trade and the for the formulation and approval of investment General Department of Energy reports on wind projects. In case wind power development gauging results (inducing the original Jata) within master plans at different levels contain 18 months after competent agencies permit the incomplete data, investors shall carry out wind research into and assessment oftt,e wind potential research and assessment according to potential at the project location. regulations. 3. For newly proposed wind power projects Article 6. Wind power development not yet included in the list of projects under the investment projects approved provincial wind power development master plan, investors shall conduct wind I. Investors may only formulate wim:ipower gauging as prescribed after obtaining investment projects in the list of wing power permission of the provincial-level People's projects approved by the Minister ofJndustry Committee for use as the basis for compilation and Trade. The contents of a win.d power of the dossier of proposal of master plan investment project comply with ,current addition, approval of the investment policy for regulations on work construction investment wind power projects and formulation of wind management and Chi use 4 of this Artitle. power investment projects. 2. For wind power projects to he invested in 4. A report on wind gauging results covers different phases and with the total capacity of the contents on implementation methodology, each stage at the time of electricity generation wind gauging duration and methods, description different from year to year. investors shall of equipment, wind gauging data and analysis of formulate investment projects according to each wind gauging results. Wind gauging data must phase of the projects. If the projected time of be up to standard and have adequate operation of a pro_1ect sees a six months' representative quantity and adequate statistics deviation from the schedule specified in the wind on wind speed, wind frequency, wind direction, power development project. the investor shall energy distribution map, air humidity, solar report such to the General Department of Energy radiation and atmosphere pressure. Wind gauging for consideration and approval. data must be collected from wind gauging masts at least 60 m high, with the collection frequency 3. The proportion of equity capital of a wind of IO minutes/time and the minimum collection power project must not he lower than 20% of cycle of 12 months at the gauging locations within the total investment amount. . @ VIETNAM LAW & LEGAL FOR - 12 OFFiCIAL GAZETTE Issue nos 10-12/Novcmhcr 2012 (Cong Bao11rn(-,61-{,6o/tv111rnil~r~7 ~!!/ ~) 4. The contents of a wind power investment 3. HJving a connection agreement with the project must comply with the work construction electricity distribution unit or l'.lcctricit\ investment management law. including the transmission unit. following principal contents: 4. Having <I financing contract Jnd capital a/ The report on wind gauging results as commitmenu to l'.nsurl'. the ;_ipprn\'L'd prescribed in Clause 4, Article S of this Circular: construction schedule in thl'. vvork construction b/ Tl1::·land area used for the wind power investment project. project .,.

Article 8. Tnmination of wind JXJWL'.r prnjl'.ct c/ A~sment of the impacts of the plan on implementation connectttrn.. of the wind farm to the regional ~ • electrici!i:System: Termination of wind pown prnicct implementation appl ics to onl'. of the fol lo\\ ing di C1n! and technical plans Jnd for the cases: dismanijimlent and handling of the wind farm's equipm~Rt after the project is terminated. 1. lf within 12 months after hcing grantl'.d an investment certificate the inwstor fails to start 5. Prt'l'Vjncial-level People's Committees shall the construction of principal work ill'.rns. the grant i'h'V~tment certificates to investors after <-- r:,r" provincial-level People's Committee shall ohtaining'lhe written consent of the Ministry of examine revoking the investment certificate and IndustrfMJd Trade on the wind power projects' report it to the Ministry of Industry and Trade. conforrn+ey with the wind power development If there arc plausibk rl'.asons. the project's master pkms at different levels and the approved ''f",.-il schedule can be approved to he prolonged but list of wind power projects. for not more than 12 months compared to the Artide 7. Conditions for starting schedule specified in the investment certificate. constrw;tion of wind fanns 2. If withir 24 months after the date of The construction of a wind farm can be commencement of operation specifiL'd in the started 011ly when the law-prescribed conditions investment certificate the project has not yet put on work construction investment management into operation for commercial ekctricity are met and the following conditions are fully generation. the provincial-level Peopk's satisfied: Committee shall examine and decide to terminate the investment project and revoke the investment 1. Having an investment certificate. certificate without having to pay damages to the 2. HJving an electricity trading contract investor and report it to the Ministry of Industry stgned with the electricity buyer. and Trade on its decision to terminate the . @ VIETNAM LAW &LEGAL Issue nos 10-12/Novcmbcr 2012 OFFICIAL GAZETTE 13 (CongBao110.166UJ6S'Nove111her27, 2012) investment project. of Energy and the provincial-level Departments of Industry and Trade for management and

Article 9. Reporting regime and operation monitoring of implcn 1entation. management 5. In the period of operation. annually hefore I. Within 10 (ten) working days after the May 31. the 1mestor shall send a rcpmt on the investment project is approved. the investor shall output of ekctricity generated frnm the wind send a dossier on the completed wind power farm in the previous year and the e~timated project ( including one hard copy and one soft electricity output in the suhsequent yenr to thL' copy) to the General Department of Energy and General Departrient of Energy for the concerned provincial-level Department of sumrnarizati,m and registration of wind power Industry and Trade for management and price support funds for the suhsequenlyearfrom nmnitoring of implementation. the Vietnam Environmental Protection facility. 2. Within 10 (ten) working days after granting 6. After the wind power project is completed an investment certificate. the provincial-level and put into rnmrnercial operation. the investor People·s Committee shall send a copy thereof shall comply with current rei:!ulations on to the General Department of Energy for managemem of ope,·ation of electricity works monitoring and management. and environmental protection. 3. Within IO (ten) working days after signing :111 electricity trading contract with the investor. Article 10. Equipment and productivity of the electricity seller shall send one valid copy wind farms thereof to the General Department of Energy. the Ministry of Industry and Trade for monitoring I. Anemometers and wind farm t;quipment and management. must meet the Vietnamese standards and technical regulatic,ns or !EC standards or 4. During the construction of a wind power equivalent standards. project. hdorc the l 5111 of the first month of a quarter. the investor shall report on the project 2. Wind turbines must he hrand-new, implementation in the previous quarter and the delivered from a workshop within 5 (fi\c) years. plan for implementation in the subsequent quarter. and accompanied hy appropriate certificates of Annually. he fore January I 5, the investor shall origin and manufacture certificates. If second- report on the project implementation in the hand turhines arc us,:d in a wind power project, previous year and the plan for implementation in such must be reported to the Ministry of Industry the subscq ucnt year. The investor shall send these and Trade for consideration and decision 111 reports concurrently to the General Department coordination with relevant agencies. 14 OFFlCIAL GAZETr Issue nos 10-12/Novemhcr 2012 reong Bao11os<i67-fl1?/Nm·e111/~,,-27. YI/ 2) 3. The productivity of a wind farm (wind a wind power project must not exceed 0.7 ha/ turbine layout) must not be lower than 90%. MW. If the road leading to a project has a complicated terrain and needs to be widClll'd to

Article 11. Work safety facilitate the transportation of wind turbine:-- and towers during th~ constructi(ln and operation. till' 1. The scope of a wind farm covers the area provincial-level People's CornmittL'L' --,hal I of wind towers. electricity transmission lines. consider and permit the proportion of till' tcrnll'd- transformer stations and auxiliary items. usc land area ot the wind power project up to I 2. The safety corridors of wind farms. wind (one) h,JMW. turbines and transmission lines and transformer stations must comply with the standards and Article 13. Management of land used within technical regulations of electric equipment. wind farms regulations on safety of high-voltage power grids 1. Land used within a \\ ind farm lllU'->t and the law on electricity work safety. conform to the land use master plan and not Lill into other apprc,ved master plans. 3. It is strictly prohibited to build works (residential areas. industrial establishments. 2. To prioritize the development of \\ind technical infrastructure facilities, houses, schools, farms in barren and rocky land areas of little streets. railways. power lines, signal and signal agricultural or aquacultural value. which arc communication lines, etc.) that encroach upon thinly populated or uninhabited. the safety corridors of wind farms. 3. Termed-use land areas of wind fanns must not fall into the Following categories:

Article 12. Land occupancy areas a/ Residential land. office land: 1. Land used in the course of development bl Security or defense land: of a wind power project covers land area for wind power project investment surveys and c/ Land of industrial parks. production and research; termed-use land area of the wind business establishments: power project; and temporary-use land area the di Land of tr.rnsport infrastructure, including wind power project. airways, railways, roads, waterways and other traffic works. 2. The land area used for a wind power project must suit the output scale of the project. 4. After a wind farm is put into operation. the The proportion of the termed-use land area of a investor shall restore the temporarily occupied wind power project must not exceed 0.5 ha/MW. area to the original state and deliver it to the The proportion of the temporary-use land use of local administration for management. .;- [~! Issue nos 10-12/Novembcr 2012 OFFiCIAL GAZETTE 15 (C6ng8aollfJ.1(i57-fxx'YNovemher27.2012) 5. Provincial-level People's Committees may I. Annually before May 31, the electricity permit the use of land within wind farms for buyers shall report to the General Department appropriate purposes (small-scale cultivation) and of Energy on: must ensure the safe operation of wind farms. a/ General information on the wind farms which have signed electricity trading contracts

Article 14. Requirements on environmental for the subsequent year (names of wind farms, protection investors, capacity, output, locations, areas, I. Wind farms must not encroach upon contract numbers and dates of contract signing): archeological and historical relics, cultural or bl The electricity ,Jutput already bought from religious sites, sensitive ecological zones and the wind farms in the previous year: nature reserves. cl The eqimated electricity outputs to be 2. Wind farms must be located at least 300 bought from each of the wind farms in the current m away from residential quarters. year and subsequent year and the estimated total money amount for electricity price support as 3. Activities of wind power project investment prescribed. development must comply with current 2. The General Department of Energy shall environmental standards. check, summarize and report to the Minister of 4. Wind farms must not affect air traffic, Industry and Trade fm consideration and sending radio, telecommunications and electronic waves to the Ministry of Natural Resources and ofresidential quarters and surrounding works. Environment and th,~ Ministry of Finance for registration of electricity price supports from the 5. Wind turbines and towers must be painted central budget. tn bright and non-reflexive colors. Advettisements are not allowed on wind turbines.

Article 16. Adjustment of wind electricity 6. Investors shall restore and rehabilitate the buying prices environment after dismantlement of wind farms. Annually before October 30, based on the general cost and electricity price of the system, Chapter III the General Department of Energy shall propose WIND POWER PROJECT a plan on adjustment of preferential prices of DEVELOPMENT SUPPORT electricity bought from wind fanns at electricity delivery locations and the electricity price support

Article 15. Registration for annual electticity levels and report it to the Minister of Industry price supports for grid-connected wind farms and Trade for submis:~ion to the Prime Minister 16 OFFICIAL GAZETT= Issue nos I 0-12/NovemhtTJ(_l_H /Cong Bao1101HJ7HxViV,11·c11il"J(_•r:}7. :}( 1/ ~) for consideration and decision. support applicable to unconnected wind pm, L'r projects

Article 17. Support for wind farms not a/ The investor of an unconnected \\'ind pl 111 L'r connected to the grid project compiles a dossin uf prnp11~:i1 for I. Principles and conditions for consideration electrici1y price ~.upport for the unconnected II ind of supports for wind farms not connected to power project and sends it direl'lly orb\ rn:1il 1,1 the grid: the Ce11L:ral Department of Energy The 1np1i1nl a/ En~uring economic, social and environ- nurnbcr of dossier sets is I() togethn 11 ith a ( ·1 )/ mental efficiency: DVD/LSB curtaining thL: soft rnpiL''- ul liiL' <,· • dossier and enc used documents. b/Tl1e>project has been completely invested and put tmti operation: b/ Within 30 (thirt_\) days :il'tcr rcCL'I\ 111g :1 complete and va id subsidy-proposing dc,ss1n. tliL· c/ S(.)me major input data for calculating Ceneral Depart1ncnt of Energy shall ,1rg:11111L' electricily price and price support level for the project .tre considered on the following the appraisal of tlw dossier and rq1rn 1 it 111 thl' ," Ministrv of Industrv and Tradl: for suh111issil111 principl~: to the Prime Minister lor consideratiu11 :md - lf~too installed capacity of the project is apprcw:tl. If necessary. the (;cneral lkpartrnl'nt higher ~ actually required capacity of the of Energy ma:✓ hire apprais;il and cou11tl'1 - regiona!,okctricity grid, the actually generated argument consultants for the appraisal. electrici,ty output of the previous year and the estimat~·ctelcctricity output to be generated in If the dossier is invalid. within I() 11 lirking subseq,ucnt years will be used as the basis for days after receiving it. the C,encral Department calculating: the price support level. For other of Energ:y shal I notify in 1Yriting the i111 L'stm ol projecls, if the generated electricity output is the required supplementation or rccornpilatiun ol based 0!1. lhe actually generated output or the the dossier. projected 'output in the approved investment 3. A dossier of proposal for electricit_1 price project-the larger output wil I be used: support for an unconnected wind power prn_1cct - TI1e total pro_ject investment, which is the compn~es: total investment amount stated in the approved a/ The investment project containing investment project, must not be higher than VND explanations about the electricity price plan and 51 million/kW (equivalent to lJSD 2,500/kW): principal contents on the necescit_\ and - The amortization expenses comply with assessment of the efficiency of the support pl:111: cuJTent regulations. b/ The report on research and assesslllL'nt of 2. Order of registration for electricity price the wind potential within at least 12 ccmsecuti, e - 1 . • ,:' ·: VETtfMUAW·.& LEGAL Issue nos 10-12/November 2012 OFFICIAL GAZETTE 17 (Cong Ba.011os667.fJ6'1/Nove111ber27.2012) months at locations within the project scope; 2. The electricity seller and buyer may only c/ The operation plan and the business plan; supplement the contents of the model electricity trading contract in order to clarify the d/ The cost and technical plans for the responsibi Iities and powers of the parties but not dismantlement and handling of wind farm modify its basic contents. equipment after the termination of the wind power project; Chapter V e/The provincial-level People's Committee's ORGANIZATION Of IMPLEME&t_ATJON opinions on the contents of the dossier; f/ Opinions of the power corporation of the Article 20. Organization of implementation '.'; 1i locality in which the project is localed on the content of the dossier proposing investment l. The C,eneral Department of Eocrgy shall support for project development disseminate, guide and insf'S'cct the .Ul-11/JW!, fi~ implementation of this Circular""'.For any Chapter IV problems arising in the course of implemtntation, the General Department of En~y shall MODEL ELECTRICITY TRADING cll'l., ~... coordinate with relevant units or 15'crilities in CONTRACT FOR GRID-CONNECTED considering and proposing amen~nts and -- WIND POWER PROJECTS supplements to the Circular to the ~1isler of

Article 18. Conditions for application of the Industry and Trade. model electricity trading contract to wind power 2. Provincial-level People's ( 'ornnl,i.llees shall projects monitor, supervise and inspect w~ power I. Application of the model electricity trading project development activities in theitn;spectivc contract to wind power projects is compulsory localities under the approved wrmI power in electricity trading between grid-connected development master plans and in !ocordance wind power projects and the electricity buyers. with this Circular. 2. Wind power projects have all electricity output generated from wind energy. Article 21. Effect This Circular takes effect on December 27,

Article 19. Contents of the model electricity 2012.- trading contract for wind power projects I. The contents of the model electricity trading For the Minister of' !11d11stn- and Trade contract for wind power projects are provided in Deputy Minister the appendix to this Circular (not translated). LE DUONG QUANG © VIETNAM LAW &LEGAL FORU