VIETNAM ELECTRICITY SOCIALIST REPUBLIC OF VIETNAM

Independence –Freedom-Happiness

No. 541/EVN-TTD Hanoi, 4 Feb 2020

Re: proposed bidding mechanism for Solar Power Project

To: Ministry of Industry and Trade (MOIT)

Vietnam Electricity (EVN) received the official letter No. 10069/BCT-DL dated 30 Dec 2019 from
MOIT as regards implementation of the Notification No. 402/TB-VPCP on the mechanism to
encourage solar power development. EVN would like to respectfully report MOIT as set out below:
I. On the bidding mechanism for solar power projects

After studying and with a reference to solar power project mechanism of some countries in the world,
EVN respectfully proposes its bidding options as hereunder:

A. Implementing Agency: MOIT or Provincial People’s Committee (PPC)

B. Bidding option:
1. Option 1: bidding for each project which is the same as the Option of solar park based
bidding as currently proposed by the World Bank (WB)
(i) Applicable object: Those large scale projects that have been added to the master plan,
having favorable conditions on (i) good solar radiation; (ii) good connecting conditions
and (iii) land/water surface and being appointed by authorized state body in order to
implement bidding as per this form.
(ii) Bidding Option:
- To supplement the project to master plan, implement on the basis of the proposal made by
various PPCs and to be appraised by the Institute of Energy (IE). MOIT will make a decision
on the basis of making a reference to EVN’s comment (or reference to the Asia Development
Bank (ADB)’s comment, EVN shall directly develop the Pre-FS in order to coordinate with
PPCs for submission to MOIT to include in the master plan).
- Public announcement of project information: Capacity, land and water surface, size of the
facilities that need relocating, connection point, scale of connection facilities which fall under
the responsibilities of the Investor (this is different from the WB’s proposal and different from
bidding model in Cambodia, the Investor to bear all land compensation and acquisition cost,
invest in connection facilities ..etc. after being selected).
- The Investor once being selected through bid evaluation process will work with PPC as
regards the Decision to allocate land and In-principle Investment Decision in accordance with
current prevailing law regulation.
- The Investor shall by itself calculate the land compensation and acquisition cost (if
applicable), the cost for connection facilities, project investment cost and transaction
expenses for the purpose of investment in construction and putting the project into
commercial operation in compliance with law regulation in order to participate in bidding in
the form of selecting the Investor that offer the lowest bidding price at the connection point.
- Template form of contract, ceiling price are included in the RFP.
- After winning the bid, the selected Investor shall enter into the PPA with EVN as per the
template PPA in the RFP with the offered bid price.; be responsible for investment in
construction and putting the project into operation on the basis of obtaining sufficient permits,
licenses as prescribed by law.
(iii) Advantages and Disadvantages:
Advantages:
The Investor shall not be at risk on sourcing plan.
Disadvantages:

- This is only suitable for large scale project, if the project is at a small scale it will take a lot of
time and organizing cost so as to attract a huge capacity quantity for a certain time period.
 - For floating solar farm, currently other than the world largest project put into operation of
150MW (in China), there has not been any large scale project as proposed in Tri An lake,
main reason is due to environmental concern. According to the ADB’s comment at the
meeting dated 13 Dec 2019, the ADB is now assisting MOIT with developing a pilot bidding
mechanism for floating solar farm of 50MW at the lake of Da Mi hydropower plant without
proposing to apply a pilot scheme for a project in Tri An lake, the main reason in the ADB’s
opinion is that the water in Da Mi lake as confirmed by Binh Thuan PPC not being directly
used for domestic living purpose. As a result, it can be evaluated that the highest risk when
assigning EVN to perform a pilot scheme is the possibility to obtain EIA report of floating solar
power projects on a large scale basis. EVN believes that the solution on bidding each project
cannot be considered as thorough solution to attract a significant amount of solar power
capacity putting into operation over the 2020-2025 period for minimizing the power shortage
hazard.
2. Option 2: Bidding on wide spreading basis
(i) Applicable object: Those projects that have been proposed by various provinces,
been appropriate in terms of land planning.
(ii) Bidding option:

Over the past time, there has been a fact that total capacity of the projects that have been added to
the master plan and proposed to be added to the master plan all of which are greater than the
demand of the Government for each time period (currently about 16,000 MW, including roughly 4,000
MW added to the master plan while its PPA not yet been signed and another 12,000 MW having
dossier to request for adding to the master plan). The above mentioned projects once submitted to
MOIT, have been ensured in terms of land planning of each local province. A common feature of the
above projects is (i) COD timing not yet identified and (ii) connecting condition not secured.
Therefore, the principle to implement this option is as follows:

- Checking connecting condition for each round of bidding on the principle that EVN only
constructs grid facilities as per planning and the Investor it be responsible for the facilities
connecting to the power grid owned by EVN – this can be deemed as prequalified round.
- Setting out demand for solar power of each bidding round at a lower level than total solar
power capacity that has been checked for meeting connection requirement.
- Organize bidding to select Investor on demand and in the form of Pay as Bid, select those
projects that offer a bid price at connection point ranging from low to high end with a ceiling
price equal to FIT price or the bid awarded price on an average of the preceding bidding
round.
- The projects being selected though bidding will of course be added to the master plan, agreed
in connection agreement and signed the PPA with EVN. Those projects disqualified in this
round will participate directly in the next bidding round.

(iii) Advantages and Disadvantages:

Advantages:

- Can inherit the former manner of project development. The Investor worked with provinces
on the land and already spent cost for implementing a number of project development stages
(engaged Consultant to prepare Pre-FS in order to proposed for being added to the master
plan, land compensation and acquisition, procurement of land, …etc), now the Investor
continues having the right to develop project. However, in order to develop project
successfully, the Invest must save the cost to enable offering a competitive bid price at
connection point.
- Can control target for solar power development in nationwide range in line with the
transmission releasing capability of existing power grid system in a competitive environment.
- Possible to purchase large amount of power capacity to ensure high growing electricity load
annually.
- Ensure competiveness in bidding through the pre- identification of total capacity that needs
to purchase over each bidding round and a regime to establish ceiling price that gradually
reduces over each round.
- The wide spreading bidding option nationwide is applied in many countries, especially South
Africa and China.

Disadvantages:
 It is necessary to have a procedure for the coordination among provinces, EVN and MOIT.
Especially at the Pre-qualified round there need to have selective procedure and criteria for
making sure of forecastability and supervisability from Investors side. In order to overcome
this disadvantage, it is possible to study China’s experience on allocation of solar power
capacity amount to each of province based on load profile of such province + total renewable
capacity that has been put into operation of each province and use these criteria to select
projects in the Pre-Q round in a transparent way.

3. Option 3: Regional bidding option: (similar to the option of substation based bidding
of the WB).
(i) Applicable object: All investors that have a demand, do bidding at regions or sub-
stations appointed by the authorized state body.
(ii) Biding option:
This option is similar to that of substation based bidding, however there is a need to supplement
more releasing capacity of relevant transmission lines in order to increase competiveness. Steps to
implement are as follows:

- MOIT calculates to set out power purchase ability as per capacity at various regions (relevant
sub-stations and transmission lines) in line with the releasing capacity of power grid and
demand for solar power development in that region.
- Bidders satisfying sufficient qualifications on capability in accordance with the RFP for bid
offer will be allowed to offer bid price. The RFP shall request a number of Bidders must qualify
preliminary conditions on the land and site alignment with the province.
- Principle for selection shall follow Pay as Bid with ceiling price = FIT price.
- The selected Bidders shall also deal with procedures on supplement to master plan, technical
agreements as regulated and sign the PPA.

(iii) Advantages and Disadvantages

Advantages: this can overcome the disadvantage of the substation based bidding option of the WB
to improve competitiveness and other advantages similar to the option of wide spreading bidding.
Scope of implementation can be performed in each province and there is no need for a Pre-Q step
as in Option 2. It is possible to purchase capacity as per demand in each specific region.

Disadvantages: (i) it is difficult to calculate and announce exchangeable capacity through each
existing station and transmission line, especially for the transmission lines that connect stations
together; (ii) it is hard to integrate the load element of province and region in consideration of
releasing capacity and supplementing to solar power planning.

C. Recommendation:
EVN recommends to MOIT:

1. Consider and study in order to apply simultaneously all three bidding options as proposed by
EVN, specifically: (i) Option 1: do bidding to select Investor to develop large scale capacity
solar power projects, floating solar projects that have been added to the master plan; (ii)
Option 2: early to implement bidding on wide spreading basis in order to select large capacity,
reduce the risk of power shortage and (iii) Option 3: apply for long term period.
2. Speed up the WB and ADB technical assistances (TA) projects currently under
implementation to finalize legal framework early for the 2 above mentioned options within
Q1/2020 in order to quickly go to live application in Q2/2020.
3. Consider: (i) complete the mechanism to implement pilot bidding for selection of floating solar
power investor (ADB is now assisting MOIT to finalize mechanism) in Q2/2020 and (ii)
Reporting to the Prime Minister seeking his permitting those projects that have been added
to the master plan and not yet signed the PPA with EVN to enjoy new FIT price mechanism.
Specific COD of each project will be checked and agreed in detail under the PPA of each of
these projects subject to the releasing capacity condition for each project. In the event this is
not accepted by the PM, it is proposed to finalize the mechanism to organize the first wide-
spreading bidding round in respect of the above mentioned projects (COD to be prior to 30
June 2021 as a condition) in Q2/2020 and continue finalizing wide-spreading bidding
mechanism to apply for those projects having COD after 30 June 2021.
 4. MONRE is requested to coordinate with ADB, EVN to consider environmental impact of large
scale floating solar power projects with capacity of 50MW or more in existing hydropower
lakes of EVN.
II. Regarding the review of report on substations and transmission lines with capacity
of 110kV or more nationwide that are capable of releasing solar power and evaluate
hydropower lakes that can be used to develop floating solar power: EVN
respectfully that it will implement at a later stage based on further instruction from MOT.

EVN hereby respectfully report for MOIT to consider and give direction accordingly.

Distributions: FOR CHIEF EXECUTIVE OFFICER

- As stated above; VICE PRESIDENT
- EREA-MOIT (to report);
- EVN Member Council (e-copy, to (signed & stamped)
report)’
- CEO Tran Dinh Nhan (e-copy, to Ngo Son Hai
report);
- Vice President Nguyen Tai Anh (e-
copy);
- Dept of Planning (e-copy);
- Filing: Admin, Power Market Dept.