POSSIBLE UNDERSTANDINGS OF “NO INVESTMENT IN ELECTRICITY BUSINESS” FOR ROOFTOP SOLAR

In our view, this statement may be understood by two scenarios including:

(i)             rooftop solar system is only developed by the factory owner for its self-consumption, and hence, any investment from professional rooftop solar investors shall be prohibited (“Subject-related Understanding”); or

(ii)           rooftop solar is only developed for on-site consumption, regardless of the owner or developer of the rooftop solar project, without selling to any other third party (“Object-related Understanding”).

The explanation of the statement “No investment in Electricity Business” under the Subject-related Understanding is the concern from professional rooftop solar investors that may prevent them to support the factory owner to jointly develop solar systems and in the present, the Subject-related Understanding is applied by local authorities for interpretation of current policies from the Government and MOIT applicable for rooftop solar sectors, for instance, any license required for the rooftop solar (Fire-fighting Approval, Construction Permit and so on) must be carried out under the name of the factory owner. However, the application of Subject-related Understanding for the statement “No investment in Electricity Business” may limit the investment in Rooftop solar and renewable energy sector and it may contradict with the Governmental strategy on development of the retail electricity market (VREC).

In addition, the Object-related Understanding of the statement “No investment in Electricity Business” seems to be more reasonable since in Official Letter 8691/BCT-DL and the draft Decree for rooftop solar development, the MOIT only focused on the consuming object of energy from the rooftop solar, in particular, the rooftop solar with or without connecting to the national grid must be for on-site consumption and not for selling to EVN or other corporate or individual entities. Of course, in those documents, MOIT has not prohibited the involvement of third party rather than the factory owner to develop the rooftop solar systems.

While the technical control of consuming object from rooftop solar’s energy may help EVN and MOIT to better ensure and maintain the safety and stability of the national grid and energy resource, the control of investment subject (factory owner or third-party investor) is only for administrative management which can be resolved by clear and relevant license(s) rather than a strict prohibition.

In conclusion, for explanation or interpretation of the statement “No investment in Electricity Business” stipulated by the MOIT in Official Letter No. 8691/BCT-DL, the Object-related Understanding may prevail based on our above-mentioned analysis, however, we may need further guidance from relevant competent authority to confirm our opinion.

Disclaimer: The abovementioned article is written based on recent documents issued by EVN and relevant authorities and it shall not be treated as an official opinion or guidance from any authorities and/or legal advice for any specific case.