A solar power purchase agreement (FTA) is a financial contract in which a developer arranges the planning, authorization, financing and installation of a solar installation on a customer`s land at a limited or no cost. The developer sells the electricity produced to the host customer at a fixed price that is usually lower than the retail price of the local business. This drop in the price of electricity is used to offset the influx of electricity from the grid customer, while the developer receives the revenue from these electricity sales as well as tax credits and other possible incentives from the system. PPAs typically range from 10 to 25 years and the developer remains responsible for the duration of the agreement for the operation and maintenance of the system. At the end of the contract term, a customer can extend the ECA, let the developer remove the system, or choose to purchase the solar system from the developer. With each installation, we add a smart meter that helps us to adjust faster, but also to warn in case of a current drop. If a warning is displayed, you may not know, but we will see it and schedule maintenance work to repair it. This will likely remain a problem for some, if not most, developers and lenders who deal with the solar energy sector in Vietnam, given that the burden of proof to prove its losses lies with the seller and whether the damage recovered will be enough to cover at least the amount it owes to its lenders, as well as its investment costs and expected returns. In this context, the ECA model for wind energy last year removed, in the context of Circular No. 02, the provision on the limitation of liability of the EVN (corresponding to the revenues of the previous year). However, for solar energy, the new ECA does not remove any similar provision of the previous solar ECA from Circular No. 16.

Specifically, Circular No. 18 imposes the mandatory application of this PPA model to all solar PPAs coupled to the grid. It only allows aaa parties to supplement the AAA to clarify the parties` rights and obligations, but not to change the fundamental content of the ECA`s proposal. In addition, Circular No 18 adds, in relation to the rules in force, that such additional content must comply with the content of the 2A model. Circular No. 18 provides, inter alia, for the updating of the following requirements for solar power projects: if the failure of the electricity buyer results in the termination of the ECA by the electricity buyer, the termination amount is the damage (i.e. the actual and direct loss) suffered by the electricity seller until the “end of the term of the contract”. However, it is not entirely clear whether the “end of the contract term” covers the period up to the date of early termination of the NSA or to the end of the initial 20-year period of the ECA.

Any interpretation may result in different legal implications and have a big difference when it comes to the amount of termination/indemnification. For now, from the perspective of an electricity seller, this still raises concerns about the allocation of risks, namely that such a limited termination payment may not be able to cover the investment costs, outstanding debt and expected return on equity of the electricity seller. This provision may raise concerns about EVN`s limited liability in the event of early termination of the NSA, in particular during the first years of the 20-year period of NSA, as well as the possible risks of delay in energy payments or the failure of other NSA conditions by EVN. This was difficult for international lenders to accept, as there was a risk that the amount would not cover their outstanding amounts due under the financing agreements with the seller. Wikipedia says: An Electricity Capture Contract (ECA). is a contract between two parties, one who produces electricity (the seller) and the other who wishes to purchase electricity (the buyer). A power purchase agreement is a power purchase agreement. .

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