Circular 20/2026/TT-BCT: Amending the Avoided-Cost Tariff Calculation Method for Small Renewable Energy Plants

Overview

Circular No. 20/2026/TT-BCT, issued by the Ministry of Industry and Trade (MOIT) on April 17, 2026 and effective from June 2, 2026, amends Circular No. 10/2025/TT-BCT dated February 1, 2025, which sets the method for determining and applying the avoided-cost tariff for small renewable energy plants (mainly small hydropower) and the standard power purchase agreement (PPA) with Vietnam Electricity (EVN).

Key Amendments

• Redefines the wet-season and dry-season date ranges for the North, Central, and South regions, and specifies that regional boundaries follow the power-dispatch system's control area (under the national power system dispatch and operation regulations) rather than administrative borders, so the tariff stays unaffected by provincial mergers or boundary adjustments.
• Replaces the phrase "state electricity management agency at MOIT" with "the Electricity Authority under MOIT" throughout several articles of Circular 10/2025/TT-BCT and in the standard PPA, clarifying the competent authority for tariff decisions and dispute resolution.
• Amends Article 3 of the standard PPA template in Appendix IV: the contract term remains 20 years from the commercial operation date, with an added obligation for both parties to finalize invoicing, adjust invoices, and settle payment upon contract termination.
• Issues a new Appendix replacing Appendix II, detailing the methodology for: (1) avoided energy cost, based on the variable cost of thermal power plants in the system; (2) avoided transmission loss, based on power flow on the 500kV line between the three regions; (3) avoided capacity cost, benchmarked against the investment and operating cost of a reference combined-cycle gas turbine (CCGT) plant.

Transitional Provisions

• Small hydropower plants or cascade hydropower clusters that signed PPAs under the prior tariff before a provincial merger or boundary adjustment continue applying the tariff for the region or administrative area defined in their existing contract.
• If a new capacity-scale regulation for small hydropower plants (replacing 2006 Decision No. 2394/QD-BCN) removes a project from the Circular's scope, that project may still choose between the avoided-cost tariff or participating in the electricity market, provided it already received investment policy approval, is included in the national or provincial power development plan, and comes online within 5 years of the new regulation's effective date. Once a plant opts into the electricity market, it cannot revert to the avoided-cost tariff.
• In force-majeure events (storm, flood, earthquake, landslide) that halt or suspend generation, the two parties may agree to extend the PPA term to cover the outage period, provided total generation time does not exceed 20 years from the commercial operation date. Pricing during the extension follows the avoided-cost tariff in effect at that time.
• Plants that signed PPAs before the Circular's effective date continue applying the wet-season/dry-season definitions from their existing contract.

Who Is Affected

The Circular applies to investors and operators of small renewable energy plants (mainly small hydropower) that have signed, or plan to sign, avoided-cost PPAs with EVN, as well as the Electricity Authority and the power system and market operator. This is a sector-specific energy-pricing regulation focused on electricity tariff mechanics and PPA terms, with no direct bearing on VAT, corporate income tax, e-invoicing, accounting standards, labor, or customs obligations.

Effective Date

The Circular takes effect from June 2, 2026.