Pricing a standalone BESS under Circular 62: a worked example

Circular 62/2025/TT-BCT is a genuine two-part tariff: a dispatch-independent capacity charge that recovers fixed costs, plus an energy charge that passes through the cost of charging. The framework caps project IRR at 12% post-tax — but because it assumes 70% gearing, leveraged equity returns land materially higher. At the bankable middle of the market, a representative project returns roughly 15 to 17% to equity. This page runs that calculation in full.

The two prices Circular 62 sets

Circular 62 sets two related prices, and keeping them distinct is the key to reading the regulation correctly.

The price bracket (Pc) is an annual ceiling published by MOIT for the relevant base year. It defines the maximum approved generation price for any project entering operation in that year, expressed per kWh.

The Service Price is the contracted revenue that flows under the bilateral PPA between the project and EVN. It has two components: a Capacity Charge in VND/kW/month paid every month regardless of dispatch, and an Energy Charge in VND/kWh paid per kWh delivered. Expressed per-kWh at the full-load operating point, the Service Price cannot exceed Pc. Pc is the regulatory cap; the Service Price is the cashflow.

The Pc formula

Pc = PCĐ + FOMC + PBĐ

• PCĐ — Average Fixed Price. Recovers capex: annualised investment cost divided by average annual delivered energy.
• FOMC — Fixed O&M Price. Recovers operating and maintenance cost on the same per-kWh basis.
• PBĐ — Variable Price. Passes through the charging electricity cost at the off-peak manufacturing tariff, grossed up for round-trip efficiency and self-use losses.

The capex slice (PCĐ) does the heavy lifting. The variable slice (PBĐ) is a passthrough by design — every dong the project pays EVN to charge comes back in the energy payment when it discharges.

Cost of capital under Circular 62

PCĐ uses a weighted average cost of capital on a capital structure the regulation fixes, not one the sponsor chooses. The structure is 70% debt / 30% equity, set by Phụ lục I and not negotiable. At the May 2026 window this produces a pre-tax WACC of roughly 10%.

• Foreign-currency debt — the 36-month rolling average of SOFR (180-day) plus a 3% arrangement fee.
• VND debt — the 60-month rolling average of 12-month VND deposit rates at Vietcombank, VietinBank, BIDV, and Agribank, plus a 3% service fee.
• Anchor dates — both averages reset to the first day of the most recent March, June, September, or December, so the inputs move every quarter.
• Cost of equity — a 12% post-tax target return, grossed up for the corporate income tax rate applicable across the 15-year economic life.

What the framework pays the sponsor

This is where most published commentary goes wrong. Circular 62 contains two separate 12% figures, and conflating them produces the false conclusion that the framework caps returns at 12%.

The framework caps project IRR at 12% post-tax — the unlevered return on total invested capital (Article 10.1(b); the Vietnamese text reads "tỷ suất sinh lợi nội tại về tài chính (IRR) không vượt quá 12%"). Because the regulation assumes 70% debt at a cost well below that, leveraged equity returns land higher. A project earning 12% post-tax IRR on its full capital base, geared 70% with debt at approximately 7.9% pre-tax, delivers equity IRR well above 12%. For an asset with Circular 62's cashflow shape — fixed capacity revenue, dispatch-independent EBITDA — the gearing uplift typically runs 3 to 5 percentage points, landing equity at roughly 15 to 17% post-tax.

The two 12% numbers are different parameters doing different jobs: Article 5.5(b) sets the cost-of-equity input to the WACC formula; Article 10.1(b) caps the project IRR that comes out of the resulting cashflow. The parallel renewable-energy framework, in force since February 2025, uses identical language, and the Vietnamese solar and wind PPA market has operated on this reading throughout.

Where the project qualifies for renewable-energy tax incentives, the benefit flows to cashflow and debt-service coverage rather than to headline IRR — the post-tax cap binds at 12% either way, and the relief supports higher gearing on a project-specific basis.

Worked example: 50 MW / 100 MWh at $170/kWh

Where the numbers move

• Capex. Across the realistic 2-hour band of $150–$190/kWh, Pc scales roughly linearly. Below ~$170/kWh, Pc sits at or under the 110 kV manufacturing peak retail tariff — the practical bankability threshold. Above $190/kWh, the project starts to look stretched.
• SOFR and VND deposit averages. Each 1 point on the blended cost of debt shifts WACC by ~0.7 points and Pc by ~150 VND/kWh.
• Tax incentive eligibility. A confirmed RE CIT holiday improves cashflow and DSCR; the post-tax IRR cap binds at 12% regardless, so the benefit supports higher gearing rather than lifting headline IRR.
• Round-trip efficiency. A real project at 90% RTE versus the 85% formula baseline earns energy-payment upside — paid as if losses are 15% but only losing 10% in practice.

Where bankability actually sits

The capacity payment is dispatch-independent — so EBITDA reduces, by construction, to the capex-recovery slice of the capacity payment, and the revenue that services debt does not depend on whether EVN dispatches the battery. The risks that matter sit on performance and process, not on price.

• Availability obligation. Article 16 sets 95% for projects below 100 MW, 97% at or above. Below threshold, the capacity payment reduces — where EPC and O&M performance feed directly into debt service.
• Bilateral negotiation on efficiency and loss rate. Article 11.2 makes round-trip efficiency and self-use loss rate bilaterally negotiated, with the feasibility-study value as a cap on losses and a floor on efficiency. EVN's preferred position is untested.
• Quarterly drift in WACC inputs. SOFR and VND deposit averages refresh every quarter; Pc moves with them. The bracket approved for year X is locked, but the inputs for year X+1 are not.
• No project has been priced yet. The first Circular 62 transaction will reveal how the Cục Điện lực and EVN apply the formula. Until then the framework is well-specified on paper but unproven in execution.

Frequently asked questions