Vietnam may allow businesses to buy green power without EVN’s involvement


(Photo: iStock)

Vietnamese Ministry of Industry and Trade (MOIT) has proposed that the government allow manufacturing businesses to buy electricity directly from renewable energy sources, regardless of the involvement of the Vietnam Electricity Corporation (EVN).

The new approach is outlined in a draft decree on the Direct Power Purchase Agreement (DPPA) mechanism developed by the MOIT.

The proposed decree specifies that purchasers must be entities or individuals utilizing electricity for production purposes at a voltage of 22 kV or above, with an average monthly consumption of 500,000 kWh.

Suppliers must be grid-connected renewable energy plants, such as wind or solar, with a capacity exceeding 10 MW. Direct transactions for residential consumers are prohibited.

The Ministry has formulated a direct power purchase model with two options: via a private power line or the national grid with EVN's involvement.

When an organization or individual directly purchases electricity from a renewable energy plant via a private line, there are no limitations on capacity, output, or connection voltage level. The terms of the contract and electricity prices are negotiated directly between the two parties. The only stipulation is that the power sources must be part of the national and provincial power development plans and hold a power license.

As for DPPA via the national grid, buyers and sellers negotiate and agree on fixed-price contracts. The trade will be conducted on the spot market in accordance with the Ministry's regulations on the competitive wholesale electricity market.

Foreign-invested companies in Vietnam have frequently urged for the implementation of the DPPA mechanism, anticipating its beneficial effects on competition within the energy sector.

The Ministry initially presented the pilot DPPA draft for feedback nearly three years ago, with an initial pilot capacity of 1,000 MW. During that time, major corporations such as Samsung expressed interest in participating.

The latest draft from the MOIT suggests that following the initial pilot phase of DPPA involving production power users and renewable energy sources, the scope of power projects could broaden to include hydropower and biomass.

Furthermore, the mechanism could be extended to encompass other types of customers, like businesses, depending on demand and the development of Vietnam’s power market. Customers in industrial zones, economic zones, and export processing zones could engage in direct transactions after terminating contracts with retail providers.

The MOIT conducted a survey at the end of last year, revealing that around 20 major companies expressed interest in procuring electricity directly, collectively requiring nearly 1,000 MW.

Moreover, 24 renewable energy projects, totaling 1,773 MW in capacity, aimed to sell electricity via the DPPA mechanism, while 17 projects with a combined capacity of 2,836 MW were contemplating participation.

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Vietnam’s major manufacturing city aims to establish first green economic zone

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