Wind farm combine with solar power farm on rice field in Ninh Thuan province, central Vietnam. (Photo: iStock)
Vietnam is gradually allowing businesses to directly purchase green electricity from power producers. In addition to the recently submitted draft decree on direct power purchase agreements (DPPA) for large power users awaiting government approval, small manufacturers and households is expected bypass Vietnam Electricity (EVN) and directly access rooftop solar, waste-to-energy, and biomass power. This move is expected to boost the overall green energy industry and attract renewable energy investments.
DPPA draft targets large power users
The DPPA draft, which foreign enterprises are highly interested in, consists of five chapters and 30 articles, detailing two forms of DPPA: direct supply and indirect supply. This means that users can obtain green electricity either through private lines or the national grid.
Under the direct supply DPPA, there are no scale restrictions on power producers, and prices are negotiated between the parties. However, users are not allowed to resell the electricity to other organizations or individuals.
For the indirect supply DPPA, which uses the national grid, wind and solar power plants with an installed capacity of 10 MW or more can connect to the national grid and enter the competitive wholesale market. Users will purchase green electricity through power retailers, with prices determined by the spot market, plus additional fees for transmission, distribution, dispatching, and operations.
However, the DPPA draft targets large power users with an average monthly electricity consumption of at least 500,000 kWh. This excludes smaller-scale power producers, such as those with rooftop solar and biomass, causing disappointment among many businesses. The current regulation prohibiting the sale of excess rooftop solar power has dampened investment enthusiasm and left many small manufacturers without access to green electricity, making it difficult to meet the green certification requirements of importing countries.
Rooftop solar installation in Vietnam. (Photo: EVN)
Vietnam to expand DPPA for rooftop solar
Vietnamese Deputy Prime Minister Tran Hong Ha recently stated that local rooftop solar, waste-to-energy, and biomass power would soon be accessible through DPPA, eliminating the need to go through EVN. He noted that the eighth version of Vietnam’s National Power Development Plan (PDP8) does not impose scale limits on renewable energy projects, suggesting that smaller projects should also be included in the DPPA mechanism.
Currently, there are over 103,000 rooftop solar projects nationwide, with an installed capacity exceeding 9,500 MW. According to the power development plan, an additional 2,600 MW is to be added by the end of 2030. It is expected that more than half of government buildings and residences will need to install solar panels. If successfully incorporated into the DPPA framework, this could trigger another wave of installations.
Source: Vietnam News, Vietnam Investment Review
