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Vietnam enters the liberalized green energy market.(Photo: Vietnam's Ministry of Industry and Trade)
After seven years of deliberation, the Vietnamese government finally passed the "Direct Power Purchase Agreement" (DPPA) on the 3rd, allowing large electricity consumers to procure green energy directly from the national grid or independent grids, without having to go through the Vietnam Electricity (EVN) for transactions. And new law relaxes limits on the scale of electricity purchases. This milestone marks Vietnam's liberalization of green energy. Here are the four key points outlined by RECCESSARY regarding the officially passed DPPA legislation.
Solar and wind must have a minimum capacity of 10 MW to sell enterprises via EVN grid
According to Vietnamese media "VnExpress," after the new law came into effect, both parties involved in renewable energy transactions are free to choose to trade through EVN or the spot market. This marks a break from EVN's previous monopoly on the electricity market and opens a new chapter in Vietnam's liberalization of green energy.
Under the newly passed agreement, solar and wind power operators can choose to transmit electricity to buyers via private grids or EVN's grid. If using the latter, the minimum capacity requirement is 10 MW for these operators, whereas no such requirement exists for private grids. Other types of power generators do not have a minimum capacity requirement; they only need to obtain a supply license or demonstrate exemption reasons to directly supply green energy to buyers in the future.
Geothermal, and wave energies are applicable, but waste energy sources are excluded
Other types such as rooftop solar, biomass, micro-hydropower, geothermal, wave, and tidal energies are also applicable under the agreement, but excluding waste energy sources. The Ministry of Industry and Trade (MOIT) of Vietnam explains that waste energy has not yet been officially classified as renewable energy.
Rooftop solar installation in Vietnam. (Photo: EVN)
Rooftop solar power can also be traded freely
Regarding rooftop solar power, which has attracted considerable attention, it can be freely sold under non-self-consumption conditions. As for self-consumed rooftop solar power, whether it will be included in the future is still under evaluation by the Ministry of Industry and Trade. Prior to the passage of the new law, Vietnam had over 103,000 rooftop solar projects nationwide with a total installed capacity of 9,500 MW, projected to reach 12,000 MW by 2030.
Relaxing conditions for corporate power purchases
On the other hand, the basic requirement for electricity buyers is that they must be entities, and their monthly electricity consumption must be at least 200,000 kWh, a significant reduction from the draft requirement of 500,000 kWh. With these relaxed conditions for electricity buyers, demand for free-market renewable energy transactions is expected to increase, although typical households consuming a few hundred kWh per month are not eligible. According to an electricity survey by EVN, approximately 7,700 users meet the basic electricity consumption requirements for the direct power purchase agreement, accounting for about 36.5% of total electricity consumption.
It took the Vietnamese government seven years from proposal to legislation to officially introduce the direct power purchase agreement, during which organizations like the European Chamber of Commerce (EuroCham) frequently urged the Vietnamese government to accelerate its efforts to meet Vietnam's multinational companies' decarbonization and net-zero goals. It is anticipated that this move will attract more large enterprises to invest in developing renewable energy.
Source: VnExpress、Saigon News
