Vietnam’s DPPA becomes clearer as draft expected to be reviewed in May


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The Direct Power Purchase Agreements (DPPA) mechanism has been proposed by the Vietnamese Ministry of Industry and Trade (MOIT) for over seven years. Finally, with recent urging from the Vietnamese Prime Minister, there has been significant progress. A preliminary draft is expected on the April 15 to seek public feedback, and the draft of the decree will be submitted to the government no later than early May.

On the April 10, MOIT convened the draft formulation committee, Minister Nguyen Hong Dien stated that the DPPA would encourage the development of renewable energy and facilitate the participation of clean energy generators. The decree will focus 5 aspects:

  • Pricing Mechanism: adjusted based on electricity generation, transmission, and distribution costs.
  • Emergency Situations: resolved through administrative procedures.
  • Electricity Consumers: as many as possible, not limited to the manufacturing sector or large users only.
  • Electricity Suppliers: includes various clean energy sources such as solar, wind, biomass, and hydropower.
  • Total Trading Volume: no limit on clean energy, but transmission and distribution limitations need to be resolved.

Nguyen Hong Dien reminded that the DPPA still needs to consider the role of the Vietnam Electricity Group (EVN) in case buyers and sellers are unable to connect to the grid, they still have to rely on EVN for power transmission and distribution.

The Vietnamese government optimizes that the DPPA can accelerate the Just Energy Transition Partnership (JETP) project and assist Vietnam in realizing its commitment at COP26 to achieving net zero emissions.

Tran Viet Hoa, Director of the Electricity Regulatory Authority (ERA-MOIT), stated during the meeting that the DPPA should not deviate from electricity development and pricing mechanisms. He emphasized that transmission and distribution costs must comply with government planning and investment regulations.

Dau Anh Tuan, Deputy General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI), believes that the approval of the new law serves as the legal foundation for related investments and projects, also clearly outlining the financial mechanism for the electricity spot market.

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