24 renewable energy projects with a combined capacity of 1,773MW have expressed interest in participating in a pilot scheme for a direct power purchase agreement (DPPA) in Vietnam, according to the Ministry of Industry and Trade (MoIT) in a report submitted to Prime Minister Pham Minh Chinh las week.
The Ministry of Industry and Trade (MoIT) noted that of the 106 projects with a capacity of 30MW or more, outlined in the amended Power Development Plan VII, 24 have shown an eagerness to engage in this experimental direct electricity sale framework. An additional 17 projects, totalling 2,836 MW, are considering their eligibility and capability to secure contracts with large electricity consumers. However, 26 projects have opted out of the DPPA pilot.
On the consumer front, 24 entities, encompassing a combined demand of approximately 1,125MW, have indicated their desire to participate.
The MoIT said the legal foundation was set for implementing electricity sales via private transmission lines - thus bypassing the national grid. Detailed guidelines will be provided for this implementation.
In contrast, transactions through the national grid were still "quite complicated," leading the MoIT to suggest further directives from the PM. As such, two options for the DPPA mechanism implementation in Vietnam have been proposed.
The first option involves integrating the DPPA mechanism into the Electricity Law, dependent on the timing of its amendment, expected around 2025-2026. The second suggestion is for the government to issue a decree based on Article 70 of the Electricity Law, detailing the execution of the DPPA mechanism.
After thorough consideration, the MoIT has proposed that the PM consider issuing the DPPA mechanism in the form of a government decree. This development comes as the government urges the MoIT to expedite the completion of the DPPA mechanism, which is currently facing delays.
Deputy Prime Minister Tran Hong Ha, in a statement last week, called for the ministry to learn from its experiences and clarify certain contents within its jurisdiction to accelerate procedures for introducing the new mechanism.
Two years ago, the MoIT had sought feedback on a draft DPPA mechanism with an initial trial capacity of 1,000MW. This would enable buyers and sellers to negotiate and agree on purchasing electricity directly from solar and wind power plants through fixed-term contracts at agreed prices.
These transactions would be carried out via the spot electricity market, operating under the regulations of the MoIT's competitive wholesale electricity market.
At that time, several major conglomerates, including Samsung, proposed their participation in this pilot.
The DPPA scheme represents a critical element in Vietnam's ongoing transition to sustainable energy sources, fostering corporate investments in renewable energy amid a regulatory landscape that is gradually adapting to the realities of climate change and market dynamics.
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