Prime Minister Pham Minh Chinh last week directed an urgent study of international and regional experiences to review Vietnam’s draft direct power purchase agreement (DPPA) pilot, which has been in limbo for years.

Foreign investors have been closely monitoring a proposed pilot on the direct power purchase agreements in Vietnam, especially those with a long-term business strategy in renewable energy. However, the country’s limited mechanisms may mean the long-term goals will be difficult to attain.

Vietnam’s commitment to achieving net zero emissions by 2050 at COP26 is expected to bring a tailwind of opportunities, helping to turn the country into a green manufacturing hub and facilitating the export of made-in-Vietnam products into the markets of developed nations.

Vietnam’s much-awaited direct power purchase agreement pilot will be an effective tool for global companies to meet their sustainability commitments, but it remains to be seen how Vietnam can meet the green energy demand from global businesses.

The Minister of Industry and Trade is likely to sign a draft circular regulating a pilot project for electricity purchases and sales between renewable energy generators and consumers under direct power purchase agreements. However, while the ministry is gaining support from some organisations, experts advise designing the schemes in an appropriate manner.

Direct power purchase agreements, which is a key driver of global renewable energy infrastructure – especially for wind and solar, are expected to pilot soon in Vietnam to attract private investment and meet the clean energy needs of international enterprises.

Vietnam has recently created several favourable policies, including the Politburo’s Resolution No.55-NQ/TW on the orientation of Vietnam’s national energy development strategy to 2030 with a vision towards 2045, to boost renewable energy development, with a new programme of corporate power purchase agreements being formulated to attract funding into the sector. Vaibhav Saxena, lawyer at Vietnam International Law Firm, ventures into the policy outlook on renewable energy in this country, which may prove extremely beneficial for financiers who expect to grow their energy investments.

While direct power purchase agreements have been one of the key drivers of global renewable energy infrastructure, especially in wind and solar, there is no defined plan for a pilot mechanism in Vietnam yet, raising the question of when and how the country can meet the clean energy needs of international enterprises.

Vietnam is already home to many multinational companies that are committed to going 100 per cent renewable or have established science-based targets to reduce greenhouse gas emissions. Brian Hull, country managing director of ABB in Vietnam, told VIR’s Phuong Thu about the company’s efforts to unlock access to corporate power purchase agreements in Vietnam as part of achieving a zero emission future.