On July 3, 2024, Vietnam’s Prime Minister signed and issued Decree No. 80/2024/ND-CP, which regulates the direct power purchase agreement (DPPA) mechanism between renewable energy generators and large power consumers. This decree took effect immediately upon its release on July 3, as shared by Mr. Nguyen Sinh Nhat Tan, Deputy Minister of Industry and Trade, at the regular Government press conference for June 2024, held on the afternoon of July 6.
DPPA is a relatively new mechanism implemented through two methods: (i) direct power purchase through a dedicated line, not connected to the national grid; and (ii) direct power purchase with a connection to the national grid.
“Right after the issuance of Decree No. 80/2024/ND-CP, on July 5, the Ministry of Industry and Trade organized a conference to implement the Decree, with the participation of representatives from 63 provinces and cities, ministries, sectors, central agencies, and international organizations,” said Deputy Minister Tan. He also acknowledged that, as with any new legal document, there would be challenges in its implementation, especially since the DPPA mechanism is novel.
Firstly, in the case of direct power purchase through a dedicated line not connected to the national grid, the two parties involved, the renewable energy generator and the large power consumer, will negotiate the contract themselves.
The Deputy Minister stated that Decree No. 80/2024/ND-CP provides a directional nature to this contract, with specific contents related to purchase, exchange, pricing, etc., left to the agreement between the two parties. This may cause confusion, especially for the power operator, who may not know the basis for negotiation.
Secondly, in the case of direct power purchase with a connection to the national grid, it is clear that the system’s integrity and safe operation must be ensured. There may be a mismatch between customer demands and supply capabilities at certain points.
Thirdly, as this is a new mechanism, the power generators, power companies, and especially the operators (the power system dispatch centers) will have to use separate procedures to implement it.
From a state management perspective, Deputy Minister Tan said that the Ministry of Industry and Trade would monitor and provide guidance, basically delegating the implementation to the units while trying to review and deploy synchronously and smoothly.
To promptly implement the DPPA mechanism uniformly across the country, the Ministry of Industry and Trade has also proposed three solutions.
Firstly, for local governments, it is necessary to facilitate and review the planning to synchronize it with solutions related to construction and fire protection to develop renewable energy plants that meet the needs of large power consumers under the DPPA mechanism.
Secondly, the Vietnam Electricity Group (EVN), as the unit responsible for managing the national power system operator, must develop procedures and regulations to implement the Decree and meet the registration needs of large customers and renewable energy generators.
Thirdly, the Ministry of Industry and Trade assigns units under the Ministry, directly the Electricity Regulatory Authority of Vietnam, to coordinate with relevant units to review and study circulars and regulations for amendment to support and ensure the effective implementation of the DPPA mechanism in the coming time.
As this is a new mechanism, the Ministry of Industry and Trade has also established a task force to monitor and respond promptly during the implementation process of the Decree.
