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Minister of Industry and Trade gives directive at the conference
On the afternoon of July 5, 2024, the Minister of Industry and Trade, Mr. Nguyen Hong Dien, chaired a conference to deploy the Government’s Decree regulating the direct power purchase agreement (DPPA) mechanism between renewable energy generators and large power consumers. Speaking at the conference, Minister Nguyen Hong Dien emphasized that Vietnam is considered a dynamic economy in the region and the world, with a high and stable economic growth rate. Therefore, Vietnam’s electricity demand is increasing rapidly (currently growing at 12-13% per year) and is expected to rise even higher in the coming years. By 2030, Vietnam is expected to double its system capacity compared to the present (150,424 MW, equivalent to an increase of over 14% per year) and is projected to reach over 500,000 MW by 2050, six to seven times the current capacity. Hence, to ensure electricity supply in accordance with the Power Development Plan VIII and the requirement of carbon neutrality by 2050, Vietnam needs to mobilize all resources to invest in the development of power sources, transmission systems, and energy storage, on one hand, and accelerate the review, amendment, and promulgation of new mechanisms and policies to attract investment and operate the renewable energy system, on the other hand. This includes improving the pricing mechanism, operation, governance, and system (such as revising the Law on Electricity; developing a competitive electricity market at all three levels; establishing mechanisms to encourage the development of rooftop solar power for self-consumption, gas and offshore wind power development; promulgating a two-part electricity price mechanism (capacity price and energy price); separating transmission prices and fees in the electricity price structure, etc.). The DPPA mechanism was officially issued by the Government in Decree No. 80/2024/ND-CP dated July 3, 2024. This is a significant and breakthrough step in promoting the formation and development of a competitive electricity market in Vietnam in the future, while also providing manufacturing enterprises with the opportunity to choose their electricity supplier to achieve green production certificates, meeting the requirements of new development trends. In his conclusion at the conference, Minister Nguyen Hong Dien once again affirmed that the DPPA mechanism is an important step in forming and developing a complete electricity market in Vietnam in the coming time. However, as this is the first time Vietnam has built, issued, and operated such a mechanism, there will inevitably be certain limitations in content and unfamiliarity in the initial stage of implementation, especially in the context of a rapidly changing and unpredictable world. Therefore, Minister Nguyen Hong Dien requested that the Electricity Regulatory Authority and the Legal Affairs Department take the lead in coordinating with relevant units of the Ministry of Industry and Trade to focus on reviewing and proposing amendments, supplements, or promulgating new circulars (under the responsibility of the Ministry of Industry and Trade) immediately after this conference. Simultaneously, they should advise and recommend relevant ministries and sectors to consider amending, supplementing, or promulgating new circulars (if necessary) to ensure smooth implementation of the DPPA mechanism without significant obstacles. He also urged the swift study and proposal of a pilot mechanism for a two-part electricity price (capacity price and energy price), separating transmission prices and fees in the electricity price structure, etc., to be submitted to competent authorities for consideration at the earliest time, creating synchronization and convenience in implementation and ensuring fairness between electricity buyers and sellers. |
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