A new decree issued by the Vietnamese government has made it legal for direct power purchase agreements (DPPA) to be signed for renewable energy between generators and large energy consumers, giving a boost to clean energy deployment in the country.
Implemented by the Ministry of Industry and Trade, the Decree No. 80/2024/ND-CP was issued on July 3, 2024. The ministry called it a breakthrough in promoting a competitive electricity market for the future. It plans to continue to perfect the arrangement with learnings from stakeholders on the way.
It will enable large electricity enterprises to choose their electricity suppliers to achieve green production certification. Electricity supply can be via private connection lines as well as through the national grid.
Renewable energy generators include owners of a plant using solar, wind, small hydropower, biomass, geothermal, ocean wave, tidal, ocean current and rooftop solar PV systems. These can supply power directly to private offtakers without using the national power grid.
To use the national grid for power supply under a DPPA, the renewable energy generator of a system of a minimum 10 MW installed capacity will need to enter into a contract with the national utility Electricity of Vietnam (EVN) to sell power on the spot market.
The offtaker also enters a retail PPA with the EVN or its subsidiary to receive power from the local power company.
Vietnam targets to grow its renewable energy share in the national energy mix to between 67.5% and 71.5% by 2050 under its Power Development Plan VIII (PDP8). Most of the solar and wind power plants under the plan are prioritized for on-site use after the strong growth in solar power in 2019 led to grid connection issues.
Yet, utility-scale solar and wind energy capacity is growing in the country. According to the Global Energy Monitor, Vietnam led ASEAN in operational utility-scale solar and wind energy capacity with 19 GW out of more than 28 GW for the region in 2023 (see ASEAN Renewable Energy Projects Need Acceleration).