A solar farm in Long An province. DPPA, if approved, would enable the direct purchase of electricity from renewable energy producers.(Photo: VNA/VNS) Hanoi (VNS/VNA) - The Ministry of Industry andTrade has proposed a mechanism under which large buyers can purchaseelectricity from renewable energy producers through direct power purchaseagreements (DPPA).
The ministry stated that the mechanism has three key objectives.
Firstly, it aims to cater to the growing demand for clean energyfrom large buyers. Secondly, it seeks to incentivise investments in the sector.Lastly, it strives to create a more competitive electricity market in Vietnam.
Under DPPA, the producers who sell electricity to buyers throughthe national grid are required to issue some documents beforehand, whichelaborate on the calculation of electricity prices and other related fees.
They are also required to have a generation capacity of 10MW andabove, which is the threshold for entrance to the electricity market. On top ofthat, their buyers must use the electricity for production purposes at avoltage level of 22kV and above.
Meanwhile, for the producers who engage in electricity salesthrough a separate grid, a different procedure would apply, which has beenfully specified in relevant legal documents. The same goes for their buyers.
It is worth noting that the Vietnam Electricity Group, the bodiesin charge of operating power grids, and electricity retailers also fall intothe scope of the Regulations on DPPA.
The regulations also lay down three rules governing the powerdeals among electricity producers, buyers, and retailers.
Under the first rule, producers who are connected to the nationalgrid are allowed to sell electricity on the spot market. The second rule statesthat buyers who purchase electricity from retailers will do so at predeterminedprices.
The last rule applies to forward contracts between producers andbuyers. It states that both parties have to settle the price difference betweenthe spot market price and the contractual price for a specific quantity ofelectricity in every period.
In May 2022, the ministry conducted a survey to gauge renewableenergy producers' stance on the mechanism. Among 95 wind and solar farms of30MW and above being surveyed, 67 responded.
Twenty-four respondents, with a total capacity of 1,173MW,expressed a strong desire to participate in a DPPA pilot programme; 17respondents, totalling 2,863MW, said they were weighing the criteria for DPPAparticipation and evaluating the feasibility of striking a contract with largebuyers.
The remaining 26 respondents did not express any interest intaking part in a DPPA pilot programme.
In another survey of 41 large electricity buyers, 24 respondedwith a yes to the question of whether they desire to enter into a DPPA. Theirtotal demand is estimated at 1,125MW./.
VNA
