Direct Purchase of Renewable Energy between Generator and Customers

• On 3 July 2024 the Government issued Decree No. 80/2024/ND-CP providing for mechanisms for direct sale- purchase of renewable energy (“DPPA”) between generators and large power consumers (“Decree 80”).   Decree 80 took effect from 3 July 2024.

• The DPPA  is for the purpose of meeting the demand for using the clean energy of large customers and at the same time attracting investments in renewable energy to protect the environment and promote a competitive retail market in Viet Nam.

• Under Decree 80 the DPPA allows the direct sale of rooftop solar and other renewable energy sources via both private transmission lines and the national grid.

• Decree 80 applies to:

+ renewable energy generator owning power plants from solar energy, wind, small hydropower, biomass, geothermal, ocean waves, tides, ocean currents, and other forms of renewable energy, and rooftop solar power system;

+ electricity retailers in industrial parks, economic zones, export processing zones, industrial clusters, high-tech parks, centralized information technology parks, high-tech industrial parks and other similar models; and

+ large power consumers being organizations or individuals buying electricity for their own use without reselling with the average consumption output of 200,000 kWh/month or more.

• DPPA through private transmission lines: This is a PPA between renewable energy generation units and large power consumers.  The PPA between the parties is mutually agreed. The electricity sale price is negotiated by both parties, except for specific cases provided for by Decree 80.

• DPPA through the national grid: The parties are  renewable energy generators and large electricity users/electricity retailers through forward contracts. According to this model, a large power consumer will sign a forward contract with a renewable generator and which in its turn will sign a contract with Electricity of Vietnam (EVN) for selling power to spot market and the consumer will sign a retail power purchase contract with EVN or its subsidiary for receiving the power from the local power company. The renewable energy generator shall own a renewable energy plant of at least 10 MW.

• The electricity price for the contracts trading renewable power through the national grid will be in accordance with the regulations on electricity prices issued by the Ministry of Industry and Trade.