The Ministry of Industry and Trade (MOIT) is proposing a Direct Electricity Purchase and Sale (DDPA) mechanism, allowing organizations and individuals using electricity for production to buy directly from renewable energy plants.
The proposed regulation on the DPPA mechanism will apply to power generation units with wind and solar power plants connected to the national power system, having an installed capacity of 10 MW or more. Major customers participating in the DPPA mechanism will be organizations and individuals purchasing electricity for production purposes from voltage level 22 kV or higher. Electricity entities like EVN, the electricity system dispatching unit, electricity market transaction operator, and electricity retailing unit will also be subject to the proposed regulation.
Two cases of DDPA have been reported to the Prime Minister: buying through a private line or through the national grid system. In the first case, the parties sign a forward contract for the difference in price, while in the second case, derivative financial contracts are signed, and the electricity is bought from a retailer unit (owned by EVN) at wholesale market price plus service charges. To implement this model, certain laws and regulations must be amended, such as the Law on Price and its guiding regulations, as well as other regulations on the Power Purchase Agreements (PPAs) to be signed with EVN.
Consequently, the MOIT is proposing a two-phase approach for applying the DPPA mechanism. In the initial stage, before the Law on Price and its guiding documents are in force, the DPPA will be directly implemented between the parties through privately-invested transmission lines. Subsequently, once the legal documents are completed, they will transition to buying and selling through EVN’s retail unit.
The MOIT is also recommending the Prime Minister to approve the development of a Decree with detailed guidelines for large electricity users and renewable energy generating units, following streamlined procedures.
Foreign-invested enterprises have been repeatedly requesting Vietnam to implement direct electricity trading, believing that it will positively impact the country’s energy industry competition. The MOIT previously proposed a pilot draft for Direct Electricity Purchase and Sale (DDPA) two years ago, with an initial capacity of 1,000 MW, and received interest from major corporations like Samsung.