Big customers could buy electricity directly from the generators in a pilot programme to develop a mechanism for a direct power purchase agreement (DPPA).

This was a highlight in a recent draft Prime Minister’s decision about the direct power purchase mechanism between renewable energy generators and big customers, which was raised for public comment.

Under the draft, the total capacity of power plants to join in the pilot programme would be less than 1,000MW.

The e-portal for registration would be opened for 30 working days to receive application files.

After that, the Ministry of Industry and Trade would announce the pilot mechanism within 15 working days and the list of generators and customers to join the pilot programme within 30 working days.

Power generators and customers could negotiate and sign contracts, including the completion of renewable energy plants’ construction and commercial operation.

The pilot direct power purchase would be implemented within one year from the time when power plants were put into commercial operation.

From the pilot implementation results, the Ministry of Industry and Trade would evaluate the market; and technical, financial and legal aspects; and complete the DPPA mechanism.

Viet Nam was underway to develop a power competitive market and now entering its third phase of a competitive retail power market which would be piloted in 2022-25 after implementing a competitive power generation market and competitive wholesale power market.

The Law on Electricity did not allow direct power purchase between customers and generators.

The pilot implementation of DPPA was considered a preparation for the development of a competitive retail power market in Viet Nam and contributed to promoting the sustainable development of renewable energy sources and attracting investments from international organisations with commitments to environmental protection, climate change prevention and sustainable development.

The DPPA mechanism will allow customers to have more choice of power suppliers while providing opportunities for renewable power producers in the context of an investment boom in renewable energy causing an oversupply. — VNS