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Direct power purchase agreement proposal announced

Released at: 20:41, 12/06/2019

Direct power purchase agreement proposal announced

Photo: USAID Vietnam

Minister of Industry and Trade and US Ambassador introduce proposal on June 12 in Hanoi.

by Minh Do

The Minister of Industry and Tradem Mr. Tran Tuan Anh,  and the US Ambassador to Vietnam, H.E. Daniel J. Kritenbrink, introduced the Ministry of Industry and Trade (MoIT)’s proposal for a direct power purchase agreement (DPPA) mechanism on June 12 in Hanoi.

The new policy would allow businesses in Vietnam to procure electricity directly from private companies producing renewable energy and enable them to power their operations with 100 per cent renewable energy.

During the development of this innovative mechanism, the Electricity Regulatory Authority of Vietnam (ERAV), an agency under MoIT, consulted with investors, financial institutions, Electricity of Vietnam (EVN) and its subsidiaries, private power producers, and other potential market participants to develop a successful DPPA pilot program.

Since 2017, USAID’s Vietnam Low Emission Energy Program has helped ERAV to identify the conditions needed to implement a DPPA policy in the country. USAID’s support has followed three steps: (1) a legal and institutional review; (2) a review and recommendation of DPPA models; and (3) a roadmap for a DPPA pilot to test preferred models for suitability in Vietnam. After recommending a DPPA design that suits the conditions in Vietnam today, USAID is now working closely with ERAV to formulate the DPPA pilot program that, after final approval, will begin later this year.

“The DPPA mechanism will allow Vietnam to rapidly achieve its renewable energy goals by attracting private sector investment and meeting the needs of corporate leaders seeking to expand their operations in Vietnam,” said Ambassador Kritenbrink.

The DPPA mechanism is an enormous opportunity for solar and wind developers to mobilize private capital to build major new solar and wind energy farms. Over 30 large international and domestic businesses represented by the Renewable Energy Buyers Alliance Vietnam are supporting this effort, and emphasized the critical need for accurate power market data to support low-risk transactions to power the clean energy revolution in Vietnam.

In addition to the DPPA, USAID works to support Vietnam in improving energy security through a series of utility scale solar and wind projects, providing technical assistance to MoIT for energy planning, and working with the private sector to increase the finance available to support Vietnam’s vision for a clean and reliable energy system for the future.

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