Deputy PM requests favorable conditions for direct power purchases

Deputy Prime Minister Tran Hong Ha on Friday asked for more efforts to create favourable conditions for the implementation of direct power purchases while ensuring network safety.

Speaking at a conference on the draft decree on the direct power purchase agreement (DPPA) mechanism between renewable energy generators and large customers, Ha urged the Ministry of Industry and Trade to complete the decree and provide a more persuasive explanation in terms of technical issues and grounds for giving priorities to wind, solar and small hydro-power plants over waste-to-energy, biomass, and thermo-power.

The draft decree also needs to clarify who can participate in the DPPA mechanism.

Agreeing that the DPPA should be encouraged not to involve the national grid, Ha said that the focus should be on ensuring network safety as well as compliance with established investment, trade, and tax regulations.

If the DPPA does encompass the national grid, Ha asked the ministry to clarify a financial mechanism for infrastructure investment and development and other costs to ensure fairness and efficiency.

It is also necessary to clarify the responsibilities of state management agencies, especially Vietnam Electricity (EVN), to ensure safety and adjust to the eighth National Power Development Plan (PDP8), while promoting the development of renewable energy, he said, with regulations to prioritize renewable energy generators which have solutions for storage and emergency situations.

The draft decree also needs to regulate procedures to certify green credit for users in line with the rest of the world.

Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan said that currently, renewable energy projects with a capacity of 10 MW and over will be allowed to participate in the DPPA via the national grid, meaning they can directly participate in the wholesale electricity market.

When everything is up and running smoothly, the capacity cap will be removed, Tan said.

Large customers have been defined as those who use upwards of 500,000 kWh per month. By this standard, there are around 3,000 large customers in Vietnam who account for 30 per cent of total electricity consumption.

This threshold was selected to harmonise benefits between relevant parties, including customers and EVN.

Tan cited statistics as saying there are nearly 1,500 customers using from 1 million kWh per month, accounting for 26% of total electricity consumption. There are about 7,700 customers using from 200,000 kWh per month, or 36.5$ of the total.