DPPA can push renewable energy adoption in Vietnam: S&P Global

Vietnam's direct power purchase agreement mechanism (DPPA), per the Government’s Decree 80/ND-CP issued earlier this month, can become a catalyst for renewable energy adoption in the coming years, S&P Global Commodity Insights said Thursday.

"With the DPPA, more renewable energy capacity is slated in the run up to 2030," a Vietnamese venture capital manager told S&P Global. "It could also boost the renewable energy certificates (RECs) market," he said.

A Vietnam-based energy construction company's representative said that the DPPA will positively impact the international renewable energy certificates (I-RECs) market. "The Ministry of Industry and Trade has a task force for I-RECs policy. They are creating a roadmap for the I-RECs market," the businessperson added.

Despite the positive feedback, market participants have expressed their concerns about the lack of details in the decree.

"Although the DPPA policy has opened new paths for corporates to bypass EVN to procure renewable energy, grid connectivity is another issue yet to be addressed," said an energy construction company's representative.

"The DPPA could be a 'gamechanger' and open doors for renewable energy generators to meet customer's demands," the Vietnam-based venture capital manager said. "But feasibility tests are yet to be conducted for renewable energy to reach grids in local municipalities."

Nguyen Ngoc Phuc Dang, a legal specialist, highlighted that rooftop solar projects can participate in private-transmission DPPAs (via private power lines), while solar power projects with capacities over 10 MW can participate in either on-grid DPPAs (via the national grid managed by state utility EVN) or private transmission.

Decree 80/2024 issued by the Vietnamese government on direct power purchase agreements (DPPA) between renewable energy developers and large consumers took effect on July 3.

It defines large consumers as those who’ve consumed at least 200,000 kWh per month on average in the last 12 months. Firms that have been consuming power for fewer than 12 months will also be deemed large consumers if they have consumed at least 200,000 kWh per month.

Under the decree, renewable energy includes solar power, wind power, small-scale hydropower, biomass power, geothermal power, sea wave power, tidal power, marine current power and rooftop solar power.

The decree focuses on two types of power purchases: via private power lines and via the national grid. With the former, sellers and consumers can negotiate prices on their own.

Many organizations have expressed high hopes for the DPPA, including the U.S. Mission to Vietnam, Samsung, and EuroCham.