Firms with 500,000 kWh per month minimum consumption to become DPPA buyer: draft rule

Only firms consuming at least 500,000 kWh per month will qualify as buyers under the latest draft decree on direct power purchase agreements (DPPAs).

Prepared by the Ministry of Industry and Trade, this rule will apply to DPPAs irrespective of whether they are linked or not with the national grid operated by state utility Vietnam Electricity (EVN).

Another condition for DPPAs is that the connection voltage level is at least 22 kV.

The draft decree will not apply on consumption of below 500,000 kWh, the ministry has clarified.

The 500,000-kWh figure is a significant change. Per current rules (Circular 39/2015), the minimum consumption level is one million kWh per month. The latest reduction aims to encourage more DPPA participants, the ministry said.

Besides, the draft decree says that only renewable energy (wind and solar power) factories with capacity of 10 MW or above are qualified as sellers.

The ministry clarified the above-mentioned points in response to queries about the regulatory framework for small consumers like businesses outside industrial parks.

The government has asked the Ministry of Industry and Trade to submit the draft DPPA decree by May 15.

More autonomy needed

Commenting on the draft decree, the American Chamber of Commerce (AmCham) in Vietnam has proposed that the government grant more autonomy for DPPA buyers and sellers.

Vietnam’s latest power development plan (PDP VIII) restricts solar power development to 12,836 MW by 2030, including 10,236 MW from solar farms and 2,600 from systems of self-consumption and self-production.

This would mean that large power producers targeting DPPAs may have to wait for updates to the current PDP, the AmCham noted. The current PDP only allows unlimited solar power production for self-consumption systems.

The Ministry of Industry and Trade has said it will consider AmCham’s proposal for inclusion in the draft decree.