Vietnam is heading toward implementing a pilot direct power purchase agreement (DPPA) scheme which, for the first time, will enable renewable energy generators to directly sell electricity to buyers, Prime Minister Pham Minh Chinh said.
The PM, who is in Japan’s Hiroshima to attend the expanded Group of Seven (G7) Summit, made the statement to Sojitz Corporation CEO Masayoshi Fujimoto on Friday.
Chinh said the Vietnamese government issued the country’s latest power development plan, or PDP VIII, on Monday with a focus on decarbonization for the economy and promoting renewable energy sources like solar, wind, biomass, and hydrogen power. The next step is to introduce a DPPA pilot scheme to make the market competitive.
The PM asked Sojitz to expand its investment in Vietnam and help bring more Japanese investors to the country.
At present, state-run Vietnam Electricity (EVN) has a statutory monopoly over the transmission, distribution, wholesale, and retail of electricity.
Fujimoto said to the PM that many Japanese companies, including major corporations, want to expand their production in Vietnam or shift production to the country. He proposed Vietnam should rapidly launch a DPPA scheme.
Sojitz has 17 joint ventures in Vietnam, including one with Vinamilk, the country's largest dairy producer. This partnership started to build their $500-million complex in Vinh Phuc province bordering Hanoi this March to raise cows and supply beef located in northern Vietnam. This project is expected to advance Vietnam’s livestock industry. Sojitz Corporation earns revenue of an estimated $1 billion or so each year.
Two years ago, Vietnam's Ministry of Industry and Trade rolled out a draft DPPA pilot scheme for reference, with a limit of 1,000 megawatts. Major international companies including Samsung said they wanted to take part in the scheme.
At the Vietnam Business Forum (VBF) in March, the American Chamber of Commerce (AmCham) said Vietnam should promptly allow DPPAs. AmCham said the proposed scheme is “an important mechanism to attract investors and private investments, not only in the energy sector but also in other sectors where companies have made commitments in the space of renewable energy, carbon reduction, and sustainability.”
According to AmCham, in 2022, private companies in Asia Pacific signed a record 7 gigawatts of DPPAs, an 80% increase from 2021, and this demonstrated their willingness to drive new clean energy investments.
“Approval of the DPPAs could unlock billions of dollars in investment from the private sector. More could be done to finance Vietnam’s move away from fossil fuels,” the chamber noted.
Also in Hiroshima on Friday, the Vietnamese PM held talks with South Korea’s President Yoon Suk Yeol. He suggested the two sides continue to promote economic, trade, and investment cooperation, with the goal of achieving balanced trade of $150 billion by 2030.
Chinh said Vietnam welcomes Korean businesses to invest in major infrastructure projects, and the country will continue to create favorable conditions for Korean firms.
The PM proposed that South Korea continue to cooperate and support Vietnam in five areas, namely capital sources, technology, human resources, institutional building, and management.
Yeol said his country is ready to work with Vietnam for closer cooperation in various fields, especially in areas where Korea has strengths and Vietnam has needs, like science and technology and innovation in order to contribute to socio-economic development and improving the lives of people in both countries.