US State Dept appreciates Vietnam’s DPPA, to help unlock $8 bln investment

Vietnam allowing direct power purchase agreements under Decree 80 issued earlier this month has been lauded as a “significant milestone” by the U.S. State Department’s Bureau of Energy Resources (ENR).

In a Monday statement, the U.S. State Department said the DPPA mechanism was an important step towards accomplishing Vietnam’s national goal of achieving net-zero emissions by 2050.

It said that the new policy, championed by both domestic and international private sector companies and investors, “establishes clear mechanisms for large energy consumers to purchase clean energy supply.”

Decree 80 allows businesses in Vietnam to directly purchase renewable power from private producers. This will support an increase in private sector investment and realize economic growth by matching corporations’ emission reduction targets with Vietnam’s clean energy and investment goals, the statement said.

It added that ENR’s Clean Energy Demand Initiative (CEDI), in partnership with the Clean Energy Buyers Alliance (CEBA), will continue to facilitate dialogue between the private sector and the government of Vietnam to support implementation of the DPPA decree and advance clean energy investments in the country.

The DPPA decree will enable the CEDI and its partners to unlock up to $8 billion in clean energy investments in Vietnam, the department said.

In a statement earlier this month, the CEBA welcomed establishment of the DPPA mechanism for large energy customers in Vietnam, saying it would help enhance Vietnam’s competitiveness and sustainability goals.

The alliance said it was committed to training its members and their supply chain partners in Vietnam in clean energy procurement through the DPPA, in addition to existing measures.

One-fifth of the Washington D.C.-based alliance’s 400 plus members are Fortune 500 companies.

The decree would allow increased flexibility and transparency as well as an improved ability to procure electricity from high-impact renewable energy projects, the CEBA statement said.

Roberta Barbieri, vice president of global sustainability at PepsiCo, a CEBA member, said: “As a global company, welcoming the DPPA mechanism to Vietnam will enable us, and other large energy customers, to drive scalable energy solutions on a local level.” It would significantly support Vietnam in its net-zero journey, he added.

Eric Gibbs, CEBA’s senior vice president of global programs, highlighted that “the DPPA benefits CEBA members and other large energy customers by allowing for greater flexibility and more transparent negotiations on price, which will spur clean energy development to power Vietnam’s rapidly growing economy. This, along with no restrictions on capacity, output, or connection voltage level, provides a robust framework for large energy customers to procure energy in high-impact renewable energy projects.”

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 businesses and business associations have expressed high hopes for the DPPA, including the U.S. Mission to Vietnam, Samsung, S&P Global, and EuroCham.