Vietnam launches Direct Power Purchase Agreement

I remember first working on the draft Direct Power Purchase Agreement (DPPA) mechanism 3 years ago with Vietnam’s Ministry of Trade and Industry. Finally…

The 3 years battle came to an end - Vietnam launched the much-anticipated DPPA mechanism under Decree 80/2024/ND-CP, effective from 3 July.

Consumers can now buy renewable energy directly from generators through either a physical or a virtual DPPA, bypassing the once-monopoly Electricity Vietnam (EVN). Consumers include entities or individuals using electricity for production at a voltage level of 22kV or higher, with an average monthly consumption of at least 200,000kWh.

🙂 Physical DPPA

• Makes use of private power grids

• All renewable energy producers can participate, except for waste-to-energy as it is not yet classified as renewable

• Producers are not restricted by capacity, but must possess or be exempt from an electricity operation license

• Renewable energy producers and consumers will sign purchase agreements with mutually agreed terms and prices. Excess electricity can be sold back to EVN under specific contracts detailing capacity, output, and pricing.

• Consumers can purchase electricity directly from renewable producers, National Power Transmission Corporation, or other retail electricity entities apart from EVN.

🙂 Virtual DPPA

• Makes use of the existing national power grid

• Eligible participants: Wind and solar projects over 10 MW, and consumers purchasing electricity for self-production

• Renewable energy generators sell all produced electricity into the spot electricity market of the competitive wholesale electricity market

• Consumers sign a power purchase agreement with EVN (or an authorized unit) to purchase electricity to meet their needs

• Renewable energy generators and consumers buy and sell electricity through forward contracts

More from Vietnam - The Government issued implementation plan for Power Development Plan 8 and for the National Comprehensive Energy Plan. Key elements include

• Funding sources: Investment projects in the energy sector will rely on non-public capital.

• Renewable energy development: Vietnam focuses on developing offshore wind power in conjunction with other renewable energy sources to create new energy forms like hydrogen and green ammonia.

• Energy database: A detailed database will be available to provide information on the planning and implementation of projects.

Want a copy of Decree 80 or Vietnam’s National Power Master Plan? Contact us.

Level up the game - Singapore is the first in the world to define transition activities. The Singapore-Asia Taxonomy defines both green and transition activities across eight focus sectors, emphasizing the need to address climate change while considering economic development and energy demands.

Traffic Light System:

Green: Activities with near-zero emissions or on a pathway to net zero by 2050.

Amber (Transition): Activities transitioning toward green within a specified timeframe or enabling significant short-term emissions reductions.

Ineligible: Activities not currently eligible under the taxonomy.

Transition activities are crucial for sectors facing technological constraints in emission reduction, such as the maritime industry. The taxonomy introduces “amber” thresholds for vessels aligned with industry targets, aiming for net-zero emissions by 2050 and intermediate goals by 2030. The taxonomy also addresses coal-fired power plants, facilitating early phase-out deals. This is particularly important given that coal currently constitutes nearly 60% of power generation in the Asia-Pacific region.

What’s the catch? Investors could use the taxonomy to assess their risk appetite and make decisions channeling capital.

More green waves this way

• Tax the ships: Cargo vessels will be charged for emissions

• Hot or not? Voluntary carbon market value goes down 

• Steel some carbon, please - to cut carbon emissions

Had fun riding the green waves? Hit reply, let us know!

Wish you a wonderful day.