Vietnam moves to liberalize its power market

Vietnam’s Ministry of Industry and Trade (MOIT) on June 12 held a public consultation to introduce its proposal for Vietnam’s Direct Power Purchase Agreement (DPPA) mechanism, marking a step closer to the launch of this critical mechanism to open further the local power market.

This new policy will allow businesses in Vietnam to procure electricity directly from private firms producing renewable energy and enable them to power their operations with 100 percent renewable energy.



The DPPA mechanism is an enormous opportunity for solar and wind developers to mobilize private capital to build major new solar and wind energy farms. Over 30 large international and domestic businesses represented by the Renewable Energy Buyers Alliance Vietnam are supporting this effort, and emphasized the critical need for accurate power market data to support low-risk transactions to power the clean energy revolution in Vietnam, the US embassy in Hanoi said in a statement.



“The DPPA mechanism will allow Vietnam to rapidly achieve its renewable energy goals by attracting private sector investment and meeting the needs of corporate leaders seeking to expand their operations in Vietnam,” the US embassy in Hanoi quoted Ambassador Daniel Kritenbrink as saying.



During the development of this innovative mechanism, the Electricity Regulatory Authority of Vietnam (ERAV), an agency under the MOIT, consulted with investors, financial institutions, Electricity of Vietnam (EVN) and its subsidiaries, private power producers, and other potential market participants to develop a successful DPPA pilot program.



In addition to the DPPA, USAID works to support Vietnam in improving energy security through a series of utility scale solar and wind projects, providing technical assistance to the MOIT for energy planning, and working with the private sector to increase the finance available to support Vietnam’s vision for a clean and reliable energy system for the future.



Since 2017, USAID’s Vietnam Low Emission Energy Program has helped ERAV to identify the conditions needed to implement a DPPA policy in Vietnam. USAID’s support has followed three steps: (1) a legal and institutional review, (2) a review and recommendation of DPPA models, and (3) a roadmap for a DPPA pilot to test preferred models for suitability in Vietnam. After recommending a DPPA design that suits the conditions in Vietnam today, USAID is now working closely with ERAV to formulate the DPPA pilot program that, after final approval, will begin later this year.



Vietnam is striving to increase the percentage of renewables in a master power development plan. The government has announced encouraging feed-in-tariff for solar and wind power developers.



According to the National Power Development Plan till 2020, total capacity of wind power will soar from 140 MW at present to about 800 MW by 2020, about 2,000 MW by 2025 and about 6,000 MW by 2030. The ratio of wind-based electricity shall be about 0.8% by 2020, about 1% by 2025 and about 2.1% by 2030.



Meanwhile, total output of solar power is expected to surge to about 850 MW by 2020, about 4,000 MW by 2025 and about 12,000 MW by 2030. The ratio of solar power shall be about 0.5% by 2020, about 1.6% by 2025 and about 3.3% by 2030.