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U.S. helps VN launch direct power purchase mechanism

VGP – Viet Nam’s Ministry of Industry and Trade (MOIT) leader and the U.S. Ambassador to Viet Nam Daniel J. Kritenbrink on June 12 attended a public consultation to introduce MOIT’s proposal for Viet Nam’s Direct Power Purchase Agreement (DPPA) mechanism.

June 12, 2019 3:57 PM GMT+7

Illustration photo

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

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

Since 2017, USAID’s Viet Nam Low Emission Energy Program has helped ERAV to identify the conditions needed to implement a DPPA policy in Viet Nam. USAID’s support has followed three steps: a legal and institutional review, a review and recommendation of DPPA models, and a roadmap for a DPPA pilot to test preferred models for suitability in Viet Nam. 

The DPPA mechanism will allow Viet Nam to rapidly achieve its renewable energy goals by attracting the private sector investment and meeting the needs of corporate leaders seeking to expand their operations in Viet Nam, said the U.S. Ambassador to Viet Nam Daniel J. Kritenbrink. 

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 Viet Nam 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 Viet Nam.

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

By Thuy Dung