On May 20, 2024, the Deputy Prime Minister Nguyen Hong Ha issued Official Letter 232/TB-VPCP to provide the Government’s conclusions and instructions on preparation of draft Decree on Direct Power Purchase Agreement (DPPA) mechanism of Ministry of Industry and Trade (MOIT) (“OL 232”). At the same time, the Government also instructed the MOIT to collect opinions from stakeholders and arrange for further consultation meetings for finalization of draft Decrees on DPPA mechanism and rooftop solar system (RTS) for self-consumption purpose.
According to OL 232 and the discussion recently on the above, the following key comments were made towards the draft decrees on DPPA mechanism and RTS:
1. Key Take-away from Comments on the Draft Decree on DPPA
– Scope of Eligible Large Consumers: The Government required the MOIT to provide solid grounds for regulating the eligibility criteria for large end-users (currently defined as having, among others, an average monthly consumption of at least 500,000 kWh). Stakeholders requested that the MOIT should consider (i) lowering the amount of 500,000 kWh and (ii) allowing not only manufacturing consumers but also service consumers to participate in the DPPA pilot scheme. In addition, some investors requested that industrial zones should be classified as large buyers for joining the DPPA pilot scheme.
– Scope of renewable energy generators: the Government requested the MOIT to research and explain whether the condition of a renewable generator’s capacity satisfying at least 10 MW is reasonable. In addition, the draft decree on DPPA should include a new definition of renewable energy generators, requirements for compliance with laws and regulations on planning and investment, and clarifications on the definition of direct private wire and its implications.
– Carbon credit regulations: the Government instructed the MOIT to regulate the carbon credit certification and benefit in relation to DPPA projects as the power purchase price of this pilot (from renewable generator to large consumer) scheme is probably higher than the retail power price of EVN.
– For new mode of private wire (off-grid) DPPA: Stakeholders requested that there should be no limit on the installed capacity and the draft decree should specify the inclusion of rooftop solar power, biomass, and waste-to-energy power as long as the projects comply with the local planning.
– For virtual (grid-connected) PPA: Stakeholders requested that there should be clear division of responsibilities among the Government and EVN in publishing data on consumption demands of each region, additional renewable energy capacity that could be exported to the grid in each region, current status of renewable energy capacity [of generators which] currently signing power purchase agreement with EVN. Wheeling fees should be correctly and completely calculated and then published.
2. Key Take-away from Comments on the Draft Decree on RTS
– Grid-connected RTS projects/ Systems: Stakeholders requested that state authorities should publish data on the scale of self-generated RTS for self-consumption purpose connected to the national grid on a semi-annual basis.
– Private wire clarification: Stakeholders recommended that the MOIT clarify and provide revisions for mitigating the likelihood of overlapping between private wire under the DPPA pilot scheme (in the case of RTS systems/projects) and off-grid solar power systems/ projects under the draft decree on RTS.
– Licensing process: Stakeholders expressed concerns about the complexity of the permit process due to the involvement of different authorities, such as EVN for grid connections, Ministry of Construction for structure approvals, and the Firefighting Police for fire fighting and prevention approvals and permits. To simplify the process, the stakeholders recommended a single self-declaration form that includes all necessary information about RTS systems, which could be circulated to the relevant authorities.
As a positive development, the draft decree on DPPA and draft decree on RTS will be resubmitted by MOIT to the Government within this May, probably COB end of May 2024. We – Duane Morris Vietnam – are following up closely with the new developments and any new progress will be updated in a timely manner.
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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.