DPPA mechanism aimed to meet the demand for using clean energy of large customers while attracting investments in renewable energy to protect the environment and promote competitive retail market in Việt Nam.

A wind farm in Bạc Liêu Province. The Ministry of Industry and Trade has submitted the long-waited draft decree on direct purchase agreement (DPPA) to the Government for approval. — VNA/VNS Photo Tuấn Kiệt

The latest draft decree has 5 chapters with 30 articles, detailing two options for direct power purchase, through separate lines and through the national grid.

Regarding direct power purchase through separate lines, buyers are not allowed to resell the electricity to other organisations or individuals.

Customers must have an average consumption of 500,000 kWh per month or more.

There will be no regulations on the capacity of renewable energy generators to be eligible for participating in direct power purchase, meaning that every renewable energy generator can sell electricity directly to large customers via separate lines. The electricity prices will be agreed upon by both parties.

For the conduction via the national grid, wind and solar power plants with a capacity from 10MW are allowed to connect to the national grid and directly participate in the competitive wholesale electricity market. Large customers will purchase power from electricity retailers.

The prices are based on the spot electricity market price together with services fees such as transmission, distribution, dispatching and operation.