New Decree Paves the Way for Direct Renewable Energy Purchases

The Vietnamese government has officially released Decree No. 80/2024/ND-CP dated July 3, 2024, outlining the direct power purchase mechanism between renewable energy producers and large electricity consumers.

The decree specifies two methods for direct power purchase:

• Direct Purchase via Dedicated Connection Lines: This involves signing power purchase agreements and delivering electricity through dedicated connection lines between renewable energy producers and large electricity consumers.
• Direct Purchase via the National Grid: This involves power trading through futures contracts between renewable energy producers and large electricity consumers (or authorised retail electricity units within specific zones). The transactions will include:

1. • Renewable energy producers selling all generated electricity to the spot market of the competitive wholesale electricity market.
   • Large electricity consumers or authorised retail electricity units signing power purchase agreements with the Vietnam Electricity Cooperation – EVN (or an authorised/decentralised unit) to meet their energy needs.
   • Renewable energy producers and large electricity consumers or authorised retail electricity units conducting power trading through future contracts.

1. Direct Purchase via Dedicated Connection Lines

For direct power purchase through dedicated connection lines, the Decree stipulates that renewable energy producers and large electricity consumers must follow these principles:

• Power purchase agreements between renewable energy producers and large electricity consumers must be mutually agreed upon, in accordance with Article 22 of the Electricity Law and relevant legal documents. The agreements should cover: contract parties; usage purposes; service standards and quality; rights and obligations; electricity pricing, payment methods, and deadlines; contract termination conditions; breach responsibilities; contract duration; responsibilities for the investment, construction, and operation of dedicated connection lines; and any other mutually agreed-upon terms.
• The electricity price is negotiated between both parties, except in cases specified in Clause 4, Article 6 of the Decree.

Renewable energy producers negotiate and sign contracts for surplus power capacity, quantity, and pricing with the EVN (or an authorised unit) as regulated.

2. Direct Purchase via the National Grid

Regarding the Spot Market Electricity Prices for direct power purchase via the national grid, the Decree clearly outlines the sale of electricity by renewable energy producers through the spot market and transactions with EVN.

According to the regulations, the spot market electricity price is the total market electricity price formed in each trading cycle of the spot market. It consists of the market energy price and the market capacity price, determined according to the competitive wholesale electricity market operations regulations issued by the Ministry of Industry and Trade (MPI).

3. Special cases:

When an electricity unit performs both generation and retail functions within specific zones, combining national grid power with local sources to retail electricity to customers, retail prices are determined according to the pricing regulations issued by the Ministry of Planning and Investment (MPI).