To meet the trend of using clean energy by electricity customers, attract investment for sustainable renewable energy development to protect the environment, and aim to implement a competitive retail electricity market in Vietnam, on July 3, 2024, the Government issued Decree No. 80/2024/ND-CP, which regulates the direct power purchase mechanism between renewable energy generation units and large electricity customers ("Decree 80"). Below are some notable points of Decree 80 as updated by ATA Legal Services:
- Direct power purchase mechanism for renewable energy
In Article 1, Decree 80 clearly defines the scope of this Decree, which is about the direct power purchase mechanism between renewable energy generation units and large electricity customers (hereinafter referred to as "large customers") through private connection lines and through the national power grid.
Large customers are identified as organizations or individuals purchasing electricity for their own use, not for resale to others, according to the regulations of the Ministry of Industry and Trade, suitable for each development period of the power system or with consumption volumes at the time of application for participation in the direct power purchase mechanism as follows:
For existing large customers: average consumption of 200,000 kWh/month or more (averaged over the most recent 12 months);
For new large customers/using electricity for less than 12 months: registered consumption of 200,000 kWh/month or more.
- Forms of direct power purchase
Decree 80 stipulates that direct power purchase is conducted through two forms:
Direct power purchase through private connection lines: the activity of signing a power purchase agreement and receiving power through private connection lines (hereinafter referred to as "private lines") between renewable energy generation units and large electricity customers as regulated;
Direct power purchase through the national power grid: the activity of power purchase through a forward contract between renewable energy generation units and large customers (or authorized retail electricity units in authorized areas) and power purchase activities are performed as regulated, including:
Renewable energy generation units sell all generated power into the spot market of the competitive wholesale electricity market;
Large customers/authorized retail electricity units in authorized areas sign power purchase agreements with the Electricity Corporation (or authorized/delegated units) to purchase all electricity needed;
Renewable energy generation units and large customers or authorized retail electricity units in authorized areas buy and sell electricity through forward contracts.
- Direct power purchase through private lines can sell surplus back to EVN
Regarding the principle of direct power purchase, Decree 80 stipulates that to purchase power through private connection lines, renewable energy generation units and large customers must sign power purchase agreements with conditions and prices agreed upon by both parties.
For surplus electricity, renewable energy generation units can sell it back to EVN/authorized units through negotiation, agreement, and signing of power purchase agreements, including provisions on capacity, volume, and price for that surplus electricity as regulated.
Additionally, besides purchasing directly through private lines, large customers can also buy and sell electricity with the Electricity Corporation/retail electricity units other than the Electricity Corporation as regulated.
Thus, if there is surplus renewable energy in direct power purchases through private lines, renewable energy generation units can sell it back to EVN.
The official recognition of the mechanism for signing contracts and conducting direct power purchase transactions between customers and generation units is expected to create a competitive market, motivate the renewable energy market, attract investment in renewable energy development, and contribute to achieving climate goals, energy transition, and sustainable development.
Decree 80 takes effect from July 3, 2024.
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