Mechanism for direct power purchase proposed

A wind power farm in Ninh Thuận Province. The Ministry of Industry and Trade has submitted a report to the Prime Minister about options for a direct power purchase agreement mechanism (DPPA) between renewable power generators and large electricity users. – VNA/VNS Photo Công Thử

HÀ NỘI – The Ministry of Industry and Trade has submitted a report to the Prime Minister about options for a direct power purchase agreement mechanism (DPPA) between renewable power generators and large electricity users without going through Việt Nam Electricity (EVN).

Specifically, in the first option, the buying and selling of electricity would be conducted through a private transmission line invested by the private sector. With this option, the purchasing and selling of electricity would not be limit ed in terms of capacity, output, connection voltage level and electricity use purpose.

The power generators would be responsible for investing in the construction of power projects in line with the power development planning. The plants and the customers must comply with the established regulations on electricity purchase and sale.

The electricity retail prices for large users were regulated under Decision No 1062 dated May 4, with the average price at VNĐ1,920.3732 per kWh.

In the second option, electricity purchase and sale would be conducted through the national grid system, meaning that the trading must go through EVN, which currently holds a monopoly in electricity retailing.

As for this option, wind and solar power plants must be connected to the national power system and have an installed capacity of at least 10 MW. Customers were required to purchase electricity for production purposes with a voltage of 22 kW or more.

In the period when the Law on Price had not come into effect, the retail electricity prices for production purposes would be regulated by the Prime Minister’s Decision No 24/2017 about the average electricity retail prices and Decision No 28/2014 about the electricity price bracket.

After the Law on Price came into effect, the electricity prices would reflect properly and fully the charges on-the-spot electricity market plus service changes.

The ministry said that it would give a push to the implementation of the first option.

An expert said that the DPPA mechanism would help ease the burden on EVN in investing in power generation and transmission while encouraging the participation of the private sector in the power industry.

In many cases, customers could buy electricity at lower or higher prices, depending on the production costs of the generators.

In mid-July, Prime Minister Phạm Minh Chính asked the Ministry of Industry and Trade to complete the study on DPPA in an effort to speed up energy transition projects.