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Decree 80/2024 outlining mechanisms for direct power purchase agreement (DPPA) between renewable energy generators and large electricity consumers (Decree 80/2024) was issued by Vietnamese Government and became effective 3 July 2024. This Decree is considered as a significant policy that aims to promote the development of renewable energy in Vietnam and enhance the competitiveness of Vietnam’s retail electricity market.

This briefing note discusses the significant highlights of DPPA mechanism to be applicable to renewable power developers, including rooftop solar power developers in Vietnam as introduced by Decree 80/2024. This post is written by Nguyen Thi Kim Anh and Ha Thanh Phuc and edited by Nguyen Quang Vu.

Under Article 27 of Decree 80/2024 on mechanism for direct sale and purchase of renewable energy with large electricity customers, the Ministry of Industry and Trade (MOIT) will be entitled to suspend or terminate a Direct Power Purchase Agreement (DPPA) if there is an “act of taking advantage of the mechanism, policy for making profit”. For termination, the consequences of such act needs to be irremediable and the MOIT will need to obtain opinion from related authorities (presumably from the Ministry of Public Security).

Any large customer or any renewable energy producer enters into a DPPA will need to comply with (or “use”) the DPPA mechanism. In addition, obviously, the parties to a DPPA enter into the DPPA for the purpose of making profit (or saving costs). But Decree 80/2024 is not clear when the use of the DPPA mechanism would be considered as “taking advantage” (lợi dụng) of the mechanism or when an entity is deemed to make so much profit that the relevant DPPA may need to be suspended or terminated.

On 27 May 2024, the Ministry of Industry and Trade (MOIT) issued Decision 1260 approving the electricity generation price (EGP) range for the year 2024 applicable to LNG combined-cycle gas turbine (CCGT) thermal power plant (nhà máy nhiệt điện tua bin khí chu trình hỗn hợp sử dụng LNG in Vietnamese).

The ceiling price of such EGP range is VND 2,590.85 per kWh (about 10.67 UScents at the exchange rate of 1 USD = 24,262 VND), exclusive of VAT. Such ceiling price was calculated based on the following factors: