MOIT puts forth three draft decrees to improve the power market
The Ministry of Industry and Trade (MOIT) has released three draft decrees with a number of new mechanisms to effectively implement the 8th Power Development Plan and improve the power market.
The Bac Lieu wind farm in Vinh Trach Dong commune, Bac Lieu city, Bac Lieu province__Photo: VNA

The Ministry of Industry and Trade (MOIT) has released three draft decrees with a number of new mechanisms to effectively implement the 8th Power Development Plan and improve the power market.

These mechanisms cover direct power purchase agreement (DPPA) between renewable power generators and customers, development of self-consumption rooftop solar power systems and gas-fired power projects.

* Under the draft decree on DPPA mechanism, customers might purchase electricity directly from wind and solar power plants through either separate transmission lines or the national power grid.

If purchasing electricity directly from power generators through separate transmission lines, customers would not be subject to any requirements on capacity, output or connection voltage level. Terms and conditions of contracts as well as electricity prices would be agreed upon by the parties themselves. The only condition is that the seller must be included in the National Power Development Plan and relevant provincial plans and possess electrical permits.

Meanwhile, the form of purchase of electricity through the national power grid would only be applied to electricity sale and purchase contracts with one party being industrial/ commercial customers using electricity at the voltage level of 22 kV or higher and with an average monthly consumption of 500,000 kWh or more and the other party being grid-connected wind and solar power plants with a capacity of over 10 MW.

Households would not be allowed to purchase electricity under the DPPA mechanism.

The seller and purchaser would negotiate and sign fixed-price forward contracts. The transaction would be conducted on the spot market in accordance with the MOIT’s regulations on the competitive wholesale electricity market. Customers would have to pay the prices based on the spot electricity market price, plus charges for a number of services and other expenses.

* Regarding the draft decree on development of rooftop solar power systems, the MOIT proposes removing the requirement on electrical permits for organizations and individuals that install rooftop solar power systems for self-consumption purpose.

Self-consumption rooftop solar power system owners may opt to inject or not inject surplus power amounts into the national grid. If excessive electrical power amounts are injected into the national grid, the State would acknowledge these amounts at a cost of zero dong or, in other words, the State would not pay for surplus power amounts.

Self-consumption rooftop solar power systems with an installed capacity of 500kWp or more would be required to have remote control systems and be connected to regional electricity dispatch units.

Noteworthily, the draft decree sets limits for the total capacity of self-consumption rooftop solar power systems in a locality so as to prevent overload of the local grid. As provided in the 8th Power Development Plan, the total installed capacity of self-consumption rooftop solar power systems nationwide would not exceed 2,600MW.

* In another draft decree on development of gas-fired power projects, the MOIT suggests that power plants using imported liquefied natural gas (LNG) might be allowed to adjust selling prices of electricity based on fluctuations of gas prices. This mechanism would also apply to natural gas-fired power plants of key petroleum projects that make substantial contributions to economic development, assurance of national energy security, security and national defense and protection of Vietnam’s sovereignty.

Owners of LNG-fired power projects included in the 8th Power Development Plan must take the initiative in negotiating and concluding commercial contracts and agreements and be held responsible for these contracts and agreements.

Regarding electricity sale and purchase contracts, under the draft decree, power plants would conclude contracts with the Electricity of Vietnam so as to participate in the competitive wholesale electricity market and sell electricity in the spot electricity market.

Expenses for purchase of power from power plants using domestically extracted natural gas or imported LNG would include legitimate, reasonable expenses and be included in electricity retail prices.

The governing regulation and dispute resolution mechanism must comply with Vietnam’s law but the parties might agree on the application of appropriate foreign laws to deal with issues not yet fully covered by Vietnam’s law.- (VLLF)

back to top