US praises Vietnam for issuing rules on direct energy purchase agreements

The U.S. Mission to Vietnam, which supported the Vietnamese Ministry of Industry and Trade in designing and drafting the Direct Power Purchase Agreement (DPPA) Decree, commended the Vietnamese government for approving the DPPA.

In a statement issued on Friday by the U.S. Mission in Vietnam, it said the United States Agency for International Development (USAID) will continue to work with the Ministry of Industry and Trade on the implementation of the DPPA.

“Our Comprehensive Strategic Partnership marks a new era of cooperation between our two nations, and the DPPA is evidence of our deepening ties and shared commitment to sustainable development,” said U.S. Ambassador to Vietnam Marc Knapper.

The U.S. Embassy said that once the new policy is implemented, Vietnamese businesses will be able to purchase electricity directly from private renewable energy companies, allowing them to power their operations with 100% renewable energy.

The embassy added that this enables Vietnam to attract private sector investment in renewable energy while also meeting the needs of corporate leaders who want to integrate renewable energy into their operations and achieve their corporations’ emission reduction goals.

“The U.S. Mission to Vietnam through USAID is honored to have partnered with the Department of Industry and Trade for many years to achieve this milestone,” said Aler Grubbs, Director of USAID/Mission to Vietnam.

“The DPPA will enable businesses to reduce their carbon footprint while enabling Vietnam to accelerate its transition to clean energy and achieve its goal of net-zero emissions by 2050. The United States remains Vietnam’s partner as you implement this important initiative and expand Vietnam’s access to clean and renewable energy,” Grubbs added.

The DPPA will enable international and domestic businesses operating in Vietnam to achieve greater carbon reductions towards net zero emissions, while accelerating the country’s transition to clean energy.

The United States is working with Vietnam to reduce greenhouse gas emissions and increase climate resilience for countries most vulnerable to climate change, including by supporting a just and inclusive energy transition, the embassy said.

“The United States is a committed partner to Vietnam in promoting the country’s transition to a clean, safe, and market-based energy sector, consistent with the shared priorities of our two countries under the Comprehensive Strategic Partnership,” it added.

Decree 80/2024 issued by the Vietnamese government on direct power purchase agreements (DPPA) between renewable energy developers and large consumers came into force on July 3.

It defines large consumers as those who used an average of at least 200,000 kWh per month over the last 12 months. Businesses that used energy for less than 12 months will also be considered large consumers if they used at least 200,000 kWh per month.

According to the decree, renewable energy includes solar energy, wind energy, small hydropower, biomass energy, geothermal energy, wave energy, tidal energy, ocean current energy and roof-mounted solar energy.

The decree focuses on two types of energy purchases: through private power lines or through the national grid. In the case of the former, sellers and consumers can negotiate prices independently.