US praises Vietnam for introducing direct energy purchase mechanism

The U.S. Embassy in Vietnam commended the Vietnamese government for passing the Direct Power Purchase Agreement (DPPA) Decree, which addresses the need for businesses to use renewable energy sources and contributes to the country’s efforts to achieve net-zero emissions by 2050.

“I sincerely congratulate the Ministry of Industry and Trade (MoIT) for its commitment and hard work in making the DPPA a reality,” said U.S. Ambassador to Vietnam Marc Knapper at the DPPA launch event on Friday.

As the Ambassador commented, the bilateral Comprehensive Strategic Partnership has ushered in a new era of cooperation between our nations, and the DPPA is evidence of the deepening ties and shared commitment of both sides to sustainable development.

The embassy said that through the United States Agency for International Development (USAID), the United States has been providing technical support to MoIT since 2017 in the design, development, and approval of the DPPA. It added that USAID will continue to work with MoIT in implementing the DPPA.

The new policy will allow businesses in Vietnam to purchase electricity directly from private renewable energy companies, allowing them to power their operations with 100% renewable energy.

The solution addresses the needs of corporate leaders who want to integrate renewable energy into their operations and achieve their corporate emission reduction goals, helping Vietnam attract more private sector investment in renewable energy.

As noted by USAID, the DPPA will enable international and domestic businesses in Vietnam to reduce their carbon footprint towards achieving net-zero emissions, while also accelerating the country’s clean energy transformation, which aims to achieve net-zero emissions by 2050.

Workers install solar panels on the roof of a building in Vietnam. Photo:TTO

“The United States remains Vietnam’s partner in advancing this important initiative and expanding Vietnam’s access to clean and renewable energy,” said Aler Grubbs, director of USAID/Mission in Vietnam.

The DPPA was issued by the government on July 3 with immediate effect, facilitating the direct purchase and sale of rooftop solar and other renewable energy sources through both private transmission lines and the national grid.

Many foreign-owned enterprises operating in Vietnam, including those in the manufacturing and high-tech sectors, have repeatedly requested Vietnam to launch the DPPA mechanism.

These companies have commitments and roadmaps in place to achieve net zero emissions, in line with climate goals being pursued around the world, so they want to ensure that the electricity used in their production is 100 percent clean.

A study by MoIT in late 2023 found that about 20 major companies, including South Korean tech giant Samsung and US footwear and clothing giant Nike, were interested in directly purchasing electricity from Vietnam, with a combined demand of almost 1,000 MW.

In addition, 24 renewable energy projects with a total capacity of 1,773 MW expressed their interest in direct power sales under the DPPA, while 17 other projects with a total capacity of 2,836 MW were considering joining the mechanism.

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