SOME KEY PROVISIONS OF THE LATEST DRAFT DECISION ON DIRECT POWER PURCHARE MECHANISM BY THE MINISTRY OF INDUSTRY AND TRADE

Following the Draft Circular released in May 2021 and Report No. 94/BC-BCT dated 29 October 2021 regarding the pilot scheme of direct power purchase agreement (DPPA) between renewable power generators and consumers, under the assignment from the Prime Minister in Document No. 229/VBCPCN dated 11/1/2022, the Ministry of Industry and Trade (“MOIT”) has further prepared and finished the Draft Decision of Prime Minister (“Draft PM’s Decision”) on this pilot scheme. The Draft PM’s Decision was uploaded on online portals of the Government and MOIT for public review from 9 May 2022. In comparison to the Draft Circular in May 2021 and Report No. 94/BC-BTC, the latest Draft PM’s Decision omits several requirements imposed on involved parties, as well as provides specific conditions and criteria for selecting participants in the pilot scheme, which are as follows:

1. To participate in the pilot scheme, consumer is no longer required to commit to purchasing electricity at least 80% of the total power that would have been provided by EVN within a given year from the generator for the first 03 years after participating the DPPA pilot scheme.
2. Generator is no longer required to provide the consumer a bank/credit institution guarantee securing obligations to complete construction of the power plant; on the other side, consumer is also not required to provide the generator a bank/credit institution guarantee securing payment obligations under their direct power purchase agreement.
3. Requirement where the term of forward contract (contract for difference – CfD) must be between 10 years to 20 years from the commercial operation date (“COD”) is removed.
4. Specific requirements and criteria for MOIT to select participants in the pilot scheme have been added:

1. Power plants having installed capacity greater than 30MV connected to the national power grid, including:

   

   • Power plants that have been ready for operation but ineligible for Feed-in tariffs pursuant to Decision No. 13/2020/QD-TTg (expiration date: 31 December 2020) as for solar power plants or Decision No. 37/2011/QD-TTg and Decision No. 39/2018/QD-TTg (expiration date: 1/11/2021) as for wind power plants; or

   

   • Power plants that are currently inoperative, under construction, included in the power development plan, whose investors have been selected by a competent state authority under the prevailing laws, and will be invested in and accepted for COD within 270 working days from the commencement date of DPPA pilot scheme.
   • Power plants whose capacity/output will not be detrimentally impacted by grid constraints at the time of registered COD.
   • Power generators whose power purchase agreement with EVN is ineffective at the time they register for participating in the DPPA pilot scheme.
   • Power generators who have already had an agreement with consumers under the mechanism of DPPA if selected for participating in the DPPA pilot scheme.

   

2. Consumers who purchase electricity for the purpose of industrial manufacturing at a voltage of 22kV or greater; and have already had an agreement with generators under the mechanism of DPPA if selected for participating in the DPPA pilot scheme.

5. In case the aggregate capacity of eligible generators applying for the pilot scheme amounts to a number greater than 1.000 MW, additional criteria for selecting generator-consumer applications will be assessed following the priority order below:

1. Consumer committing to purchasing higher total volume of power (%) as agreed in the principle contract with the generator.
2. Generator owning the power plant that has earlier anticipated COD.
3. Valid application successfully submitted to the registration portal of DPPA pilot scheme earlier.

Read more: PILOT DIRECT POWER PURCHASE AGREEMENT (DPPA): PROMULGATING AUTHORITY AND PROPOSED MODEL

Phuc Dang