Solar power restrictions will delay direct purchase mechanism, foreign businesses warn

By Phuong Dung   May 9, 2024 | 08:31 pm PT
Solar power restrictions will delay direct purchase mechanism, foreign businesses warn
Solar power panels in central Binh Thuan Province. Photo by VnExpress/Viet Quoc
With no solar power plant set to be licensed before 2030, businesses are concerned this will hamper the development of the direct power purchase mechanism.

This is because a draft decree by the Ministry of Industry and Trade on direct power purchase allows only plants listed in the 2021-2030 National Power Development Plan to sell directly to buyers.

The American Chamber of Commerce in Vietnam (AmCham Vietnam) has expressed concern since it means consumers do not have many choices to buy directly from.

It proposed that, instead, new solar farms should be licensed if they are part of a direct power purchase agreement.

The industry ministry has said it would consider this request.

However, industry insiders do not expect to see many new plants be built before 2030 since capacity installed in 2010-20 exceeded national plans.

Minister of Industry and Trade Nguyen Hong Dien warned in April that provinces’ proposals for more renewable power plants would not be approved if they exceed the national plan.

Certain localities might have potential for more plants but the country does not need them now, and without careful consideration there could be major oversupply in future, he said.

Businesses have also called on the government to include all transmission from plans under direct power purchase mechanism in the national grid.

Miro Nguyen of AmCham said last month that most countries in the world allow direct power purchase from the national grid.

National utility Vietnam Electricity could collect fees for such transmission, while this would simplify development and ensure stability, she added.

The European Chamber of Commerce in Vietnam has also advised the government not to install new transmission systems for direct power purchase.

Currently Vietnam Electricity is the only distributor of energy in the country, and it does this through the national grid.

A survey by the trade ministry at the end of last year found that some 20 large enterprises wanted to be able to directly buy a total of 1,000 megawatts.

Major foreign companies such as Samsung, Heineken and Nike each consume between 500,000 and 1 million kilowatt-hours a month.

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