A mechansim allowing businesses in Vietnam to directly close contracts to buy power at competitive prices from renewable energy generators is expected to enter a pilot run next year under a program backed by the U.S. Agency for International Development
The USAID and Vietnam’s Ministry of Industry and Trade are working together to enable private sector electricity buyers and renewable energy providers to enter into Direct Power Purchase Agreements (DPPA).
The DPPA mechanism will allow businesses to competitively procure renewable energy in Vietnam while also creating new business opportunities for world-class clean energy technologies, according to USAID.
An event was held on Wednesday on the sidelines of the APEC CEO Summit in the central city of Da Nang to celebrate a unique partnership of governments and the private sector in the DPPA project.
Among the attendes were leading executives from global businesses including ABB, Nike, and Citibank, who affirmed their urgent need for expanded and simplified access to renewable energy and pledged to work with Vietnam’s trade ministry and USAID to help accomplish this goal.
Newly-appointed U.S. Ambassador to Vietnam Daniel Kritenbrink also had his first meeting with local media since taking the post earlier this month.
|U.S. Ambassador to Vietnam Daniel Kritenbrink (right) is seen at the event. Photo: Son Luong/Tuoi Tre News|
Asked why the DPPA is necessary when businesses in Vietnam can now easily buy industrial electricity from EVN, the country’s power giant, Michael Greene, USAID Mission Director for Vietnam, said the mechanism will allow companies to enjoy constant power prices and utilmately save power costs.
While EVN power price is as low as 7.5 U.S. cents per kWh for industrial buyers, Greene said the rate is expected to rise to 13 cents per kWh by 2030. “By signing a long-term DPPA to buy power from a clean energy generator, businesses can have a constant power price in a long term,” he elaborated.
“The second thing is that by locking in the price for renewable energy, such as solar, wind or biomass power, we will have a lower price over the long term compared to the price charged by EVN.”
The USAID Vietnam leader asserted that the U.S. government and his agency are supporting Vietnam to develop the DPPA because they believe the Southeast Asian country “needs clean energy to power its incredible growth.”
“The DAPP allow companies, energy suppliers and electricity buyers to have direct purchase contracts and reduce the risks of those agreements,” he said.
Greene added that the DAPP will also help Vietnam attract foreign investment from experienced companies worldwide into the private energy sector.
|Michael Greene, USAID Mission Director for Vietnam. Photo: Son Luong/Tuoi Tre News|
Vietnam seeks to ramp up renewable energy generation from solar and wind power to 1,650 megawatts (MW) by 2020 and to 18,000 MW by 2030, according to USAID.
Greene said USAID and Vietnam’s Electricity Regulatory Authority are working to have the DPPA enter a pilot run in 2018. Asked if there are any barriers that may prevent the pilot program from getting started as scheduled, Greene said he does not see any potential obstacles to the plan.
“The U.S. government has been committed to moving forward with the project and so has the Vietnamese authorities and you can see how businesses are eager for it at the event today,” he told Tuoi Tre News.