Provisions on suspension, termination, and restoration of participation in the direct power purchase mechanism in Vietnam from March 7, 2024

Provisions on suspension, termination, and restoration of participation in the direct power purchase mechanism in Vietnam from March 7, 2024 (Internet image)

Decree 80/2024/ND-CP was issued by the Government of Vietnam on March 7, 2024, detailing the direct power purchase mechanism between renewable energy producers and major electricity consumers.

Provisions on suspension, termination, and restoration of participation in the direct power purchase mechanism in Vietnam  from March 7, 2024

(1) Suspension of Participation in the Direct Power Purchase Mechanism

• Suspension of participation in the direct power purchase mechanism for major electricity consumers or retail electricity units within designated clusters, renewable energy producers in cases:

• Suspension of the electricity market according to the Operational Regulation of the Competitive Wholesale Electricity Market issued by the Ministry of Industry and Trade;

• One of the contracts in the direct power purchase mechanism is suspended or expired, affecting the interests of the concerned parties;

• Acts of exploiting the mechanism and policies for profiteering;

• Electricity consumers participating in the direct power purchase mechanism with an average monthly electricity consumption (computed over 12 consecutive months) of less than 200,000 kWh/month.

• Payment during the suspension of participation in the direct power purchase mechanism for major electricity consumers or retail electricity units within designated clusters, renewable energy producers:

• Major electricity consumers purchase electricity and pay according to the retail electricity tariff regulated by the Ministry of Industry and Trade;

• Retail electricity units within designated clusters purchase electricity from the Electricity Corporation according to the current electricity price;

• Renewable energy producers sell electricity to the Vietnam Electricity Group (or an authorized unit), negotiating a uniform generation price within the renewable energy generation price framework issued by the Ministry of Industry and Trade or other existing pricing mechanisms.

(2) Termination of Participation in the Direct Power Purchase Mechanism

• Parties terminate the direct power purchase mechanism participation in the following cases:

• Voluntarily terminating at the request of participating parties;

• Acts of exploiting the mechanism and policies for profiteering with irreversible consequences;

• In case of termination of participation in the direct power purchase mechanism, renewable energy producers, major electricity consumers, retail electricity units within designated clusters, and the Electricity Corporation must negotiate and sign electricity purchase contracts according to current regulations.

(3) Restoration of Participation in the Direct Power Purchase Mechanism

• Parties restore participation in the mechanism in the following cases: violations have been rectified and confirmed by competent authorities; competent authorities decide to resume the electricity market;

• In the case of restoration, the units must continue to perform the agreements in the signed power purchase contracts.

  The authority in suspending, terminating, and restoring participation in the direct power purchase mechanism is as follows:

• The Minister of Industry and Trade decides on the suspension and restoration of participation of major electricity consumers or retail electricity units within designated clusters, renewable energy producers based on reports and recommendations from the Vietnam Electricity Group, the system operation unit, or other related agencies and organizations;

• The Minister of Industry and Trade decides on the termination of participation in the direct power purchase mechanism of major electricity consumers or retail electricity units within designated clusters, renewable energy producers after consulting the related agencies in writing (if any).

(Article 26 Decree 80/2024/ND-CP)

Direct Power Purchase Mechanisms from March 7, 2024

Direct power purchase is the activity of buying and receiving electrical energy through the following two forms:

• Direct power purchase through Dedicated Connection Lines is the activity of signing power purchase contracts and receiving electrical energy via dedicated connection lines between renewable energy producers and major electricity consumers as regulated in Chapter II Decree 80/2024/ND-CP.

• Direct power purchase through the National Grid is the activity of buying and selling electricity through Forward Contracts between renewable energy producers and major electricity consumers (or retail electricity units within designated clusters) and the buying and selling activities as regulated in Chapter III Decree 80/2024/ND-CP, including:

• Renewable energy producers sell all generated electricity into the spot market of the competitive wholesale electricity market;

• Major electricity consumers or retail electricity units within designated clusters sign power purchase contracts with the Electricity Corporation (or an authorized unit/ decentralized unit) to buy all necessary electric energy;

• Renewable energy producers and major electricity consumers or retail electricity units within designated clusters conduct electricity trade through Forward Contracts.

(Article 4 Decree 80/2024/ND-CP)

Nguyen Ngoc Que Anh

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