Vietnam’s Ministry of Industry and Trade (MIOT) aims to open Vietnam’s electricity market to bilateral power purchase agreements (PPAs) through a pilot scheme that will, for the first time, enable renewable energy generators to directly sell to private off-takers under virtual or synthetic deals Sell electricity.

Under current regulations, state-owned energy company Vietnam Electricity (EVN) has a monopoly on the transmission, distribution, wholesale and retail of electricity and is the sole buyer in the market.

Moritz Sticher, a senior consultant at the Berlin-based consultancy Apricum, told pv magazine that the program has not yet started and that "there is no firm date yet". Originally scheduled to take place between 2022 and 2024, the plan is now expected to be in the first quarter of 2023. Formal planning after the pilot program should begin in 2025.

The government has drafted several pieces of legislation since 2020, and several amendments have been delaying the plan. In January, the tariff structure for the program was revised. "Off-takers will now buy at retail prices, rather than spot market prices plus PPA fees," Sticher said. National utility Genco will still pay EVN at wholesale rates. The buyer and generator will also enter into a forward CFD for future trading cycles.

"This mechanism now provides investors with a fixed price for electricity and puts the risk of price fluctuations on those who go offline. For off-takers, a change in electricity price from wholesale to retail means EVN is approximately approx. 2% share, so the return on the investor side is slightly less (assuming the off-taker will target the same total tariff) and the attractiveness for the off-taker due to changes in tariff risk,” explained Sticher Say.

The pending PPA program has hampered the development of utility-scale projects in Vietnam, which "has no interest in rapidly adding large-scale solar capacity," according to Sticher. Continued uncertainty about renewable energy targets, ongoing curtailment issues and stranded projects in previous rounds of feed-in tariffs are also said to have contributed to the situation.

According to figures in Apricum's new "Solar in ASEAN Region" report, Vietnam currently has around 18.47GW of installed solar capacity. National Electricity Development Plan Seven lowered the solar target to 13.6 GW of utility-scale and 3.4 GW of rooftop solar by 2045. Offshore and onshore wind will make up for the reduction in solar generation, as well as electricity imports from Laos, Apricum said.

In Laos, the commercial and industrial (C&I) sector is growing, with total installed capacity forecast to reach 10,792 MW by the end of 2022, according to Apricum's central scheme. Most C&I projects are funded by independent power producers (IPPs).