ACEC urges DPPA implementation in Vietnam at Green Energy Forum
With an increasing number of companies basing investment and supply chain decisions on their ability to source renewable electricity, there is a big economic risk for countries that fail to accelerate their renewable energy transition.
Direct power purchase agreement (DPPA) plays a vital role in accelerating the uptake of renewable electricity by enabling long-term deals between electricity producers and corporate customers for the purchase renewable electricity directly from producers. It is therefore recognized as one of the most effective pathways for businesses to participate in Asia in the clean energy transition, Suji Kang, Program Director of ACEC, underscored at the recent Green Energy Forum organized by EuroCham Vietnam.
A panel session, where finance, buyer, seller, and policy advocate representatives were present, prommoted the DPPA movement in the industry and it was strongly emphasized that the availability of green energy is a main requirement for investors when selecting a new location. DPPA serves as a very important mechanism for accelerating the uptake of renewable energy.
The urgent need for investments on the grid was also highlighted as a fundamental factor to cope with future demand, on top of other key policy levers neccesary to best facilitate a functional DPPA program. These include transparency on the rules to participate, clear pricing mechanisms, limits on curtailment and dialogues with industry.
The discussions led the panel to conclude that for DPPA to become successful there are three conditions to be met:
1. The legal framework needs to be beefed up to make sure that the projects are bankable.
2. The grid infrastructure needs to be improved as it is currently not capable of taking on long distance transportation of renewable energy.
3. Security needs to be given to investors on price mechanisms to sell back to the national grid.