1. Comment on the Decree:
"What are your initial thoughts on Vietnam's new Decree
No. 80/2024/ND-CP regarding the mechanism for direct electricity
purchase and sale between renewable energy generation units and
large electricity consumers?"
[OM] Decree No. 80/2024/ND-CP, or I call it the DPPA Decree, was very much welcomed by not just me but everyone working on the energy sector. I waited years for this Decree to be issued and I think it was a good decision of the Government to finally issue it now. However, there remains sections needing further guidance from relevant authorities, the detailed procedures to participate in grid-connected DPPA for example.
2. Opinion on Implementation:
"In your opinion, how effectively do you think this decree
will be implemented in Vietnam, and what challenges might arise
during its execution?"
[OM] In my opinion, DPPA Decree will play an important role in the development of renewable energy in Vietnam. I do believe that investors are making moves based on this decree and investment will flow into Vietnam. However, as there still remains some uncertainties in the decree, I do believe that further guidance regarding (i) the procedures for participation; (ii) guidance on the contracts' forms; (iii) parties participating in DPPA mechanism under DPPA Decree must be issued by relevant authorities soon to ensure DPPA Decree's enforceability. Further, as the Electricity Operation License remains the most important sub-license for electricity trading activities and such a license is under the sole discretion of relevant competent authorities, I think the requirement for this sub-license will significantly impact the decision-making of energy investor.
3. Suggestions for Improvement:
"Based on Germany's experience with renewable energy
policies, what suggestions would you offer to improve the
effectiveness of this new decree in Vietnam?"
[OM] When it comes to Germany, Germany's renewable energy sector is among the most innovative and successful worldwide. This is due to the fact that German policymakers issued a wide range of legal documents aiming at the development of renewable energy – the Grid Expansion Acceleration Act, Renewable Energy Act, Building Energy Act. Under the said laws, policymakers introduce incentives for renewable energy; introduce the principle that the use of renewable energies is of overriding public interest and will be given priority over other concerns (e.g. species protection) until greenhouse gas neutrality is achieved; increase public acceptance; streamline procedures for grid planning to build grid faster; etc. Thus, I would like to suggest a clear guidance on DPPA Decree on all current unclear issues, including more detailed procedures, streamlined process, less emphasis on sub-licenses, etc.
4. German Investment in Vietnam:
"Could you share some recent examples of German businesses
investing in the renewable energy sector in Vietnam, and what
impact have these investments had on the local energy
market?"
[OM] Recently, PNE AG studied several offshore wind farms in Vietnam off the coast of south-central province of Binh Dinh Province with the total investment capital of USD4.6 billion. Going back a little, Fuhrländer AG and EAB invested multi million dollars in onshore wind farms in Binh Dinh and Ninh Thuan respectively. I do believe that German investors, apart from commercial benefits, bring in valued experience in development of renewable energy projects.
5. Germany's Expertise
Contribution:
"How can Germany's expertise in renewable energy
contribute to Vietnam's energy transition, and what
collaborative opportunities do you see between the two countries in
this field?"
[OM] I want to focus on the grid on this matter.
In Germany, it is important to note that, according to the Energy Industry Act, the electricity grid in Germany is sub-divided into transmission grids (maximum voltage) and distribution grids (high, medium and low voltage). Accordingly, the high voltage transmission grid is largely owned by the four transmission system operators (TSOs): TenneT, 50Hertz Transmission, Amprion and TransnetBW. At a lower level of distribution grids, distribution grids are operated by a large number of regional and minicipal grid operators. To expand the grid infrastructure to encourage renewable energy supply, the Grid Expansion Acceleration Act (NABEG) was issued to reduce the time required for planning and approval procedures for interstate or international very-high voltage lines. Further, to prevent security risks, in Germany, investment screening can by utilized by competent authorities to review the acquisition of German firms by foreign buyers on a case-by-case basis under Foreign Trade Payments Act and the Foreign Trade and Payments Ordinance in energy sector. Generally, under the investment screening mechanism, in some specific sectors (i.e. grid operation), the parties entering into an acquisition transaction of more than 10% voting rights must notify their transaction to the Economic Affairs Ministry for the Ministry's review.
On the other hand, in Vietnam, the grid is now under the sole operation and management of EVN while investment from other investors are not yet formally allowed and recognized. Further, a screening mechanism similar to that of Germany is also absent. Thus, I do believe that Germany can help Vietnam in developing relevant mechanisms to promote the grid as well as prevent unwanted investment in specific sectors. This support can be implemented in various ways, i.e. training, assignment of experts, treaty on the collaboration. As a German expert myself, I am more than willing to support Vietnam in this regard.
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