This photo shows power lines in Hanoi, Vietnam, Tuesday, July 9, 2024. Vietnam will let electricity-guzzling factories buy electricity from wind and solar power producers, helping big companies like Samsung Electronics meet their climate targets and relieving pressure on the country’s overstrained grid. This photo shows a building with a Samsung logo in Hanoi, Vietnam, Tuesday, July 9, 2024.
“The DPPA will dramatically alter this status quo,” said Giles Cooper, a partner at the international law firm Allens based in Hanoi who specializes in energy policy. Vietnam’s move addresses investors’ concerns about access to stable and clean energy. That’s a priority for a country seen as a promising alternative for businesses looking to diversify supply chains outside China.
Vietnam’s largest foreign investor, Samsung, was among the earliest to start working with the government on introducing this mechanism. The company aims to transition all its business sites to renewable energy by 2027, and Vietnam is its largest mobile phone manufacturing base, accounting for more than half of all production.
The success of DPPAs will depend on how quickly Vietnam can upgrade its rickety electrical grid, which as is in the case in many, has failed to keep up with rapid growth of clean power generation. Vietnam says it needs $15 billion to strengthen it. The new directive has two mechanisms for factories to directly buy renewable energy. The first is the so-called direct wire model where some large consumers of electricity can be connected to a nearby renewable power plant through a direct transmission line. They can then buy the electricity at an agreed-upon rate. This ensures the power will be entirely clean energy with no involvement of EVN.