The Decree on direct electricity trading mechanism

On 03/7/2024, the Government issued Decree No. 80/2024/ND-CP dated July 3, 2024 regulating the direct electricity trading mechanism between renewable energy power generation units and large electricity consumers.

According to the Decree, direct electricity trading is the activity of buying, selling and receiving electricity carried out through 02 forms as follows:

- Direct electricity trading via the private connection line is the activity of signing an electricity trading contract and delivering electricity via a private connection line between a renewable energy power generation unit and a large electricity consumer as prescribed in Chapter II of this Decree.

- Direct electricity trading through the National Grid is the activity of buying and selling electricity through a Forward Contract between a renewable energy power generation unit and a large electricity consumer (or an electricity retailer in an authorized cluster or zone model) and the electricity trading activity is carried out according to the provisions of Chapter III of this Decree, including: Renewable energy power generation units sell all produced electricity to the spot electricity market of the competitive wholesale electricity market; the large electricity users or electricity retailers in an authorized cluster or zone model sign an electricity trading contract with the Electricity Corporation (or an authorized/decentralized unit) to buy all electricity to meet demand; renewable energy power generation units and large electricity consumers or electricity retailers in an authorized cluster or zone model buy and sell electricity through a Forward Contract.

Regarding the form of direct electricity trading via a private connection line, the Decree stipulates that renewable energy power generation units and large electricity consumers conduct direct electricity trading via a private connection line according to the following principles:

- The electricity trading contract between the renewable energy power generation unit and large electricity consumers in the case of direct electricity trading via a private connection line is agreed upon by both parties in accordance with the provisions of Article 22 of the Electricity Law and relevant legal documents, including the following main contents: Contract subjects; purpose of use; service standards and quality; rights and obligations of the parties; electricity price, payment method and term; conditions for contract termination; liability for breach of contract; contract term; responsibility for investment, construction, management and operation of the private connection line; other contents agreed upon by the two parties;

- The electricity selling price is agreed upon by both parties except for the case specified in Clause 4, Article 6 of this Decree.

The renewable energy power generation units negotiate, agree and sign electricity trading contracts on capacity, output, and price for surplus electricity output with Vietnam Electricity Group (or authorized units) according to regulations.

In addition to direct electricity trading activities via private connection lines as prescribed above, large electricity consumers are allowed to purchase and sell electricity with the Electricity Corporation (or electricity retailers other than the Electricity Corporation) according to regulations.

In case the Electricity Unit performs both electricity generation and electricity retail functions in the models of zones and clusters, and simultaneously purchases electricity from the national electricity system with other on-site power sources to retail electricity to electricity users in the models of zones and clusters, the retail electricity price for customers is implemented according to the Regulations on implementation of electricity prices issued by the Ministry of Industry and Trade.

Regarding the form of direct electricity trading through the national grid, the Decree also clearly stipulates the sale of electricity by renewable energy power generation units through the spot electricity market and the purchase and sale of electricity with the Electricity Corporation.

According to the regulations, the spot electricity market price is the total electricity market price formed according to each trading cycle of the spot electricity market and is determined by the sum of the market electricity price and the market capacity price. In which, the market electricity price and the market capacity price are determined according to the Regulations on the operation of the competitive wholesale electricity market issued by the Ministry of Industry and Trade.

This Decree takes effect from the date of signing and promulgation.