VIETNAM’S government said on Wednesday (Jul 3) it had issued a new decree to allow factories to directly buy electricity from power suppliers, in a move that could help unleash the country’s rich renewable energy potential.

Under the new rules, power consumers can buy electricity directly from renewable power generators via private transmission lines at negotiated prices, the government said in a statement.

Vietnam, a regional manufacturing hub, has been seeking to boost solar and wind in its power mix, but weak transmission infrastructure and regulatory hurdles have kept several projects from getting hooked to the national grid.

The country has this year been ramping up coal burning and expanding its generation capacity and grid to avoid a repeat of last year’s crippling blackouts.

The reform could increase renewable energy production and make it easier for multinationals to access clean power sources – which is crucial in particular for exporters to avoid higher tariffs and meet environmental, social and governance (ESG) requirements.

This means Vietnam-based manufacturers, such as Germany’s Bosch, Denmark’s Lego or Apple’s suppliers, can directly buy electricity from producers, effectively ending the monopoly grid of Vietnam Electricity (EVN), the state-owned distributor.

The decree also allows consumers to buy electricity via the national power grid operated by EVN, as long as the sellers have a generation capacity of at least 10 megawatts.

In May last year, Vietnam approved a long-awaited master power development plan that would raise the country’s total installed power generation capacity to over 150 gigawatts (GW) by 2030 from over 80 GW at the end of last year.

Under that plan, the country’s solar capacity will reach 12.8 GW and wind capacity 27.88 GW by 2030.

Vietnam’s onshore wind energy potential is estimated at 221 GW and offshore wind potential at 600 GW, while solar energy potential is estimated at 963 GW, according to the plan. REUTERS