Viet Nam allows direct RE transactions from the producers to consumers, promising further RE and transmission capacity growth in the country 

After more than three years of development, Viet Nam’s long-awaited Direct Power Purchase Agreement (DPPA) scheme was approved on 3 July 2024. This decree outlines mechanisms for major electricity consumers to procure renewable energy (RE) directly from producers via a private transmission line or utilising the national grid which is commonly referred as ‘power wheeling concept’, setting a new standard within the ASEAN region. 

The DPPA scheme offers two mechanisms: physical and virtual. The physical DPPA allows RE generation companies (RE GENCOs) to sell RE directly to large consumers—those with over 200,000 kWh monthly consumption and a 22 kV or higher voltage connection—through private transmission lines. Consumers pay for electricity based on consumption, with excess sold to EVN under specific contracts. 

The virtual DPPA uses a forward contract (Contract for Differences) to allow RE procurement via the national grid. RE GENCOs can sell solar or wind power through the Vietnam Wholesale Electricity Market (VWEM), with an obligation to sign a Power Purchase Agreement (PPA) with EVN and pay price differences if the market price exceeds contract prices. Virtual DPPA participants must have a plant capacity over 10 MW and adhere to technical standards, including Supervisory Control and Data Acquisition (SCADA) systems for power quality monitoring and disturbances mitigation due to power quality issues. 

This scheme benefits industrial consumers aiming to decarbonise their electricity consumption. Financially, it mitigates investment risks in RE supply and purchases, attracting foreign investments to Viet Nam’s renewable and industrial sectors. 

The DPPA will enhance competitiveness among power producers, including EVN and RE GENCOs, further shaping VWEM and supporting Viet Nam’s vision of a liberalised power market. It also aids the National Load Dispatch Center (NLDC) in transmission network planning by providing insights into RE supply-demand balance through forward contracts. 

While discussions of this scheme are widely discussed from the angle of ‘power wheeling’ perspective, this article aims to focus on the ‘third-party access’ (TPA) part as the important piece that enables DPPA to be implemented. The DPPA, especially the part via the national grid, could be done as Viet Nam has a VWEM running, which also provides access and information on how the generation could be dispatched to the demand considering the existing grid capacity. This is commonly referred to as ‘third-party accesses’.  

Are other ASEAN countries considering this Third-Party Access scheme? 

Power wheeling and TPA are indications that the electricity market in a country is going to reform from vertically integrated to unbundling. In ASEAN, this journey has been experienced by the Philippines and Singapore during the liberalisation of their power market. Philippines market reform was initiated in 2001 by the enactment of the Electricity Power Industry Reform Act of 2001 (EPIRA) where in Section 31, the country introduced retail competition and open access (RCOA) allowing qualified retailers to supply electricity from WESM or GENCOs using distribution utility wires. Through the enactment of EPIRA in 2001, the Philippines’ WESM was first operational in Luzon Grid in 2006, with the retail market liberalisation in 2013. 

On the contrary, Singapore fully liberalised its electricity supply business up to the retail market in 2018.  Although Singapore’s retail market liberalisation is considered new, the reform process started way back with the launching of the Singapore Electricity Pool (SEP) in 1998. The wholesale market known as the National Electricity Market Singapore (NEMS) was opened in 2003, three years prior to the first operation of the Philippines’ WESM, making it the first electricity market in ASEAN. 

The good practices and the challenges from the journey of the Philippines and Singapore’s transformation towards electricity market liberalisation, especially in establishing TPA, would be relevant references for other ASEAN Member States to look at. Learning from both the Philippines and Singapore journey, the transformation was done in stages. It took quite some time, especially in setting up the needed policy and regulatory framework and the institutional arrangement for implementing the TPA and wheeling framework. Indonesia, Thailand, and Peninsular Malaysia are also considering implementing this kind of scheme in their country as well to facilitate large consumers that require renewable energy for their operations.  

Thailand first introduced competition in the electricity supply business back in 2003 with the enhanced single-buyer method, where the private sector was allowed to sell electricity by competitive bidding through the Electricity Generation Authority of Thailand (EGAT) or directly to consumers. Although the market structure has been effective in supplying electricity to consumers, plans to reform the electricity industry are needed to increase competition in the electricity supply business. In 2022, the Energy Regulatory Committee (ERC) announced the development of the TPA Framework Guideline with a vision to develop the TPA code for the distribution system, endorsing market liberalisation through the competitive participation of private retail entities. The TPA framework guideline outlines the scopes, duties, services, and charges in the power market, which includes information on wheeling charges and congestion management. 

In Indonesia, power wheeling started to be discussed with the enactment of Indonesia’s Ministerial Regulation No.1/2015 on cooperation for electricity supply and joint utilisation of the electrical grid. Under this regulation, power wheeling needs the consent of PT PLN (Persero) as the grid owner and the rate of the wheeling should be based on negotiations between PT PLN (Persero) and the IPPs or the consumers. However, due to the complication of performing economic dispatch and the undefined business scheme, the power wheeling in Indonesia has not yet been implemented despite the intention towards that exist.  

In Peninsular Malaysia, the third-party access mechanism for corporate consumers to access RE under the recently launched Corporate Renewable Energy Supply Scheme (CRESS) programme as part of PETRA’s Government Renewable Energy Enhancement for Niche Sector (GREENS MADANI) initiative. Under the Electricity Supply Act 1990 (Act 447), Energy Commission known as Suruhanjaya Tenaga regulates the implementation of open grid access in CRESS framework, which allowed corporates in procuring green energy from TNB Grid and Retail through Grid System Operator (GSO) and Single Buyer (SB) that will act as market and system operators in managing “access and dispatch” aspects within electricity supply system upon the government agreement. Meanwhile, in the other regions in Malaysia, such as Sabah and Sarawak, there has been no specific announcement regarding the TPA framework due to respective state energy authorities that may differ. 

How could this TPA principle be an enabler for encouraging RE cross-border trading?  

In the national context, the establishment of TPA is an indication that a country is in an electricity market reform process. Nowadays, one of the prominent drivers observed in this region that encourages reform is the need for large consumers to procure RE. As stated above, this trend is emerging in ASEAN countries like Viet Nam, Thailand, Malaysia and Indonesia. For a country which has limited RE resources like Singapore, this big RE demand pushes the pursuance of cross-border electricity trading. 

While third-party access (TPA) is crucial for larger renewable energy (RE) procurement at the national level, it is not a prerequisite for cross-border RE trading. This means that a country does not need to reform its electricity markets and establish a TPA framework domestically before engaging in cross-border electricity trading. Countries with different electricity market structures and stages of liberalisation can trade under bilateral or multilateral arrangements, provided they agree on a framework that ensures equal and transparent access to transmission capacity information for all cross-border trading participants. 

The Lao PDR-Thailand-Malaysia-Singapore (LTMS) Power Integration Project is a current example demonstrating that multilateral power trading (MPT) can occur as long as trading parties agree on communication and trading rules, including information sharing and transparency under the TPA concept. However, understanding TPA principles and translating them into a regional framework is necessary to facilitate more cross-border or multilateral trading in ASEAN. 

A recent example is Malaysia’s Energy Exchange Malaysia (ENEGEM) platform, launched to exploit cross-border electricity trading opportunities between Malaysian RE generators and buyers in Singapore. ENEGEM implements the TPA principle, bridging demand and supply despite the different market landscapes. Malaysia, with its enhanced single-buyer model, trades with buyers in Singapore’s liberalised market. Another successful regional TPA implementation is the South African Power Pool (SAPP), where involved countries trade within a common regional power market while maintaining their national electricity market structures. 

Understanding TPA principles and their benefits is essential to unlocking wider cross-border electricity trading in ASEAN. Addressing TPA will initiate discussions on broader market building blocks for utilising ASEAN Power Grid (APG) interconnectors for cross-border trading. These include a regional data-sharing and communication framework, determining available transmission capacity, and wheeling charge methodology. These topics are part of ASEAN cooperation under the ASEAN Power Grid, particularly in expanding MPT in the region. The ASEAN Centre for Energy (ACE) collaborates with ASEAN utilities, regulators, and policymakers to build stakeholder capacity through workshops, programmes, and policy briefs. Analysing the TPA and power wheeling experiences of different ASEAN countries to shape the regional framework is vital for facilitating higher RE cross-border trading opportunities.