Samsung Vietnam seeks competitive prices for renewable energy to drive green transition

During a meeting with Deputy Prime Minister Tran Hong Ha on August 12, Choi Joo Ho, CEO of Samsung Vietnam, emphasized the importance of increasing the use of renewable energy in the company’s operations.

Choi highlighted the need for affordable renewable energy sources to help achieve Vietnam’s commitment to reducing net greenhouse gas emissions to zero by 2050.

He commended the recent implementation of Decree No. 80/2024/ND-CP, introduced on July 3, 2024, which establishes a direct power purchase agreement (DPPA) mechanism, enabling large electricity consumers to purchase power directly from renewable energy producers.

For Samsung Vietnam, which operates six manufacturing plants and a research center with a total investment of $22.8 billion, this decree represents a significant opportunity to increase its reliance on renewable energy.

The company has been a major contributor to Vietnam’s export economy, recording $33.5 billion in exports in the first seven months of 2024, a 5 per cent increase from the same period last year. Samsung Vietnam’s exports constitute nearly 14.8 per cent of the nation’s total export value.

The company is planning significant investments in Vietnam over the next three years, with the goal of turning its facilities in the country into the largest global module production hub. This strategic direction was reinforced by Samsung Chairman Lee Jae Yong during a recent meeting with Prime Minister Pham Minh Chinh.

Deputy Prime Minister Tran Hong Ha reiterated the government’s commitment to supporting businesses in their green transition.

He noted that after the introduction of the DPPA mechanism, the Prime Minister had instructed the Ministry of Industry and Trade to establish criteria for selecting renewable energy projects that would be connected to the national grid, to be included in the Power Development Plan VIII. Projects not connected to the national grid will not face capacity restrictions.

The Deputy Prime Minister also called on foreign enterprises, including Samsung Vietnam, to offer solutions to address challenges in implementing the DPPA mechanism, with the goal of operating Vietnam’s electricity market on a fully market-driven basis.

Vietnam has pledged to accompany businesses in their efforts to reduce carbon emissions through various measures, including emission limits, the carbon credit market, and other incentives.

The Ministry of Industry and Trade, along with other relevant agencies, will continue to work closely with Samsung Vietnam to address the company’s concerns and facilitate the implementation of the DPPA mechanism.

In addition, the government encouraged Samsung to continue investing in research and development, particularly in new industries such as semiconductor manufacturing.

According to Decree 80, large electricity consumers eligible to participate in DPPA must connect to the grid at a voltage level of 22kV or higher and have an average monthly consumption of at least 200,000 kWh.

Earlier this year, major corporations including Samsung, Apple, Heineken, and Nike expressed interest in purchasing electricity from renewable energy projects through the DPPA mechanism, with a combined demand of nearly 1,000 MW.

A report by Viet Dragon Securities Company indicated that the DPPA mechanism could stimulate the revival of renewable energy projects that had stalled after the expiration of the fixed FIT 2 tariff at the end of 2020.

However, the company cautioned that the rollout of projects under the DPPA framework could be delayed due to the need for detailed procedural guidelines and related legal documents. The earliest projects under this mechanism may not become operational until late 2025.