The Ministry of Industry and Trade (MoIT) recently submitted a response to the National Assembly’s Science, Technology, and Environment Committee’s review of the draft amended Electricity Law.

The National Assembly's Science, Technology, and Environment Committee emphasized that the draft law requires thorough examination and objective, comprehensive analysis. It recommended that the law be passed in two sessions: initial feedback during the current 8th session and formal approval in the following one.

However, if the revisions focus solely on "urgent, clear, and well-defined issues" and the government has thoroughly prepared the proposal, incorporating feedback from deputies and relevant bodies, the committee may coordinate with the government to pass the law within a single session, following a streamlined process.

MoIT's position on the draft law

The MoIT asserted that the draft law amendments address critical, mature issues and include necessary additions to fill existing regulatory gaps. The proposed changes have been carefully assessed for their impact, covering renewable and new energy, which have been trialed for years.

For emerging areas like offshore wind and nuclear power, the draft law establishes guiding principles and delegates detailed regulatory work, aligning with current needs for gradual implementation and iterative evaluation.

According to the MoIT's power development plan (Power Plan 8) and estimates, by 2030, peak power capacity will increase by 40,000 MW, reaching 90,000 MW compared to about 50,000 MW at the end of 2024. Northern Vietnam will require 20,000 MW, the South 18,000 MW, and the Central region 2,000 MW.

The ministry noted that this is a significant increase, and power projects often take 3-5 years to build. Therefore, a new law is needed soon to facilitate policy and institutional development, supporting planning and investment for integrating new power sources into the grid. This will help attract social resources to ensure energy security and include mechanisms for mobilizing renewable, new, and nuclear energy investments.

"Given these pressing needs, the government has proposed passing the law in a single session," the MoIT stated.

Clarifying power purchase commitments

The committee expressed concern over Clause 8, Article 5, which outlines minimum long-term power purchase commitments by buyers. This clause could contradict the principles of competitive markets outlined in Clause 1, Article 60 of the draft law, which emphasizes transparency, equality, and fair competition without discrimination.

In a competitive electricity market, power plants can bid against each other to maximize output, ensuring the most cost-effective energy sources, like hydropower, are utilized. If long-term power purchase commitments are required, buyers such as the Vietnam Electricity Corporation (EVN) would bear significant financial burdens, impacting its balance sheets and contravening market trends.

The committee advised a careful review of this clause.

The MoIT explained that “contractual power volume” in the electricity market refers not to a physical guarantee but a financial commitment within long-term contracts (Qc). The rationale behind this is to ensure investment security, especially as Vietnam transitions away from coal power and integrates LNG, a critical baseload power source that supports renewable energy development.

Due to the higher investment and operational costs of LNG compared to other power sources, it is less competitive in the open market. Without long-term contractual commitments, LNG plants would struggle to recover their investments, which would deter investors and impact energy security.

“To guarantee stable revenue and debt servicing, investors require buyers to commit to minimum long-term power purchases,” the MoIT elaborated.

The ministry also underscored the strategic importance of nuclear energy as a reliable, large-scale baseload power source that is green and sustainable. Therefore, it is necessary to include policies for nuclear energy development in the amended Electricity Law, laying the groundwork for future implementation when authorized.

Luong Bang