You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 10, 2025

Clear Guidance for Direct Power Purchase Agreements in Vietnam

Subscribe to Updates

On March 3, 2025, the government of Vietnam issued Decree No. 57/2025/ND-CP, regulating the direct power purchase agreement (DPPA) mechanism between renewable energy generators and large electricity consumers (“Decree 57”). Decree 57 took immediate effect and replaces Decree No. 80/2024/ND-CP on the same subject. The new regulations enable investors to kickstart their investment plans for DPPAs in Vietnam. Below are the key changes and provisions of Decree 57.

Participants in On-Grid DPPAs

Decree 57 expands the eligibility criteria for participating in DPPAs via the national grid (on-grid DPPAs):

  • Sellers: In addition to wind and solar power generators, biomass energy generators with a capacity of 10 MW or more can now participate.
  • Buyers: Electric vehicle charging businesses are now eligible to participate, broadening the scope beyond just production businesses.

Large Electricity Consumers

Instead of setting definite criteria at the government decree level, Decree 57 defines large electricity consumers based on average electricity consumption as set out in wholesale electricity market regulations to be issued by the Ministry of Industry and Trade (MOIT). Although the threshold for DPPA participation remains for now at 200,000 kWh per month, Decree 57 will allow the MOIT to adjust this threshold as deemed necessary.

Decree 57 also provides specific guidance for large electricity consumers based on their consumption period. To participate in both private off-grid DPPA (selling electricity directly via a grid system separate from the national grid) and on-grid DPPA models, large electricity consumers must meet the minimum threshold for electricity consumption set by the MOIT under the Vietnam wholesale electricity market regulations (“Minimum Consumption Threshold”). Consumers with a consumption history of at least 12 months must have already met the Minimum Consumption Threshold at the time of registration or notification, while those whose consumption period is less than 12 months must commit to meeting the Minimum Consumption Threshold.

For continued participation in the DPPA model in subsequent years, one of the following conditions must be met:

  • The total period of DPPA implementation is less than 12 months; or
  • The consumer’s average electricity consumption between November 1 of the preceding year and October 31 of the current year meets or exceeds the Minimum Consumption Threshold.

Private Off-Grid DPPAs

Decree 57 introduces detailed rules related to private off-grid DPPAs, including, among others, the following:

  • Rooftop solar power generators are entitled to sell surplus electricity provided it does not exceed 20% of the total actual generated electricity.
  • While parties can agree on the selling price of electricity, Decree 57 mandates that the price cannot exceed a ceiling price within the price bracket for the corresponding type of power source. This price bracket (to be approved and published by the MOIT annually) is calculated using a statutory formula that considers average fixed prices, operation and maintenance costs, and other variable expenses.

DPPA Contracts

Decree 57 provides clearer regulations for private off-grid DPPA and on-grid DPPA contracts.

For private off-grid DPPAs, renewable energy generators and large electricity consumers will enter into a power purchase agreement that has no mandatory template, under which the generator will sell electricity to the consumer at a price they both agree upon. The electricity price may be negotiated, but it must fall below the ceiling price for the relevant power source as specified by the price bracket.

In the on-grid DPPA framework, there are three types of contracts:

  • EVN Power Purchase Agreement (EVN PPA): Under this agreement, renewable energy generators will sell their entire generation output to the national power corporation, Vietnam Electricity (EVN), in the spot market, with payments based on the spot price for immediate delivery.
  • Customer Power Purchase Agreement (Customer PPA): This contract between a customer and the power corporation covers the customer’s total electricity needs. The agreement includes charges for electricity (at wholesale spot price), service fees, adjustments, and costs for electricity purchased to cover any shortfall in generation (at retail price). EVN is required to update and report to the MOIT the applicable costs for 2025, including system service usage, clearing settlement, and distribution grid energy loss conversion factors, before the costs are published on the electricity market website. This will facilitate investors to run financial models for investments in on-grid DPPAs.
  • Forward Contract (or Contract for Differences): Renewable energy generators and customers enter into a contract specifying the committed price and consumption ratio. The contract’s revenue is determined by the difference between the committed price and the spot price.

Details of these three contracts are specified in the appendices of Decree 57.

Adding Terms to Statutory Template Contracts

Under Decree 57, renewable energy generators, large electricity consumers, and EVN have the right to supplement the statutory templates for power purchase agreements and other agreements with additional terms and content to clarify the rights and obligations of the parties, provided that such additional terms do not contradict relevant legal provisions.

Related Professionals

Industries

Energy

Location

RELATED INSIGHTS​ 

June 6, 2024
On January 18, 2024, Vietnam’s National Assembly passed a new Land Law (“Land Law 2024”) that is scheduled to take effect on January 1, 2025, replacing the current Land Law 2013. To mitigate challenges faced by the real estate market, in late May 2024, the government proposed amendments to the Land Law that would move the effective date up five months, to August 1, 2024, pending approval by the National Assembly. One of the key sectors to be impacted by the Land Law 2024 is the energy sector, which requires large land areas for power plants and infrastructure, especially given Vietnam’s 2050 net zero emissions commitment. Below are highlights of how the new Land Law 2024 will affect Vietnam’s energy sector. Annual payment of land rental Under the Land Law 2013, investors implementing energy projects (e.g., solar power projects) are entitled to choose to lease land with either (i) an annual rental payment or (ii) a single upfront payment for the entire term of use. Under the Land Law 2024, these investors are only allowed to use land in the form of an annual rental payment. As the annual land rental is calculated in five-year cycles, based on the land price table decided by the state, this new restriction means that investors in energy projects will face an additional risk of a sudden increase in land rental, disrupting their financial planning. Investors using land sites leased with annual rental payments are also not allowed to mortgage their land-use rights, but can only mortgage assets attached to the land, at credit institutions licensed to operate in Vietnam. Accordingly, this may affect the ability of energy projects to obtain financing during the development stage, because they no longer have assets that can be mortgaged. Obtaining land Under the Land Law 2024,
Read More
June 4, 2024
Thailand’s Department of Mineral Fuels (DMF) is in the process of preparing a notification that will open the application period for onshore petroleum exploration and production rights in the country’s 25th bidding round. The 25th round of bidding will cover nine petroleum blocks, including the northeastern areas (blocks L1/66, L2/66, L3/66, L4/66, L5/66, L7/66, and L9/66) and central areas (blocks L6/66 and L8/66). The DMF estimates that application submissions will commence around the middle of 2024, and the successful bidder will be announced at the end of the same year. Based on previous rounds of bidding, applicants must meet the following key criteria: The applicant is a company with the purpose of carrying out petroleum exploration and production; The applicant commands the necessary assets, machinery, equipment, tools, and specialists to explore for, produce, sell, and dispose of petroleum; The applicant has not abandoned its operations under a concession or been subject to revocation of a concession in Thailand; and None of its personnel, shareholders, directors, or authorized directors is listed as a person who has abandoned its operations under a concession, or has been subject to revocation of a concession in Thailand. If the applicant does not itself possess all the qualifications under (2) above, it must have another government-approved company that possesses all the qualifications under (2) and has a capital or management relationship with the applicant, and the applicant must supply guarantees that the company will make available to the applicant all necessary assets, machinery, equipment, tools, and specialists for the applicant to explore for, produce, sell, and dispose of petroleum. Companies with a vested interest in petroleum exploration and production in Thailand must remain vigilant for updates. The DMF is expected to provide an update and more details on the bidding very soon. For more details
Read More
June 4, 2024
As Vietnam continues its rapid economic development, the demand for sustainable and reliable energy sources has never been more critical. Solar power has emerged as a key component of Vietnam’s strategy to diversify its energy portfolio and reduce its carbon footprint. Recent developments of the regulatory framework governing solar power projects in Vietnam, as discussed below, highlight the country’s commitment to renewable energy and its efforts to create a conducive environment for solar power investments. Objectives for the Development of Solar Power Projects On May 15, 2023, the Prime Minister issued Decision No. 500/QD-TTg, approving the National Power Development Plan for 2021-2030 with a vision to 2050 (“PDP VIII”). Following this, on April 1, 2024, the Prime Minister promulgated the Implementation Plan for PDP VIII (“Implementation Plan”). These documents underscore Vietnam’s commitment to promoting renewable energy, particularly solar. They emphasize self-production and self-consumption of solar power, the development of rooftop solar systems, and the promulgation of the direct power purchase mechanism. The integration of solar power with battery storage is also encouraged, contingent upon economic viability. PDP VIII sets ambitious capacity targets for solar power. By 2030, the capacity is projected to reach approximately 12,836 MW, accounting for 8.5% of the total power capacity. This includes 10,236 MW from concentrated solar power and 2,600 MW from self-production and self-consumption solar power. By 2050, the capacity is expected to rise to between 168,594 MW and 189,294 MW, representing 33.0-34.4% of the total power capacity. Additionally, PDP VIII and the Implementation Plan list 27 solar power projects, totaling 4,136.25 MW, slated for implementation after 2030. However, these projects may be advanced under self-production and self-consumption arrangements. Draft Decree on Direct Power Purchase Agreements On April 15, 2024, the Ministry of Industry and Trade (“MOIT”) released a draft decree on direct power
Read More
June 3, 2024
Nearly a year after Vietnam’s issuance of its National Power Development Plan for 2021-2030, with a vision to 2050 (“PDP VIII”), the Prime Minister issued Decision No. 262/QD-TTg dated April 1, 2024, approving the Implementation Plan for PDP VIII (“Implementation Plan”). Among other contents, the Implementation Plan sets forth the list of prioritized power source projects through 2030, and the capacity of renewable energy sources through 2030, as detailed below. Prioritized Power Source Projects through 2030 The Implementation Plan lists out six types of power source projects prioritized for development through 2023 according to the capacity approved under PDP VIII. They include: Domestic gas-fired power (14,930 MW) LNG-fired power (22,400 MW) Coal-fired power (30,127 MW) Cogeneration power using residual heat, blast furnace gas, and by-products of technological lines in industrial facilities (2,700 MW) Hydropower (29,346 MW) Pumped storage hydropower (2,400 MW) With respect to each type, the Implementation Plan provides details of projects by location and their operational progress. Such information is set out in Schedule III of the Implementation Plan. For power source projects not included in this list, the provincial People’s Committees will consult with the Ministry of Industry and Trade (“MOIT”) and relevant agencies on compliance with the planning prior to appraisal and issuance of in-principle investment approval. Renewable Energy Projects through 2030 The Implementation Plan allocates the capacity of the following renewable energy sources by locality/region: Offshore wind power (6,000 MW) Onshore wind power (21,880 MW) Hydroelectric power (29,346 MW) Biomass electricity (1,088 MW) Electricity produced from waste (1,182 MW) Rooftop solar power for self-production and self-consumption (2,600 MW) Battery storage (300 MW) With respect to each renewable energy source, the Implementation Plan provides a list of certain renewable energy projects through 2030, including the expected life cycle of the projects, and the allocated capacity
Read More