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​ 

December 15, 2023
As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2023. This guide outlines the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Country Guides series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource for planning international business strategy and researching new markets. The full Guide to Doing Business in Thailand is available through the button below.
Read More
July 25, 2023
Thailand’s Energy Regulatory Commission (ERC) is in the process of reviewing a draft regulation that updates the nationality qualifications for the ultimate shareholders and directors of applicants for an energy business license. The draft ERC Regulation Re: Qualifications, Documents and Application for Electricity Business—which is intended to replace the ERC Regulation Re: Application and Permission for Electricity Business B.E. 2551 and its amendments—is likely to be adopted soon and will affect licensed companies that are foreign majority owned when they apply for or renew their energy business licenses. The draft regulation requires partnerships, limited companies, and public limited companies to have the following qualifications unless there is an international agreement granting national treatment for a specific commitment (mode 3 or mode 4) or exemption by other laws: Juristic persons must be established under Thai law or registered in Thailand with the objective of carrying out electricity business; For private limited companies, foreign ultimate shareholders must not hold more than 49% of the total shares, and the number of the foreign shareholders must not exceed half of all shareholders; At least half of all directors must have Thai nationality; and Any authorized directors must have Thai nationality. When the draft regulation is adopted, it will not take retroactive effect on previously granted energy business licenses, which will continue to be valid until they expire if there is no material change to the license as defined by the draft regulation. Once the license is up for renewal (energy business licenses are normally issued for a specific period of time), it will be subject to the draft regulation. All license applications submitted prior to the effective date of the draft regulation and under consideration will be deemed applications for a license under the draft regulation. As noted above, the new qualification requirements
Read More
July 7, 2023
Cambodia has the potential to be one of the top countries in the world for generating renewable energy through solar, based on the average amount of sunlight hours available per day and the consistent sunshine throughout the year. The Cambodian government has recognized this potential and has made major updates to its energy policies in recent years. Solar power is now taking over a much larger portion of the total energy mix in Cambodia, especially as a number of utility-scale solar power plants have come online in recent years. The long-term Power Development Master Plan 2022–2040 sets out the long-term energy policy for Cambodia and requires a bigger role for renewables. The use of solar power will play a key role in this aim to increase the role of renewables, with the plan foreseeing almost 30% of all national power generated through solar technologies by 2040. Two of the latest legislative and regulatory steps by the government are the Ministry of Mines and Energy’s guidelines for rooftop solar systems, and most recently the long-awaited Environment and Natural Resources Code, which was enacted on June 29, 2023. Rooftop Solar Projects Many companies, from small startups to multinationals, are exploring the potential for rooftop solar in Cambodia. However, despite the favorable natural factors, the regulatory framework was not always clear or friendly to rooftop solar, hampering investment. This started slowly changing with the adoption of the first solar energy regulation in 2018, which provided the country’s first official guidance on both solar power plants and rooftop solar. It provided some much-needed clarity, but the 2018 solar energy regulation—and especially the subsequent electricity tariff schemes—often kept rooftop projects from being financially viable. Many players in the industry voiced their doubts about the regulations and tariffs, focusing especially on the capacity charge—a monthly
Read More
May 19, 2023
On May 15, 2023, Vietnam’s Deputy Prime Minister Tran Hong Ha signed Decision No. 500 of the Prime Minister approving the National Power Development Plan for the period 2021-2030, with a vision to 2050 (“PDP VIII”), following extensive public consultations and multiple rounds of review since the first draft version was circulated in 2021. The plan was approved in the context that in the past few years, a number of large power projects have been behind schedule for operation, while new projects have not been able to be implemented due to waiting for additional planning. PDP VIII is the master plan for the development of the power source and transmission grid at 220kV or higher; services in renewable energy and new energy in Vietnam; and works connecting the power grids of Vietnam and neighboring countries. We set out below some quick updates regarding PDP VIII. 1. Development Targets Key development targets are summarized in the table below: Investors in coal, domestic gas, and LNG projects may need to have a conversion plan ready given the 2050 targets to convert to other sources of energy. 2. Solar Projects A list of 27 solar power projects that were planned for the period of 2021-2030 but which have not been assigned to investors are not allowed to be deployed but can be considered after 2030, except in the case of deployment in the form of self-production and self-consumption (Appendix IV). These projects represent 4,136.25 MW of capacity that will be left on the sidelines until 2030. 3. Hydropower Projects A list of 14 potential hydropower projects can be considered if economic and technical conditions allow for more hydropower development (Appendix III). These projects represent 1,244 MW of capacity that can be added to the hydropower targets for 2030. 4. Projects Prioritized for
Read More