(As updated)
Electricity of Vietnam (EVN)–a state-owned corporation–has been the exclusive supplier of electricity. Power consumers have not been allowed to purchase electricity directly from renewable energy (RE) developers. That has changed. The Government has issued regulations (Decree 57[1] and Decree 243[2]) which allow RE developers to sell their electricity to: (i) large power consumers or (ii) retail electricity providers (REPs) in industrial, export-processing zones, hi-tech parks under direct power purchase agreements (DPPAs). This Article discusses the DPPA mechanism, and the conditions and requirements for RE developers and power consumers to participate. It also discusses the contract templates, and the pricing mechanism under Decree 57 and Decree 243.
Notable changes in Decree 57 and Decree 243.
The first DPPA legal framework was set out in Decree 80[3]. It was soon clear that Decree 80 was inadequate. It was replaced by Decree 57 in March 2025, and Decree 57 was amended by Decree 243 in June 2026. A number of new rules were introduced and have been incorporated in Decree 57 and new Decree 243. Below are the notable changes:
- The concept of “large power consumers” has been changed in a broad and open manner. The requirement for monthly minimum power consumption (200kWh) and the requirement on the voltage connection level of large power consumers have all been removed. Data centres and charging stations for electric vehicles are also allowed to participate in the DPPA mechanism.
- Now RE developers can sign DPPAs directly with REPs, and REPs can also sign DPPAs directly with large power consumers (in case REPs develop RE and sell electricity to large power consumers).
- In the past, only wind and solar power plants were permitted to participate in the virtual DPPA mechanism. Now, biomass power plants are also permitted to sell electricity under the virtual DPPA mechanism.
- In the past, the price that electricity could be sold to large power consumers under the physical DPPA mechanism was capped, and price was subject to ceiling prices notified by the Ministry of Industry and Trade (MOIT) from time to time. Now, RE developers and its customers (large power consumers and REPs) under the physical DPPA are free to negotiate their own price.
- Owners of rooftop solar projects can sell the remaining volume of electricity to EVN at the average price of electricity during the previous year. However, the maximum remaining volume of electricity is limited to 50%[4] of the actual capacity to generate power. Subject to the capacity of the EVN grid, the 50% cap can be expanded after 2030.
- Procedures for final acceptance, safe operation and fire prevention have been specified and introduced in Decree 243.
- Several administrative and licensing procedures have been simplified. For example, rooftop solar power projects under the “self-production and self-consumption” mechanism are no longer required to be registered with local authorities.
- A number of technical requirements have been introduced in Decree 243. For example, RE developers are required to install zero-export devices, smart meters, and remote data collection devices.
DPPA mechanisms.
There are two forms of the DPPA mechanism in Decree 57 and Decree 243: the physical DPPA and the virtual DPPA. Under the physical DPPA format, RE developers can sell their electricity directly to large power consumers or to REPs via private transmission lines. But what if the distance from an RE plant to the factories of large power consumers or REPs is long? It will often be impractical and costly to develop a long private transmission line. In those cases, RE developers can sell their electricity using EVN’s grid under a virtual DPPA mechanism. Under the virtual DPPA mechanism, RE developers can sell their electricity to EVN, and EVN can then sell electricity to large power consumers from its pooled supply of power. This innovative and creative feature should open wide the pathway for renewable energy. The virtual DPPA mechanism, in which EVN is an intermediate party, allows EVN to charge for the transmission, and distribution of electricity to power consumers. Consumers that purchase electricity from RE developers under the virtual DPPA mechanism will not receive 100%-clean energy from the selected RE developer. That is, the electricity under the virtual DPPA mechanism, is transmitted via EVN’s grid, and EVN’s grid contains electricity generated from many sources: coal, gas, RE sources, plus electricity imported from Laos and from China.
Conditions and requirements for RE developers and power consumers.
Under the physical DPPA mechanism, power plants that generate electricity from solar energy, wind, small hydropower, biomass, geothermal, ocean waves, tides, ocean currents, rooftop solar power and other forms of RE, are allowed to sell their electricity directly to large power consumers or to REPs. Of course, power plants must have power generation licenses, power retailing licenses, and RE projects must be included in the national power development plan known as PDP8. Those RE projects authorized to be developed under PDP8, can be found in Decision 262 of the Prime Minister dated April 1, 2024. In theory, existing RE projects that have been fully licensed can also participate in the DPPA mechanisms. In such case, existing PPAs which were signed with EVN must be terminated, and the RE project will not be able to carry forward the existing favourable feed-in tariff (FiT) they enjoyed under the signed PPAs.
Under the virtual DPPA mechanism, only biomass, wind and solar power plants can sell their electricity to large power consumers through EVN’s grid, and the capacity of biomass, wind and solar power plants must exceed 10 MW. Biomass, wind and solar power plants must have power generation licenses and these biomass, wind and solar power RE projects must be included in PDP8.
Contract Templates.
There is still no contract template for the physical DPPA. RE developers and large power consumers are free to negotiate and conclude DPPAs. Decree 57 provides only key terms and conditions (subject of the contract; purpose of use; service standards and quality; rights and obligations of the parties; electricity price, payment method and term; conditions for contract termination; liability for breach of contract; term of the contract; responsibilities for investment, construction, management and operation of transmission lines; other terms and conditions). From the RE developers’ perspective, a number of other provisions need to be included such as termination payment, operation and maintenance costs of the private transmission line, deemed delivery, foreign exchange risks, force majeure, guarantees, etc.
The arrangements, under the virtual DPPA mechanism, are specified in two separate agreements: (i) agreement between RE developer and EVN whereby RE developers can sell electricity to EVN at the market price (spot price), and EVN can re-sell the purchased electricity to large power consumers (or a pool of power consumers); and (ii) agreement between EVN and large power consumers (or a pool of power consumers) whereby large power consumers can buy electricity that EVN has purchased from RE developers plus electricity generated by EVN. In the past, the parties had to use PPA templates set out in Decree 80. These PPA templates have been removed from Decree 57. Now, Decree 57 provides only key terms and conditions. These key terms and conditions can be found in Appendices 1, 2, and 3 attached to Decree 57.
Pricing mechanism.
In the past, the price under the physical DPPA mechanism was capped, and it was subject to ceiling prices notified by MOIT from time to time. Now, the contracting parties to a physical DPPA, are free to negotiate the price of electricity. However, the price under the virtual DPPA must be the price stipulated in Decree 57 or it must be determined under formulae set out in Decree 57.
In particular, the price under a power purchase agreement between RE developers and EVN (ie, under the virtual DPPA mechanism) will be the market price (spot price) as determined each and every 30-minutes via the electricity competitive trading market. At this point, wind and solar power projects do not have a competitive advantage over conventionally powered plants in terms of price. As such, owners of solar and wind power projects may be unwilling to participate in the competitive electricity trading market.
Subject to the actual volume of electricity consumed by large power consumers, the price under the power purchase agreement between EVN and large power consumers (under the virtual DPPA mechanism) may vary. If the actual volume of electricity used by large power consumers is less than the agreed output capacity as set out in the forward contract between RE developers and large power consumers, the price will be determined under a formula set out in Decree 57. If the actual volume of electricity used by large power consumers is greater than the agreed output capacity, as set out in the forward contract between RE developers and large power consumers, the price which EVN charges large power consumers will include two components: (i) the price that is determined under formulas set out in Decree 57 (for the agreed volume), and (ii) EVN’s then retail price which applies to other consumers pursuant to EVN’s pricing policies and tariffs (for the volume that exceeds the agreed volume).
Under the forward contract between large power consumers and RE developers, large power consumers are responsible to pay RE developers if the full market price is less than the agreed price set out in the forward contract. Decree 57 is silent on a situation whereby the full market price exceeds the agreed price set out in the forward contract. This matter should be addressed by RE developers and large power consumers.
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The DPPA framework was introduced for the first time in 2024. However, the first legal framework (Decree 80) was implemented only for 7 months. The DPPA framework was replaced by Decree 57 in March 2025, and Decree 57 was further amended in June 2026. To date, only one DPPA has been executed. This new area requires a clearer and more comprehensive regulation. A sensible policy (including mandatory and voluntary policies) will promote the development of renewable energy. For example, the government can create favourable conditions and can shorten regulatory procedures for development of the DPPA mechanism, or the Government can require large-power consumers (data centres, cement/steel production, etc) to use renewable energy under DPPA arrangements or the government may provide incentives/subsidiaries for the development of renewable energy.
Rooftop solar power developers have more room to sell the remaining electricity to EVN (increasing from 20% to 50%) under Decree 243. However, the price of the remaining electricity that rooftop solar power developers sell to EVN is only the average price of electricity of the previous year. This price is low and it does not encourage the private sector to invest by a reason of cost efficiency (production costs vs selling price). A clear formula to compute the reasonable price should be introduced. These policies will be welcomed by the private sector.
In general, the issuance of Decree 57 and Decree 243 is a solid first step to promote the development of RE and to accelerate the DPPA mechanism in which exporting companies are keen to integrate carbon neutrality and green energy to meet global trade regulations.
[1] Decree 57/2025/ND-CP of the Government dated March 3, 2025 (“Decree 57”).
[2] Decree 243/2026/ND-CP of the Government dated June 26, 2026 (“Decree 243”).
[3] Decree 80/2024/ND-CP of the Government dated July 3, 2024 (“Decree 80”).
[4] The previous cap was 20%.
