Decree 57: Vietnam Launches Full DPPA Regime For Renewable Power

On 3 March 2025, the Government of Vietnam issued Decree 57/2025/ND-CP (Decree 57), establishing a formal legal framework for Direct Power Purchase Agreements (DPPAs) under the Electricity Law 2024. Decree 57 replaces the pilot mechanism introduced under Decree 80/2024/ND-CP (Decree 80)and introduces clearer regulatory pathways for renewable energy generators (RE GENCOs) and large electricity consumers to transact electricity directly, either through private infrastructure (Off-Grid) or the national transmission system (Grid-Connected).

This legal update outlines the key provisions of Decree 57, highlights distinctions from the earlier pilot scheme, and provides a comparative overview of DPPA models to assist stakeholders in navigating the updated regulatory landscape.

1. Definition of Private Grid under the Off-Grid DPPA Model

For the first time, Decree 57 formally defines a "private grid" under the Off-Grid DPPA Model. Specifically, the following infrastructure qualifies:

1. Transmission systems developed, installed, and operated by RE GENCOs, comprising overhead lines or underground cables, transformers, and associated equipment used to connect the power generation facility with the consumer load point; and
2. Private rooftop solar systems (RTS) developed and owned by RE GENCOs, enabling the direct sale of electricity to large electricity consumers, unless otherwise agreed between the parties.

This codification resolves prior ambiguity under Decree 80 and confirms that RE GENCOs may construct and operate their own infrastructure to deliver electricity directly to end users, without requiring grid access or Vietnam Electricity (EVN) coordination — unless contractually agreed.

2. Participants in the Off-Grid DPPA Model

Decree 57 confirms and expands the categories of participants eligible to engage in Off-Grid DPPAs:

i. Renewable Energy Generators (RE GENCOs)

These are entities that own and operate renewable energy generation assets. Under Decree 57, qualifying technologies now include:

1. Solar power;
2. Wind power;
3. Ocean energy;
4. Geothermal energy;
5. Hydropower;
6. Biomass;
7. Waste-to-energy (newly added under Decree 57); and
8. Other renewable energy sources as permitted under the Electricity Law 2024

The inclusion of waste-to-energy projects is a significant expansion that enables municipalities and waste management operators to participate in the DPPA market while addressing solid waste challenges.

ii. Large Electricity Consumers

To qualify under the Off-Grid DPPA Model, consumers must meet the following thresholds:

1. Have an average electricity consumption of at least 200,000 kWh/month over the past 12 months (if consumption history is available); or
2. Be newly registered with expected monthly consumption of at least 200,000 kWh at the time of applying for DPPA participation.

3. Treatment of Excess Electricity under Off-Grid DPPAs

Decree 57 introduces a three-part mechanism governing the treatment of excess electricity produced by renewable generators under Off-Grid DPPAs, depending on the location and infrastructure involved:

i. Sale to the National Grid(where permitted)

RE GENCOs may sell up to 20% of actual RTS electricity output to EVN, its generation subsidiaries, power corporations (PCs), or other authorised power companies.

The applicable tariff is based on the average system marginal price (SMP) of the previous calendar year, as published by the National Electricity System and Market Operator (NSMO) but must not exceed the ceiling price for ground-mounted solar projects (currently VND1,184.90/kWh or approximately US¢4.74/kWh).

ii. Sale within Energy Parks or Industrial Clusters

RE GENCOs operating within energy parks or industrial clusters may sell excess electricity to internal consumers or licensed electricity retailers.

Prices are subject to commercial negotiation, provided that the final price does not exceed the relevant ceiling price under the applicable tariff framework.

iii. Sale from Other Power Sources to the Grid

For non-RTS renewable energy sources (e.g. biomass, waste-to-energy), RE GENCOs may negotiate sales with EVN or PCs.

The electricity price and volume must be consistent with the tariff bracket applicable to the relevant energy source.

In addition, Decree 57 allows large electricity consumers to procure additional electricity from PCs or zone-authorised retailers to supplement their DPPA-sourced supply, enhancing supply security and flexibility.

4. Grid-Connected DPPA Model – Expansion to Biomass and Market Participants

Decree 57 reaffirms the Grid-Connected DPPA Model, which facilitates electricity transactions through the national transmission grid without relying on EVN's centralised dispatching system. It expands eligibility to biomass power plants, in addition to solar and wind projects.

Key features of the model include:

i. Renewable Energy Generators (RE GENCOs):

1. Must have a minimum installed capacity of 10 MW; and
2. Must participate directly in the Vietnam Wholesale Electricity Market (VWEM).

Eligible generators now include:

1. Ground-mounted solar projects;
2. Wind farms (onshore and offshore); and
3. Biomass plants.

ii. Large Electricity Consumers and Authorised Electricity Retailers:

1. Large consumersare defined consistently with the Off-Grid DPPA model (≥200,000 kWh/month average usage).
2. Authorised retailersare entities permitted to purchase electricity from PCs or other electricity suppliers for resale to end users within industrial parks or energy zones.

5. Comparative Overview: Decree 57 vs. Decree 80

Conclusion and Outlook

Decree 57 formalises Vietnam's DPPA mechanism, offering a viable and legally enforceable path for corporate energy buyers and renewable energy developers to enter into direct electricity transactions. The inclusion of broader energy sources and private grid arrangements, combined with pricing flexibility, opens new opportunities for clean energy procurement and project structuring.

Nevertheless, practical implementation will require:

1. Clarifications through MOIT-issued circulars on DPPA registration, pricing transparency, and dispatch coordination;
2. Grid availability assessments and coordination with EVN and Power Corporations; and
3. Careful review of contracts to ensure bankability while complying with local regulations.

Next Steps for Market Participants:

1. Identify eligible project structures and consumer profiles under the Grid-Connected or Off-Grid models;
2. Prepare draft Power Purchase Agreements aligned with Decree 57 requirements and market-based pricing;
3. Engage with the Department of Industry and Trade and relevant authorities early to clarify grid connection or private grid approvals; and
4. Monitor regulatory updates to align ongoing transactions with implementation practice.

Click here to download: Legal Update - Vietnam Launches Full DPPA Regime for Renewable Power (EN) - April 2025.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.