Decree 57/2025 - Key Features and Impact on Direct Power Purchase Agreements in Vietnam

Introduction

Following the launch of the new Electricity Law on 30 November 2024, which took effect on 1 February 2025 (Electricity Law 2024), Decision No. 768/QD-TTg (Decision 768) issued on 15 April 2025 by the Prime Minister of Vietnam approved the revised National Power Development Plan VIII (PDP 8) for the period 2021–2030, with a vision to 2050. This decision replaces the previous Decision No. 500/QD-TTg, dated 15 May 2023.

Key highlights of the revised PDP8 are that onshore and nearshore wind capacity is forecast to reach between 26,066 MW and 38,029 MW by 2030, while offshore wind capacity is projected to be 17,032 MW by 2035. Solar power capacity targets have been raised to between 46,459 MW and 73,416 MW. Biomass power is set to contribute between 1,523 MW and 2,699 MW by 2030, and waste-to-energy between 1,441 MW and 2,137 MW by 2030. Higher targets are set for the period from 2031 to 2050.

This is a positive development from the perspective of rooftop solar developers. Prior to Decision 768, the only basis to develop new rooftop solar power within the 2023 version of PDP 8 appeared to be in the form of self-produced, self-consumed power under Decree 135/2024/ND-CP because the capacity of then existing projects (or projects that were approved at the time) exceeded the target set forth by the 2023 version of PDP 8, and this would have continued to be the case until 2030.

The above capacity targets require renewable developers to be incentivized to invest in projects. They also require facilitating offtake of power produced from such projects directly by consumers. In this regard Decree 58/2025/ND-CP (which was issued and came immediately into effect on 3 March 2025 and replaces Decree 135/2024/ND-CP) outlines new regulations for the development of renewable energy and new energy sources, with a particular focus on offshore wind power projects.

Decree 57

To implement Electricity Law 2024, Decree 57/2025/ND-CP (Decree 57) was issued on 3 March 2025 and came immediately into effect. Decree 57 sets out regulations on the mechanism for direct electricity purchase and sale between renewable energy power generation units and large electricity users in Vietnam. This would promote electricity purchase and sale through direct power purchase agreements (DPPAs), as well as through electricity term contracts, electricity purchase or sale options and electricity futures contracts in Vietnam.

Decree 57 replaces Decree 80/2024/ND-CP (Decree 80), which had set out rules around renewable energy generators and large electricity consumers engaging in DPPAs. The electricity price for such DPPAs under Decree 80 was subject to specific regulations and involved more administrative oversight. Decree 57 introduces clarity for renewable energy generators and large consumers to sell and purchase electricity directly, whether through a private grid or through the national grid. The electricity price can be negotiated but should not exceed the applicable ceiling generation tariff for the corresponding type of renewable energy.

The scope of sources of renewable electricity qualified for DPPAs under Decree 57 includes ocean energy, geothermal energy, hydropower, biomass, waste-to-energy, and other renewable energy sources permitted under the Electricity Law 2024. Importantly, private rooftop solar systems (RTS) can also participate in the direct sale of electricity through DPPAs to large customers. Electric vehicle charging businesses are now eligible to participate in on-grid DPPAs as well.

RTS projects that have physical DPPAs (see note on physical DPPAs below) with large electricity consumers can also sell surplus electricity to licensed electricity retailers in industrial parks, economic zones, export processing zones, industrial clusters, high-tech zones, concentrated information technology zones, high-tech agricultural zones or the like (where those units are located) and/or to Vietnam Electricity (EVN). However, if the sale is made to EVN (both inside and outside these zones and clusters), the sold surplus electricity must not exceed 20% of actual output. This allows surplus electricity to be sold, providing an additional revenue stream for RTS projects. The purchase and sale price of surplus electricity can be contractually agreed but should not exceed the applicable ceiling generation tariff for ground-mounted solar.

DPPA models and offtake contracts

Decree 57 sets out two primary types of DPPAs:

1. the grid connected model, which involves the sale and purchase of electricity between a renewable energy developer and large consumers through the national grid. Decree 57 permits solar, wind and biomass projects (x) having a minimum capacity of 10 MW and (y) participating in the competitive wholesale electricity market to sell electricity through the national grid; and
2. the private DPPA model, which is an off-grid model (see note below on private grids) but there may be some grid connected elements as well on account of excess power being sold into the national grid. All renewable energy projects qualified under Decree 57 can enter a private DPPA.

Decree 57 further specifies three types of on-grid offtake contracts which a renewable energy developer can enter:

• A PPA with EVN, under which renewable energy developers can sell their entire generation output to EVN on the Vietnam Wholesale Electricity Market (VWEM). The payments are made based on the spot price at the time of delivery. For this PPA, Decree 57 now only sets out key required contents, instead of the more detailed PPA template under Decree 80. This might allow for more negotiation flexibility on their terms under Decree 57, provided the PPAs cover the required key contents and are not contrary to the provisions of Decree 57.¹

• Physical DPPAs with large customers, under which the price of the electricity includes charges for electricity (at wholesale spot price), plus service fees, adjustments, etc.

• Financial DPPAs (which are forward contracts or contracts for differences) with large customers or their authorised electricity retailers, under which revenue is determined by the difference between the committed price under the contract and the spot price.

Flexible pricing

The negotiated price for electricity under a DPPA is agreed upon by parties to the DPPA but cannot exceed the applicable ceiling generation tariff for the corresponding type of renewable energy. This cap (which is set by Vietnam’s Ministry of Industry and Trade (MOIT)) ensures that the prices remain within a regulated range, promoting fairness and preventing excessively high prices that could disadvantage consumers or distort the market.

This is an improved position on Decree 80, which allowed prices to be negotiated without explicitly mentioning a cap.

Smaller consumers and developers

Under Decree 80, DPPAs could only be made between a renewable generator and a large customer or “eligible electricity retail unit”. “Eligible electricity retail unit” under Decree 80 meant electricity retail units in industrial parks, economic zones, export processing zones, industrial clusters, high-tech zones, concentrated information technology zones, high-tech agricultural zones or the like, that were granted electricity operation licences for electricity retail in these zones and clusters, had electricity purchase volumes from 200,000 kWh/month or more and were connected to a voltage level of 22 kV or higher. This was a hard requirement under Decree 80.

Decree 57 continues to use that concept but removes the condition that offtakers under DPPAs must have an electricity purchase output of at least 200,000 kWh/month and be connected to a voltage level of at least 22 kV. It instead links customer eligibility to a minimum consumption threshold to be issued from time to time by the MOIT in accordance with stages of development of the local electricity market. To remain eligible under Decree 57, it is understood that a large electricity consumer must consume at least the minimum amount prescribed by the MOIT. It is important for offtakers under DPPAs to monitor MOIT's regulations to ensure they meet the minimum take amount for ongoing qualification under Decree 57.

By removing this condition, Decree 57 allows a wider range of electricity retailers to participate in the DPPA market, since the minimum consumption threshold can now be varied by the MOIT. This can include smaller consumers who previously did not meet the high consumption threshold as prescribed in Decree 80. The removal of these conditions lowers the barriers to entry for businesses and consumers wishing to engage in direct power purchase agreements, thereby encouraging the adoption of renewable energy. It also helps facilitate participation by smaller renewable projects in the DPPA market and supports increased adoption of rooftop solar installations.

Private grid

Decree 80 did not provide a specific definition of a "private grid" under its off-grid DPPA model. Instead, it introduced the concept of a "private line model" without imposing detailed requirements or definitions for the infrastructure involved. By providing a clearer definition of what constitutes a “private grid”, Decree 57 enables provisions of a legal framework that would help avoid ambiguities and potential disputes between parties involved in DPPAs. The definition of “private grid” includes overhead lines, underground cables, transformers, and associated equipment, which outlines the necessary infrastructure for connecting renewable energy generators to consumers.

To develop a private grid, the following should be taken into account:

1. Renewable generation facilities that exceed 1MW in capacity must obtain an electricity operating licence, which is issued by the MOIT. Approvals are also required from the local People’s Committee.
2. Renewable generation facilities must conduct environmental impact assessments and obtain necessary environmental permits.
3. Private grids must comply with national technical standards and regulations to ensure safety, reliability, and efficiency. For grid-connected models, the integration of private grids with the national grid must be in line with the approved national or provincial power master plan.
4. Renewable energy projects may be required to provide financial guarantees or insurance to cover potential risks and liabilities. Renewable energy generators and consumers must report their transactions to the local People's Committee.
5. Compliance with all regulatory requirements must be continuously monitored and maintained to ensure the ongoing validity of the project.

National Power System and Market Operation Company

From August 2024 onwards, the National Load Dispatch Centre has been separated from EVN to form the National Power System and Market Operation Limited Liability Company (NSMO).

Separating the National Load Dispatch Center from EVN and establishing NSMO as an independent entity enhances transparency and reduces potential conflicts of interest in the electricity market. NSMO, being an independent operator, can manage the power system and market transactions more impartially, fostering a more competitive and efficient electricity market.²

The NSMO is regulated by the MOIT and is expected to ensure that the power system and market operations are directly overseen by a regulatory body focused on industry standards and market regulations.