Vietnam Catalyzes Electricity Market Framework with Key DPPA Policy Updates

Vietnam -- March 2025

Vietnam’s Direct Power Purchase Agreement (DPPA) mechanism has been a critical step toward liberalizing the electricity market, allowing renewable energy generators (RE GENCOs) to sell power directly to large consumers instead of through EVN, the state utility. Since its pilot phase in 2020, DPPA faced challenges in pricing mechanisms, contractual clarity, and grid integration. 

To address these, the government introduced Decrees No. 56, 57, and 58 (March 2025), refining DPPA regulations and renewable energy incentives. 

1. Expanded Consumer Eligibility (Decree 57/2025/ND-CP): DPPA participation, previously restricted to industrial users, now includes businesses operating EV charging networks, broadening market participation. Large electricity consumers must meet MOIT-defined thresholds based on past 12 months’ usage or projected demand for new participants.  

2. Strengthened Rooftop Solar Integration: Under the new framework, rooftop solar producers selling power to third parties cannot exceed 20% of total generation, preventing excessive reliance on private solar trading. Surplus electricity follows market-based pricing, aligned with ground-mounted solar rates. 

3. Clearer Power Procurement Rules (Decree 56/2025/ND-CP): The decree establishes competitive bidding for gas-to-power, coal, and renewable projects listed in national or provincial power plans with multiple investors. Additionally, a standardized Power Purchase Agreement (PPA) draft is required in tenders, reducing uncertainties for investors and ensuring fair contract terms. 

4. Incentives for Energy Storage & R&D (Decree 58/2025/ND-CP): To improve grid reliability, electricity storage systems now receive priority incentives. The policy also encourages domestic R&D in renewable energy, supporting local innovation and reducing reliance on foreign technology. 

   
   

   Discussion 

Key updates, such as greater flexibility in defining large electricity customers, the inclusion of biomass power, clearer participation rules for rooftop solar power in the direct power purchase agreement (DPPA) mechanism, and the introduction of a surplus electricity sales mechanism, reflect the government’s proactive approach and long-term vision in advancing the DPPA framework, encouraging renewable energy, and safeguarding the environment.

While the previous decree established the initial framework for the DPPA mechanism, Decree 57 represents a major step forward, swiftly and flexibly addressing its shortcomings. It expands the pool of participants while ensuring fairness and transparency in electricity transactions.

The revised DPPA framework is expected to accelerate corporate renewable energy adoption, aligning with Vietnam’s net-zero 2050 target and brands’ RE100 compliance. These updates strengthen investor confidence but necessitate implementation transparency to unlock Vietnam’s full renewable potential from carbon certificates to green energy contracts. 

Vietnam News Agency's infographic on 2030 goal of Power capacity from Renewable energy

References:

Nguyen, T. (2025, March 21). Decree upgrade becomes electricity market catalyst. Vietnam Investment Review - VIR; https://vir.com.vn/. https://vir.com.vn/decree-upgrade-becomes-electricity-market-catalyst-124944.html ‌