03 updates on the direct power purchase agreement mechanism under Decree No. 57/2025/ND-CP

On 03 March 2025, the Government issued Decree No. 57/2025/ND-CP prescribing the direct power purchase agreement mechanism between renewable energy generators and large customers (“Decree 57”). Decree 57 took effect on 03 March 2025 and replaced Decree No. 80/2024/ND-CP to ensure the principles and participation model under the direct power purchase agreement (“DPPA”) mechanism are consistent with the spirit of the Law on Electricity 2024.

In this article, BLawyers Vietnam presents 03 notable new provisions under Decree 57 regarding the DPPA mechanism that promote renewable energy development in Vietnam.

1. Adjustment to participants under the DPPA mechanism

In comparison with the previous provisions, Decree 57 has adjusted the participants in the DPPA mechanism as follows:

1. Adjusting and unifying the definitions of participants in accordance with the Law on Electricity 2024, such as renewable energy generation units and large electricity customers (“LECs”).
2. Implementing the participants under the DPPA mechanism through the national grid to include biomass power generation units, in addition to solar and wind power. Biomass power is a abundant renewable energy source that can be generated from organic waste such as crops and agricultural residues. Therefore, implementing biomass energy in the DPPA mechanism will promote the utilization of this resource, contribute to the diversification of renewable energy sources, and support the broadening of participants in the DPPA framework.
   • Implementing DPPA through the national grid shall be limited to three energy groups, in contrast to the form of DPPA with a dedicated direct connection. This limitation is due to the fact that other forms still present numerous issues requiring further study and do not yet ensure feasibility and effectiveness when applied via the national grid.
3. Adding the purpose of providing electric vehicle charging services to the list of permitted electricity usage purposes for LECs participating in DPPA through the national grid. This addition is appropriate and aligns with the growing demand for power in the context of promoting environmentally friendly, low-emission electric vehicles.

2. Additional conditions for large customers

According to Decree 57, LECs must meet the following conditions in order to participate in the DPPA:

1. At the time of submitting the application to participate in the DPPA:
   1. For LECs who have used electricity for 12 months or more: The total volume of average electricity consumption over the most recent 12-month period (determined based on the total volume of electricity purchased from a Power Corporation (or its authorized, decentralized unit, or a Power Company must not be lower than the minimum electricity consumption threshold for LECs specified in the competitive wholesale electricity market operating Regulations issued by the Ministry of Industry and Trade.
   2. For LECs that have used electricity for less than 12 months: The registered consumption volume, based on the anticipated electricity purchase from a Power Corporation (or its authorized, decentralized unit), or a Power Company, must not be lower than the minimum electricity consumption threshold for LECs specified in the competitive wholesale electricity market operating Regulations issued by the Ministry of Industry and Trade.
2. For continued participation in the DPPA mechanism in the subsequent year, the LECs must meet the following conditions:
   1. LECs that have participated in the DPPA mechanism for fewer than 12 months may continue to participate in the DPPA mechanism for the following year.
   2. For LECs that have participated in the DPPA mechanism for 12 months or more: their average electricity consumption from November of the preceding year to the end of October of the current year (determined based on the total volume of electricity purchased from a Power Corporation (or its authorized, decentralized unit), or Power Company) must not be lower than the minimum electricity consumption threshold for LECs specified in the competitive wholesale electricity market operating Regulations issued by the Ministry of Industry and Trade.

3. Additional mechanism for handling surplus electricity generation

Decree 57 implemented a mechanism to handle the surplus electricity generated by Units of renewable energy generation fed into the national grid or into the grids of industrial zones or clusters when such output is not fully sold to LECs via dedicated connection lines (“Surplus Electricity”). The Surplus Electricity shall be handled based on the following principles:

1. The Surplus Electricity generated by Units of renewable energy generation that invest in and install rooftop solar power systems and sell electricity to Vietnam Electricity, Power Corporation, or Power Company shall not exceed 20% of the actual generated electricity. The purchase price for the Surplus Electricity shall be the average electricity market price of the preceding year, as published by the System and Market Operator, and shall not exceed the ceiling price of the generation price bracket applicable to ground-mounted solar power.
2. In the case where Units of renewable energy generation invest in and install rooftop solar power systems to sell electricity directly to LECs located within industrial zones or clusters, and sell the Surplus Electricity to retail electricity units within such zones or clusters, the volume and price of the Surplus Electricity shall be mutually agreed upon by both parties but shall not exceed the ceiling price of the generation price bracket applicable to ground-mounted solar power.
3. Except for the cases stipulated under items 3.(i) and 3.(ii) above, Surplus Electricity generated by Units of renewable energy generation shall be sold to Vietnam Electricity, Power Corporation, or Power Company. The volume and purchase price of such Surplus Electricity shall be mutually agreed upon by both parties, but shall not exceed the ceiling price of the generation price bracket applicable to the corresponding type of renewable energy.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 20 May 2025

Writer: Chau Dang