Update: 07.10.2025
The Government’s Decree No. 80/2024/ND-CP, effective from July 3, 2024 (“Decree 80“), is considered the first legal framework to regulate the mechanism of direct power purchase between renewable energy power generation units and large electricity users. However, in the face of the strong development of the renewable energy sector, this decree has revealed certain problems and limitations. To meet the practical requirements of socio-economic development and ensure the effective operation of the direct power purchase and sale mechanism for the participating parties, on March 3, 2025, the Government issued Decree No. 57/2025/ND-CP regulating the direct power purchase and sale mechanism between renewable energy power generation units and large electricity users (“Decree 57“) to annul the previous Decree 80. The introduction of Decree 57 is considered to have expanded the scope of application, increased flexibility and promptly solved problems in the implementation of the DPPA mechanism.
This article will review some new regulations on the direct power purchase mechanism under Decree 57 to give the Client an overview of the regulations that are likely to impact your business activities.
1. Objects of direct electricity purchase and sale through the national grid include additional biomass power generation units
According to the previous regulations in Decree 80, power generation sources participating in the DPPA mechanism through the national grid only include wind power and solar power. However, Article 2.2.a of Decree 57 has officially added biomass electricity to the group of subjects allowed to participate.
Biomass power or biomass electricity is a form of renewable energy produced by using biomass resources such as crops, plants, forests, organic waste, and other resources to generate electricity. The process includes steps from raw material collection, processing to power generation.
With the advantage of being an agricultural country, Vietnam is estimated to generate about 60 million tons of biomass waste from agricultural production each year – an abundant and untapped resource. The expansion of power generation objects in the DPPA mechanism helps to effectively utilize this by-product, reduce environmental pollution, and encourage investors to promote the development of biomass power projects in Vietnam.
2. Changes in conditions on capacity and consumption for large electricity users
One of the limitations of Decree 80 is the rigid conditions for large electricity users, specifically including: (i) average monthly electricity consumption of 200,000 kWh or more; (ii) the connection voltage level is 22kV or higher; and (iii) electricity must be used for production purposes. These conditions have created barriers for many other businesses that want to participate in the DPPA mechanism.
In Decree 57, these conditions have been adjusted in a more flexible direction. Specifically, the conditions on capacity and consumption output for large electricity users will be regulated and flexibly adjusted by the Minister of Industry and Trade to suit each period of development of the power system instead of specifying the electricity consumption output of 200,000 kWh/month or more, the connection voltage level is 22kV or higher as in the Decree 80. In addition, Decree 57 has also expanded the target of customers, no longer limited to enterprises that use electricity for production purposes but allows businesses operating in other fields including service providers to participate in the DPPA mechanism.
This change not only contributes to removing barriers to participation but also expands access to the mechanism for small and medium-sized enterprises, thereby promoting competitiveness and wider access to renewable energy in the economy.
3. Supplementing regulations on the mechanism for selling surplus electricity from rooftop solar power
A prominent new point of Decree 57 is clearer regulations on the treatment of surplus electricity output from rooftop solar power systems. Accordingly, rooftop solar power generation units are allowed to sell electricity directly to large electricity users in the same zone or industrial park, and at the same time can sell the surplus output to electricity retailers in that area. The price of this surplus electricity is agreed upon by the parties themselves but must not exceed the ceiling price in the electricity generation price bracket of the terrestrial solar power type.
This mechanism not only facilitates investment in rooftop solar power systems, but also helps investors optimize profits, avoid waste of excess power, and encourage the development of a sustainable distributed power generation model.
4. The participating parties may agree on the selling price by themselves but must be within a certain limit
According to the provisions of Clause 1, Article 6 of Decree 57, in case of direct electricity purchase and sale through a separate connected power grid, the electricity sale price will be agreed upon by the parties themselves but must not exceed the ceiling price set by the electricity generation price bracket.
This point is markedly different from Decree 80, which gives the parties full power to negotiate prices without being limited by any ceiling. The addition of the selling price limit in Decree 57 shows an effort to tighten state management, ensuring that the parties do not arbitrarily push the price too high or too low, causing market instability. At the same time, the regulation still retains the right of the parties to actively negotiate prices, thereby maintaining flexibility and fairness in the power purchase and sale mechanism.
5. Proposal to apply the two-component electricity price separation mechanism
In addition to the above-mentioned positive changes and adjustments, the Ministry of Industry and Trade still needs to continue to study and promulgate regulations and guidelines on electricity prices in the DPPA mechanism, specifically the mechanism of separating transmission prices and fees from electricity.
Currently, electricity prices are made up of two factors: the price of electricity generation plus fixed costs such as transmission and system operation fees. In fact, Vietnam is applying a one-component price, that is, the electricity price is included in the selling price. However, this is making it difficult to determine electricity prices transparently, especially in the DPPA model through the national grid such as: How will the cost to pay for the operation of the national grid be determined? How to balance costs to ensure that the cost of transmitting electricity to users is not too high?
Therefore, to solve these problems, Vietnam should soon implement the application of two-component electricity tariffs to dissect the cost of electricity transmission, apply to the DPPA mechanism, in order to create synchronization and fairness between electricity buyers and sellers, including EVN, producers, electricity-consuming units.
In general, the introduction of the DPPA mechanism brings many practical benefits to both electricity consumers, renewable electricity investors and the national economy. For businesses, DPPA helps to proactively control energy costs in production and business activities through long-term contracts, minimize price risks and improve brand image by using clean energy. This is also an effective solution for businesses to fulfill their commitment to sustainable development, reduce greenhouse gas emissions and meet the Net Zero commitment in 2030. On the investor side, DPPA opens up opportunities to directly approach large customers, increase capital recovery and improve financial feasibility for renewable power projects. At the same time, this mechanism also contributes to reducing pressure on the national grid, encouraging the development of renewable energy and promoting the process of building a transparent and modern competitive electricity market in Vietnam.
Currently, Decree 57 has established specific regulations related to the DPPA direct power purchase and sale mechanism, and in the coming time, this mechanism may continue to be guided in more detail or have important adjustments and supplements. Therefore, businesses need to proactively update and closely monitor legal developments related to the DPPA to ensure that their activities and policies are always in accordance with current legal regulations. We will continue to monitor and provide updates on new changes in this area.
ADK VIETNAM LAWYERS