Vietnam to ease DPPA rules to expand access for power consumers, retailers

Vietnam's Direct Power Purchase Agreement (DPPA) Decree proposes to ease restrictions on large power consumers and power retailers. (Photo: iStock)

Less than a month after the Vietnamese government issued the new Electricity Law, it has introduced five draft decrees for public consultation, with one focusing on the Direct Power Purchase Agreement (DPPA) mechanism. The draft decrees aim to relax the regulations for large power consumers and power retailers, hoping to invigorate the green electricity trading market.

Vietnam ministry to ease DPPA rules for power consumers, retailers

Under the current decree, only the Vietnam Electricity Group (EVN) and power retailers are eligible to participate in the DPPA mechanism. However, the new draft proposes extending the service to provincial and municipal units under EVN, allowing them to provide similar services. Additionally, while the current law limits power consumers to the manufacturing industry, the new draft removes these industry restrictions.

Previously, the regulations required power retailers to be entrusted by large power consumers to purchase green electricity from EVN or renewable energy generators, with a minimum monthly purchase of 200,000 kWh. The draft decree eliminates the 200,000 kWh requirement, and due to the changes, the list of eligible entities for purchasing electricity will now include EVN’s provincial and municipal units.

The draft also introduces a qualification review system. Under the virtual DPPA model, large power consumers whose average monthly consumption falls below 200,000 kWh will undergo qualification reviews by the Ministry of Industry and Trade (MoIT) by December 15 each year. After the results are announced within 15 days, these consumers will temporarily lose the right to participate in the DPPA mechanism.

Vietnam passed the amendment to the Electricity Law in November 2024. (Photo: Vietnam National Assembly)

DPPA draft decree is set to enacted in February 2025

In addition to the DPPA details, the MoIT has proposed revisions to other laws, including specific regulations on offshore wind power and self-use generation in the Renewable Energy Law, parts of the Power Development Plan related to liquefied natural gas, power operation licenses, and power engineering safety regulations.

The MoIT aims to quickly gain parliamentary approval after the public consultation, with the revised laws expected to take effect alongside the new Electricity Law on Feb. 1, 2025.

According to the Vietnam National Power Development Plan (PDP8), the goal is to increase the share of solar and wind power in total installed capacity to over 60% by 2050, compared to around 30% currently.

The new Electricity Law provides a clearer framework for the development of renewable energy and low-carbon sources like nuclear power, while maintaining the security of the power system and ensuring reasonable electricity prices.

Source: The Investor, Baker McKenzie, Vietnam Briefing