Vietnam Energy Direct Power Purchase Agreements

On July 3, 2024, the government of Vietnam (GVN) issued Decree No. 80/2024/ND-CP (Decree 80), creating a pathway for local companies to pursue direct power purchase agreements (DPPAs). After months of circulated proposals, this announcement marks a significant milestone for providers of renewable energy and demonstrates GVN’s commitment to decarbonizing its economy and achieving net-zero emissions by 2050.

Decree 80 establishes mechanisms for large energy consumers in Vietnam to purchase electricity directly from private firms producing renewable energy, enabling them to power their operations with renewable energy, in part or in full. If implemented effectively, this DPPA policy has the potential to help Vietnam attract private sector investment in renewable energy while meeting the needs of companies seeking to reduce emissions by integrating renewable energy sources into their operations.

Decree 80 creates the following two pathways for electricity trading, forwarding, and receiving activities:
•    Direct electricity purchase and sale via private connection line allows for the signing of electricity purchase and sale contracts and electricity delivery and receipt via separate connection lines between renewable energy generating units and large electricity users.
•    Direct electricity purchase and sale through the National Grid allows for electricity purchase and sale activities through forward contracts between renewable energy generating units and large electricity users (or electricity retailers in authorized zone and cluster models).

State-owned enterprises currently provide approximately 60% of installed capacity in Vietnam, with Independent Power Producers (IPPs) providing the remainder. The DPPA announcement will create opportunities for IPPs to gain market share in the medium to long term, especially for U.S. renewable energy companies seeking to support Vietnam’s industrial sector. Although Vietnam’s energy sector will continue to predominantly rely on fossil fuels in the near term, U.S. firms should continue to monitor GVN’s efforts to develop policy mechanisms to further support the deployment of renewable energy, particularly in the solar and wind subsectors.

Interested in learning more? Contact the U.S. Commercial Service Hanoi at office.hanoi@trade.gov