Key Highlights of Decree No 57/2025 on the Mechanisms for Direct Power Trading Between Renewable Energy Generation Entities and Large Electricity Consumers

On 03 March 2025, the Government issued Decree No. 57/2025/ND-CP which provides regulations on the mechanisms for direct power trading between renewable energy generation entities and large electricity consumers and took effect from the date of promulgation (“Decree No. 57”). Decree No. 57 officially repeals Decree No. 80/2024/ND-CP dated 03 July 2024 (“Decree No. 80”) on the same matter with the objective of further improving the legal framework for DPPA in Vietnam.

Accordingly, Decree No.  57 continues to maintain the two forms of DPPA, including direct power purchase via private grid connections and via the national power grid. In comparison with Decree No. 80, Decree No. 57 introduces several adjustments to enhance the feasibility of the DPPA mechanism, aligning with the Law on Electricity 2024, effective from 01 February 2025 with the following key updates:

1.          Expanding the scope of application   

Under the previous regime, only solar and wind power generators were eligible for participation in the DPPA mechanism. Decree No. 57 adds biomass power to the list of eligible sources. This expansion helps diversify Vietnam’s renewable energy supply and encourages investment in electricity production from agricultural and forestry by-products and other biomass materials, promoting more efficient use of renewable energy.

Furthermore, while Decree No. 80 limited eligible consumers to manufacturing entities, Decree No. 57 broadens the scope of eligibility to include electric vehicle charging service providers. This amendment is intended to promote the development of electric vehicle charging infrastructure, facilitate the transition to green transportation, and promote clean energy use in the transport sector.

2.          Additional requirements for large electricity consumers

Decree No. 57 sets out specific criteria for determining eligibility of large electricity consumers to participate in the DPPA scheme. Accordingly, Decree No. 57 classifies large electricity consumers into two categories: (i) Customers who have used electricity for 12 months or more, with an average electricity consumption over the past 12 months that meets or exceeds the consumption threshold for large electricity users as specified in the Competitive Wholesale Electricity Market Operation Rules issued by the Ministry of Industry and Trade; and (ii) Customers who have used electricity for less than 12 months, whose electricity consumption is determined based on their projected demand and is not lower than the consumption threshold for large electricity users under the Competitive Wholesale Electricity Market Operation Rules issued by the Ministry of Industry and Trade.

These clear criteria simplify the identification of eligible customers and facilitate smoother implementation of the mechanism.

3.          Limitation on surplus rooftop solar power sold to Vietnam Electricity (EVN)

Decree No. 57 introduces a new restriction for rooftop solar power systems installed and operated by renewable energy generators, the surplus electricity sold to EVN must not exceed 20% of the total actual electricity output.

The selling price of surplus electricity is determined based on the average market electricity price from the previous year and must not exceed the ceiling price of ground-mounted solar power. This provision helps better control the rooftop solar market and avoid adverse impacts on the national grid’s stability.

4.          Introduction of price caps

While Decree No. 80 did not provide specific regulations on ceiling prices under the DPPA mechanism, Decree No. 57 introduces clearer limits. For the direct power purchase mechanism via private grid connections, the electricity selling price must not exceed the maximum price set in the generation price bracket applicable to the corresponding type of power source.

For surplus electricity from renewable energy generators sold to EVN, the price and volume are to be mutually agreed upon by the parties, but must not exceed the maximum price within the generation price bracket for the respective type of power source. The inclusion of ceiling price regulations helps prevent electricity price manipulation and ensures fair competition in the renewable electricity market.

5.          Strengthening the management and supervision of electricity trading transactions

Decree No. 57 introduces detailed provisions on the management and supervision of electricity trading transactions between power generators and large electricity consumers regarding the procedures for participating in direct power purchases via the national grid as stipulated in Article 26 of Decree No. 57. These provisions aim to ensure that the procedures are carried out smoothly, transactions are more transparent, and all activities are in compliance with legal regulations, while also establishing measures for handling violations, if any.

6.          Facilitating the development of the renewable electricity wholesale market

A notable feature of Decree No. 57 is the establishment of a mechanism to promote the development of a renewable energy wholesale market. This allows renewable energy generators to sell electricity directly to large consumers without intermediaries, creating opportunities to optimize pricing and enhance market competitiveness. It also enables large consumers to access reliable and reasonably priced renewable electricity.