Vietnam sets out framework for direct power purchase agreements

23 July 2024

On 3 July 2024, the Vietnam Government issued Decree No. 80/2024/ND-CP which regulates the Direct Power Purchase Agreement (“DPPA”) mechanism between renewable energy generation companies and large electricity consumers (“Decree 80”), with immediate effect. This DPPA regime has been in the works for more than seven years.

Decree 80 creates a direct market for renewable energy, potentially providing a boost to the sector and giving large electricity consumers more control over their power sources. This could lead to increased investment in renewable energy projects, contributing to the growth of the sector.

The DPPA regime under Decree 80 contemplates two models of DPPAs, namely private wire DPPAs where the sale and purchase of electricity is via private wire systems and virtual DPPAs where the sale and purchase of electricity is via the national grid connection.

This article discusses these models.