Vietnam’s Direct Power Purchase Agreement (DPPA) Framework under Decree No. 243/2026/ND-CP: Key Amendments and Continuing Legal Issues
On 26 June 2026, the Government of Vietnam promulgated Decree No. 243/2026/ND-CP, amending and supplementing Decree No. 57/2025/ND-CP governing the Direct Power Purchase Agreement (“DPPA“) mechanism between Renewable Energy Generators and Large Electricity Consumers.
The new Decree significantly expands the scope of eligible participants and revises several operational requirements applicable to the DPPA mechanism. At the same time, a number of important legal and practical issues remain unresolved and are likely to affect the development, financing and implementation of renewable energy projects.
In this Legal Insight, Phan Quang Chung, Managing Partner of BFSC Law LLC, reviews the principal amendments introduced by Decree No. 243/2026/ND-CP and discusses the continuing legal issues that investors, renewable energy developers, electricity retailers and large electricity consumers should carefully consider.
1. Key Amendments Introduced by Decree No. 243/2026/ND-CP
1.1 Expansion of Eligible Participants in the DPPA Mechanism
1.1.1 Expansion of Participants under the Private Connection Line DPPA
Decree No. 243 expands the scope of participants eligible to engage in the DPPA mechanism through private connection lines by including electricity retailers operating within industrial parks, industrial clusters and similar developments.
Notably, unlike the National Grid-based DPPA mechanism, the amended regulations do not exclude electricity retailers operating within urban areas or free trade zones from participating in the private connection line model.
Where acting as the electricity purchaser, an electricity retailer within an industrial park or industrial cluster must satisfy the minimum annual electricity consumption threshold applicable to a Large Electricity Consumer, as prescribed by the Ministry of Industry and Trade.
Furthermore, such electricity retailers may also participate as electricity sellers where they invest in renewable energy generation facilities supplying electricity to Large Electricity Consumers located within the relevant industrial park or cluster. In such circumstances, they are entitled to the same rights and subject to the same obligations as Renewable Energy Generators participating in the private connection line DPPA mechanism.
1.1.2 Expansion of Participants under the National Grid-based DPPA
Decree No. 243 also broadens the categories of eligible purchasers participating in the National Grid-based DPPA by introducing two additional groups:
- Large Electricity Consumers purchasing electricity for the operation of data centres; and
- Electricity retailers operating within industrial parks and industrial clusters, excluding those located in urban areas and free trade zones.
In addition, the Decree clarifies the concept of electricity consumers purchasing electricity for electric vehicle charging services, a category that had already been introduced under Decree No. 57. Specifically, the amendment confirms that electricity consumed for electric vehicle charging stations, charging posts and battery-swapping facilities serving commercial charging services falls within the scope of the DPPA mechanism.
It should also be noted that the replacement of the phrase:
“electricity retailers within industrial parks and industrial clusters authorised by Large Electricity Consumers”
with
“electricity retailers within industrial parks and industrial clusters (excluding urban areas and free trade zones)”
should not be interpreted as eliminating the existing mechanism under Decree No. 57 whereby Large Electricity Consumers may authorise an electricity retailer to purchase electricity on their behalf through the National Grid-based DPPA.
1.2 Revision of the Minimum Electricity Consumption Threshold
Under Decree No. 57, the methodology for calculating the electricity consumption threshold required for participation in the DPPA mechanism created practical implementation difficulties and, in certain circumstances, could not reasonably be applied (as discussed in our 2025 analysis).
Decree No. 243 revises the methodology for determining the minimum electricity consumption applicable to both Large Electricity Consumers and electricity retailers operating within industrial parks and industrial clusters for purposes of determining eligibility to participate in the private connection line DPPA mechanism in both Year N and Year N+1.
The revised calculation method substantially improves the practical operability of the eligibility assessment.
Nevertheless, the amended regulations still do not address situations where a Large Electricity Consumer or an eligible electricity retailer subsequently fails to satisfy the prescribed consumption threshold for the following year, thereby creating uncertainty regarding the continuation of existing DPPA arrangements. This issue is discussed further in Section 2.1 below.
1.3 New Obligations Imposed on Electricity Retailers within Industrial Parks and Industrial Clusters
Following the inclusion of electricity retailers as eligible participants under the private connection line DPPA mechanism, Decree No. 243 introduces a new Article 8a prescribing additional obligations applicable to such entities.
Under the new provisions, where a Large Electricity Consumer located within an industrial park or industrial cluster wishes to purchase electricity directly from a Renewable Energy Generator through a private connection line, the relevant electricity retailer is required to facilitate the implementation of such arrangement by performing various contractual and technical obligations.
However, where the Renewable Energy Generator is not simultaneously the electricity retailer, these obligations appear to interfere extensively with the commercial operations of the existing electricity retailer.
From both legal and commercial perspectives, these requirements may create a new regulatory bottleneck and are likely to generate practical implementation difficulties, as discussed further in Section 2.2 below.
2. Continuing Legal Issues under the Amended DPPA Framework
Although Decree No. 243 significantly expands the scope of the DPPA mechanism, several legal and practical issues remain unresolved. These uncertainties are likely to affect project development, contractual certainty, project financing and legal due diligence for renewable energy investments.
2.1 Continuing Eligibility Based on Annual Electricity Consumption
Neither Decree No. 57 nor Decree No. 243 provides a clear solution where the annual electricity consumption of a Large Electricity Consumer or an eligible electricity retailer falls below the prescribed minimum threshold during the relevant assessment period.
Under the current regulations, eligibility is determined based on electricity consumption during the twelve-month period from 1 November of Year N-1 to 31 October of Year N. Where the prescribed consumption threshold is no longer satisfied, the purchaser may cease to qualify for participation in the DPPA mechanism in Year N+1.
However, the legislation remains silent on several fundamental legal questions, including:
- whether the competent regulatory authorities may require the termination of an existing DPPA;
- whether the parties may lawfully continue performing the agreement despite the purchaser’s loss of eligibility; and
- whether continued performance of the agreement would constitute a contractual breach or merely a regulatory non-compliance issue.
These uncertainties may significantly affect the long-term bankability of DPPA projects, particularly where substantial investments have already been made in renewable generation facilities and private connection infrastructure.
2.2 Mandatory Amendment of Existing Electricity Supply Agreements
Article 8a of Decree No. 243 requires electricity retailers operating within industrial parks and industrial clusters to amend existing electricity supply arrangements, facilitate grid connection and satisfy various additional obligations where a qualifying Large Electricity Consumer elects to purchase electricity directly from a Renewable Energy Generator through a private connection line.
From a commercial perspective, this requirement represents a significant regulatory intervention in existing contractual relationships.
In practice, the implementation of this obligation is likely to encounter both legal and technical difficulties, particularly where the electricity retailer has already invested in electricity distribution infrastructure or entered into long-term electricity supply arrangements with customers located within the industrial park or industrial cluster.
Unless further implementation guidance is issued, these requirements may create unnecessary disputes between Large Electricity Consumers and electricity retailers regarding contractual rights, operational responsibilities and cost allocation.
2.3 Multiple Roles of Electricity Retailers under the DPPA Framework
Another important issue arising from the amendments concerns the possibility that an electricity retailer may simultaneously perform multiple functions within the DPPA framework.
Following the expansion of eligible participants under Decree No. 243, an electricity retailer operating within an industrial park or industrial cluster may potentially act in several different capacities, including:
- as an electricity purchaser under one DPPA arrangement;
- as an authorised purchaser acting on behalf of a Large Electricity Consumer under another arrangement;
- as a Renewable Energy Generator where it develops and operates its own renewable energy facilities; and
- as an electricity seller supplying electricity to customers located within the same industrial park or industrial cluster.
The current legislation provides no guidance on whether these multiple capacities may legally coexist, nor does it establish any framework governing the contractual relationships or conflict management mechanisms applicable to such situations.
From both regulatory and commercial perspectives, further clarification would be desirable to ensure consistency and legal certainty.
2.4 Direct Power Purchase Arrangements for Rooftop Solar Projects
One practical issue that continues to attract considerable market attention concerns the possibility of implementing DPPA arrangements for rooftop solar installations developed by third-party investors.
Many electricity consumers—particularly those that do not satisfy the minimum consumption threshold applicable to Large Electricity Consumers—wish to procure electricity generated from rooftop solar systems developed, financed and operated by independent investors.
Commercially, such arrangements could represent an efficient business model capable of expanding access to renewable electricity while reducing pressure on Vietnam’s national power system.
Nevertheless, neither Decree No. 243, Decree No. 57 nor Decree No. 58 currently provides a legal framework addressing this type of arrangement.
Accordingly, the legal feasibility of third-party rooftop solar DPPA structures remains uncertain under the existing regulatory regime.
3. Practical Considerations for Investors and Market Participants
Although Decree No. 243 represents a significant step towards expanding Vietnam’s Direct Power Purchase Agreement (DPPA) framework, the amendments also introduce several practical and legal challenges that market participants should carefully evaluate before implementing or restructuring DPPA projects.
In particular, the expanded participation of electricity retailers within industrial parks and industrial clusters creates additional contractual relationships and regulatory obligations that may prove difficult to implement in practice.
At the same time, several fundamental legal issues remain unresolved, including:
- the legal consequences where a purchaser subsequently ceases to satisfy the eligibility requirements for continued participation in the DPPA mechanism;
- the enforceability of existing DPPAs in such circumstances;
- the extent to which regulatory authorities may intervene in existing contractual arrangements;
- the ability of electricity retailers to participate simultaneously in multiple commercial capacities under different DPPA structures; and
- the absence of a regulatory framework for third-party rooftop solar power purchase arrangements.
These issues are expected to have a direct impact on project development, project financing, legal due diligence, transaction structuring and risk allocation in renewable energy investments.
Accordingly, investors, Renewable Energy Generators, Large Electricity Consumers and electricity retailers should conduct a comprehensive legal review of the revised DPPA framework before entering into new transactions or implementing existing projects.
Particular attention should be given to:
- eligibility requirements throughout the project lifecycle;
- contractual mechanisms addressing changes in regulatory status;
- risk allocation provisions in Power Purchase Agreements (PPAs), grid connection agreements and project documentation;
- potential regulatory intervention affecting existing contractual relationships; and
- legal due diligence relating to the long-term enforceability of DPPA arrangements.
A carefully structured contractual framework remains essential to mitigate regulatory risks and minimise potential disputes arising during project implementation.
Disclaimer
Disclaimer: This publication is provided solely for general information purposes and reflects the personal legal analysis of the author as of the date of publication. It does not constitute legal advice and should not be relied upon as a substitute for professional legal advice in relation to any specific transaction or circumstance.
Readers should seek independent legal advice before making any investment, commercial or legal decisions based on the information contained in this publication.
Contact
For further information regarding Vietnam’s Direct Power Purchase Agreement (DPPA) framework, renewable energy projects, project development, project finance or energy-related transactions, please contact us.
Author
Phan Quang Chung
Managing Partner
BFSC Law LLC
📞 Tel: (+84 24) 7108 2688 (Ext. 102) ✉ Email: [email protected]
Phan Quang Chung is the Managing Partner of BFSC Law LLC. He has more than two decades of experience advising domestic and international clients on Corporate & M&A, PPP and Infrastructure, Energy Projects, Capital Markets, Banking & Finance, Corporate Governance and complex commercial transactions.
His practice focuses on investment structuring, project development, mergers and acquisitions, infrastructure projects, renewable energy, capital markets and cross-border transactions involving both private enterprises and listed companies.