DPPA mechanism for Vietnam promulgated by the Government

The Government has just promulgated Decree No. 80/2024/ND-CP dated July 3, 2024, regulating the DPPA mechanism between renewable energy generators (REG) and large electricity users (LEU).

Accordingly, Decree No. 80/2024/ND-CP stipulates that the direct power purchase agreement (DPPA) is the purchase, sale, and distribution of electric power carried out in 02 forms: DPPA through separate connection lines and the National Grid.

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* DPPA through separate connection lines is the activity of signing PPA and distribution agreement through an individual connection line between REG and LEU as per regulations specified in Chapter II of this Decree.

* DPPA through the National grid is an activity of buying and selling electricity through forward agreements between REG and LEU (or electricity retailers in the models of authorized zones and clusters) and electricity trading activities carried out as provided in Chapter III of this Decree including:

- REG sells all produced electricity into the spot electricity market of the competitive wholesale electricity market;

- LEU or electricity retailers in the models of authorized zones and clusters sign PPAs with the Power Corporations (or authorized/decentralized units) to purchase the entire power to meet their demand;

- REG and LEU or electricity retailers in the models of zones and clusters authorized to buy and sell electricity through forward agreements.

The Decree also stipulates the Principles of DPPA through separate connection lines. Regarding the form of DPPA through the separate connection line, REG and LEU conduct DPPA through the separate connection line under the following principles:

- Power purchase agreements (PPAs) between REG and LEU in case of DPPA through a separate connection line agreed upon by both parties in accordance with the provisions of Article 22, the Electricity Law and related legal documents include the following main contents: agreement subject; the purpose of use; service standards and quality; rights and obligations of the parties; electricity price, payment method and term; agreement termination conditions; liability for agreement breach; duration of the agreement; responsibility for investment, construction, management and operation of separate connection lines; other contents agreed upon by both parties;

- The electricity selling price is agreed upon by both parties, except for the cases specified in Clause 4, Article 6 of this Decree.

REG negotiates, agrees, and signs PPAs on capacity, output, and price for surplus electricity output with Vietnam Electricity (or authorized unit) as regulated.

In addition to DPPA activities through separate connection lines specified above, LEU is allowed to buy and sell electricity with the Power Corporations (or electricity retailers other than the Power Corporation) as regulated.

In case the Power Unit performs both functions of power generation and power retail in the models of zones and clusters, combining buying power from the national power system and other on-site power sources to retail power to customers using electricity in models of zones and clusters, retail electricity prices for customers are implemented in accordance with the Regulations on implementation of electricity prices promulgated by the Ministry of Industry and Trade (MOIT).

Regarding the form of DPPA through the national grid, the Decree also clearly regulates on the sale of electricity by REG through the spot electricity market and the purchase and sale of electricity with the Power Corporations. According to regulations, the spot electricity market price is the total electricity market price formed according to each transaction cycle of the spot electricity market and is determined by the total sum of the market electricity price and the market power capacity price. In which, these prices are determined following the Regulations on operating the competitive wholesale electricity market promulgated MOIT.


  • 03/07/2024 09:55
  • Translator: Mạnh Hùng
  • 1251