Issuance of Decrees Implementing the 2024 Electricity Law

Introduction

The Vietnamese government has issued a series of decrees to implement the 2024 Electricity Law (“Electricity Law“)[1]. The decrees took effect from the date of their issuance, and replaced/revoked several decrees, including decrees recently issued in 2024. These decrees are:

1. Decree No. 57/2025/ND-CP of the Government dated 3 March 2025 regulating the mechanism for direct electricity trading between renewable energy generation units and large electricity consumers (“Decree 57” or “DPPA Decree“);
2. Decree No. 58/2025/ND-CP of the Government dated 3 March 2025 providing details on the provisions of the Electricity Law on the development of renewable energy (“RE“) and new energy (“Decree 58” or “RE and New Energy Decree“); and
3. Decree No. 61/2025/ND-CP of the Government dated 4 March 2025 providing details on the provisions of the Electricity Law on electricity operation licences (“Decree 61” or “Operation Licence Decree“)

(collectively, “Decrees“).

This Update provides a summary of the key features of the Decrees and discusses how they interact to liberalise Vietnam’s electricity sector and promote the development of RE and new energy.

DPPA Decree

Decree 57 replaces Decree No. 80/2024/ND-CP of the Government dated 3 July 2024 (“Decree 80“), which introduced the concept of direct power purchase agreement (“DPPA“). Please see our November 2024 Legal Update titled “DPPA and Rooftop Solar Power Regulations” for further details.  By way of background, during the effective period of Decree 80, the following agreements as reported in the press were signed:

1. cooperation agreement under the DPPA mechanism between Power Construction Consulting Joint Stock Company 2 (“PECC2“) and H&M Vietnam signed on 19 November 2024;

2. agreements on cooperation on the potential of the DPPA mechanism and cooperation in the supply of solar modules between PECC2 and First Solar Vietnam Manufacturing Co., Ltd. executed on 10 December 2024; and

3. cooperation agreement under the DPPA mechanism between PECC2 and Solarvest Vietnam Co., Ltd. and Hai My Saigon Factory Co., Ltd. signed on 17 January 2025.

It is not clear if, pursuant to these agreements, any DPPAs were signed and projects implemented.

In terms of scope and models relating to DPPA, Decree 57 continues the foundation of establishing a framework for DPPA between RE producers (such as rooftop solar, solar, wind, or other renewable sources) and large electricity consumers in Vietnam as set out in Decree 80. It aims to promote the development of RE and enhance flexibility in electricity trading while ensuring compliance with the Electricity Law and related legislations.  

Under Circular No. 16/2025/TT-BCT of the Ministry of Industry and Trade (“MOIT“) dated 1 February 2025 on regulations on operation of competitive wholesale electricity market which took effect on the same date (“Circular 16“), the threshold of a minimum usage of 200,000 kWh per month defines a “large consumer”. Unlike Decree 80, Decree 57 grants MOIT the authority to determine from time to time the threshold for determining “large consumers”. However, MOIT has not yet exercised this authority to make any changes to the definition.   

Key Features

The key features of the DPPA Decree are set out below.

1. Scope and applicability. Decree 57 applies to RE generation units and large electricity consumers engaging in direct electricity transactions. Decree 57 sets out two DPPA models of power trading: (i) through the national grid; or (ii) via private lines.

• • Direct trading via the national grid (transactions via virtual/synthetic DPPAs)
    • It facilitates transactions through forward contracts within the competitive wholesale electricity market.
    • RE producers sell all generated electricity to the spot market[2], while large consumers purchase electricity through agreements with power corporations or authorised retail units.

• • Direct trading via private lines (transactions via physical DPPAs)
    • Parties (RE producers and large consumers) can negotiate and agree on electricity prices, which must not exceed the maximum price cap set within the applicable power generation price framework for the respective renewable energy types.
    • Contracts must align with Article 44 of the Electricity Law and include key terms such as party information, purpose, service quality, rights and obligations of parties, pricing, payment terms, termination conditions, liability for breaches, contract duration, and responsibilities for constructing and operating dedicated connection lines.

2. Objective. The DPPA Decree encourages growth of RE by enabling direct access to large consumers, bypassing traditional intermediaries, thereby promoting a competitive electricity market.

3. Contractual flexibility. Contracts are bilaterally negotiated, allowing customisation within the bounds of law and fostering a market-driven approach to pricing and terms.

RE and New Energy Decree

Decree 58 focuses on the development of RE and new energy in Vietnam, providing detailed regulations to implement the provisions of the Electricity Law relating to RE and new energy. This is the first comprehensive decree issued in Vietnam that governs matters relating to RE and new energy development, providing the legal framework for promoting clean energy sources. Decree 58 revokes Decree No. 135/2024/ND-CP dated 22 October 2024 (“Decree 135“) stipulating the mechanisms and policies to encourage the development of rooftop solar power for self-production and self-consumption. It is to be noted, however, that the provisions setting forth the policies to encourage RE and new energy development as contained in Decree 135, have been incorporated into Decree 58. 

Key Features

The key features of the RE and New Energy Decree are outlined below.

1. Scope and objectives. Decree 58 aims to promote the development of RE sources (e.g. solar, wind, and biomass) and new energy technologies (potentially including innovations like energy storage or hydrogen-based solutions). It establishes a legal framework to encourage these sectors through specific policies and incentives, the most notable of which include the following: 

• • Power projects from RE sources with installed power storage systems and connected to the national power system are given priority to mobilise during peak hours of the power system in accordance with regulations, except for self-produced and self-consumed power sources. 

• • Research and development (“R&D“) of technology in the field of wind power and solar power in Vietnam is encouraged and supported, pursuant to the Electricity Law. 

• • The implementation of programs for research, development, application of science and technology, production of solar panels, wind turbines, and power conversion equipment are prioritised.

2. Preferential policies. Decree 58 introduces incentives for RE projects, particularly those that integrate energy storage systems into the projects, and connect to the national grid. These projects are prioritised for dispatch during peak demand hours, addressing the intermittency challenges of renewable sources like solar and wind.

• • For offshore wind power investment. Foreign investors will be permitted to hold up to 95% of the charter capital in companies involved in offshore wind power projects. This represents a significant increase from previous regulations and is designed to attract more foreign capital and expertise to bolster Vietnam’s offshore wind energy sector. 

• • • Conditions for foreign investors: When participating in investment, bidding, or implementation for offshore wind power projects, foreign investors must meet the following requirements as stipulated in Article 28 of Decree 58:
      • Experience: They must have experience in developing at least one offshore wind power project that is operational in Vietnam or elsewhere. For joint ventures with multiple investors, the experience requirement is calculated based on the collective experience of all joint venture members.
      • Capital: This includes either direct investment or contributing at least 15% of the total project investment, with equity accounting for at least 20% of the contributed capital.
      • Domestic participation: The offshore wind project in Vietnam must include participation from domestic enterprises, holding at least 5% of the charter capital or voting shares in the project company. These domestic enterprises must either be 100% state-owned enterprises, or comprise state-owned enterprises that own more than 50% of the charter capital or voting shares.
      • Government approvals: (i) foreign investors must obtain written consent from the Ministry of National Defense, the Ministry of Public Security, and the Ministry of Foreign Affairs; and (ii) for investment guideline approval applications, the competent appraisal agency is responsible for collecting these opinions during the appraisal process. In other cases (e.g. investor selection), the agency organising the selection process must gather these opinions prior to proceeding with the selection process.
      • Local resource commitment: Foreign investors must commit to using human resources, goods, and services from domestic suppliers during the investment, construction, and operation phases, ensuring competitiveness in price, quality, progress, and availability.

• • • Conditions for domestic investors: Domestic investors including Vietnamese individuals and economic organisations established in and operating under Vietnamese law (excluding foreign investors mentioned above), must meet the following conditions to be eligible to participate in offshore wind project investment and bidding:
      • Financial capacity: They must contribute capital equivalent to at least 5% of the total expected project investment, with equity accounting for at least 20% of the capital contributed.
      • Experience: They must have experience in developing at least one operational energy project (in Vietnam or elsewhere), through direct investment, capital contribution at a prescribed rate, or involvement in project management, construction design, or construction. For joint ventures, their experience is calculated based on the collective experience of all members.

• • • Power purchase agreement (“PPA“) negotiation with Vietnam Electricity (“EVN“): The winning bidder must negotiate the electricity price for PPA with EVN. The selection of investors for offshore wind projects is governed by Article 29 of Decree 58, with the following key provisions:
      • Projects selling to the National Power System: (i) Except for projects where the Prime Minister simultaneously approves both the investment policy and the investor, all projects must comply with Vietnam’s laws on investment, bidding, and electricity; (ii) The electricity price ceiling in the bidding dossier must not exceed the maximum price within the offshore wind power generation price bracket, as set by MOIT for the bidding year; and (iii) The winning bid price serves as the maximum price for negotiations between the electricity buyer (i.e. EVN) and the winning investor.
      • EVN’s Role: EVN is obligated to purchase electricity as directed by the competent authority or the agency conducting the bidding.
      • Negotiation and contract timeline: (i) Within 24 months of signing the business investment project contract, the winning investor must approve the project feasibility study report; and (ii) Within 30 months of signing the contract, EVN and the investor must negotiate and finalise the PPA price to ensure timely project implementation in line with power development planning and national energy supply security.

• • • For projects for export (not via National Power System): (i) Investor selection must comply with laws on investment, bidding, and electricity; (ii) Projects must be fully implemented by a domestic investor or an economic organisation where domestic investors hold more than 50% of the charter capital of the project company; (iii) The electricity export price must not fall below the maximum price in the offshore wind power generation price bracket set by MOIT for the bidding year; and (iv) Business investment project contracts must follow bidding laws, while PPA is agreed upon by the parties, the provisions of which must comply with Vietnamese law. 

• • For new energy power projects. The following projects are entitled to preferential and support policies stipulated in Article 23.2 of the Electricity Law: (i) new energy power projects produced from 100% green hydrogen, 100% green ammonia, or 100% mixture of green hydrogen and green ammonia; (ii) projects supplying electricity to the national power system; and (iii) the first project for each type of new energy power. The specific and defined preferential mechanisms that these projects are entitled to include the following:

• • • Exemption from sea area usage fees during the basic construction period, which period should not exceed three years from the date of commencement of construction. There will be a 50% reduction in sea area usage fees for a period of nine years after the expiration of the exemption period of the basic construction period.

• • • Exemption from land use fees and land rent during the basic construction period, which period should not exceed three years from the date of commencement of the project construction. After the expiration of the exemption period of the basic construction period, the exemption and reduction of land use fees and land rent shall be implemented in accordance with the investment and land regulations.

• • • The minimum long-term contract electricity output is 70% of the loan principal repayment period but should not exceed 12 years, unless the investor and the electricity buyer have a separate agreement relating to this. This mechanism does not apply in cases where the project cannot generate the minimum committed output due to reasons attributable to the project side, or due to load demand or technical conditions that cause the power system to not consume all the electricity output of the power plant as stipulated in the contract.

3. R&D support. Decree 58 emphasises R&D in RE technologies, encouraging the development and domestic production of equipment such as solar panels, wind turbines, and power conversion systems. It provides State support for scientific research and technological applications in these areas.

4. Regulatory framework. Decree 58 aligns with the Electricity Law and other existing regulations, offering a structured legal basis for RE projects. It also makes reference to additional priority incentives under current laws, the details of which vary as discussed above.

5. Transitional Provisions. The RE and New Energy Decree contains the following transitional provisions:

• • Organisations and individuals owning rooftop solar power systems installed before 1 January 2021 and currently trading electricity with electricity providers are prohibited from developing additional power sources to increase their contracted capacity.

• • Rooftop solar power systems developed between 1 January 2021 and the effective date of this Decree (i.e. “3 March 2025“) which have not followed the procedures outlined in Decree 135, must comply with the provisions of this Decree.

• • Registration dossiers for self-produced and self-consumed rooftop solar power systems, including requests to sell surplus electricity, which were submitted before 3 March 2025, will continue to be processed in accordance with Decree 135.

• • Organisations and individuals who were assigned to sea areas by competent authorities for offshore wind power development surveys prior to 3 March 2025, may continue their survey activities based on the decisions of the relevant state agencies assigning those sea areas.

Operation Licence Decree

Decree 61 provides detailed regulations and guidance on the issuance, management, and conditions for obtaining permits for electricity-related activities under the Electricity Law. It aims to streamline administrative processes, ensure compliance with safety and operational standards, and support Vietnam’s electricity sector development.

Decree 61 revokes Articles 29 to 47 of Decree No. 137/2013/ND-CP dated 21 October 2013 detailing the implementation of a number of articles of the previous Electricity Law and the law amending and supplementing a number of articles of the previous Electricity Law, which have been amended and supplemented by Decree No. 08/2018/ND-CP dated 15 January 2018 and Decree No. 17/2020/ND-CP dated 5 February 2020 often referred to as Decree No. 137/2013/ND-CP).

Key Features 

Set out below are the key features of the Operation Licence Decree.

1. Scope and applicability. Decree 61 applies to organisations and individuals involved in electricity activities, including generators, transmitters, and distributors. It ensures that all operators, whether traditional or renewable, meet safety, reliability, and technical standards.

2. Conditions for issuing electricity activity permits. Entities must meet specific technical, financial, and organisational requirements, such as having qualified personnel and adequate infrastructure, and compliance with safety regulations. Detailed conditions vary depending on the type of activity (e.g. power generation and distribution).

3. Permit issuance process. The process involves submitting the required dossier to a competent authority (typically MOIT or its designated agencies).  The required documents to be submitted include legal entity registration, technical plans, safety compliance certificates, and financial capability proof.  Decree 61 specifies the timeframes for processing the application of permits, with provisions for online submission via the National Public Service Portal of MOIT.

4. Permit types and validity. Permits are categorised based on the nature of electricity activity. Validity periods are defined, with options for renewal or extension upon meeting renewal criteria.

5. Amendments, supplements, and revocation. Decree 61 outlines the procedures for modifying or supplementing permits, and provides the conditions under which permits may be revoked (e.g. non-compliance, and safety violations).  

6. Responsibilities and enforcement. Decree 61 stipulates the operational, safety, and environmental standards that permit holders must adhere to, with penalties for non-compliance with the same. Regulatory agencies are tasked with the enforcement of these standards.

7. Transitional Provisions. It is provided that entities holding permits issued before the effective date of Decree 61 (i.e. 4 March 2025) are given a prescribed grace period within which to comply with the new requirements or reapply for permits as may be necessary. 

How the Decrees Interact

The Decrees complement each other to modernise Vietnam’s electricity sector, particularly by promoting RE and introducing market mechanisms. Here’s how these Decrees connect:

1. Market liberalisation via DPPAs (Decree 57). Decree 57 allows RE producers to bypass EVN and sell electricity directly to large consumers, such as industrial parks and factories. This introduces competition into a previously monopolistic market, giving generators flexibility in pricing and crafting contracts while offering large buyers access to potentially cheaper and cleaner energy. It relies on the operational framework set by Decree 61 to ensure that participating entities are licensed and compliant.

2. Boosting RE (Decree 58). Decree 58 supports Decree 57 by creating a favourable environment for RE projects. For example, it may offer financial incentives or simplifies permitting processes, making it easier for generators to participate in DPPAs. It can also address grid integration, ensuring that RE from DPPAs can be efficiently transmitted, especially in the synthetic model using the national grid.

3. Regulatory Oversight (Decree 61). The Operation Licence Decree ensures that all players in this evolving market—renewable generators, private line operators, or grid participants—meet strict standards. This is critical as Decree 57 opens the market to new entrants and Decree 58 encourages more projects.  It maintains grid stability and safety, especially as decentralised renewable sources increase under the DPPA framework.

Combined Implications on Vietnam’s Energy Sector

When read together, the Decrees form a cohesive strategy to transform Vietnam’s electricity landscape. Some of their anticipated key combined effects are:

1. Accelerated RE growth. Decree 57’s DPPA mechanism, supported by the incentives provided for under Decree 58, encourages investments in renewable projects like solar and wind. Large consumers can directly procure clean energy, aligning with Vietnam’s goals to reduce fossil fuel reliance and meet international climate commitments. For example, a factory could sign up a physical DPPA with a nearby solar farm under Decree 57, supported by a streamlined approval process for solar farm development set out in Decree 58. An operation licence will eventually be granted pursuant to Decree 61.

2. Increased market competition. By breaking EVN’s monopoly on electricity purchases, Decree 57 fosters a competitive market. This could lower electricity costs for large consumers and provide renewable generators with stable revenue streams through direct contracts. The synthetic DPPA model, which involves spot market trading, adds further dynamism that would potentially stabilise prices for generators.

3. Enhanced regulatory framework. Decree 61 ensures that the liberalisation that the Decrees intend to achieve does not compromise reliability. This is because it mandates, among others, that all operators including those involved in DPPAs are qualified, thus reducing risks as the sector diversifies.

Issues and Challenges to Take Note of

While their combined intent is progressive, the Decrees also pose challenges:

1. Grid infrastructure. Increased renewable integration, especially via physical DPPAs, requires a robust grid. Vietnam may need upgrades to handle decentralised and variable energy inputs, which Decree 58 might address but will still demand investment.

2. Implementation complexity. The synthetic DPPA model’s reliance on forward contracts and market mechanisms requires a sophisticated electricity market, which Vietnam is still developing. Training and capacity-building will be essential.

3. Equity. Large consumers will benefit most from DPPAs, while smaller consumers remain tied to EVN. Policymakers must ensure broader access to these advantages over time.

Conclusion

The Decrees, when read together, reveal a strategic push to liberalise Vietnam’s energy sector, promote renewable energy, and maintain regulatory control over the energy sector: (i) Decree 57 opens the market with DPPAs, (ii) Decree 58 fuels renewable growth, and (iii) Decree 61 ensures stability. Together, the Decrees form a guiding framework for the implementation of the Electricity Law, which could drive a cleaner and more competitive energy future for Vietnam, provided infrastructure and implementation challenges are met proactively.

If you have any queries on the above, please feel free to contact any of our team members listed below.

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[1] Please see our December 2024 Legal Update titled “Vietnam’s New Electricity Law” for the key features of the Electricity Law.

[2] Under Article 3.82 of Circular 16, the spot [electricity] market is defined as the market that schedules mobilisation, calculates market prices according to bids and makes payments according to each trading cycle of the day for electricity buying and selling transactions between power generation units and power purchasing units. This definition replaces the previous definition of spot market under Article 3.79 of MOIT Circular No. 21/2024/TT-BCT dated 10 October 2024.