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A New Step Forward in Direct Power Purchase Agreements and Renewable Energy Development

On 26 June 2026, the Government issued Decree No. 243/2026/ND-CP, amending and supplementing certain regulations on the direct power purchase agreement mechanism between renewable energy generators and large electricity users, as well as regulations on the development of renewable and new energy.

Decree 243/2026 does not fundamentally change the structure of the DPPA mechanism. However, it addresses several practical issues arising during implementation, particularly in relation to self-generated and self-consumed rooftop solar power, battery energy storage systems, and electricity distribution mechanisms within industrial zones.

Key Highlights

First, Decree 243/2026 expands the scope of participants in the DPPA mechanism. In addition to large electricity users engaged in production activities, the Decree adds data centres and operators of electric vehicle charging stations, charging pillars or battery swapping cabinets for business purposes. Retail electricity units in industrial zones, export processing zones, economic zones, high-tech zones and industrial clusters are also allowed to participate in the mechanism.

Second, the Decree adjusts the rooftop solar power mechanism. The permitted surplus electricity output for sale is increased from 20% to a maximum of 50% of the system’s generated output. In certain cases, the parties may agree on a ratio exceeding 50% until 31 December 2030, provided that grid absorption capacity and safe system operation requirements are satisfied.

Third, the Decree introduces a pricing mechanism for surplus electricity. The purchase price for surplus electricity is determined based on the average electricity market price of the preceding year as announced by the electricity market and system operator, subject to a price cap to control costs and maintain market stability.

Fourth, the Decree officially recognises the role of battery energy storage systems (BESS). Electricity output from storage systems is recognised under both the surplus electricity sale mechanism and the DPPA mechanism, creating a legal basis for Solar + BESS models, internal grid systems and smart energy management solutions.

Impacts on Businesses and Investors

For renewable energy investors, Decree 243/2026 creates greater opportunities to commercialise surplus electricity output, improve project economics and shorten the payback period. However, investors should also pay close attention to metering requirements, monitoring connections, technical conditions and electricity activity licensing requirements.

For large electricity users, particularly manufacturers, data centres and EV charging station operators, the new mechanism expands access to green electricity and supports compliance with ESG, RE100 and emission reduction requirements in global supply chains.

For retail electricity units in industrial zones and clusters, Decree 243/2026 provides a legal basis for a transaction chain model: renewable energy generator – retail electricity unit – electricity users. This marks an important step towards developing a competitive retail electricity market within industrial zones.

Issues to Watch

Although Decree 243/2026 has addressed several practical obstacles, further guidance is still required, particularly on pricing mechanisms, system service charges, cost allocation among parties, treatment of curtailed electricity output, and conditions for obtaining or being exempt from electricity activity licences.

Recommendations

Businesses and investors should proactively review their transaction models, reassess project financial efficiency, identify relevant system costs and design appropriate contractual provisions to allocate risks, especially curtailment risks. Parties should also carefully check the conditions for participating in the DPPA mechanism, selling surplus electricity and completing relevant administrative procedures before implementing their projects.

Conclusion

Decree 243/2026 represents an important step in improving the legal framework for Vietnam’s competitive electricity market and renewable energy development. The expansion of the DPPA mechanism, the increase in the surplus electricity sale ratio and the recognition of battery energy storage systems are expected to promote private investment, support businesses in accessing green electricity and contribute to Vietnam’s sustainable energy transition.

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