On 3 March 2025, the Government issued Decree No. 58/2025/ND-CP providing guidance on the Law on Electricity pertaining to development of renewable energy power and new energy power (“Decree 58”), replacing Decree No. 135/2024/ND-CP regulating policies and mechanisms to encourage the development of self-production and self-consumption rooftop solar power (“Decree 135”). Decree 58 focuses on incentives for new energy projects, mechanisms for self-production and self-consumption rooftop solar (“RTS”) power projects, and development of offshore wind power projects.
I. Mechanisms for self-production and self-consumption RTS power projects
1. Self-production and self-consumption: Similar to Decree 135, mechanisms and policies under Decree 58 are provided for the development of self-production and self-consumption RTS power installed on the roofs of various constructions including individual residences, offices, industrial zones, clusters, export processing zones, high-tech parks, economic zones, production facilities, and business establishment. Self-production and self-consumption RTS power, according to Decree 58, refers to electricity produced and consumed by an organization or individual to meet their demands.
2. Principles for development of self-production and self-consumption RTS power systems:
• The implementation of the construction and project development must be in compliance with all applicable regulations on investment, construction, land, environment, safey, firefighting and prevention;
• During the RTS power system’s investment and construction phase, imported and used solar panels and DC-to-AC converters are strictly prohibited.
3. Models: According to Decree 58, developers of self-production and self-consumption RTS power systems can opt to either connect or not to connect their RTS power system to the grid. In the case of connection to the grid, no more than 20% of the RTS power system’s installed capacity may be sold to Vietnam Electricity (EVN) in exchange for the surplus power produced. Depending on whether or not they are connected to the national power grid and whether or not they have extra power production that they may sell to EVN, RTS power systems must meet a variety of standards as set out in Decree 58.
4. Mechanism for RTS power system not being connected to the grid: RTS power system in this case is not subject to the requirement of the electricity operation permit and is able to be developed without any limitation regarding its capacity. Prior to installation, the developer must inform the relevant power units and the provincial Department of Industry and Trade (DOIT) of the RTS power system’s installed capacity and location. They must also notify the provincial authorities responsible for construction, fire safety, and firefighting of the RTS power system’s installation.
5. Grid-connected RTS power system:
• RTS power systems with a capacity of less than 100kW: Developers must notify the DOIT and local construction and fire prevention and firefighting competent authorities. Developers can choose whether surplus electricity is imported into the national grid. A zero-export device must be installed if surplus electricity is not fed into the national grid.
• RTS power systems with a capacity from 100 kW to under 1,000 kW: Apart from the procedures as set out for RTS power system being less than 100kW, developers must further notify EVN and may sell the surplus electricity of no more than 20% of its actual installed capacity if the capacity has not exceeded the total capacity allocated to its local province/city under the national power development plan and its detailed implementation plan.
• RTS power systems with a capacity of 1,000 kW or more: Developers must register with the DOIT to obtain the development registration certificate. The electricity operation permit is required if the developers sell the surplus electricity to the grid. When the total capacity exceeds the capacity allocated to such province/city under the national power development plan and its detailed implementation plan, the developer must additionally follow the regulated procedure for supplementing its project to the national power planning. A zero-export device must be installed if surplus electricity is not fed into the national grid.
6. Batter energy storage system (“BESS”): According to Decree 135, installing BESS is advised for developers in order to guarantee reliable and secure power system operations.
II. Incentives for new energy power projects
1. Incentives provided for new energy projects:
• Exemption from sea area usage fees during the basic construction period but not exceeding 03 years from the date of commencement of construction. 50% reduction in sea area usage fees for a period of 09 years after the exemption period of the basic construction period;
• Exemption from land use fees and land rent during the basic construction period but not exceeding 03 years from the date of commencement of construction. After 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 provisions of law on investment and land;
• The minimum long-term contracted electricity output is 70% within the loan principal repayment period but not exceeding 12 years unless the investor and the electricity buyer have another agreement. This mechanism shall not be applied in cases where the project fails to generate the minimum committed output due to reasons from the project side or due to load demand or technical conditions of the power system that cannot consume all the output;
2. New energy projects qualified for incentives:
• New energy projects produced from 100% green hydrogen, 100% green ammonia, or 100% mixture of green hydrogen and green ammonia;
• Projects supplying electricity to the national power system;
• The first project for each type of new energy.
III. Development of offshore wind power projects:
• Applicable projects: Offshore wind power projects with in-principle investment policy approval issued by competent authorities before 1 January 2031.
• Conditions applied to foreign investors:
Experience: Foreign investors must have at least invested and developed one offshore wind power project that is operating and generating power in Vietnam or elsewhere;
Financial capability: Foreign investors must have their capital in the project accounting for at least 15% of the project’s total estimated investment capital, and their equity ratio on the capital contribution to the project being at least 20%;
• Participation of domestic enterprises: Domestic enterprises must hold at least 5% of the charter capital or total voting shares in the economic organization implementing the offshore wind power project. The domestic enterprises can be State-owned enterprises or enterprises in which a State-owned enterprise with 100% of the charter capital holds more than 50% of the charter capital or total voting shares. Additionally, for offshore wind power projects that export electricity without using the national power system, the domestic enterprises must hold more than 50% of the charter capital;
• Authorities’ consensus: Foreign investors must obtain written consensus from the Ministry of National Defense, the Ministry of Public Security, and the Ministry of Foreign Affairs; and
• Commitment to using domestic resources: They must commit to using domestic human resources, goods, and services from domestic suppliers, ensuring fair competition in terms of price, quality, progress, and availability.
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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
VIETNAM – DIRECT POWER PURCHASE AGREEMENTS – WHAT YOU MUST KNOW
On 3 July 2024, the Government issued Decree No. 80/2024/ND-CP regulating the direct power purchase mechanism (“DPPA”) between renewable energy generators and large power consumer (“Decree 80”), marking the first legal instrument ever to regulate such a matter. On 3 March 2025, the Government issued Decree No. 57/2025/ND-CP to replace Decree 80 to be in line with the amended Law on Electricitry (“Decree 57”).
Some key provisions:
Similar to Decree 80, Decree 57 introduces two separate DPPA models:
1. Model 1 – Private Wire Model: this model envisions the sale of power from a renewable energy generator with large power consumer through a power private wire (not connected to the national power grid). There is no requirement on application/registration for joining this Model but large power consumer shall report the execution of power purchase agreement with the renewable energy generator to local provincial People’s Committee, competent local power company, and competent system operator. Renewable energy generators include owners of energy, solar, wind, biomass, small hydro power plants as well as rooftop solar systems.
2. Model 2 – Grid-connected Model: this Model envisions the sale and purchase of power under a forward contract between large power consumer and renewable energy generator. To implement this Model: (x) large power consumer shall sign a forward contract with renewable generator, (y) renewable energy generator shall sign a contract with Electricity of Vietnam (EVN) for selling power to spot market (i.e., VWEM – Vietnam Wholesale Electricity Market) and (z) large power consumer shall sign a retail power purchase contract with EVN or its subsidiary (e.g., local power company) for receiving the power from the local power company. Renewable energy generator shall own a renewable energy plant of at least 10 MW. This Model requires registration of participation with competent system operator and will subject to the approval and guidance from the competent system operator for proceeding.
Analysis in details:
1. Scope of Regulations
The main subjects under Decree 57 are:
• Renewable energy generator owning power plants from solar energy, wind, small hydropower, biomass, geothermal, ocean waves, tides, ocean currents, and other forms of renewable energy, together with rooftop solar power system granted with electricity operating license or rooftop solar power system being exempted from such a license.
• Large power consumer being organizations or individuals using electricity for production purposes or engagement in the business of charging services for traffic vehicles who purchase electricity from power corporations, power companies, and electricity retailers connecting and providing voltage levels from 22kV or higher.
2. Conditions for large electricity consumers to participate in DPPA mechanism:
• For large electricity consumers who have been using electricity for 12 months or more: The average overall electricity usage over the past 12 months (calculated based on the total electricity acquired from a Power Corporation or its authorized entities) cannot be less than the minimum electricity consumption threshold for large electricity users as outlined in the regulations governing the operation of the competitive electricity market issued by the Ministry of Industry and Trade (“MOIT”).
• For large electricity consumers who have been using electricity for less than 12 months: The average overall electricity usage is determined by the projected electricity demand acquired from a Power Corporation (or its authorized entities) and must meet or exceed the minimum consumption threshold for large electricity consumers as outlined in the regulations governing the competitive wholesale electricity market established by the MOIT.
3. General principles
The two models for DPPA mechanism are regulated to be implemented under the following principles:
• Private wire:
(i) Parties: This form must be implemented between renewable energy generation units and large power consumer where the DPPA is mutually agreed between the parties;
(ii) PPA: The PPA between the parties is mutually agreed with core contents being in line with Decree 57. The electricity sale price is negotiated by both parties and does not exceed the maximum price of the electricity generation price frame of the corresponding type of electricity source.;
(iii) Limit on surplus power from rooftop solar: Surplus electricity from renewable generators with rooftop solar systems selling directly to major electricity users must not surpass 20% of the total electricity produced. This surplus electricity is also determined at the average market electricity price from the prior year, as reported by the electricity system and market operator. It must not go beyond the highest cost of the ground-mounted solar energy pricing structure.
(iv) Procedures: Regarding relevant procedures, upon the renewable energy generation unit’s obtainment of relevant approvals/licenses and the execution of the PPA between the parties, the large electricity user must report the PPA to the provincial People’s Committee, the competent local power company and competent system operator.
• Grid-connected:
(i) Parties: The parties to this form of DPPA mechanism are renewable energy generators and large electricity user/electricity retailer through forward contracts. To implement the above forward contract: (x) large power consumer shall sign a contract with a forward contract with renewable generator, (y) renewable energy generator shall sign a contract with Electricity of Vietnam (EVN) for selling power to spot market (i.e., VWEM – Vietnam Wholesale Electricity Market) and (z) large power consumer shall sign a retail power purchase contract with EVN or its subsidiary (e.g., local power company) for receiving the power from the local power company. Renewable energy generator shall own a renewable energy plant of at least 10 MW.
(ii) PPA: Subject to the specific method of implementation of grid-connected mechanism, the contents of the PPA will contain specific contents as regulated in Decree 57. The same principle applies for the electricity sale price.
(iii) Procedures: Subject to the specific method of implementation of grid-connected mechanism, specific procedures will apply, according to Decree 57. Generally, this Model requires registration of participation with competent system operator and will subject to the approval and guidance from the competent system operator for proceeding.
4. Spot electricity market price:
Regarding grid-connected form of electricity trading, Decree 57 provides detailed regulations on the selling of renewable electricity generation units through spot electricity market and the trading with EVN as follows: According to relevant 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 sum of the market electricity price and the market capacity price. In particular, the market electricity price and market capacity price are determined according to the Regulations on operating the competitive wholesale electricity market issued by the MOIT.
We – Duane Morris Vietnam – are following up closely with the implementation of this Decree 57 and any new progress will be updated in a timely manner.
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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
CAIJING MAGAZINE INTERVIEWED DR OLIVER MASSMANN – VIETNAM – IMPACT OF TRUMPS TARIFFS – WHAT YOU MUST KNOW!
1. How will Trump’s tariffs affect Vietnam’s export performance? Compared with the 46% tariff rate announced in April, would you consider 20% a favourable outcome from Vietnam’s perspective?
DMVN: While the imposition of 20% tariff will undoubtedly present challenges, Vietnam’s export performance is expected to remain strong due to its strategic approach and unmatched international integration. The new 20% tariff on Vietnamese exports to the US is certainly a more favorable outcome compared to the initially proposed 46%.
This reduction is a testament to the Vietnamese Government’s proactive and skillful negotiations. Furthermore, the tariffs also apply to a wide range of other countries, which could help level the playing field. To mitigate the negative effects, Vietnamese businesses are already diversifying their export markets, leveraging free trade agreements with the European Union (EVFTA) and other partners.
2. How might Trump’s tariff policies affect FDI flows into Vietnam, particularly in light of the 40% tariffs on transshipment? Compared with other ASEAN countries, what are Vietnam’s unique strengths?
DMVN: The 40% tariff on transshipment is a significant measure aimed at preventing the rerouting of goods. However, Vietnam is well-positioned to handle this challenge. This policy may actually incentivize legitimate companies to invest in manufacturing with a higher local content, rather than simply using Vietnam as a transit point. This could lead to a higher quality of FDI in the long term.
Compared to other ASEAN countries, Vietnam’s unique strengths are numerous:
• Political Stability with the private sector at the heart of its development: Vietnam’s stable government and commitment to a pro-business environment, thanks to Resolution 68 issued recently, provide a secure foundation for long-term investment.
• Strategic Location: Its proximity and land border with China make it a natural hub for manufacturing and supply chain diversification.
• Strong Workforce: Vietnam has a large, young, and increasingly skilled labor force with competitive wages.
Unmatched international integration: The country has a robust network of free trade agreements, including the CPTPP and EVFTA, which opens up access to many international markets.
3. How about Chinese investment? Do you anticipate an increase of Chinese investment?
DMVN: I do anticipate an increase in Chinese investment, as the country continues to be a key player in the regional supply chain. Chinese companies are increasingly investing in manufacturing facilities in Vietnam to produce goods that can be exported without being subject to US tariffs on Chinese-made products. While this trend has been ongoing, the new US tariffs on transshipment will likely encourage a greater focus on investments that involve substantial manufacturing and local value-add within Vietnam. This will ultimately benefit the Vietnamese economy by creating jobs and strengthening our manufacturing base.
4. In recent years, have you observed any trends or shifts in foreign investment into Vietnam—either in terms of sectors, source countries or investment strategies?
DMVN: In recent years, we have observed several key trends and shifts in foreign investment into Vietnam. First of all, there is a clear trend towards investment in high-tech manufacturing, particularly in semiconductors, electronics, and advanced components, as well as renewable energy, where I have seen billions of dollars being committed to be invested in Vietnam. This aligns with Vietnam’s policy to attract higher-value and high-quality investment. Also, while traditional investors from Singapore, South Korea, and Japan remain strong, there is a growing interest from other nations and regions seeking to diversify their supply chains. Notably, foreign investors, especially Chinese investors, are increasingly targeting the development of industrial parks, warehouses, and logistics networks, recognizing the need to support the country’s growing manufacturing and export capabilities.
Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.