Vietnam’s Direct Power Purchase Revolution: Unlocking corporate net-zero and potential for foreign investment

More than a year after it was introduced, the DPPA continues to dominate industry conversations. It was one of the main topics of discussion at the Green Economy Forum in Hanoi, an energy conference Risk Advisory attended last November. A diverse panel comprising lawyers, investors, and consumer goods executives debated the opportunities and challenges posed by the DPPA. 

Why is the DPPA so important for foreign investors?

Vietnam is at a critical juncture in its energy transition. Following a brief period of uncertainty surrounding the expiry of the feed-in tariff (FiT) scheme, the government has signalled its renewed commitment to the energy sector via a series of unprecedented policy changes that stand to benefit foreign investors. 

Introduced in 2024, the Direct Power Purchase Agreement (DPPA) enables large electricity consumers to buy renewable energy directly from producers via a private transmission line, bypassing state-owned Vietnam Electricity (EVN). A key instrument in a recent series of high-impact policy developments, the DPPA is a key development in Vietnam’s shift from centralised state-run monopoly to a more liberalised, competitive landscape. It addresses bankability issues, helps multinationals meet net-zero targets, and opens the door to a greater range of renewable energy sources. 

At the Green Economy Forum in November 2025, experts and market participants emphasised the improved bankability and predictable transmission fees as key advantages of the DPPA. Until now, international banks have been reluctant to provide funding for Vietnamese renewable energy projects. Standard EVN power purchase agreements entail fluctuating tariffs and bankability concerns. The DPPA is expected to alleviate some of these financial uncertainties. Investors can now negotiate more favourable bilateral contracts directly with corporations, agreeing on set electricity prices and minimising uncertainty. More predictable revenue streams that are not contingent on fluctuating state-regulated tariffs are making these projects more attractive to international banks.

The DPPA is favourable to a greater range of renewable energy sources, providing investors and manufacturing companies with a growing number of options. Waste-to-energy projects now qualify as renewable energy sources under the DPPA and are therefore eligible to sell energy directly to consumers. 

Ultimately, the DPPA is instrumental in supporting multinational corporations in meeting their net-zero targets. Vietnam is a manufacturing hub for several key consumer industries, from textiles to electronics. Easier and cheaper access to renewable energy sources is set to facilitate adherence to strict ESG requirements, increasing competition and revenues. 

Challenges posed by the evolving landscape

A promising development, the DPPA is set to improve access to renewable energy sources. However, investors must remain aware of residual challenges.

We have seen an uptick in requests from investors who are looking to understand the complex regulatory landscape in Vietnam, and have helped summarise and demystify the practical implications of new policies. The DPPA is still a relatively recent development, and there is little practical guidance for companies seeking to trade renewable energy directly. Buyers and sellers need to therefore be prepared to navigate these complexities with scant precedent in place. 

While the DPPA allows companies to bypass EVN, the country’s overburdened grid still has the potential to have a significant adverse effect on market participants. Developers are allowed to sell excess electricity back to the national grid. However, when the grid is overloaded, the energy generated is wasted, resulting in wasted revenue.

Currently, the DPPA targets large power consumers and generators, imposing a minimum average monthly consumption threshold of 200,000 kWh to trade electricity directly with producers of renewable energy. The latter must have a minimum of 10 MW of installed capacity. The current criteria renders many companies ineligible for DPPA coverage.

Early movers are unlocking opportunities and taking advantage of DPPA 

That said, these challenges are surmountable, in some instances presenting even more opportunities for growth. The overburdened EVN grid is a difficult obstacle to overcome in the short term but it incentivises companies to invest in battery energy storage systems. The current minimum consumption and generating thresholds are also likely to be subject to review by the Vietnamese government as the market grows.

A growing number of international companies are already taking advantage of the recent regulatory changes, overcoming these challenges and investing in renewable energy sources for their manufacturing hubs in Vietnam. International toy company LEGO is a prominent recent example. In April 2025, LEGO opened a factory in Binh Duong that is set to eventually operate solely on renewable energy sources. LEGO will derive its energy from rooftop solar panels, an increasingly popular choice that bypasses the EVN grid, and also secured a permit to develop battery storage on adjacent land. 

Challenges remain, but international companies like LEGO are already taking advantage of the recent slew of policy changes to build and run manufacturing plants powered exclusively by a wide range of green energy sources. 

Risk Advisory works extensively in the energy sector in Vietnam, helping our clients navigate the political, regulatory and operational risks in the market. Ranging from market entry studies, stakeholder mapping and supply chain analysis, we provide intelligence, evidence and analysis to guide legal and commercial decision-making across the Asia-Pacific region.