When a developer offers to ‘install solar free on your factory roof and sell you power below EVN’s price’, the factory enters a three-layer legal relationship: energy, real estate and tax. The on-site PPA model spread widely after the 2024-2025 power framework, but a contract mischaracterising the model leaves risk when the factory is transferred, mortgaged or the contract ends early. This article teaches how to read the model.
Three models that must not be blended
Model one — self-generation self-consumption: the factory invests in its own system and uses its own output. Current power law (Electricity Law 61/2024/QH15 and Decree 58/2025/ND-CP on renewable and self-consumption development) allows rooftop solar for self-consumption through notification and registration with the local power authority and utility, without a power-operation licence for the self-used portion; surplus exported to the grid is capped by ratio with its own settlement mechanism under Decree 58/2025 — verify the exact ratio at installation time, as this parameter moved across drafts. Model two — on-site PPA behind the meter: the developer invests in, owns and operates a system on the factory roof and sells power to the factory itself, without the national grid; this is NOT the grid-based direct power purchase (DPPA) mechanism under Decree 57/2025/ND-CP — do not let advisers label an on-site contract DPPA, since eligibility and procedures differ. Model three — pure roof lease: the factory merely leases roof space and the tenant handles the power itself — rare, because offtake is hard to solve outside the first two models.
The core on-site PPA risk: another party’s asset on your real estate
A system worth billions of dong belongs to the developer but is fixed on the factory’s roof for 15-25 years. The contract must settle five clause groups in advance: roof-use rights (term tied to the PPA term, maintenance access, a ban on the factory shading or building over the array, waterproofing and roof-structure responsibility — who pays when the roof leaks under panel loads); insurance and fire risk (the solar system, and any storage, creates its own fire-safety file and property-insurance conditions — the factory must notify its property insurer of the system’s presence); transfer and mortgage (if the factory sells or mortgages the plant, must the buyer or bank inherit the PPA; if the developer sells the project to a fund, does the factory have a consent right); early termination and removal (time-based buyout price of the system, dismantling and roof-restoration duty, fate of the connection point); and power quality and guaranteed output (output guarantee level, metering by the system’s own meter, and the regime for long outages).
Tax and documentation points to settle upfront
Power bought under a PPA is power bought from a selling enterprise: the developer issues VAT invoices by metered volume, electricity VAT sits at the standard 10%, and the factory credits it as input like EVN power. In self-consumption there is no sale for the self-used portion, but surplus sold under Decree 58/2025’s mechanism is electricity-sale revenue with its own invoices. On incentives: renewable projects fall within investment-incentive sectors and areas under investment law, grounding CIT incentives for the project owner — that benefit belongs to the developer and does not automatically convert into deeper power discounts for the factory; negotiate value through price and output terms rather than generic ‘tax incentive’ talk. Who owns the renewable certificates (I-RECs) generated by the system must also be written into the contract — an ESG asset of real value to exporting factories with RE100 commitments.
Recommendations
Before signing a rooftop PPA: characterise the model by the actual power flow, obtain independent legal review of the five clause groups, check roof structure and the existing fire file, and pre-clear with the bank holding the plant mortgage and the property insurer. A good PPA lets both sides exit in an orderly way after 20 years; a bad one turns the factory roof into litigation at the first transfer.
Frequently Asked Questions
Is an on-site rooftop solar PPA a DPPA?
No. An on-site PPA sells power behind the meter to the roof owner itself, without the national grid. DPPA under Decree 57/2025/ND-CP is direct purchase through the grid between a renewable generator and a large electricity customer, with its own eligibility and procedures.
What procedure does a factory self-installing solar need?
Under Electricity Law 61/2024/QH15 and Decree 58/2025/ND-CP, rooftop solar for self-consumption proceeds by notification and registration with the power authority and utility, with no power-operation licence for the self-used portion; grid-exported surplus is ratio-capped with its own mechanism — verify the current ratio when installing.
What is the biggest rooftop PPA risk?
The developer’s asset sits on the factory’s real estate for 15-25 years: settle roof use and structure, insurance and fire safety, succession on transfer or mortgage of the plant, buyout and dismantling on early termination, and output guarantees — missing one group invites disputes at the first adverse event.
How are tax and I-RECs handled in a PPA?
PPA power carries 10% VAT invoices from the developer, creditable by the factory like EVN power. Ownership of I-REC certificates from the system is not automatic for the factory — it must be written into the contract, especially for factories with RE100 commitments.
This article has been quality-reviewed by the FLAW AI Legal Council