Acquiring a Renewable Energy Company: PPA and Incentives

Acquiring a Renewable Energy Company: the PPA Is the Heart, Incentives the Leverage

In energy M&A, the most valuable asset is often not the turbines or panels — it is the PPA (Power Purchase Agreement) and the investment incentives attached to the project. A good-tariff PPA with 20 years remaining can decide the entire valuation; conversely, one missed change-of-control clause can collapse the deal after signing. This article examines what must be scrutinized.

Contents

• 1. Why renewable energy M&A differs from ordinary M&A
• 2. The PPA — the heart of the deal
• 3. Three PPA models in Vietnam today
• 4. Investment and tax incentives: leverage that does not transfer automatically
• 5. Legal due diligence checklist for a power project
• 6. Indispensable SPA clauses
• 7. Frequently asked questions
• 8. When to work with a lawyer
• References

1. Why renewable energy M&A differs from ordinary M&A

A power project is a tightly "planned" asset: investment policy approval, electricity operation license, land use rights, PPA — every link is state-licensed or approved. Acquiring the project company means acquiring the entire license chain. Legal due diligence in power is therefore deeper and more specialized than in ordinary commercial M&A.

2. The PPA — the heart of the deal

The PPA is the electricity sale contract — the core revenue source, typically lasting 20–25 years. When reviewing a PPA, the buyer must answer:

• Tariff: fixed or formula-adjusted? How does it compare with current levels? (Note: FIT policies for solar and wind expired in 2020–2021 — new projects no longer enjoy them.)
• Term and committed output: how many years remain? Any minimum offtake (take-or-pay) and at what level?
• Payment: payment mechanics, late-payment penalties, payment security from the buyer.
• Termination: early termination events and compensation.
• Change of control: does the power buyer have pre-approval rights over project transfer? This is the "death clause" of many deals.

3. Three PPA models in Vietnam today

1. PPA with EVN: selling to Vietnam Electricity under state-issued model contracts — the traditional framework, stable but inflexible.
2. DPPA via the national grid: direct sales to large power consumers through the transmission grid — legal framework under Decree 57/2025/ND-CP on direct power purchase (replacing Decree 80/2024, amended by Decree 243/2026/ND-CP).
3. DPPA via private lines: direct sales bypassing the national grid — suitable for industrial clusters with large load near the project.

The Law on Electricity 72/2024 (effective 01/02/2025) is the overarching framework for these trading models. Buyers must identify which model the target operates under, as legal risk and cash flow differ greatly across the three.

4. Investment and tax incentives: leverage that does not transfer automatically

Renewable projects typically enjoy incentive packages: CIT incentives (preferential rates, time-bound exemption/reduction under the Law on CIT 67/2025), land rental incentives, and investment incentives under the Law on Investment 143/2025. Key M&A points:

• Incentives attach to a qualifying project, not to the shareholder. Under the Law on CIT 67/2025, tax incentives apply to income of an investment project meeting incentive conditions — so a share transfer does not by itself extinguish incentives, but it does not preserve them automatically either: verify whether the conditions (location, sector, scale, schedule…) remain satisfied after the ownership change. Where conditions continue to be met, incentives keep applying; otherwise they may be revoked with tax arrears.
• Notification/adjustment procedures: investor changes may require notifying or adjusting the Investment Registration Certificate and tax incentive filings.
• Clawback risk: if the post-M&A project no longer meets conditions (e.g., changed objectives or scale), incentives may be revoked with tax arrears.

Deal valuation must be based on cash flow net of incentive risk, not on the assumption incentives remain intact.

5. Legal due diligence checklist for a power project

• [ ] Investment policy approval / Investment Registration Certificate valid and correct post-M&A holder
• [ ] Electricity operation license (generation) in force
• [ ] Land use rights / land lease: term, purpose, financial obligations
• [ ] PPA in force: tariff, term, change of control, termination clauses
• [ ] Environmental, construction and fire-safety licenses
• [ ] Tax and investment incentive status: incentive decisions, conditions still met
• [ ] Debts and project asset mortgages with banks (project finance typically mortgages the entire PPA and assets)
• [ ] Disputes and claims over land and compensation

6. Indispensable SPA clauses

• Conditions precedent: change-of-control approval from the power buyer; licenses remaining valid post-transfer; no material PPA breach.
• Representations & warranties: on PPA validity, licenses, incentive status, absence of land disputes.
• Indemnity: for tax risk (arrears from lost incentives) and PPA termination risk.
• Price adjustment: earn-out or adjustment mechanisms tied to actual power output and sustained tariffs.

7. Frequently asked questions

Q: What is a PPA and why does it determine the value of a renewable energy M&A deal?

A: A PPA (Power Purchase Agreement) is the electricity sale contract — the sole/core revenue source of a power project. Tariff, term, payment terms and termination conditions in the PPA directly determine project cash flow and valuation.

Q: What types of PPA exist in Vietnam today?

A: Three main groups: (1) PPAs selling to EVN under model contracts; (2) DPPA via the national grid — direct sales to large customers through the transmission grid; (3) DPPA via private lines — direct sales bypassing the national grid. The DPPA framework follows Decree 57/2025/ND-CP.

Q: Do FIT tariffs still apply to new projects?

A: No. FIT policies for solar and wind expired (2020–2021). New projects use tariffs under current bidding/negotiation mechanisms — so the PPA tariff must be carefully checked during due diligence.

Q: Does acquiring a renewable energy company keep its tax incentives?

A: It depends on whether the project still meets incentive conditions after the M&A. Under the Law on CIT 67/2025, tax incentives attach to a qualifying investment project (location, sector, scale, schedule…) rather than to the shareholder — so a share transfer does not automatically extinguish incentives, but buyers must re-verify all conditions and complete notification/adjustment procedures with the tax and investment registration authorities. If the post-M&A project no longer qualifies, incentives may be revoked with tax arrears.

Q: What does a change of control clause in a PPA mean?

A: It allows the power buyer (EVN/DPPA customer) to pre-approve or terminate the contract when project ownership changes. Missing this clause in DD can put the PPA — the most valuable asset — at risk after M&A.

Q: Which licenses must legal due diligence of a power project check?

A: Investment policy approval/Investment Registration Certificate, electricity operation license, land use rights/land lease, a valid PPA, and related environmental, construction and fire-safety licenses.

8. When to work with a lawyer

Work with an energy-specialized lawyer when: reviewing the PPA and project license chain; negotiating change-of-control terms with EVN/DPPA customers; assessing post-transfer tax incentive risk; or structuring the SPA with output-linked price adjustments. FLAT Law Firm advises energy M&A from DD to closing — contact hotline 0988424851.

References

• Law on Electricity 72/2024/QH15 (effective 01/02/2025).
• Decree 57/2025/ND-CP on direct power purchase (amended by Decree 243/2026/ND-CP, effective 26/6/2026).
• Law on Investment 143/2025/QH15 (effective 01/3/2026; Articles 7 and Appendix IV on conditional investment sectors effective 01/7/2026).
• Law on Corporate Income Tax 67/2025/QH15 (effective 01/10/2025).
• Content cross-checked at time of writing (28/9/2026).

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