The direct power purchase mechanism (DPPA) under Decree 80/2024/ND-CP opens to FDI enterprises on one very specific participation condition: they must be a large electricity customer — consuming electricity for production purposes at an average of 200,000 kWh/month or more under clause 12, Article 3 of the decree. Reaching that threshold, the enterprise may choose one of the two application cases in Article 2: buying power through a private line connected directly to a renewable generation unit (price agreed by the two parties), or buying power through the national grid from a wind or solar generation unit of 10 MW or more participating in the competitive wholesale electricity market (price under the spot price mechanism plus grid service charges and a forward contract). This article presents only the conditions, registration procedure and price mechanism of each case as written in the decree.
Legal basis
- Clause 12, Article 3 of Decree 80/2024/ND-CP: a large electricity customer in the DPPA mechanism is a customer using electricity for production purposes with an average consumption output of 200,000 kWh/month or more; customers newly connected or without sufficient consumption data determine large-customer status by the output registered in the connection agreement and existing power purchase contract.
- Point a, clause 1, Article 2 of Decree 80/2024/ND-CP — the private-line case: the renewable generation unit and the large electricity customer connect directly by a private transmission and distribution line invested by the parties; the electricity price, related charges and commercial terms are agreed by the two parties in the direct power purchase contract; this case does not join the competitive electricity market, and the parties perform notification and registration as prescribed by the decree with the management authority and the grid operator.
- Point b, clause 2, Article 2 of Decree 80/2024/ND-CP — the national-grid case: the seller is a renewable generation unit from wind or solar connected to the national grid with installed capacity from 10 MW upwards and participating in the competitive wholesale electricity market; the buyer is a large electricity customer connected at a voltage level from 22 kV upwards using electricity for production purposes, or an electricity retail unit in an industrial park or cluster authorised by the large customer; the two parties also hold power purchase contracts with electricity sector units to settle the physical electricity through the grid.
- Decree 80/2024/ND-CP on the price mechanism in the national-grid case: the customer pays the spot market electricity price for the metered contract output, plus direct purchase service charges through the grid (transmission charges, distribution charges, dispatch costs and ancillary services as prescribed), and settles the difference with the seller under a forward contract (contract for difference — CfD) based on the agreed contract price and contract output.
- Decree 80/2024/ND-CP on sequence: DPPA parties must satisfy conditions on connection and electricity metering (meters meeting electricity market standards), and perform registration and notification to the grid and electricity market operator and the management authority (the Department of Industry and Trade where the establishment/power plant is located) before commercial operation under the mechanism.
Buyer-side participation conditions: consumption threshold and connection voltage
The first hard condition sits on the buyer side, with no exception for FDI enterprises: the customer must use electricity for production purposes (a factory, a production establishment) and reach an average consumption output of 200,000 kWh/month or more under clause 12, Article 3 of Decree 80/2024/ND-CP — equivalent to a factory with a continuous load of several hundred kW. Enterprises with several factories/metering points need to check status per electricity customer under each power purchase contract; a new factory without consumption history uses the output registered in the connection agreement as the initial basis. The second condition applies only to the national-grid case: the customers connection point must be at a voltage level from 22 kV upwards; customers connected at low voltage or medium voltage below this threshold must invest in a connection upgrade or consider the private-line case if a renewable plant is nearby.
On the seller side, conditions divide by case: through a private line, the seller is a renewable generation unit (wind, solar and the renewable forms within the decrees scope) with a plant connected directly to the customer by a private line; through the national grid, the seller must be a wind or solar generation unit connected to the national grid with capacity from 10 MW upwards and a member of the competitive wholesale electricity market — this condition excludes small rooftop solar projects from the seller side in the grid case, although they may still sell via a private line to an eligible customer.
Registration procedure and the price mechanism of each case
The sequence under Decree 80/2024/ND-CP comprises: the two parties sign the direct power purchase contract (and in the grid case, additional contracts with transmission, distribution and market operation units for services and metering); complete the connection conditions and an electricity metering system meeting electricity market requirements; register and notify the grid and market operator and the Department of Industry and Trade before commercial operation; and operate settlement on the monthly metering cycle. FDI enterprises should note the duty to report contract and actual output to the management authority under the decree — DPPA is a managed mechanism, not a purely commercial agreement outside supervision.
On the price mechanism: in the private-line case, the electricity price and all charges (including the private lines investment and operation costs, and handling of shortfall/surplus electricity with the grid if there is backup connection) are decided by the bilateral contract — no state-imposed price. In the national-grid case, the buyers total cost has three components: the spot market electricity price applied to the contract output, grid service charges (transmission, distribution, dispatch, ancillary services) paid to electricity sector units, and the difference settlement with the seller under the CfD based on the agreed contract price — if the contract price is higher than the spot price, the buyer pays the difference; if lower, the seller refunds it. The actual electricity cost under grid DPPA therefore fluctuates with market prices and the locked CfD price, and is not a fixed state-issued tariff.
Frequently asked questions
What are the DPPA eligibility conditions for an FDI firm?
Under Decree 80/2024/ND-CP: the enterprise must be a large electricity customer — using electricity for production purposes with an average consumption output of 200,000 kWh/month or more (clause 12, Article 3); the seller in the private-line case is a renewable generation unit, and in the national-grid case a wind/solar generation unit of 10 MW or more participating in the competitive wholesale electricity market, while the grid buyer must be connected at a voltage level from 22 kV upwards (Article 2). An FDI enterprise participates like a domestic customer when it meets these conditions.
What is the DPPA registration procedure?
Under Decree 80/2024/ND-CP: the two parties agree and sign the direct power purchase contract; complete connection conditions and an electricity metering system meeting requirements (in the grid case, sign additional transmission and distribution service contracts with electricity sector units and register for the mechanism with the grid and electricity market operator); perform registration and notification to the management authority (the Department of Industry and Trade) and related units before commercial operation; then settle and report on the electricity metering cycle.
How is the DPPA electricity price calculated?
Under Article 2 of Decree 80/2024/ND-CP, the price depends on the participation case: via a private line — the electricity price and related charges are agreed by the seller and buyer in the contract (no state-imposed price); via the national grid — the buyer pays the spot market electricity price for the contract output, plus direct purchase service charges through the grid (transmission, distribution, dispatch, ancillary services), and settles the difference with the seller under a forward contract (CfD) on the basis of the agreed contract price.
Is it cheaper than buying grid electricity?
The law does not guarantee DPPA is always cheaper than grid electricity: in the private-line case, the price is the negotiation result with the renewable generation unit; in the grid case, the total cost comprises the fluctuating spot market price plus grid service charges and the CfD settlement at the locked contract price. Whether there are savings depends on the contract/CfD price the enterprise can negotiate, the factorys load profile and how well renewable output matches consumption demand — the enterprise should simulate on its own actual load data before signing a long-term contract.
This article has been quality-reviewed by the FLAW AI Legal Council
