A high level of complexity counts among the factors limiting the effect of the DPPA mechanism in the nine months since its introduction.

Vietnam’s Direct Power Purchase Agreement
(DPPA) mechanism, introduced under Decree No. 57/2025/ND-CP and effective from
March 3, 2025, was once expected to become a breakthrough tool for accelerating
Vietnam’s renewable-energy market. Within this policy, businesses can proactively
access green electricity, reduce their dependence on the national grid, and drive
clean-energy projects in a more flexible and efficient manner.

However, nine months after its introduction,
reality shows that those initial expectations have yet to materialize. Numerous
obstacles and operational challenges in implementing the mechanism have created
significant barriers for many businesses. These and other issues were brought to
the forefront at the recent Green Economy Forum (GEF) 2025.

High risk, high return

Mr. Alessandro Antonioli, CEO of Copenhagen
Offshore Partners Vietnam, identified several factors that continue to shape investment
decisions in Vietnam’s renewable-energy sector. He said that what investors look
for is actually quite straightforward. “In our market, decisions depend on having
both price and volume guaranteed; that’s what gives investors the confidence to
commit.”

But the path forward is not without complications.
Mr. Antonioli noted that tracking financial flows has become increasingly difficult,
especially as many renewable-energy projects in Vietnam have been built in a highly-localized
and fragmented manner. “It’s getting harder to trace where money goes and how projects
are structured,” he explained, adding that this lack of transparency can slow capital
inflows.

As the energy landscape shifts, he agreed
that current models may no longer be enough. The sector is moving quickly, and with
it comes a need for fresh ideas and more sophisticated investment approaches. He
stressed that the industry must be ready for this next stage. “With the market changing,
we need to rethink the financial framework and bring in investors who are prepared
for more complex, modernized opportunities,” he said.

Mr. Antonioli also emphasized that Vietnam
will only keep up with rising digital and technical demands if it can attract capable
developers – those who understand how to operate, integrate, and scale advanced
renewable systems. Without this talent, he warned, the country could struggle to
capture the full potential of its clean-energy transition.

According to Ms. Phan Thi Thu Thuy, Deputy
Head of the Electricity Market and Power System Department at the Electricity Regulatory
Authority under the Ministry of Industry and Trade, the DPPA mechanism is opening
significant space for growth for both investors and large electricity consumers.
“The potential for DPPA is tremendous, but every transaction must comply with the
Power Purchase Agreement (PPA) and the strict regulations of the electricity market,”
she emphasized.

However, she also noted that the DPPA
mechanism is not a playground for risk-averse investors; rather, it is a space for
those willing to embrace a “high-risk, high-return” model. “This is a high-risk
investment area, but it offers substantial rewards for those who are willing to
lead,” she believes.

Despite these hurdles, Mr. Huynh Buu
Quang, Vietnam Chief Country Officer at Deutsche Bank, underscored that the existing
PPA framework generally serves its purpose. “The PPA is typically used to manage
the direct relationship between the power generator and the consumer, and we have
not seen significant issues with this structure,” he said, suggesting that the underlying
agreement remains strong.

Mr. Andrew Khan, Managing Director at
Carlsberg Vietnam, noted that while the company has been sourcing renewable electricity
through I-RECs (International Renewable Energy
Certificates) since 2022, these are only an initial step. To achieve
net-zero production emissions by 2028, Carlsberg Vietnam plans to expand its use
of renewable energy through DPPA participation and on-site solar projects, in line
with both Vietnam’s net-zero roadmap for 2050 and the group’s global targets.

“The DPPA mechanism help makes renewable
sourcing more meaningful and impactful,” said Mr. Khan. “It strengthens Vietnam’s
clean energy infrastructure, supports long-term sustainability goals, and signals
a clear commitment to modernizing the power market and attracting high-quality green
investment. It also opens the door for deeper technology and expertise exchange
between Vietnam and Europe. European enterprises can bring innovation, technical
know-how, and financing solutions that support Vietnam’s climate agenda.”

Financial concerns

From a financial perspective, Mr. Quang
noted that although the DPPA market holds substantial potential, it is unlikely
to expand rapidly due to the inherent complexity of its mechanisms and project structures.
“There is a lot of complexity, so DPPAs cannot break through in a short period of
time,” he believes.

The mechanism is, however, increasingly
seen as a key pathway that enables businesses to buy and use renewable energy directly,
unlocking new opportunities for both sustainability goals and long-term energy security.
Thanks to the mechanism, businesses now have the opportunity to purchase and use
renewable electricity directly, supporting both their growth and long-term sustainability
commitments.

However, Mr. Quang also emphasized that
the current price of renewable electricity remains relatively high, causing many
businesses to hesitate. “Renewable electricity prices are still high, so it is understandable
that companies are cautious,” he said.

Regarding typical financial considerations,
he noted that “a lot depends on the execution capability of the project developer
and the consumer’s ability to pay, which is standard in any credit agreement.” He
went on to emphasize that “the real challenges are not with the overall structure
of the DPPA, but with the finer details spelled out in the contracts.” Even so,
he affirmed that Deutsche Bank remains ready to support projects that meet the bank’s
risk-management standards.

Ms. Thuy also suggested an approach for
power producers to better explain their offered prices, particularly when using
renewable energy combined with BESS (Battery Energy Storage Systems). She emphasized
that when sellers propose higher offers, they should clearly outline the environmental
benefits, operational stability, and load-optimization potential that BESS provides.
“When buyers understand why the price is higher, and recognize the value of BESS
and renewable energy, they will be more likely to consider investing,” she said.

Against the backdrop of Vietnam’s goal
to achieve net-zero emissions by 2050, the government has pledged to work alongside
the business community in the energy transition. “We will continue to strive to
create the most supportive mechanisms for businesses,” Ms. Thuy added. “The DPPA
therefore represents an opportunity for those willing to take the lead and lay the
first stones in this emerging market.”

VET-Anh Hoang