VIETNAM: INVESTING IN SOLAR PROJECTS WITH DPPA AND BESS – WHAT YOU MUST KNOW

How Deals Actually Get Done Today

A Different Market After the FiT Era

Vietnam’s solar sector has moved into a new phase. The feed-in tariff boom is over. Projects are no longer built on the back of state-guaranteed tariffs, but on the strength of contracted corporate demand.

Today, bankable solar transactions are built around two pillars:

• Direct Power Purchase Agreements (DPPA) – allowing renewable generators to sell electricity directly to large consumers under Decree 57/2025.
• Battery Energy Storage Systems (BESS) – enabling solar power to become schedulable, reliable, and commercially viable in a more complex grid environment.

Investors who understand how these two elements interact will close deals. Those who treat them separately usually struggle.

DPPA: The Offtaker Is the Project

Under the current regulatory framework, renewable generators may contract directly with large electricity users, either through:

• A private wire connection, or
• A grid-enabled structure, where electricity flows through the national grid but commercial settlement occurs directly between generator and consumer.

In practical terms, this means one thing:

The offtaker replaces the state as the anchor of the project.

Bankability now depends on:

• The credit quality of the industrial buyer
• The clarity of the pricing formula
• The allocation of curtailment and imbalance risk
• The enforceability of termination provisions

A modern DPPA in Vietnam is not merely an ESG instrument. It is the core financial document of the project. Lenders will review it with the same rigor as a traditional utility PPA.

BESS: From Technical Add-On to Revenue Instrument

Battery storage is no longer a technical afterthought. In many provinces, it is the difference between a theoretical solar asset and a commercially viable one.

BESS creates value in three main ways:

1. Time shifting – delivering power during peak demand periods
2. Profile shaping – aligning solar output with industrial consumption patterns
3. Risk reduction – mitigating curtailment and scheduling exposure

However, storage only becomes financeable when its economic role is clearly defined in the contract.

If BESS revenues rely on future ancillary markets or regulatory assumptions, debt providers will heavily discount them. If storage capacity, availability, and dispatch rights are clearly priced within the DPPA structure, it becomes a bankable asset.

The Three Layers of a Financeable Structure

1. Project Foundation

• Secure land and site control
• Realistic grid interconnection strategy
• Strong EPC wrap with performance guarantees
• Proper safety and fire compliance planning for BESS
• Clear construction and commissioning pathway

Development uncertainty is the most common reason DPPAs fail before financial close.

2. Contract Architecture

A bankable DPPA must clearly define:

• Contracted volumes and delivery windows
• Pricing structure (fixed, indexed, time-of-use)
• Metering and settlement methodology
• Curtailment allocation
• Change-in-law protection
• Termination compensation

For BESS, the agreement should specify:

• Committed MW capacity
• Guaranteed discharge duration
• Availability levels
• Degradation and augmentation responsibilities

Ambiguity in any of these areas translates directly into higher financing costs.

3. Risk and Finance Alignment

Debt providers will focus on:

• Offtaker credit support (LC, parent guarantee, escrow)
• Predictable termination payments
• Step-in rights
• Insurance coverage, particularly for storage systems
• Conservative assumptions regarding grid constraints

In Vietnam’s evolving regulatory landscape, clarity of risk allocation matters more than theoretical upside.

How Deals Actually Close

Successful sponsors typically follow a disciplined sequence:

1. Secure a credible industrial offtaker first
2. Choose the DPPA model early (private wire vs grid-enabled)
3. Align technical design with contractual obligations
4. Integrate BESS economics into the core pricing model
5. Draft the DPPA as if a credit committee will read every clause
6. Structure termination and security provisions before approaching lenders

Projects that treat financing as an afterthought often return to renegotiation. Projects structured for bankability from day one move faster.

Conclusion: Bankability Is the Strategy

Vietnam’s solar market is not shrinking—it is maturing.

The regulatory framework now allows direct corporate procurement. National planning signals strong support for storage. Industrial demand for renewable electricity continues to grow.

But the decisive factor is no longer policy enthusiasm. It is contract strength.

A project becomes bankable when:

• The offtaker is creditworthy and committed
• The DPPA clearly allocates operational and regulatory risk
• Storage economics are contractually secured
• Termination scenarios are financially defined
• Development milestones are realistically achievable

In today’s Vietnam market, success does not come from building megawatts quickly. It comes from structuring projects that can survive credit analysis.

Solar plus DPPA plus BESS is not merely a technical combination.

It is a financing strategy

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Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.