1 Legal and regulatory framework

1.1 What role does the state play in the renewables industry and which national legislative and regulatory provisions have relevance for the renewables industry in your jurisdiction?

The United Arab Emirates has committed to the global carbon agenda and plans to reduce carbon dioxide emissions by 30% by 2030. In 2017, the United Arab Emirates also launched the Energy Strategy 2050, which aims to diversify current energy sources and double the country's use of clean energy sources by 2050. In meeting its commitments and demand for local consumption, the United Arab Emirates is relying on renewable power projects, including solar and nuclear power.

In addition to the laws establishing the federal and emirate-wide regulatory bodies described below, laws and decrees relevant to the renewable energy industry include:

  • Federal Decree-Law 17/2022, regulating the Connection of Distributed Renewable Energy Production Units to the Electricity Grid;
  • Abu Dhabi Law 2/1998 ('Abu Dhabi Independent Power Project (IPP) Law'), which governs power projects in Abu Dhabi; and
  • Dubai Law 6/2011 ('Dubai IPP Law'), which governs power projects in Dubai.

The relevant regulatory bodies include the following:

  • The Federal Ministry of Energy and Infrastructure is the primary regulator at the federal level and is responsible for establishing policies and procedures for the water and electricity sectors in the United Arab Emirates.
  • The Etihad Water and Electricity Authority regulates the water and electricity sector from generation to distribution in the Northern Emirates (Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain).
  • TAQA is a government-controlled and listed energy and water company operating in several countries. It is one of Abu Dhabi's flagship companies and owns the majority of Abu Dhabi's power assets, playing a major role from the development to the distribution of energy and water throughout Abu Dhabi.
  • Masdar plays a leading role in developing and operating utility-scale renewable energy projects, both in the United Arab Emirates and overseas.
  • In the Emirate of Sharjah, the Sharjah Electricity and Water Authority was established in 1995 and is responsible for the generation, transmission and distribution of electricity.
  • The Dubai Supreme Council of Energy (DSCE) plays a major role in regulating the exploration, production, storage and distribution of petroleum products and electricity. The DSCE also proposes policies and procedures and has developed the Clean Energy Strategy 2050, which aims to provide 75% of Dubai's total energy output from clean energy sources by 2050.
  • The Dubai Electricity and Water Authority (DEWA) is the public service infrastructure company in the Emirate of Dubai, managing the entire chain of electricity and water, from production to distribution. DEWA has introduced a net metering scheme in Dubai in order to encourage the owners of commercial and residential buildings to switch to renewable energy supplies, such as solar photovoltaic panels.
  • The Emirates Nuclear Energy Corporation is the entity responsible for the deployment and ownership of nuclear energy plants in the United Arab Emirates. In 2019, the Barakah Nuclear Energy Plant, located at Al Dhafra in the Emirate of Abu Dhabi, commenced operations to produce up to 25% of the country's electricity requirements.
  • In Ras Al Khaimah, the Ras Al Khaimah Electricity and Water Authority was established in 2013 to regulate the ownership, management, operation and maintenance of power generation plants, desalination plants, water fields and power transmission and distribution networks.

1.2 Which bilateral or multilateral instruments or treaties with effect in your jurisdiction have relevance for the renewables industry?

The United Arab Emirates is a signatory to a number of international treaties that are relevant to the promotion and use of renewable energy. These include:

  • the Montreal Protocol on substances that deplete the ozone layer (1987);
  • the United Nations Framework Convention on Climate Change (UNFCCC) of 1992;
  • the Kyoto Protocol to the UNFCCC of 1997; and
  • the Paris Climate Accords (2015).

1.3 Which national regulatory bodies are responsible for enforcing the applicable laws and regulations? What powers do they have and what is their general approach in regulating the renewables industry?

The national regulatory bodies are outlined in question 1.1, including their scope of powers in regulating the renewables industry.

1.4 What role do regional or local government or public bodies play in the renewables industry?

Generally speaking, governmental and public authorities are:

  • leading efforts to adopt the latest innovations that address climate change and mitigate the effects of global warming; and
  • playing a major role in supporting the United Nations Sustainable Development Goals 2030.

Other national energy councils develop and implement plans which aim to promote renewable energy for the purpose of meeting the need for energy output from clean energy sources.

More specifically, the role of local government and public bodies includes:

  • establishing policies and procedures for the water and electricity sectors in the United Arab Emirates;
  • implementing the federal government's electricity policies;
  • controlling, supervising and organising the energy sector, and issuing licences to entities engaged in the energy sector;
  • contracting with all entities licensed to produce and distribute water and electricity;
  • developing and operating utility-scale renewable energy projects;
  • proposing any and all initiatives relating to the energy sector, including privatising electricity assets;
  • regulating, licensing and supervising electricity generating service providers, facilities and properties; and
  • determining electricity prices.

2 Renewables industry

2.1 Which renewable technologies are considered relatively mature in your jurisdiction, and which are emerging as potentially new technologies in the market?

The United Arab Emirates operates a number of renewable energy projects, including the 5.6-gigawatt (GW) Barakah Nuclear Energy Plant and the 2-GW Al Dhafra solar photovoltaic project, which will produce a total clean power generation capacity of 8.8 GW by 2025. This means that the majority of Abu Dhabi's electricity in 2025 should come from clean sources.

The United Arab Emirates is also home to three of the world's largest and lowest-cost solar plants – a technology that has become mature in the United Arab Emirates given the investment the government has made in recent years for the purpose of diversifying power generation and meeting the growing demand for local consumption.

In addition to nuclear, among other emerging technologies adopted, the United Arab Emirates is developing the use of waste for power generation, with several partner companies helping it achieve its renewable energy target. Work on the construction of a waste-to-energy plant in the Al-Warsan 2 area of Dubai is already underway. With the help of this plant and recycling efforts in Dubai, the emirate aims to produce 7% of its electricity needs through waste conversion.

The United Arab Emirates is also planning to add hydrogen to the energy mix, supporting sustainable development strategies and economic diversification. Hydrogen can be produced from:

  • available and traditional sources such as gas and oil; or
  • renewable sources such as solar energy, geothermal energy and other organic sources, which the United Arab Emirates is in the process of researching and developing.

2.2 Who are the key players in the renewables industry in your jurisdiction?

There are a number of key players in the renewables industry, at both federal and emirate levels. These are listed in question 1.1 and include:

  • the Ministry of Energy;
  • the Etihad Water and Electricity Authority (for the northern Emirates);
  • the Dubai Supreme Council of Energy;
  • the Dubai Electricity and Water Authority;
  • the International Renewable Energy Agency;
  • the Emirates Nuclear Energy Corporation;
  • TAQA;
  • the Ras Al Khaimah Electricity and Water Authority;
  • the Sharjah Electricity and Water Authority; and
  • Masdar.

2.3 How much do renewables currently contribute to the domestic energy mix? What are the near-term projections for the role they will play?

In 2021, the United Arab Emirates' clean energy capacity accounted for 19.63% of the total energy mix.

The UAE Energy Strategy 2050 – which aims to deliver clean, secure, affordable energy and reduce greenhouse gases – targets an energy mix that combines renewable, nuclear and clean energy sources. The details of this energy mix are as follows:

  • 44% from clean energy;
  • 38% from natural gas;
  • 12% from clean coal; and
  • 6% from nuclear power.

3 Utility-scale renewables projects

3.1 What utility-scale renewables projects are currently operational or planned in your jurisdiction? What are their key features?

Operational projects include the following.

  • Solar:
    • Shams 1 Abu Dhabi in the Al Dhafra region, western Abu Dhabi, is a concentrated solar power (CSP) plant. It is a 2.5-square-kilometre plant with the capacity to feed 100 megawatts (MW) of electricity into the national grid – enough to power 20,000 homes and divert 175,000 tonnes of carbon dioxide (CO2) per year from the atmosphere. The plant is considered the first utility-scale commercial solar project in the Middle East and one of the largest in the world.
    • The Mohammed bin Rashid Al Maktoum (MBR) Solar Park in Dubai is comprised of three phases and is a single-site solar park, with a planned capacity of 5000 MW by 2030. Phase 1 began operations in 2013 with a capacity of 13 MW. The second phase began operations in April 2017 with a capacity of 200 MW. The third phase was inaugurated in November 2020 with a capacity of 800 megawatts (MW). Phase 3 is powering 240,000 homes and offsetting 1.4 million tonnes of CO2 emissions per year. There are two additional planned phases. Phase 4, with an anticipated completion date in 2023, is planned to produce approximately 900 MW; while the final fifth phase is planned to produce another 900 MW.
  • Nuclear:
    • The Barakah Nuclear Energy Plant is composed of four units. Units 1 and 2 are commercially operational and produce respectively 18000 gigawatt-hours (GWh)and 10,000 GWh of power. They both combine for an offset of 14000 kilotonnes of CO2 emissions. While Unit 3 has been connected to the grid, it has not yet become commercially operational. As at the time of writing, Unit 4 is 92% complete.

Planned projects include the following:

  • Solar:
    • Dubai will build a large-scale CSP plant on a single site, which is expected to begin power generation within the next five years. The project is expected to exceed a power-generating capacity of 150 MW and deliver inexpensive power at less than $0.08 cents per kilowatt-hour. The project, when completed, is expected to slash carbon emissions in Dubai by more than 6.5 million tonnes of CO2.
  • Waste to energy:
    • In Sharjah, Masdar, in partnership with Bee'ah, is developing a waste-to-energy plant to divert more than 300,000 tonnes of solid municipal waste from landfill each year. The plant will process more than 37.5 tonnes per hour of municipal solid waste, converted into heat, which is then used to drive electrical turbines. The net electrical power produced will be up to 30 MW, which will be supplied directly to the Sharjah electricity grid.
    • In Abu Dhabi, Emirates Water and Electricity Company, in partnership with the Abu Dhabi Waste Management Centre, is developing a waste-to-energy plant to divert 75% of waste away from landfill. The plant will have an expected processing capacity of between 600,000 and 900,000 tonnes of waste per year and will generate enough electricity to power up to 22,500 UAE households. The plant is expected to reduce CO2 emissions by up to 1.5 million tonnes per year.
    • In Dubai, a waste to energy plant is being built in Al Warsan 2, at a cost of AED 2 billion. The plant is expected to commence commercial operations in 2023. It is also anticipated that the plant will be able to process 2,000 metric tonnes every day during the first phase of operations, producing 60 MW of energy.

3.2 What authorisations are required for the construction and operation of utility-scale renewables projects in your jurisdiction?

Generally speaking, the authorisations of one or more of the following entities is required for the construction and operation of renewables projects, including those relating to design and engineering, mobilisation, quality standards, health and safety:

  • the municipality of the emirate;
  • the electricity and water authority of the emirate;
  • the Department of Economic Development of the emirate;
  • the Dubai Energy Council, for projects in Dubai;
  • the Etihad Water and Electricity Authority, if the project is taking place in the Northern Emirates (Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain);
  • the Ministry of Energy; and
  • the Supreme Council for Energy.

3.3 Do these authorisations vary in respect of the location of the energy source, the location of the asset or the involvement of a foreign entity?

The authorisations do vary depending on the location of the energy source, as more or fewer layers of authorisations may be required. For example, an emirate-led solar project in Dubai or Abu Dhabi does not require authorisation by federal bodies.

As referred to in question 1, in addition to the federal level, each emirate has introduced a set of regulations for the construction and operation of renewables project. Authorisations are required to ensure compliance with these regulations.

The nature of the authorisations is generally the same with respect to the involvement of foreign entities.

3.4 What is the procedure for obtaining such authorisations? How long does this typically take? Who is responsible for issuing them?

The procedure for obtaining authorisations is normally set out in the contract, which usually replicates the customary or regulatory practices adopted by the body issuing the authorisation in question.

Typically, at the design stage, drawings are submitted to the respective municipality and the water and electricity authority for approval. This includes any variations to the design of the project. Meetings may take place between the engineering teams of both parties to resolve any issues. The discretion to approve or resolve any design/variation thereof rests with the governmental body. Authorisations are normally issued in the forms adopted by the body issuing the authorisation.

There is no set timeframe for issuing such authorisations and any time impact will be determined on a case-by-case basis. That said, the timeframe is usually quick, save where further scrutiny is required or complex issues must be resolved.

Authorisations are typically issued by one or more of the entities set out in question 3.2.

3.5 What are the key features of such authorisations, including any process for renewal and the rights and obligations of the holder?

Authorisations are normally issued for a specific entity – usually the contractor/operator – in relation to a specific project and for a specified period. The authorisations include the key activities that the contractor/operator can perform on a project.

For example, for a typical electricity generation licence granted pursuant to the Dubai IPP Law for a CSP + photovoltaic project, a description of the licensed activity will be provided. The term of the licence is indefinite, unless revoked or terminated by notice in writing from the licensor due to breach by the licensee of the Dubai IPP Law or the conditions of the licence. It can also be terminated by mutual consent of the licensee and the licensor.

The licence can be subject to amendments while in force, and may include an authorisation for subcontracting of the licensed activity (including the identity of the subcontractor). A schedule is attached to the licence, setting out its conditions, including:

  • a list of any prohibited activities;
  • a requirement for compliance with the Independent Power Project Code and the power purchase agreement; and
  • the provision of certain information to the licensor, including accounting information, audited financial accounts, estimates, returns and reports (whether or not prepared specifically at the request of the licensor) of any description, as the licensor may consider necessary.

Finally, the licence will include a plant description, including its capacity and the technology used, as well as a plan of its location and layout.

In Dubai, the process for amending a licence is typically set out either in the licence itself or in Article 18 of the Dubai IPP Law, which authorises the licensor to amend, for any reasons related to the public interest, the conditions of a licence pursuant to a notice of amendment issued to the licensed entity.

3.6 Can these authorisations be transferred? If so, how and subject to what consents? Do any restrictions apply to the transfer?

Any transfer, assignment or subcontracting of licensed activities usually forms part of the terms of the licence. Typically, the licence specifies the identity of the transferee, assignor or subcontractor, thus recording the prior consent of the licensor for third parties – in addition to the principal licensee – to be involved in the licensed activities. Any involvement of entities not identified in the licence or performance of activities that have not been licensed will likely amount to a breach of the licence and the Dubai IPP Law. Any involvement of entities not identified in the licensed activities requires an amendment of the terms of the licence.

3.7 What obligations apply in relation to decommissioning? How is this funded?

The extent of obligations will depend on what the end use will be for the resulting brownfield site; but the usual position is that the project company will be required to return the site at the end of the project life in the state that it was first occupied for construction. It is thus responsible for:

  • implementing and paying for corrective actions to address environmental contamination; and
  • taking action to close or decommission all operating units at the plant.

Although some financial support may be available in the form of grants, loans and tax incentives, the usual position is that the decommissioning will be funded by the project company, which will have accounted for such costs in the operating returns over the lifetime of the project.

Regarding the decommissioning of nuclear power plants, although the Barakah Nuclear Energy Plant is not yet fully operational, the Federal Authority for Nuclear Regulation – which regulates the decommissioning of nuclear energy plants in the country (the Barakah plant being the first and only one at present) – already has an initial decommissioning plan in place for when the plant reaches its end of life in 60 to 80 years' time.

3.8 What are the main barriers to the development of utility-scale renewables projects in your jurisdiction?

The UAE government has made a significant leap in recent years in supporting the diversification of energy generation. However, it will likely take some time before the identified goals and targets are achieved.

There are certain barriers which depend on the energy source. For instance, with regard to solar panels, there are restrictions relating to aesthetics and safety, as well as operational costs.

Separately, there is practically no renewable energy component manufacturing industry based in-country – largely because of the very small domestic market for renewables. This is despite the emergence of a few downstream supply chain factories, in particular in energy-intensive photovoltaic-grade silicon production.

In summary, there are three principal barriers to the expansion of renewable energy:

  • the absence of a market for renewables, due to cheap fossil fuel and energy-use subsidies;
  • the absence of support policies for renewables, including both grid access regulations and financial support schemes; and
  • the lack of an experienced workforce (eg, engineers) in renewables.

3.9 Environmental issues

  1. What environmental regulations or requirements must renewables generators in your jurisdiction observe on an ongoing basis (from pre-development to decommissioning)?
  2. What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?
  3. Which national and regional regulatory bodies are responsible for the enforcement of environmental obligations, and what is their general approach in regulating the renewables industry?

(a) What environmental regulations or requirements must renewables generators in your jurisdiction observe on an ongoing basis (from pre-development to decommissioning)?

A number of environmental protective regulations impact the way in which renewables projects are pre-developed, constructed, commissioned, operated and decommissioned. Federal Law 24/1999 on the Protection and Development of the Environment is the overall umbrella law for environmental protection, including:

  • conserving the quality and natural balance of the environment; and
  • avoiding harmful effects resulting from development projects.

It has blanket application and compliance is required w by all, including renewables generators.

There is also a series of other legislative provisions regarding environmental protection – for example, in relation to the development of aquatic resources and the use of radioactive substances. Each emirate and various free zones within the individual emirates have an additional set of local laws on various environmental issues specific to that emirate or free zone. If an entity wishes to undertake a project in the United Arab Emirates which may have an impact on the environment, it must apply for a licence from the Federal Environmental Agency or other relevant competent local authority, depending on the area in which the entity is proposing to undertake the project. The application process involves an environmental impact assessment.

Other relevant environmental regulations include:

  • Federal Law 20/2006 on the Use of Radioactive Materials (which amended Federal Law 1/2002);
  • Federal Law 12/2018 on Integrated Waste Management, which applies to waste from production to recycling, treatment and disposal, including industrial, agricultural, marine and oil waste, but excluding radioactive waste; and
  • Ministerial Decree 37/2001 on the Handling of Hazardous Materials, Hazardous Waste and Medical Waste.

(b) What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

Federal Law 20/2006 sets out a number of penalties for non-compliance with the environmental provisions within the United Arab Emirates in general. Penalties include fines from AED 1,000 to AED 10 million and life imprisonment.

Supplementary regulations or decrees issued by specific emirates set out their own penalties, which can complement or differ from those specified within the federal law. It is thus important that an entity is fully aware of the specific regulations governing the area in which it proposes to carry out an activity.

Typically, contracts for the construction, operation or decommissioning of renewable generators include a number of contractual provisions in respect of the environment, which may result in the imposition of contractual remedies if breached by the licensed entity, its directors, managers or employees. Other environmental terms set out in respective licences may potentially lead to revocation of the licence as a penalty applied by the authority granting the licence, if such terms are breached by the licensee.

(c) Which national and regional regulatory bodies are responsible for the enforcement of environmental obligations, and what is their general approach in regulating the renewables industry?

A number of federal and local regulatory agencies oversee compliance with environmental obligations, including the following:

  • The Federal Ministry of Climate Change and Environment regulates the environmental industry by managing emissions and drafting flexible programmes and plans to enhance the capabilities of diverse sectors to adapt to climate change. It defines targets and indicators, such as increasing the share of clean energy in the total domestic energy mix to 50% by 2050.
  • The Abu Dhabi Environment Agency regulates and enforces Abu Dhabi's environmental laws to protect biodiversity and preserve the quality of life. It carries out thousands of compliance inspections and assesses and characterises risks to develop a better understanding of environmental threats in the emirate.
  • The Ras Al Khaimah Environment Protection and Development Authority regulates the renewable industry by developing plans and policies for the protection of natural resources and the climate.
  • The Dubai Municipality is engaged in developing infrastructure that enhances Dubai's attractiveness for investments in clean energy projects and is responsible for enforcing the United Arab Emirates' national objectives in the field of environmental sustainability. Notably, the ministry regulates the emirate of Dubai's waste to energy programme, including the landmark Dubai Waste Management Centre.

3.10 Health and safety issues

  1. What key health and safety requirements apply to renewables projects in your jurisdiction and are there best practices in relation to health and safety that should be adopted?
  2. What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

(a) What key health and safety requirements apply to renewables projects in your jurisdiction and are there best practices in relation to health and safety that should be adopted?

The Department of Energy regulates and supervises all health and safety aspects of the water, wastewater and electricity sectors in Abu Dhabi and implements the Abu Dhabi Occupational Safety and Health System Framework. The key health and safety requirements include:

  • the provision of personal protective equipment;
  • occupational health (including provision of vaccines);
  • implementation of an occupational health and safety management system;
  • building management; and
  • other required investments in training/competency development, wellbeing programmes, plant and equipment.

Further, the UAE Supreme Council for National Security has developed a series of Occupational Health and Safety Management System standards to mitigate occupational health and safety risks as far as is reasonably practicable. The standards apply across the entire United Arab Emirates, excluding free zones, where they are advisory and serve as guidelines only. The standards cover:

  • change management;
  • procurement and contract management;
  • incident investigation and reporting;
  • corrective action and prevention;
  • engineering and operational safety systems; and
  • emergency management.

(b) What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

As stated in question 3.9(b), Federal Law 24/1999 sets out a number of penalties for non-compliance with the environmental provisions within the United Arab Emirates in general. Penalties include fines ranging from AED 1,000 to AED 10 million and life imprisonment.

Supplementary regulations or decrees issued by specific emirates each set out their own penalties which can complement or differ from those specified within the federal law. It is therefore important that an entity is fully aware of the specific regulations governing the area in which they propose to carry out an activity.

Typically, contracts for the construction, operation or decommissioning of renewable generators include a number of contractual provisions in respect of the environment, which may lead to the imposition of contractual remedies if breached by the licensed entity, its directors, managers or employees. Other environmental terms set out in respective licences may potentially lead to revocation of the licence as a penalty applied by the authority granting the licence, if the licensee breaches the licence terms.

4 Distributed generation projects

4.1 What are the key differences in relation to small-scale distributed generation projects compared to utility-scale projects in your jurisdiction with regard to the regime discussed in question 3?

The United Arab Emirates is in the process of releasing regulations for utility-scale generation and small-scale distributed generation. The two may be distinguished as follows:

  • Utility-scale generation is usually for bigger projects (20 megawatts) that generate and sell electricity to wholesale buyers; while small-scale distributed generation involves smaller projects that generate and consume energy for end users, such as residential homeowners or corporations.
  • Utility-scale generation usually require large expanses of flat land; while small-scale distributed generation can be installed on building rooftops, parking lots, malls and similar.

4.2 What are the main networks that apply to small-scale distributed generation projects in your jurisdiction?

The most common small-scale distribution generation projects in the United Arab Emirates involve rooftop solar panels.

5 Taxes and incentives

5.1 What national, regional and/or local incentives are available as subsidies or support to facilitate the deployment of renewables projects in your jurisdiction?

Abu Dhabi and Dubai have introduced regulations whereby owners are credited for any surplus electricity produced by their solar photovoltaic (PV) panels beyond what is used in their own premises. If the solar PV panels produce more energy than is required, the owner can automatically feed any excess into the grid and the owner will be credited to the value of the electricity provided to the grid.

As part of the independent power project (IPP) structure, financial benefits are offered through take-or-pay protection and deemed payment mechanisms to cover private participants in the event of grid failure (subject to conditions) or force majeure scenarios. There are currently no financial or regulatory incentives that are specific to utility-scale renewable power.

Dubai has introduced the Dubai Green Fund, which provides access to loans for investors in the renewable energy sector for investment in energy-efficiency projects.

5.2 Are any tax reliefs available for investment in renewables projects?

We are not aware of any tax relief that may be available for investment in renewable projects.

5.3 Have there been any interventions affecting renewables projects in terms of their ability to be constructed or operated, or their ability to earn revenue, in your jurisdiction?

One of the main interventions is obtaining the relevant licences and permits to construct and operate renewable projects. Additionally, private companies must sell their projects and the electricity generated to government utility companies, which can adversely affect the ability of the IPP to earn revenue.

5.4 What other incentives are available to promote the development of the renewables industry in your jurisdiction?

Dubai has introduced the Dubai Green Fund to provide access to loans for investors in the renewable energy sector. The Dubai Green Fund is the investment arm of the Dubai Electricity and Water Authority (DEWA) and offers loans to companies in the clean energy sector – for example, for investment in energy-efficiency projects such as Dubai International Airport or Jebel Ali Free Zone.

Abu Dhabi recently launched a clean energy certificate scheme which, among other things, aims to attract investment in the sector in Abu Dhabi.

In order to encourage residential and commercial buildings to make use of solar panels, Dubai passed Executive Council Resolution 46/2014 concerning the Connection of Generators of Electricity from Solar Energy to the Power Distribution System in the Emirate of Dubai, known as the Shams Dubai, a distributed renewable energy regime. Resolution 46 sets out the requirements for both residential and commercial solar power-generating units connected to the power distribution system, and applies to all producers (building owners or tenants), including special development zones and free zones.

Further, as part of the IPP structure, financial benefits are offered through take-or-pay protection and deemed payment mechanisms to cover private participants in the event of grid failure (subject to certain limitations and conditions) or political force majeure/change in law scenarios.

The DEWA has also introduced a smart apps via smart grid and meters initiative, which aims to carry out the mass rollout of smart meters in Dubai, enabling more demand-side management mechanisms.

The United Arab Emirates is rapidly expanding the use of clean energy. It operates three (soon to be four) nuclear power reactors that provide energy to the country's grid, and is home to three of the largest and lowest-cost solar plants in the world.

6 Financing structures

6.1 Is debt financing typically used and are there any particular structures that are common for renewables projects in your jurisdiction?

For IPP structures, the applicable sponsors usually secure long-term project financing from local or international commercial banks and sometimes even export credit agencies.

6.2 What are the advantages and disadvantages of these different types of structures?

Generally, for the IPP structure, long-term financing from banks or credit agencies can be difficult and expensive to obtain. However, the advantage in the United Arab Emirates is that all renewable projects are owned by government entities, so it is somewhat easier to obtain financing.

6.3 What other considerations and concerns should parties bear in mind when deciding on a financing structure for a renewables project?

The parties should bear in mind the following considerations:

  • the cost of the equipment;
  • the cost of implementation;
  • a sustainability study if the equipment can be placed in the area demarcated by the partner;
  • an agreement with off-takers if the excess energy can be transmitted to the grid;
  • the financing terms of the project; and
  • any concessions to be provided if the excess energy is sold or transmitted to the off-takers.

6.4 What main financing institutions are active in your jurisdiction?

Local and international banks and export credit agencies, such as ECI and ADEX.

6.5 Which financing markets are usually turned to for sources of debt in your jurisdiction, (eg, local, London, New York)?

Given the government involvement, most funding is obtained locally, although usually with an international element included which is generally from either Europe or Asia.

7 Transmission, distribution and export

7.1 What are the applicable processes for connecting renewables projects with transmission, distribution and export networks in your jurisdiction? Do these processes differ between different types of renewable technologies and between renewables and non-renewable projects?

A licence (or formal exemption) must be obtained from:

  • the Abu Dhabi Department of Energy (DOE);
  • the Dubai Regulatory and Supervisory Bureau (RSB); or
  • Etihad Water and Electricity (EWE), which caters to Ras Al Khaimah, Fujairah, Umm al Quwain and Ajman).

In Abu Dhabi, it is the DOE and in Dubai it is the RSB that is responsible for licensing regulated activities. Regulated activities in this context include any activity related to generating electricity, desalinating and adding minerals to water, or a combination of generating electricity and desalinating and adding minerals to water, for the purpose of supplying the transmission system with produced electricity and/or water in Dubai.

The licensing process typically requires:

  • an environmental impact assessment and a construction or building permit; and
  • a valid trade licence and commercial registration.

Depending on the kind of licence required, a number of 'no objection' certificates may be required – for example, from the DOE.

There are also specific licensing requirements for contractors supplying and installing distributed renewable energy facilities.

Connection to the transmission network requires compliance with the technical standards. Each of the emirates will typically have different technical standards for connecting the transmission system.

7.2 What requirements and restrictions apply to the export of renewable energy onto the network?

It is envisaged that the United Arab Emirates, with its abundant solar power, has the potential to export renewable hydrogen in the future.

As the power and energy sector is state owned, the UAE government decides on the export of any renewable energy.

Currently, UAE exports oil and gas only to various countries.

7.3 What other considerations and concerns should be borne in mind in relation to the transmission, distribution and export of renewable energy in your jurisdiction, including participation in ancillary services, wholesale electricity trading markets, network charging arrangements specific to renewables and the ability to construct part of the connection infrastructure? Are there long queues and delays for connection?

The United Arab Emirates has introduced a number of laws and regulations to regulate the transmission, distribution and export of renewable energy. The energy sector – which includes the distribution and transmission of renewable and non-renewable energy in the United Arab Emirates – is state owned and controlled.

7.4 Are there any initiatives, reforms or consultations relating to the connection of renewables projects?

The Emirates National Grid (ENG) aims to interconnect the four main electricity and water authorities in the United Arab Emirates (Abu Dhabi DOE, the Dubai Electricity and Water Authority, EWE and the Sharjah Electricity and Water Authority), to enable:

  • the sharing of power between the seven emirates; and
  • the formation of an integrated power system.

Renewable energy sources are increasingly contributing to the ENG.

The United Arab Emirates has entered into bilateral agreements with Japan and Russia to develop hydrogen, particularly for storage and transportation, so this renewable energy source may well be exported in the future.

The United Arab Emirates is also planning to establish a power market platform aimed at facilitating the export of electricity. The platform will allow companies and institutions in the United Arab Emirates to exchange electricity in the future.

8 Storage

8.1 What processes and rules apply to parties wishing to construct and operate a storage (eg, battery, hydrogen, hydro) project in your jurisdiction?

The Abu Dhabi Department of Energy and the Dubai Regulatory and Supervisory Bureau regulate the storage of energy as part of their authority to regulate the energy sector.

8.2 Are there any barriers to the development of storage projects in your jurisdiction?

We are not aware of any barriers to the development of storage projects in the United Arab Emirates.

8.3 What other considerations and concerns should be borne in mind in relation to the development of storage projects in your jurisdiction?

There are significant developments being made globally to develop and store energy, and the United Arab Emirates has entered into bilateral agreements with some countries to develop and store energy.

9 Competition

9.1 Are there any dominant players, including dominant purchasers, in the renewables industry in your jurisdiction?

The energy sector is state owned, with every emirate having its own regulatory authority. There are no private players in the United Arab Emirates. Further, there are no dominant purchasers, as the purchase of electricity is not permitted by the private sector.

9.2 Are there any pro-competition measures that are targeted specifically at renewables generators?

There are no pro-competition measures, as the energy sector is a closed sector and is not open to private players.

10 Disputes

10.1 In your jurisdiction, do disputes typically go to arbitration or litigation, and does this vary for different types of disputes? What sorts of matters tend to come up in disputes?

The United Arab Emirates is a federal state with federal courts and local courts operating in each emirate. It is also the home of the Dubai International Arbitration Centre, the Abu Dhabi Commercial Conciliation and Arbitration Centre and a branch of the arbitration court of the International Chamber of Commerce at the Abu Dhabi Global Markets. It is common in the United Arab Emirates for commercial, construction and energy disputes to be resolved by arbitration, rather than court litigation; whereas agency-related, civil, criminal, banking or liquidation claims are usually settled by the local courts. Although it is not uncommon to refer claims arising from bonds and guarantees to arbitration, it is typical to have these claims settled by the UAE courts.

Further, claims with an international element, such as claims arising from international shipping and distribution agreements, are settled by arbitration.

With regard to the types of claims typically appearing in disputes, these depend on the nature of the agreement in question. COVID-19-related claims, such as force majeure and unforeseen circumstances, continue to be a common theme across industries. As for construction and energy-related matters, claims related to issues in design, variations, back charges, delay and disruption, default in payment or performance obligations are commonly referred to arbitration.

10.2 Have there been any important disputes in the public domain that relate to or may potentially impact on the renewables industry or the deployment of renewables projects?

As noted in question 10.1, construction and energy-related disputes are typically referred to arbitration. Pursuant to Article 48 of Federal Law 6/2018 on arbitration, the arbitration process and the arbitrator's award is confidential and should not be published without the parties' consent.

Accordingly, arbitration awards are rarely published in the United Arab Emirates. To the best of the authors' knowledge, at present there are no disputes in the public domain that relate to or may potentially impact the renewables' industry or the deployment of renewables projects.

11 Trends and predictions

11.1 How would you describe the current renewables landscape and prevailing trends in your jurisdiction?

As numerous projects are being planned across the region, projects are becoming subject to greater renewable energy targets, innovative research and development, and investments across the entire industry value chain. The United Arab Emirates is considered to be the region's fastest-growing market for renewables. The main sectors representing an opportunity for renewable energies include construction, transportation and industrial.

As the United Arab Emirates plans to generate most of its electricity from renewable energy by 2050, major opportunities exist in solar energy, waste-to-energy, wind energy and water treatment. Further, and with regard to nuclear, once all four units of the United Arab Emirates' Barakah Nuclear Energy Plant are commercially operating, the Barakah plant will produce up to 25% of the country's electricity requirements, while in parallel preventing the release of 21 million tons of carbon emissions each year (this is equivalent to removing 3.2 million cars off the roads annually).

The extent of the renewables landscape is not limited to the above or to the United Arab Emirates. In January 2021, the United Arab Emirates launched the Abu Dhabi Hydrogen Alliance – comprised of the Abu Dhabi National Oil Company, Mubadala and ADQ – which will advance low-carbon green and blue hydrogen in emerging international markets and help to build a substantial green hydrogen economy in the United Arab Emirates.

11.2 What influence are net zero commitments having on the development of the renewables industry in your jurisdiction?

Net zero commitments are shaping the renewables industry into a more dynamic and appealing sector for investors and players alike. These commitments are designed by various governmental strategies, including the UAE Plans for 2030 and 2050.

As the focus of these visions is on solar and nuclear power, as well as green hydrogen, it is expected that the net zero commitments will expand the government's role in these areas, which should result in more projects and more funding in the future.

11.3 What new developments are anticipated in the next 12 months, including any proposed legislative reforms?

It is expected that new legislative reforms will be enacted in the next 12 months. The public is usually made aware of such reforms when the laws are published in the Official Gazette.

12 Tips and traps

12.1 What are your top tips for renewables generators in your jurisdiction and what potential sticking points would you highlight?

The most important factor for renewable energy in the United Arab Emirates is the empowerment of government agencies to take holistic, comparative views of energy costs – and to act on these through regulation and/or tendering.

The costs and the process of installing solar panels should not be prohibitive. The United Arab Emirates could also revise its costs for waste disposal to support greater waste-to-energy conversion and encourage the installation of solar panels in residential projects by offering cost incentives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.