Introduction
Every country has its own legislation that governs the renewable energy sector. While the local legislation varies from one country to another, international treaties and agreements share a common interest in serving the public, the people, the living species, the global environment, and the economy in terms of sustainability, productivity, and safety.
While foreign investments in the Renewable Energy sector require compliance with laws and regulations in a wide range of aspects, such as investment and incorporation as reflected in the foreign investment law, the companies law, and the civil transactions law. This article discusses the amendments to regulations that are directly relevant to renewable energy sectors, highlighting the amendments and the new emerging legal aspects.
International Treaties
First of all, when it comes to the treaties and international agreements related to clean energy sources that Saudi Arabia is a signatory or a member of, the most relevant treaty is the Framework Agreement on the establishment of the International Solar Alliance, which Saudi Arabia has signed on the 19th of February 2019, and became a member country on the 12th of February 2020. Indeed, the Kingdom is also a member of other major treaties and agreements pertaining to climate change, which are the Paris Agreement, and the International Renewable Energy Agency (IRENA) initiatives, beside other treaties that are directly or indirectly relevant to Renewable Energy.
On the other hand, taking into account the local laws, Saudi Arabia has enacted laws and regulations governing the solar source, and these have been published and enforced. That said, the following paragraphs explore whether amendments and new laws impact the Renewable Energy business, aiming to facilitate legal awareness to foreign investors in renewable energy projects in Saudi Arabia.
Overview of Legislations on Renewable Energy
To understand the current legal landscape, it's helpful to know which government entities and foundational documents govern the renewable energy sector in Saudi Arabia. While this article focuses on the amendments and new laws, it is essential to introduce some of the important legislation and the responsible government authority. However, this article excludes the procedural aspect of the foreign investment requirements as well as the incorporation and licensing process. For example, the following represents the competent government, and defining some of the main issued regulations or references specifically related to Renewable Energy:
Regulatory References and Government Entities that have authority power, lead initiatives, and have oversight into the Renewable Energy sector:
King Abdullah City for Atomic and Renewable Energy
Statute of King Abdullah City for Atomic and Renewable Energy, where roles and responsibility scopes are addressed, besides the structural organization and the framework of the external and internal policies.
Renewable Resource Atlas. Providing support in feasibility study, future practical planning, and includes researching tools, technical data and measurements, data base for geographic and climate, solar and wind energy supplies.
Saudi Electricity Regulatory Authority
Regulatory Framework for Renewable Energy Generation for Self-Consumption, which defines requirements, billing arrangements and ensures effective and safe construction, installation, maintenance and operation.
Regulatory Framework for Small-Scale Solar Photovoltaic Energy Systems, detailing requirements, financial aspects, billing for excess energy, protection rules for consumers.
The Saudi Standards, Metrology and Quality Organization
Technical Regulations for Small-Scale Photovoltaic Solar Energy Systems, enforcing requirements, especially for quality assurance, compatibility measures, and conformity assessment procedures.
Ministry of Municipalities and Housing
Solar Panel Building Requirements Guide, to ensure safety of individuals and properties, to reduce visual distortion and improve urban landscape, in addition to licensing for the installation of solar panels and confirm compatibility with other authorities.
Ministry of Energy
Law of Energy Supplies, regulating the allocation of energy to consumers in the fields of electricity generation, crude oil refining, petrochemical production, water desalination, industry, mining, agriculture, construction, communications, transportation, logistics, and others. Also, Regulating licensing for natural gas and liquids activities and hydrogen-related activities.
Energy Allocation Regulations, regulating the allocation of energy to its consumers in the areas stipulated in Article (Two) of the system, to achieve optimal energy uses, contribute to raising the level and diversity of the national economy, achieve energy mix targets, and raise levels of energy efficiency.
Saudi Energy Efficiency Center
Statute of the Saudi Energy Efficiency Center, addressing the roles and responsibility besides the structural organization and the framework of the external and internal policies.
Planning Guidelines for Sustainable Urban Growth in Saudi Arabia, guiding for the planning and allocating, designing, and managing the energy uses in urban cities while introducing district cooling systems, and educating in energy efficiency and water conservation in buildings.
Exploring Amendments and New Laws
Saudi Arabia is experiencing continuous and evident reforms in the legal system. These reforms are led by the rapid, transformative era within all fields, aiming for adaptation and development. Thus, the determination of amendments and new laws is indeed a necessary tool, enabling investors and stakeholders to comply with those changes and effectively plan for their business and project.
Based on research in this matter, analyzing the recent legislative resources, the laws and regulations pertaining to Renewable Energy are found to be covering all frameworks and scopes. In other words, the regulatory has tailored sufficient legal provisions, including rights and responsibilities, procedural requirements, licensing steps, governance principles, as well as strategies and public programs.
Notwithstanding the absence of any substantial amendments with regards to the laws and regulations directly pertaining to Renewable Energy within the last two years, it is notable to repeat researches to explore the updates on the laws and regulations in Saudi Renewable Energy projects that are relevant directly or indirectly to foreign investment, more specifically, the procedural aspect laws and regulations have been undoubtedly amended in the current time, and have potentials for more development in the near future.
For example, the Foreign Investment law, the Companies law, in addition to Saudization requirements, have been recently amended for enhancement, bringing facilitation and business opportunities to foreign investors. However, the Saudization requirements are likely subject to development, taking effect in the field of roles and jobs under Renewable Energy.
The factors indicating a potential change in the Saudization requirements are mainly grounded on the fact that the Ministry of Energy has signed three new agreements to promote the localization of renewable energy industries in the Kingdom, in cooperation with the Public Investment Fund. These agreements are the result of the ongoing cooperation between the Ministry of Energy and the Public Investment Fund, covering the fields of wind turbines, solar cells and panels, and solar wafers and ingots, utilizing the efforts to localize renewable energy components and achieve the goals of Saudi Vision 2030.
Ultimately, the reliable resources that provide knowledge and track amendments and new laws which shall be reviewed from time to time represented in the three main authorities: the National Center for Archives and Records, Public Consultation Platform and Saudi Press Agency.
Conclusion
In summary, while the core regulatory framework for renewable energy has remained largely stable, foreign investors should be mindful of the significant and ongoing amendments to broader business and investment laws, driven by Saudi Vision 2030 and a push for localization, aim to create a more attractive and dynamic environment for foreign capital. Therefore, staying informed through official government platforms is crucial for effectively navigating the Saudi market and capitalizing on new opportunities in the renewable energy sector.
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.
