Many countries have adapted energy policies and laws to encourage investment in renewable energy sources. They are also looking to different financing, legal and commercial frameworks, including public-private partnerships (PPPs) to leverage private capital and expertise to support the development of renewable energy projects.
This section includes links to RE policies, laws, and regulations from countries around the world, key sample and standardized contracts used for the implementation of RE projects, as well as, reading materials and links to useful online resources.
For more information, visit the section on Toolkits, the scan the Renewable Energy Projects by Resource (Solar Power, Wind Power, Hydropower, Biomass and Geothermal) or check-out Water Projects Using Renewable Energy.
Renewable Energy Policies, Laws and Regulations
The recent growth of the RE market has been driven to a large extent by policies, laws and regulations that encourage private investment in RE. Often these approaches are combined in order to optimize the benefits of several mechanisms.
Key mechanisms to promote the uptake of RE include:
National RE targets - Legal requirement to produce a certain portion of energy from RE sources together with a timeline by which the target has to be reached.
Feed-in tariffs (FiT)/feed-in premiums (FiP) - FiT and FiP guarantee the purchase of generated RE at a fixed price or premium for a defined period in time.
Quota Obligations or Renewable Portfolio Standards (RPS) - Requirements for utilities to source specific percentages from RE sources.
Grid Access Provisions - Provisions that give RE producers facilitated access to the grid, e.g. through mandated grid access or reduced transmission fees.
Auction Schemes - Public competitive bidding for procuring new RE capacity at the lowest possible price.
Some samples from specific countries:
Reference: Energy Regulation and Legislation in China - This report from the Environmental Law Institute presents China's energy regulatory system and framework.
Reference: EBRD - Renewable Development Initiative for EBRD : Funded by USAID, this website tracks the latest developments of 29 countries located throughout Central and Eastern Europe and the Former Soviet Union and serves as an information resource to project developers, policymakers and researchers.
Reference: European Commission – Renewable Energy : This site on renewable energy by the European Commission contains links to the policy framework of the European Union as well as the Renewable Energy Directive.
Reference: European Union Renewable Energy Legislation: Overview of the secondary EU legislation that falls under the legislative competence of DG ENER and that is currently in force (split by policy areas). Last updated on 19 December 2014.
Reference: Res Legal Europe – Legal Sources on Renewable Energy - RES LEGAL Europe is a professionally edited and free of charge online database on support schemes, grid issues and policies regarding renewable energy sources in the EU 28 Member States, the EFTA Countries and some EU Accession Countries. The database covers all three energy sectors: electricity, heating & cooling and transport. It provides a quick overview of the different national regulations regarding renewable energy sources in a clear, concise and convenient way and links to the original legal sources in their original language as well as link to a translation of the law if available.
Reference: IEA/IRENA Global Renewable Energy Policies and Measures Database - International Renewable Energy Agency (IRENA) maintains a joint database with the International Energy Agency (IEA) for policies and measures pertaining to renewable energy from around the world. The database is searchable by country and sector.
Reference: Bill 630/2003 -September 23,2009 draft submitted to Special Commission of Brazilian Congress by Workers’ Party Congressman Fernando Ferro of the State of Pernambuco redacting Bill 603 of 2003 - provides incentives to the generation of energy through alternative resources, renewables and bio-fuels; promotes research including with respect to: hybrid and electric cars, the storage of power and use of hydrogen and compressed gas; creates the National Fund for Alternative and Renewable Resources.
Reference: Brazil 10 Year National Energy Expansion Plan - The Brazilian Energy Research Company published in 2010 the 10 Year National Energy Expansion Plan providing projections for energy demand and offer in a 10-year horizon and general energy guideline policies.
Reference: Alternative Energy Auction of July 2011 – Regulation Portaria MME 113 of Feb 1, 2011 - Authorizes ANEEL to organize alternative energy auctions on July 2011 and provides pre-qualification criteria for developers/investors interested in participating in the auction.
Reference: Brazilian Research Company EPE Web Page on Energy Auctions - Provides information and updates on the Brazilian Energy Auctions organized by ANEEL, including information on pre-registration requirements and deadlines.
Reference:Brazil PROINFA – Program for Incentivizing of Alternative Power Resources – Reference Documents
- Law 10,438 of 2002 of April 26 2002 as amended by Laws 10,762/03 and Law 11,943 of March 28, 2009: Authorizes the creation of PROINFA – Program for Incentive of Alternative Power Resources.
- Decree 5,025 of March 30,2004 - Regulates the PROINFA program establishing targets, deadlines and requirements.
- Decree no. 5,882/06 of August 31, 2006 - Provides that income from carbon trading arising out of PROINFA projects are to be used to offset costs of the PROINFA program and regulates the criteria for trading carbon credits arising out of PROINFA projects.
- Regulation Portaria MME 45/04 of March 30,2004 - Authorizes Eletrobras to issue calls for proposal under PROINFA and establishes criteria for pre-qualification to be reflected in calls for proposal.
- Regulation Portaria MME 86/07 - Establishes the criteria and instructions for calculation of the minimum national content of equipment and services required under the PROINFA program
- PROINFA Update– Power Point Presentation by Minister of Mines and Energy - Power point presentation dated January 2009 prepared by the Alternative Energy Resources Department of the Secretary of Planning and Energy Development of the Minister of Mines and Energy -- provides comprehensive data, graphs and maps on PROINFA results, costs, challenges and opportunities, and also reference to PROINFA’s legal and regulatory framework and financing mechanism.
Reference: United States: Incentives and Policies for Renewable Energy and Energy Efficiency - The Database of State Incentives for Renewables & Efficiency (DSIRE) is a comprehensive source of information on state, federal, local, and utility incentives and policies that support renewable energy and energy efficiency. Established in 1995 and funded by the U.S. Department of Energy, DSIRE is managed by the North Carolina Solar Center and the Interstate Renewable Energy Council, Inc.
- ANEEL – Regulatory Agency
|Back to top|
Renewable Energy Sample Project Documents and Contracts
Renewable energy projects rely on a number of legal contracts. One central contract is the power purchase agreement (PPA), which governs the sale and purchase of power:
The seller's primary responsibilities under a PPA are to build, operate and maintain a power generation facility in accordance with the requirements of the PPA and applicable law, and to deliver the agreed amount of power.
In turn, the buyer is obliged to purchase the energy produced and to pay the agreed tariff.
Various elements of the renewable energy PPA depend on the underlying incentive scheme. Typically, one price component in RE PPAs is e.g. a fixed price per kWh for electricity delivered for a certain number of years.
Risk allocation between the parties may be influenced by the limited ability of the seller to control the output of some RE resources. The lack of output predictability may call for some flexibility with regard to the minimum capacity to be delivered or require the offtaker to pay to some extent for delivered excess electricity. See also Key Features of Power Purchase Agreements.
The following are sample contracts published by the Regional Center for Renewable Energy and Energy Efficiency (RCREEE).
RCREEE is an independent non-profit regional organization which aims to enable and increase the adoption of renewable energy and energy efficiency practices in the Arab region. RCREEE teams with regional governments and global organizations to initiate and lead clean energy policy dialogues, strategies, technologies and capacity development in order to increase Arab states’ share of tomorrow’s energy.
Power Purchase Agreement (PPA) Model for Electricity Generated from Renewable Energy in RCREEE Member States, RCREEE January 2012. PPA to be entered into by a Seller and a Purchaser of energy. The Seller undertakes to construct, own, operate and maintain a renewable energy generating facility, and the Purchaser undertakes to buy the energy output generated by Facility.
User’s Guide for The Power Purchase Agreement Model for Electricity Generated from Renewable Energy Facilities, by Adel Beshara, RCREEE March 2012. The User's Guide provides more detailed information on specific provisions in the Power Purchase Agreement Model for Electricity Generated from Renewable Energy in RCREEE Member States (such as term, pre-commercial operation obligations, commercial operation, sale and purchase of energy output, metering, defaults and termination). Additionally, it provides guidance on the development of Renewable Energy Power Purchase Agreements (“REPAs” or “RE-PPAs”).
Land Use Agreement (LUA) Model for Renewable Energy Electricity Generating Facilities in RCREE Member States, RCREEE, January 2012. LUA of public owned lands to be used for Renewable Energy (RE) projects. Agreement between the Land Owner (a public entity) and a Land User (a company investing in project development in the field of renewables) for a term of 23 years (pided into three phases: installation, operation and removal of renewable energy improvements).
User's Guide for Renewable Energy Electricty Generating Facilities' Land Use Agreement (LUA) Model by Adel Beshara, RCREEE March 2012. This Guide focuses on the long-term land use phase for the installation and operation of a renewable energy project. It discusses topics that are common to any lease and provides additional explanation of some clauses that can have different alternatives commonly used in the industry or proposed by the author (e.g., provisions on fee payments, removal and site restoration). It also covers the phase preceding the long-term land use phase, the option phase, and provides guidance with regard to Option Agreements for Site Evaulation including thoughts on how to avoid land speculation and profiteering as well as information on Easements.
Below are country specific samples:
Model PPAs for wind, biomass, small hydro, geothermal, biogas and solar projects.
Reference: Draft Standard PPA of December 2010 published by the Malawi Energy Regulatory Authority for [hydro/geothermal/gas fired] power generation between IPP (“Seller”) and Purchaser, a company entitled to purchase electricity and to transmit and distribute electricity in the Republic of Malawi; Seller proposes to develop, design, finance, insure, construct and complete, own, operate and maintain a [hydro/geothermal/gas fired] power generation facility and Purchaser wishes to purchase from the Seller he capacity of such power generation facility and all of the net electrical output pursuant to the terms and conditions of the PPA.
See also Independent Power Producer (IPP) Framework for Malawi of 8 March, 2017
Reference: Model Privileged Producer Electric Power Purchase Agreement pursuant to Article 65 of the Law on Energy Republic of Serbia (applicable for wind, solar, small hydro biomass). The Energy Agency of the Republic of Serbia has published more information on Privileged Power Producers.
Reference:Model Implementation Agreement and Standardized PPA published by the Global Energy Transfer Feed in Tariff (GETFiT) Programme. The main objective of the GET FiT Program is to assist East African nations in pursuing a climate resilient low-carbon development path resulting in growth, poverty reduction and climate change mitigation. Through the roll-out of phase one of the program, a portfolio of up to 15 small-scale Renewable Energy generation projects promoted by private developers with a total installed capacity of about 125 MW and approximately 780 GWh production / year will be fasttracked. The GETFiT Programm has also published a License Certificate and License Conditions.
Reference: Zambia Renewable Energy Feed-in Tariff (REFIT) Program: REFIT Power Purchase Agreement - Model PPA between state-owned utility and the Seller (draft of February 2016). The 20-year agreement is applicable for solar, hydro, biomass, geothermal and wind plants and outlines the provisions commonly found in PPAs in respect of international, private power projects. The PPA is based on the assumption that the developer will finance the project through project finance arrangements. The Seller will also enter into an implementation agreement with the government of Zambia and will obtain a Generation License from the energy regulator in Zambia. The standardized agreement is based on a REFIT policy to stimulate renewable energy production and to promote private sector participation in energy sector. See also Model Grid Connection Agreement, REFIT Guidelines and REFIT Rules.
Other relevant contracts relate to the financing, building and operation of the power plant, e.g. land use agreements, construction and operating contracts, as well as implementation agreements. See Related Project Agreements Typically Necessary for a Power Project.
|Back to top|
Further Reading and Resources
South Africa's Renewable Energy IPP Procurement Program: Success Factors and Lessons by Anton Eberhard, Joel Kolker and James Leigland, Public-Private Infrastructure Advisory Facility (PPIAF), May 2014.
Revisiting Public-Private Partnerships in the Power Sector by Maria Vagliasindi, World Bank 2013.
- Power PPPs, Handshake, International Finance Corporation's (IFC's) quartely journal on public-private partnerships, Issue # 13, October 2012.
- Progressive policy-making has the greatest impact on our renewable energy future. GENI gathered what they believe to be the most effective government policies around the world to promote renewable energy technologies
Recommendations for the Design of Successful Renewable Energy Auctions or Competitive Tenders in Africa, Lessons from South Africa by Anton Eberhard and Raine Naude: Part B contains recommendations for tender documentation and contracts.
- European Commission – Renewable Energy
Inter-American Development Bank: Resources related to renewable energy
Small Power Purchase Agreement Application for Renewable Energy Development: Lessons from Five Asian Countries, Steven Ferrey, January 2004
Important Features of Bankable Power Purchase Agreements for Renewable Energy Power Projects, OPIC, USAID, International Trade Agency, US Trade and Development Agency
|Back to top|