Many countries have adapted energy policies and laws to encourage investment in renewable energy (RE) 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, see Renewable Energy Projects by Resource (Solar Power, Wind Power, Hydropower, Biomass and Geothermal) or see Water Projects Using Renewable Energy.
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 regulatory and pricing 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.
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: 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.
Brazil introduced an auction system to procure electricity in 2004 (Law no. 10.848/2004, and Decree no 5163/2004) for the market regulated by ANEEL, the Brazilian Electricity Regulatory Agency.
In the same year EPE – Empresa de Pesquisa Energética was created (Law no. 10.847). The EPE Web Page on Energy Auctions provides information and updates on the Brazilian energy auctions organized by ANEEL as well as links to Laws and Regulations in the Brazilian Energy Sector.
Alternative Energy Auction of July 2011 – Regulation Portaria MME 113 of Feb 1, 2011 - Authorizes ANEEL to organize alternative energy auctions and provides pre-qualification criteria for developers/investors interested in participating in the auction.The capacity to be awarded and the types of energy sources to be promoted at the auctions are defined by MME - Ministerio de Minas e Energia. All types of auctions are conducted by CCEE – Camara de Comercialização de Energía Elétrica, a regulated non- profit entity formed by agents from the power market, on behalf of ANEEL.
Further to the auction-based scheme, a new FIT-scheme has been introduced by the Brazilian government in December 2015 to promote distributed power generation from renewable sources by consumers (Executive Order 538/2015).
For more details see The Brazilian Power Market: An Interesting Investment Regime for Onshore Wind and Solar Power? Fieldfisher LLP, April 2016.
Chile’s RE incentive scheme is based on several different laws, including Law 20257 (Ley de Energías Renovables No Convencionales) as amended by Law 20701 (Procedimiento para Otogar Concesiones Eléctricas) and Law 20018 (Modifica el Marco Normativo del Sector Electrico), as amended by Law 20805 (Perfecciona el Sistema de Licitaciones de Suministro Eléctrico para Clientes Sujetos a Regulaciones de Precios). For more details see Renewable Energy in Latin America: Chile, Norton Rose Fulbright, 2017.
The Renewable Energy Sources Act, also referred to as Renewable Energy Law (Erneuerbare Energien Gesetz – EEG) of 2000 as amended through July 2017 sets out the main support scheme for electricity generation from wind, hydro, solar, biomass and sewage gas combustion, as well as geothermal energy. It used to be based on a FiT scheme and has recently introduced an auction model for utility-scale projects.
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.
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 developed for an independent power producer (IPP) 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 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.
Other important contracts include land use agreements, supply agreements, installation agreements, O&M agreements and implementation agreements.
Below are links to sample project documents that were developed for multiple renewable energy sources. For sample documents that relate to specific resources see the sample project documents under Solar Power, Wind Power, Hydropower, Biomass and Geothermal.
Regional Center for Renewable Energy and Energy Efficiency (RCREEE)
The following are sample contracts published by the Regional Center for Renewable Energy and Energy Efficiency (RCREEE), 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 (divided 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 Evaluation including thoughts on how to avoid land speculation and profiteering as well as information on Easements.
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) developed by the United States Agency for International Development (USAID) with the Ministry of Energy and the regulator. The 20-year agreement is applicable for solar, hydro, biomass, geothermal and wind plants and outlines the provisions commonly found in PPAs for private power projects internationally. 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:Support Mechanisms and Draft Regulations 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.
Mini Grids for Half a Billion People: Market Outlook and Handbook for Decision Makers, Technical Report of the Energy Sector Management Assistance Program (ESMAP), World Bank 2019
Mini Grids and the Arrival of the Main Grid: Lessons from Cambodia, Sri Lanka and Indonesia, Technical Report of the ESMAP Program, World Bank 2018
Renewable Energy Policies in a Time of Transition, International Renewable Energy Agency (IRENA), International Energy Agency (IEA), and the Renewable Energy Policy Network for the 21st Century (REN21), 2018
Understanding Power Project Procurement, Commercial Law Development Program (CLP) in partnership with the African Legal Support Facility - Fourth handbook in Power Africa's "Understanding" series, Understanding Power Project Financing This handbook is intended to provide the reader with an overview of the mechanisms and strategy behind successful Power Project Procurements. It explores the complexity of procuring privately-owned power projects and describes the approaches that public procuring entities can use to establish and sustain power projects, including the advantages and disadvantages of the alternatives. It also describes how these entities can implement these alternatives. Refers specifically to renewable energy projects and includes a chapter on feed-in tariffs.
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.
From the Bottom Up : How Small Power Producers and Mini-Grids Can Deliver Electrification and Renewable Energy in Africa. Directions in Development--Energy and Mining; Tenenbaum, Bernard; Greacen, Chris; Siyambalapitiya, Tilak; Knuckles, James. 2014. Washington, DC: World Bank.
Revisiting Public-Private Partnerships in the Power Sector by Maria Vagliasindi, World Bank 2013.
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.
Important Features of Bankable Power Purchase Agreements for Renewable Energy Power Projects, OPIC, USAID, International Trade Agency, US Trade and Development Agency- Summarizes 10 Important Features to Include or Consider for a Bankable PPA.
See also Power Projects: Further Reading and Resources