Libya is an oil-producing country that relies mainly on oil and gas as its primary energy source and income. It urgently needs to explore alternatives to fossil fuels for sustainable development. Renewable energy in Libya is as abundant as fossil fuel energy. As an option, Libya can easily tap into its natural energy sources, such as solar and wind, by inviting international investors to invest in renewable energy.
In 1978, the Solar Energy Research Center was established to research renewable energy applications in Libya. There has been a great interest in Libya to explore the possibility of investing in renewable energy, but in reality, no major renewable energy project materialized. The Renewable Energy Authority of Libya (REAOL) was established in 2007 to support and spreadthe call for exploring renewable energy. The legal status and regulatory powers of such bodies are examined in detail in our analysis of government entities under Libyan administrative law.
The REAOL released a Strategic Plan in 201, setting a target of 10% renewable energy contribution to Libya’s electricity energy mix by 2025. Renewable energy will come from wind, concentrated solar power, photovoltaic, and solar water heating.
Libya needs to establish a legal framework to regulate the renewable energy sector. According to REAOL, in 2013, a draft law regulating renewable energy was submitted to the appropriate authority in Libya for approval. As of today, there is no law in place regulating renewable energy in Libya. The 2013 draft law encouraged the private sector to participate in electricity production.
However, Law No. 9 of 2010 encourages investment in Libya under certain conditions. Investing in renewable energy by bringing technology and know-how to Libya could entitle investors to numerous exemptions. For instance, an investor is entitled to exemption from all taxes, customs duties, import fees, service charges, and other fees and taxes of a similar nature for machinery, equipment, spare parts, transport means, furniture, and raw materials, among other exemptions. In addition, there are exemptions related to the distribution of dividends and equity returns.
The Libyan energy sector remains closed to private investors. The General Electricity Company of Libya (GECOL) is the sole entity engaged in electricity generation. Prior to 2011, GECOL produced about 6,000 megawatts of electricity, but since then it has faced a deficit of approximately 2,000 megawatts.
For Libya, a wealthy developing country, participation by the international private sector is essential to bring in the technology, expertise, and capital needed to tap into the unrealized potential of renewable energy. This is especially true in emerging economies whose governments lack the budgetary resources and technical expertise to invest heavily in renewables.
There is no policy to provide financial support to private-sector investors for renewable energy projects. Consequently, Libya should express its interest in welcoming international investors who are willing to take advantage of the abundant sources of renewable energy and the benefits of the investment law.
