Investing in Renewable Energy in Libya
Libya is an oil-producing country relying mainly on oil and gas as the principal energy source and income. It is in dire need of searching for 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.
Libya’s Renewable Energy Plan
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 find a legal framework to regulate the renewable energy sector. According to REAOL, in 2013, a draft law regulating renewable energy was submitted to the proper authority in Libya to be approved. As of today, there is no law in place regulating renewable energy in Libya. The draft law of 2013 encouraged the private sector to participate in electricity production.
However, Law no. 9 for 2010 encourages investors to invest in Libya under conditions. Investing in renewable energy by bringing technology and know-how to Libya could entitle investors to many 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 to other exemptions related to the distribution of dividend and equity returns.
The Need for Private Public Participation
The Libyan energy sector remains closed to private investors. The General Electricity Company of Libya (GECOL) is the only entity engaged in electricity production. Prior to 2011, GECOL produced around 6,000 megawatts of electricity, but since then, it faced a deficit of approximately 2,000 megawatts.
For Libya as a rich developing country, the participation of the international private sector is essential inbringing in the technology, expertise, and capital required to tap into the unrealized potential of renewable energy. This is true, especially in emerging economies, whose governments lack the budgetary resources and technical expertise necessary to invest heavily in renewables.
There is no policy to provide financial support to investors from the private sector to engage in 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.