Legal and commercial takeaways from the Libya Energy Transition Conference

Across the presentations and panel discussion there was broad alignment on the direction of travel: renewables are now a central pillar of Libya’s energy strategy and are expected to sit alongside, rather than displace, hydrocarbons. For international investors, this creates a mixed picture: a sizeable resource base, clear political messaging and early-stage projects on the one hand, and a still-evolving legal framework and institutional capacity constraints on the other.

Strategic Vision and Institutional Landscape:

The conference opened with REAOL’s Chairman presenting the National Renewable Energy and Energy Efficiency Strategy 2023–2035. The strategy, launched in Tripoli in late 2023, targets a significant share of electricity generation from renewables by 2035 and positions renewables as a tool to diversify government revenues away from hydrocarbons, which currently account for the overwhelming majority of fiscal income.

• Institutional roles: REAOL and GECOL were presented as the twin pillars of the sector: REAOL leading policy and project promotion; GECOL remaining the grid owner and principal off-taker. This creates a dual-counterparty landscape for investors.
  • The message from the panel was that NOC, REAOL and GECOL are now expected to coordinate closely, including in hybrid oilfield/renewable projects. In theory, this should enable investors who wish to invest in both Oil & Gas and Renewable projects.

• Macroeconomic objectives: Officials repeatedly framed renewables as a tool for national development: reducing the need to export crude solely to finance imported fuels, creating thousands of jobs and improving energy security. This narrative is important for investors because it underpins the political will to prioritise grid access, customs exemptions and other incentives for qualifying projects.
• Governance context. While not the focus of the conference, the broader reality remains that Libya’s power sector is fragmented and under strain, with around 10.4 GW of installed capacity spread over more than 160 units, much of it ageing. For commercial parties, this means renewable projects will be judged not only on resource quality but also on how far they can relieve pressure on an overstretched system. A considerable amount of work will have to be put into renovating this grid before the ambitions of becoming a major renewable energy exporter can be realised.

Flagship Projects and Cross-Border Export Vision

Eng. Asiel Ertima set out a pipeline of early projects and the aspiration to position Libya as a hub for sustainable energy in North Africa and the Mediterranean:

• Domestic utility-scale projects. The headline examples were:
  • A 200 MW solar plant in Ghadames;
  • A 200 MW wind farm in Kufra; and
  • A 200 MW wind project in Misrata.

These projects, with an indicative aggregate value in the hundreds of millions of dollars, are at varying stages of approval. The technical concept is deliberately flexible: plants could remain single-technology or be converted into hybrid solar-wind schemes with integrated storage, subject to investor appetite and grid studies.

• Grid integration and hybridisation: GECOL’s involvement is central. The panel stressed that these projects are being designed to connect directly into the national grid and, in some cases, into existing oil-field infrastructure. Commercially, this raises structuring questions: will projects be developed as IPPs selling into GECOL under long-term PPAs, as merchant plants with partial state support, or as dedicated captive power for hydrocarbons facilities? Each model implies a different risk allocation around off-take, curtailment and grid upgrades.
• Export-orientated interconnection. The conference also reiterated the long-standing idea of interconnectors with Malta, Italy and Greece with a potential export capacity of around 2 GW and an estimated capital cost of USD 3–5 billion. However, these agreements are still in the early stages, with a lot of technical studies and diplomatic negotiations still required. Commercially, such interconnections could:
  • underpin long-dated cross-border PPAs with EU utilities;
  • allow Libya to monetise surplus renewable generation; and
  • create scope for blended finance packages involving European DFIs and guarantee institutions.

However, cross-border projects will demand a higher level of regulatory sophistication (on congestion management, wheeling charges, EU market access and sanctions compliance) than currently exists, and investors will want greater clarity before attributing real option value to this export story.

Legal and Regulatory Framework – What Is in Place & What Is Missing?

From a legal perspective, Libya’s renewables framework is best described as partially formed.

• General investment regime – Law No. 9 of 2010: In the absence of a dedicated renewables statute, most projects are expected to rely on the Investment Law, which offers foreign investors tax and customs exemptions, profit repatriation rights and, in some cases, the ability to own 100% of the project vehicle in priority sectors. The panel highlighted that the same law has historically been used to structure large-scale investments, including outside the power sector, and continues to provide a workable entry route for foreign capital.

• Draft renewable energy law. REAOL and other stakeholders are in the process of drafting a sector-specific law, but it has yet to be enacted. This leaves a structural gap: there is no consolidated statute dealing with licensing, priority dispatch, feed-in mechanisms, or standardised IPP frameworks. One panel intervention acknowledged that the absence of dense regulation can feel attractive for developers in the short term, as it provides flexibility and scope to negotiate bespoke arrangements. However, Tarek Eltumi emphasised that serious capital ultimately requires clarity, not vacuum; investors may accept tailored solutions, but only if they are grounded in a predictable legal environment and backed by enforceable state commitments.
• Risk of over-regulation: Equally, speakers warned against rushing into a highly prescriptive regime that layers overlapping approvals and caps on returns over the top of nascent projects. Morocco was cited as a cautionary example of how multiple agencies and complex permitting can slow deployment. The key message was that Libya should target smart regulation: enough law to provide certainty around tariffs, land rights and dispute resolution, but not so much that it deters early-stage developers through procedural friction.
• Contracts as de facto regulation: An interesting comparison was drawn with Libya’s upstream sector: major transactions, including legacy deals with international oil companies, were concluded under model contracts and government decrees even in the absence of modernised petroleum legislation. The point for renewables is similar: where the statutory framework is incomplete, well-drafted PPAs, implementation agreements and government guarantees can themselves become the primary risk-allocation tools, provided they are bankable and enforceable under Libyan and international law.

Bankability, Financing Structures and the Role of Guarantees

Bank ABC’s representative focused squarely on bankability. The message was that the sector’s trajectory is promising, but investors and lenders need more precision.

Commercial and legal points that arose include:

• PPA design and off-taker credit. International lenders will scrutinise the payment obligations of GECOL (or any alternative off-taker) and will likely insist on:
  • hard-currency tariff mechanisms or indexation;
  • clear rules on dispatch and curtailment;
  • government support agreements addressing change in law, political force majeure and foreign exchange convertibility.
• Capital structure and local content. Financing discussions inevitably link to Libya’s investment climate more broadly, including foreign exchange rules, security perfection, and requirements around local employment and procurement under Law 9/2010 and related regulations. Investors must consider whether to structure transactions through joint ventures with Libyan partners or rely on 100% foreign ownership under the investment regime, bearing in mind political expectations even where the law does not expressly mandate local shareholding.
• Incentives and exemptions. REAOL signalled that qualifying investors can expect tax and customs exemptions, nominal land rents and other incentives, consistent with provisions under the Investment Law and the National Strategy’s emphasis on fiscal support for clean energy. From a legal perspective, the key issue is durability: investors will want these incentives enshrined in investment licences and project-specific agreements, with protections against unilateral withdrawal.
• Storage and system services. A recurring question from the Q&A was whether Libya’s regulatory framework will expressly address energy storage and grid services. Legally, storage raises distinct issues: asset classification (generation vs. network), tariff setting and ownership models. Commercially, early clarity on storage will influence project design and could open the door to innovative revenue stacks (capacity payments, ancillary services, and congestion management) rather than relying solely on energy-only PPAs.

Risk Allocation and Practical Considerations for Investors

Although the conference narrative was optimistic, participants were realistic about the challenges ahead. From an investor’s standpoint, several themes emerged:

• Political and regulatory risk. Libya’s broader political environment continues to be characterised by change and institutional fragmentation. Investors will therefore focus on stabilisation provisions, international arbitration clauses, and where possible political risk insurance.
• Implementation capacity. REAOL openly acknowledged internal gaps in technical expertise and the need for international partners to transfer know-how. Institutional strength will matter when it comes to grid-connection timetables, permitting, and day-to-day contract management.
• Precedent and signalling value. Early projects will act as market benchmarks. Their contractual structure, tariff levels, and risk allocation between state and private sector will likely set expectations for subsequent rounds. Investors may wish to treat first-wave projects as an opportunity to shape these standards, but should also be aware that they will be negotiating without a long track record of closed deals to lean on.
• Balancing flexibility with discipline. One of the more candid observations from the panel was that “Total-sized deals have been done in Libya without a dedicated law, but with contracts that gave investors security and confidence.” This underlines a key point: in Libya, commercial discipline in contracting can partially substitute for legislative detail, but cannot replace it entirely. Prospective sponsors should therefore approach negotiations with a dual lens: treating contracts as the principal risk-allocation mechanism for the short term, while advocating for the passage of a coherent renewables law to support long-term sector growth.

Eltumi Partners advises developers, lenders and industrial offtakers on renewable energy projects in Libya and the MENA region from entry strategy and licensing to contracting, financing and delivery. For enquiries, contact enquiries@eltumipartners.com.

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