Law & Regulation
Electricity Law
The Electricity Law establishes the statutory framework for electricity activities, sector planning, licensing, regulation, competition, network access, service standards and consumer/public-interest protection. Institutional functions are divided between policy and regulatory bodies under the current government structure. It is not a PPA or concession document. It determines the regulatory perimeter within which generation, transmission, distribution, trading and supply arrangements operate.
Legal Significance
What This Instrument Does
The Law defines electricity activities and sector objectives, requires licensing or exemption, grants regulatory powers over tariffs/charges and service performance, supports network and market arrangements, regulates access and connection, and provides compliance and enforcement mechanisms.
Why It Matters
Power-project bankability depends on lawful generation and connection, a valid offtake pathway, network access and a stable regulatory allocation. The Law identifies the licences and regulatory powers surrounding those contracts, while the PPA, connection agreement and project approvals allocate transaction-specific obligations.
Key Provisions
- Sector objectives and policy
Establishes reliability, efficiency and development goals. Transaction relevance: frames regulatory decision-making without guaranteeing project economics.
- Electricity-activity perimeter
Defines generation, transmission, distribution, trading and supply functions. Transaction relevance: maps licences and counterparties.
- Licensing and exemptions
Requires authorization for regulated activities. Transaction relevance: licences are development and financing conditions precedent.
- Regulatory authority powers
Enables rulemaking, supervision and approvals. Transaction relevance: contracts remain subject to regulatory decisions within mandate.
- Tariffs, charges and revenue regulation
Provides authority over regulated economics. Transaction relevance: relevant to network/service revenue assumptions; not every PPA price is a statutory tariff.
- Network access and connection
Supports regulated connection/use architecture. Transaction relevance: affects grid studies, connection agreements and dispatch readiness.
- Competition and market structure
Enables sector organization and competitive arrangements. Transaction relevance: influences permissible market participation and offtake models.
- Reliability, quality and service standards
Establishes performance obligations. Transaction relevance: drives design, testing, availability and operating systems.
- Consumer and public-interest protection
Regulates service relationships and continuity. Transaction relevance: material to distribution/supply projects and service obligations.
- Information, inspection and compliance
Gives oversight powers. Transaction relevance: requires regulatory reporting and auditable operational data.
- Violations, penalties and licence measures
Enables enforcement. Transaction relevance: licence suspension/revocation risk can threaten project revenue.
- Emergency and continuity powers
Supports system-security intervention. Transaction relevance: relevant to dispatch, curtailment and force-majeure/interface analysis, subject to specific rules.
When You Would Use This
Mapping licences for generation, transmission, distribution or supply.
Structuring a power project and its regulatory approvals.
Reviewing grid connection and network-access assumptions.
Assessing tariff, charge or regulated-revenue exposure.
Drafting PPA/regulatory change and compliance provisions.
Conducting lender due diligence on licence and enforcement risk.
InfraLex Relevance
The Law is the principal project-linked electricity-sector record. Its interfaces with PPAs, grid agreements, environmental approvals and PSP/procurement are editorial, not persisted legal relationships.
Legal Framework Position
- Sector RegulationPrimary / Framework Instrument
Instrument Overview
- Official Citation
- Royal Decree M/44, 16/5/1442H
- Instrument Type
- Law / Act
- Source Language
- Arabic
- Last Verified
- 6 September 2026