The UAE has established one of the most active energy and infrastructure development programmes in the Middle East, underpinned by a layered regulatory architecture that practitioners must understand at both federal and emirate level before structuring any transaction or advising on compliance.
Key takeaway
Energy and infrastructure projects in the UAE operate under a dual federal-emirate regulatory regime, with Abu Dhabi and Dubai maintaining distinct sector authorities and licensing frameworks. Project finance structures must account for UAE-specific security law, the new corporate tax regime under Federal Decree-Law No. 47 of 2022, and sector-specific concession terms. Dispute resolution choices between DIAC, ADCCAC, DIFC-LCIA and ICC arbitration carry material procedural consequences. Practitioners advising developers, lenders or offtakers must integrate regulatory, tax and transactional analysis from mandate inception.
Regulatory Architecture: Federal and Emirate Layers
Energy regulation in the UAE is not unified under a single federal body. The Supreme Council for Financial and Economic Affairs sets broad national policy, while sector regulation is largely devolved. The federal electricity and water sector was historically governed by Federal Law No. 6 of 1998 establishing the Federal Electricity and Water Authority (FEWA), which retains jurisdiction over the Northern Emirates. Abu Dhabi and Dubai each operate autonomous sector authorities with separate licensing regimes.
In Abu Dhabi, the Department of Energy (DoE) replaced the Abu Dhabi Water and Electricity Authority (ADWEA) as the policy and regulatory body, while Abu Dhabi Power Corporation (ADPower) holds the principal generation, transmission and distribution assets through subsidiaries including Abu Dhabi National Energy Company (TAQA). The Regulation and Supervision Bureau (RSB) issues generation, transmission, distribution and supply licences under the Abu Dhabi Electricity Regulation Law. Practitioners must confirm which regulatory instrument is applicable to the asset before advising on licensing obligations.
Dubai's sector is regulated by the Dubai Supreme Council of Energy as the policy authority and the Dubai Electricity and Water Authority (DEWA) as the integrated utility. DEWA operates under its own legislative framework established by emirate decree. Independent power and water projects awarded by DEWA are structured under bespoke power and water purchase agreements rather than a general licensing statute, meaning transactional counsel must analyse project documents directly rather than relying solely on a statutory licensing regime.
Concession Structures and Project Documentation
Large-scale UAE energy projects — independent power producers (IPPs), independent water producers (IWPs) and solar independent power producers (SIPPs) — are typically awarded through competitive tender processes and documented under long-term power purchase agreements (PPAs) or water purchase agreements (WPAs) with the relevant offtaker. Abu Dhabi PPAs have tenors of 25 to 30 years; DEWA's solar procurement rounds, including the Mohammed bin Rashid Al Maktoum Solar Park tranches, have used similar tenors. The concession structure includes a project company incorporated in the UAE, with the offtaker or a government-related entity holding a minority equity stake.
The project documents typically comprise a PPA or WPA, a shareholders' agreement, an engineering, procurement and construction (EPC) contract, an operations and maintenance (O&M) agreement and security documents. UAE federal contract law under Federal Law No. 5 of 1985 (the Civil Transactions Law) and Federal Law No. 18 of 1993 (the Commercial Transactions Law) govern contract formation and performance unless DIFC or ADGM law is contractually selected and jurisdiction supports that choice. Practitioners should pay particular attention to force majeure provisions, which under UAE civil law have a more constrained scope than common law equivalents and require the event to be wholly beyond the obligor's control.
Government support instruments — including government guarantees, direct agreements with lenders and political risk comfort letters — are critical credit supports that lenders routinely require. Abu Dhabi government entities executing guarantees must comply with emirate financial obligations procedures, and validity depends on proper authorisation under applicable emirate financial regulations. DIFC and ADGM offer common law contract frameworks that international lenders often prefer for inter-creditor and finance documents, even where the underlying project is onshore.
Project Finance: Security and Lending Structures
UAE project finance transactions rely on a security package that must be carefully mapped against the rules governing security creation over UAE-sited assets. Federal Decree-Law No. 20 of 2016 on Mortgageable Funds and its implementing regulations govern the creation of security over movable assets through a registered pledge system maintained by the Ministry of Economy. Real property mortgages over Abu Dhabi land are registered with the Abu Dhabi Department of Municipalities and Transport; Dubai land mortgages are registered with the Dubai Land Department. Perfection failures at registration are a common transactional risk.
Account pledges, share pledges and assignment of receivables — including the PPA payment stream — form the core of the project finance security package. Assignment of the PPA in Abu Dhabi requires offtaker consent under the standard Abu Dhabi PPA form; practitioners must obtain a direct agreement between the offtaker and the lenders to provide step-in rights and cure periods before enforcement. The UAE does not recognise a floating charge in the English law sense, so lenders must take fixed security over each category of asset and ensure each pledge or assignment is separately perfected.
Islamic finance structures, including ijara, istisna'a and wakala arrangements, are common in UAE project finance, particularly for government-sponsored projects and where Sharia-compliant investors participate. These structures require additional documentation layers and Sharia board approvals, and the security and enforcement mechanisms must be adapted to avoid prohibited elements. Onshore UAE courts have jurisdiction over enforcement of registered mortgages, though arbitration clauses in finance documents are enforceable for contractual disputes.
Public-Private Partnership Framework
Abu Dhabi enacted a dedicated PPP law — Abu Dhabi Law No. 2 of 2019 on Public-Private Partnerships — which establishes the legal basis for awarding PPP contracts, the scope of private sector participation and the risk allocation principles applicable to PPP projects in the emirate. The law is supplemented by executive regulations and guidelines issued by the Abu Dhabi Department of Finance. Dubai does not yet have a standalone PPP statute, and its infrastructure procurement relies instead on sector-specific legislation and concession agreements awarded under emirate authority.
At federal level, the UAE has not enacted a comprehensive federal PPP law that applies across all emirates, though federal ministries and authorities have structured PPP-type arrangements for healthcare, transport and utilities projects using existing public procurement and corporate frameworks. Practitioners advising on federal PPP projects must assess the applicable federal authority's enabling legislation to confirm it has power to enter long-term contractual commitments and to grant revenue or availability payment obligations binding on the federal budget.
Risk allocation in UAE PPPs follows broadly recognised PPP principles — demand or volume risk is typically retained by government for social infrastructure; construction and operating risk is transferred to the private party — but emirate-specific deviations exist. Land grant mechanisms, wayleave rights and utility connection obligations are frequently negotiated project-specifically. Practitioners should benchmark proposed risk matrices against concluded Abu Dhabi PPP precedents in the healthcare and transport sectors, where market terms are now reasonably established.
Corporate Tax Considerations for Energy Projects
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses introduced a federal corporate tax at a standard rate of 9% on taxable income exceeding AED 375,000, effective for financial years beginning on or after 1 June 2023. Energy project companies incorporated in the UAE mainland are within scope. Free zone entities — including those in DIFC and ADGM — may qualify for a 0% rate on qualifying income if they satisfy the substance and non-disqualifying income conditions prescribed under the legislation and implementing ministerial decisions.
Extractive businesses and non-extractive natural resource businesses are subject to a specific carve-out under Federal Decree-Law No. 47 of 2022: income subject to emirate-level taxation under an emirate concession or fiscal regime is excluded from federal corporate tax. Abu Dhabi's oil and gas concession holders, including ADNOC group companies, have historically been taxed at the emirate level under Abu Dhabi Law No. 4 of 1965 and successor instruments rather than under federal income tax. Practitioners must identify whether a given energy project falls within the extractive carve-out or is subject to federal corporate tax.
Withholding tax under the UAE corporate tax regime is currently set at 0% for domestic payments and for payments to foreign entities, though this position may be revised. The OECD Pillar Two global minimum tax framework applies to UAE entities forming part of multinational groups with consolidated revenues exceeding EUR 750 million; UAE-incorporated top-up tax rules are expected to be enacted in line with the UAE's commitment to the Inclusive Framework. Energy groups with international parents must model the Pillar Two exposure at project and holding company level.
Renewable Energy: Policy, Licensing and Clean Energy Targets
The UAE's Energy Strategy 2050 targets 44% clean energy in the national energy mix. Abu Dhabi's clean energy targets are operationalised through procurement rounds managed by Abu Dhabi Power Corporation, with Masdar — now a subsidiary of ADQ — acting as the principal developer vehicle for international and domestic renewable projects. DEWA in Dubai procures solar capacity through its SIPP programme and has set a target of 100% clean energy for Dubai by 2050 under the Dubai Clean Energy Strategy.
Grid connection for renewable projects is governed by technical codes issued by the relevant transmission system operator. In Abu Dhabi, transmission assets are operated by TRANSCO, a subsidiary of ADPower; in Dubai, DEWA operates the integrated grid. Developers must obtain a generation licence from the relevant regulator and a grid connection agreement from the transmission operator before commissioning. Licence conditions include local content requirements, particularly in Abu Dhabi under the Tawazun and In-Country Value (ICV) programmes, which impose obligations on contractors and suppliers to source locally.
Offshore wind and green hydrogen are emerging sectors where the regulatory framework is still developing. No dedicated offshore wind licensing regime exists at federal or emirate level as of early 2026; projects have proceeded under bespoke arrangements with the relevant emirate authority. Green hydrogen projects at Masdar City and KIZAD operate under free zone or industrial zone frameworks. Practitioners advising on new technology energy projects should engage early with regulators to establish the applicable permit and licence pathway, as analogical application of existing electricity licensing rules may not be straightforward.
Oil and Gas: Upstream Concessions and ADNOC Framework
Upstream oil and gas exploration and production in Abu Dhabi operates under a concession framework rooted in the Supreme Petroleum Council's jurisdiction and ADNOC's role as the national oil company holding all upstream concessions on behalf of the Abu Dhabi government. Concession agreements are awarded by Supreme Petroleum Council resolution; international oil companies participate as minority interest holders under concession or production sharing structures. Federal Law No. 4 of 1971, as amended, established the framework for petroleum activities at federal level, but Abu Dhabi's emirate-level regime effectively governs the substantive terms for the bulk of UAE hydrocarbon production.
ADNOC has increasingly diversified its commercial arrangements, including the introduction of integrated gas development agreements and fee-based service agreements alongside traditional concessions. The ADNOC Drilling, ADNOC Logistics and ADNOC Gas listings on the Abu Dhabi Securities Exchange reflect a broader commercialisation strategy. Corporate counsel advising investors in ADNOC subsidiaries must analyse the intersection of Abu Dhabi concession terms, UAE corporate law under Federal Decree-Law No. 32 of 2021 on Commercial Companies, and the securities regulatory framework of the Securities and Commodities Authority.
Pipeline and midstream infrastructure in Abu Dhabi is largely held through ADNOC's midstream subsidiaries, with minority interests sold to sovereign wealth fund investors under long-term lease and usufruct structures. These transactions involve complex UAE property and commercial law analysis, including the validity and registrability of usufruct rights over pipeline easements under UAE federal and Abu Dhabi land laws. Due diligence on such transactions requires title verification at both emirate land authority and ADNOC entity level.
Dispute Resolution in Energy and Infrastructure
International arbitration is the standard dispute resolution mechanism in UAE energy and infrastructure contracts. The principal institutional options are ICC arbitration (Paris-seated or DIFC-seated), DIFC-LCIA arbitration administered under the DIFC-LCIA Rules, arbitration under the Dubai International Arbitration Centre (DIAC) Rules 2022, and arbitration under the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC). DIFC courts and ADGM courts offer common law adjudication with English-language proceedings and straightforward recognition and enforcement of judgments within their respective ecosystems.
The UAE Federal Arbitration Law — Federal Law No. 6 of 2018 — governs arbitrations seated in the UAE mainland and aligns broadly with the UNCITRAL Model Law. Enforcement of foreign arbitral awards in the UAE is governed by the New York Convention, to which the UAE acceded in 2006, and by bilateral enforcement treaties. Onshore UAE courts have historically applied a formal review of award requirements, including the requirement for an Arabic translation of the award and the arbitration agreement for enforcement proceedings; practitioners must comply with these procedural requirements to avoid enforcement delays.
Construction and EPC disputes in infrastructure projects frequently involve claims under FIDIC contract forms, which are widely used in UAE public and private sector projects. UAE courts and arbitral tribunals have addressed FIDIC engineer determinations, extension of time claims and variation disputes. Practitioners should note that the UAE Civil Transactions Law contains mandatory provisions — including those relating to unjust enrichment and the judicial power to adjust penal clauses — that may affect the outcome of contractual damages claims even in arbitration seated outside the UAE if UAE law governs the substantive contract.
Free Zone Vehicles: DIFC and ADGM for Energy Transactions
DIFC and ADGM are the two principal common law free zones used to structure energy and infrastructure holding companies, joint venture vehicles and finance parties in UAE transactions. Both operate under independent legal systems: DIFC under DIFC Law and its own courts with final appellate jurisdiction vested in the DIFC Court of Appeal; ADGM under ADGM regulations modelled substantially on English law with the ADGM Courts exercising jurisdiction. Entities incorporated in DIFC or ADGM are treated as non-resident for UAE onshore regulatory purposes but must satisfy the relevant free zone authority's licensing requirements.
The choice between DIFC and ADGM for a project holding company or finance vehicle turns on several factors: proximity to the relevant emirate authority (ADGM in Abu Dhabi; DIFC in Dubai), applicable free zone corporate tax qualifying income analysis under Federal Decree-Law No. 47 of 2022, lender preference for governing law and dispute resolution, and the specific corporate governance requirements of each free zone. ADGM's commercial companies framework closely mirrors English company law, which international lenders find familiar; DIFC's framework similarly draws on English law concepts.
Both DIFC and ADGM have enacted foundations and limited partnership legislation that is used in fund structures investing in energy and infrastructure assets. ADGM's Abu Dhabi Global Market Investment Funds Regulations and DIFC's Collective Investment Law provide the regulatory framework for fund managers. Energy infrastructure funds — whether investing in operating assets, development projects or private credit — must structure their regulatory approvals, carried interest arrangements and investor documentation with reference to the applicable free zone financial services regulatory framework alongside the corporate tax analysis.
Practical checklist
- Identify the applicable regulatory authority (FEWA, Abu Dhabi DoE/RSB or DEWA) and confirm the licensing requirements before project documentation is finalised.
- Map the security package against UAE movable and immovable asset registration requirements under Federal Decree-Law No. 20 of 2016 and relevant emirate land registration rules, and obtain offtaker direct agreements before financial close.
- Analyse corporate tax exposure under Federal Decree-Law No. 47 of 2022, including the extractive business carve-out, free zone qualifying income conditions and Pillar Two top-up tax obligations for multinational groups.
- Select the dispute resolution forum and seat early, and verify that arbitration agreements, governing law clauses and enforcement mechanisms comply with Federal Law No. 6 of 2018 and New York Convention requirements.
This article is for general information only and does not constitute legal advice. For advice on a specific matter, please contact us. Last updated: 25 August 2026.