Commercial and industrial solar in the UAE is commercially strong — DEWA’s commercial tariff sits around AED 0.44/kWh, and Abu Dhabi’s small industrial rate reaches AED 0.286/kWh. But the UAE is not a single solar market. Each emirate has a separate utility, a separate capacity cap, separate application documents, and separate rules about what systems are physically eligible. Overlaying all of this is Federal Decree-Law No. 11 of 2024 (the UAE Climate Law), which took effect on 30 May 2025 and now requires every UAE-operating entity to measure and report greenhouse gas emissions — making behind-the-meter solar a compliance tool as much as an energy cost play. This guide covers the full C&I solar picture: emirate-by-emirate rules, procurement structures, wheeling prohibition, VAT zero-rating, and how FIDIC contract forms apply to UAE solar EPC projects. The UAE solar compliance hub covers the national regulatory framework in full.
No Wheeling Anywhere in the UAE — Each Site Needs Its Own Application
Grid wheeling — supplying solar electricity generated at one location to a customer at a different location through the utility network — is prohibited under DEWA, ADDC, AADC, and EtihadWE rules. There is no open retail electricity market in any UAE emirate. C&I companies with multiple premises cannot offset solar generation from one site against electricity bills at another. Each premises requires its own separate solar installation, its own utility connection application, and its own signed connection or netting agreement. For large C&I portfolios, this means site-by-site project execution rather than a single generation asset serving the whole portfolio.
UAE C&I Solar by Emirate: Quick Reference
| Emirate | Utility | Max System Size | Net Metering / Netting Rate | Ground Mount Eligible? |
|---|---|---|---|---|
| Dubai | DEWA (Shams Dubai) | 1 MW per plot | Consumer’s slab rate (~AED 0.44/kWh commercial) | No — rooftop, facade, and structure-integrated only (ban since May 2020) |
| Abu Dhabi / Al Ain | ADDC / AADC | 5 MW per site (LV network) | Customer’s own tariff rate (AED 0.20/kWh commercial; AED 0.286/kWh small industrial) | Check with ADDC; no explicit published ban, but applications evaluated case by case |
| Ajman, UAQ, RAK, Fujairah | EtihadWE (DSS program) | 20 MW aggregate annual cap (first-come, first-served) | Industrial tariff AED 0.26–0.32/kWh; calendar-year credit validity | Check with EtihadWE; DSS covers industrial and agricultural sectors |
| Sharjah city | SEWA | Per SEWA application | SEWA tariff schedule | Check with SEWA |
Above 5 MW in Abu Dhabi and above 1 MW in Dubai, projects move outside the small-scale programs and require a medium-voltage connection or EWEC-level procurement — a fundamentally different process.
Dubai: DEWA Commercial Solar Rules
The 1 MW Cap and Rooftop-Only Requirement
DEWA’s Shams Dubai program, governed by the Connection Conditions Version 4 published in June 2022, sets a hard limit of 1 MW per plot for grid-tied solar. This cap applies per cadastral plot number — a business occupying two adjacent plots on a single site cannot combine them to exceed 1 MW without DEWA’s explicit approval for a single-plot reclassification.
Ground-mounted installations have been ineligible since May 2020. Systems must be mounted on rooftops, building facades, or structures integrated into the building envelope. Carport canopies are generally eligible as structure-integrated. Free-standing ground arrays on commercial land are not.
For systems above 400 kW, DEWA applies additional conditions: supplementary grid integration equipment is required, and DEWA charges infrastructure costs to the applicant. Systems above 1 MW require a medium-voltage (MV) grid connection with interface switches on both LV and MV sides — a materially different and more expensive engineering scope than a standard LV rooftop connection.
DEWA Contractor Categories
All Shams Dubai grid-tied systems must be installed by a DEWA-certified contractor. DEWA certifies contractors in three categories:
| Category | System Size Range | Typical C&I Use |
|---|---|---|
| A | Up to 50 kW | Small commercial, retail units |
| B | 50 kW to 150 kW | Mid-size commercial |
| C | Above 150 kW | Large commercial, industrial, warehouse rooftops |
Most C&I projects use Category C contractors. DEWA publishes the current approved contractor list on its website — confirm current approval status before engagement, as the list is updated.
Commercial Net Metering Tariff
DEWA credits exported surplus at the consumer’s applicable slab rate. For commercial customers, the flat tariff is 38 fils/kWh plus a fuel surcharge of approximately 6 fils/kWh, bringing the effective commercial rate to around AED 0.44/kWh. At this rate, the economics of commercial rooftop solar in Dubai are among the strongest in the region — a 500 kW rooftop system generating approximately 800,000 kWh/year offsets around AED 352,000 in annual electricity costs.
Use the generation financial tool to model annual savings and simple payback at the DEWA commercial tariff for any system size.
Free Zones in Dubai: No Exemption
Federal Decree-Law No. 17 of 2022 explicitly includes free zones and investment zones within its scope. Companies in JAFZA (Jebel Ali Free Zone), DAFZA (Dubai Airport Free Zone), Dubai Silicon Oasis, and all other Dubai free zones must obtain prior approval from DEWA and sign a connection agreement before energising any grid-tied solar system. There is no separate free zone solar regime and no exemption from the Shams Dubai process. Free zone projects connect to the grid through DEWA infrastructure; the utility approval process is identical to that for mainland Dubai commercial premises.
If a free zone authority requires its own NOC before a tenant can approach DEWA, obtain that NOC first and include it in the DEWA submission package.
Dubai PPA Model
For commercial tenants and building owners who prefer no upfront capital outlay, the dominant structure in the Dubai market is the zero-capex behind-the-meter PPA. Under this model, a licensed solar developer builds and owns a system on the customer’s rooftop. The customer signs a 15–20 year agreement to purchase the solar electricity generated at a rate discounted against the current DEWA tariff. The developer holds the Shams Dubai connection agreement and bears the DEWA application, engineering, and metering responsibilities. This is a behind-the-meter transaction — not wheeling — because generation and consumption occur at the same premises.
Key PPA contract terms to verify before signing: who receives DEWA net metering credits during the agreement term; what happens to system ownership at contract expiry; responsibility for operations and maintenance; early termination provisions if the customer vacates the premises.
DEWA Mandatory Net Metering: No Cash Payment
Like ADDC, DEWA does not pay cash for exported solar electricity. Surplus generation is credited as kWh offsets against the next bill at the consumer’s slab tariff. Credits accumulate but do not convert to cash or bank balance. A well-designed commercial system should be sized to maximise self-consumption during business hours rather than to maximise export — because export credits simply offset future bills, not generate revenue.
Abu Dhabi: ADDC Commercial Energy Netting
The 5 MW Per Site Limit
Abu Dhabi’s Small-Scale Solar PV Energy Netting Regulation, published by the Department of Energy (DOE) in January 2017, allows commercial and industrial customers connected to the LV distribution network to install up to 5 MW per premises. This is five times the Dubai limit — a meaningful difference for large industrial sites and warehousing complexes.
The Abu Dhabi framework is an energy netting mechanism, not a cash feed-in tariff. Exported kWh are credited against future bills at the customer’s own tariff rate with no expiry date. There is no monetary payment for surplus generation under any scenario.
Abu Dhabi Commercial Tariff Rates
| Customer Category | ADDC Tariff (2025) |
|---|---|
| Expatriate residential | 26.8–30.5 fils/kWh |
| Commercial | AED 0.20/kWh (20 fils/kWh) |
| Small industrial (under 1 MW demand) | AED 0.286/kWh (28.6 fils/kWh) |
| UAE National residential | 6.7–7.5 fils/kWh (subsidised) |
The commercial tariff in Abu Dhabi (AED 0.20/kWh) is lower than Dubai’s equivalent (~AED 0.44/kWh). This extends the payback period for own-and-operate solar in Abu Dhabi compared to Dubai. However, for industrial customers on the AED 0.286/kWh small industrial tariff, and for any C&I customer using a zero-capex PPA structure (where payback rests with the developer), Abu Dhabi C&I solar remains commercially viable.
RSB Approval: Mandatory for All Abu Dhabi Projects
The Regulation & Supervision Bureau (RSB) under the Abu Dhabi DOE must approve all small-scale solar PV projects before installation begins. The RSB technical review covers single-line diagrams, system sizing, equipment conformity (IEC 61215, IEC 61730, IEC 62109, IEC 62116), earthing and protection design per the Abu Dhabi Electricity Wiring Regulations 2020, and QCC/ECAS conformity certificates. RSB written approval is a prerequisite for signing the ADDC or AADC PV Connection Agreement.
For C&I projects in Abu Dhabi, engaging an RSB-approved PV consultant to manage the submission is standard — ADDC will not accept a submission package directly from the building owner without a qualified consultant’s involvement.
Very Large C&I: EWEC Context
Above 5 MW, projects exit the small-scale energy netting framework entirely. Emirates Water and Electricity Company (EWEC) operates as the single buyer for utility-scale generation in Abu Dhabi. EWEC procures through competitive tender, with winning developers signing 25–30-year PPAs directly with EWEC. There is no open retail market and no direct wheeling framework for large C&I customers. The Al Dhafra Solar Project (2 GW, operational November 2023) at approximately 1.35 US cents/kWh and the Al Ajban project (1.5 GW, targeting Q3 2026 operational status) illustrate the scale of Abu Dhabi’s utility-side solar development — but these are not accessible C&I procurement routes.
Zero-Capex PPA in Abu Dhabi
The same developer-owned behind-the-meter PPA structure available in Dubai applies in Abu Dhabi. A developer builds on the C&I customer’s premises at no upfront cost. The customer purchases solar kWh at a rate below the applicable ADDC tariff. The developer holds the ADDC Connection Agreement and RSB approval. PPA terms run 15–20 years. For Abu Dhabi commercial customers on AED 0.20/kWh, the PPA discount rate is lower than in Dubai — developers typically offer 10–15% below the utility tariff — but for industrial customers on AED 0.286/kWh, the savings are more substantial.
Pro Tip: Use Solar Design Software to Generate RSB-Ready Documentation
A well-prepared RSB submission package includes system sizing calculations, single-line diagrams, and shading analysis in a format reviewers can assess quickly. Solar design software purpose-built for C&I projects generates these outputs — including IEC-compliant single-line diagrams, string configuration reports, and yield simulations — and gives your RSB-approved consultant the documentation needed to complete the submission with fewer revision rounds.
Northern Emirates: EtihadWE DSS for Industrial Customers
The Distributed Solar Scheme
Etihad Water and Electricity (EtihadWE) launched its Distributed Solar Scheme (DSS) in September 2024, covering customers in Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah. Unlike the earlier phase of the DSS which focused on residential customers, the September 2024 expansion explicitly includes industrial and agricultural sector customers — making it relevant for C&I operations across all four northern emirates.
Key DSS Parameters
| Parameter | Value |
|---|---|
| Sectors covered | Industrial and agricultural (as well as residential) |
| Industrial tariff | AED 0.26–0.32/kWh |
| Credit validity | Calendar year (not indefinite) |
| Annual aggregate cap | 20 MW (first-come, first-served) |
| Program launch | September 2024 |
The calendar-year credit validity is a material difference from Abu Dhabi’s indefinite credit carry-forward. EtihadWE DSS credits accumulate within the calendar year and reset at year-end — unused credits do not roll forward to January. This means system sizing for northern emirates C&I projects should prioritise matching generation to consumption within-year, not banking credits across years.
The 20 MW aggregate annual cap is filled on a first-come, first-served basis. Industrial customers in RAK, Ajman, UAQ, and Fujairah with large rooftop potential should submit applications early in the calendar year. Once the cap is reached, new applications are queued for the following year’s allocation.
Industrial Application Process for EtihadWE DSS
EtihadWE DSS applications are submitted through the EtihadWE online portal. Industrial customers must obtain a municipality NOC as a prerequisite and use EtihadWE-approved contractors. The distribution company installs a bidirectional meter on approval. Connection agreement terms and metering specifics are set out in the EtihadWE DSS application pack, which is updated periodically — confirm the current version at etihadwe.ae before submitting.
Sharjah: SEWA Operates Separately
Sharjah city is served by SEWA (Sharjah Electricity and Water Authority), which operates its own solar connection scheme independent of both DEWA and EtihadWE. If a C&I project is located in Sharjah city, the application process, capacity rules, and tariff rates follow SEWA’s own published conditions. Consult SEWA directly for current program terms, as the Sharjah solar framework is less publicly documented than DEWA’s Shams Dubai or Abu Dhabi’s energy netting regulation.
C&I Procurement Structures
The four structures below cover the full range of how commercial and industrial customers in the UAE deploy solar. Each has distinct legal, financial, and operational implications — the right structure depends on the customer’s balance sheet, lease tenure, credit appetite, and operational capacity.
| Structure | Description | Best For | UAE Context |
|---|---|---|---|
| Own & Operate (CAPEX) | Customer finances, owns, and operates the system; receives all net metering/netting credits | Asset owners with long-term lease or freehold tenure, strong balance sheets | Highest long-term return; full credit accrues to owner; system is a depreciable capital asset |
| Zero-Capex PPA | Developer builds and owns system on customer’s premises; customer pays discounted per-kWh rate under a 15–20 year PPA | Commercial tenants, capex-constrained businesses, large occupied buildings | Dominant UAE market structure; developer holds connection agreement; no capex for customer; savings start day one |
| Solar Lease | Developer builds and owns system; customer pays fixed monthly fee regardless of generation output | Customers wanting budget certainty; smaller commercial sites | Less common than PPA in UAE; simpler billing but generation-risk rests with customer |
| BOOT (Build-Own-Operate-Transfer) | Developer builds, owns, and operates for a defined period (typically 10–20 years), then transfers asset to customer | Larger C&I projects where customer wants eventual ownership | Used for 300 kW+ projects where customer wants ownership at term; transfer mechanism requires specific contractual structure |
For own-and-operate customers, the system design must optimise self-consumption during operational hours. Using solar design software to simulate hourly generation against a load profile for a warehouse, factory, or retail complex allows you to right-size the system and model accurate payback projections.
Design UAE C&I Solar Projects to Utility-Submission Standard
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UAE Climate Law 2024: The Corporate Solar Driver
What the Law Requires
Federal Decree-Law No. 11 of 2024 — commonly called the UAE Climate Law — took effect on 30 May 2025. It applies to all entities operating in the UAE, including free zone companies and investment zone entities. The law requires:
- Measurement of Scope 1 and Scope 2 greenhouse gas emissions per the GHG Protocol Corporate Standard or ISO 14064-1
- Periodic reporting of measured emissions to the relevant competent authority
- Maintenance of records supporting emissions calculations for audit purposes
Fines for non-compliance start at AED 50,000 and scale to AED 2 million for a first violation, with repeat violations subject to double penalties. The enforcement framework is still being implemented through subordinate regulation at the time of writing, but the law itself is operative.
Why This Drives C&I Solar Demand
Grid electricity is the primary Scope 2 emission source for most UAE commercial and industrial businesses. The UAE grid emission factor is currently in the range of 0.35–0.40 kg CO2/kWh (with a government target of 0.27 kg CO2/kWh by 2030 as renewables penetrate the generation mix). For a commercial building consuming 2 million kWh/year from the grid, that represents 700–800 tonnes of CO2-equivalent Scope 2 emissions annually.
A 500 kW rooftop solar system generating approximately 800,000 kWh/year — consumed behind the meter — eliminates the Scope 2 emission associated with that generation entirely, as on-site solar has a zero grid emission factor under both GHG Protocol and ISO 14064. This is a direct, auditable emissions reduction that satisfies Climate Law reporting obligations.
The commercial argument has therefore shifted: UAE C&I solar is no longer only about reducing electricity bills. For companies with material Scope 2 exposure, it is now also a regulatory compliance mechanism. Companies procuring solar specifically to reduce Climate Law-reportable emissions should document:
- Pre-installation Scope 2 baseline (kWh from grid × emission factor)
- Solar system’s annual generation log (DEWA/ADDC bidirectional meter data)
- Net Scope 2 after solar (grid kWh after solar offset × emission factor)
- Emission factor source and version used
The UAE Energy Strategy 2050 sets mandatory solar installation on all new Dubai buildings by 2030 — further signalling the direction of regulatory pressure on building owners and developers.
Free Zones Are Not Exempt from UAE Climate Law
Some companies in JAFZA, KIZAD, and other free zones have historically operated under different federal regulatory regimes for certain compliance matters. The UAE Climate Law contains no free zone exemption. All entities operating in the UAE — onshore, free zone, and investment zone — are within scope. Free zone companies that have not begun Scope 1 and Scope 2 emissions measurement as of 30 May 2025 are already in a non-compliant position as the law has taken effect.
The Solar–Climate Law Connection in Practice
A typical five-step approach for a C&I customer combining solar with Climate Law compliance:
Establish Emissions Baseline Before Installation
Pull 12 months of utility bills and calculate current annual grid consumption in kWh. Multiply by the applicable UAE grid emission factor to establish the pre-solar Scope 2 baseline. This baseline must be documented and dated — auditors need to compare pre- and post-solar emissions to validate the reported reduction.
Size the Solar System Against the Load Profile
Model the solar system’s annual generation against the building’s hourly consumption profile. Behind-the-meter solar reduces Scope 2 only for the kWh actually consumed on-site from the solar array — exported kWh that offset future bills reduce future Scope 2, but are recorded in the period in which they are consumed, not when generated. An accurate load-matched design is essential for credible emissions modelling.
Install and Commission with Bidirectional Metering
The DEWA, ADDC, or EtihadWE bidirectional meter records both generation (solar kWh produced) and export (surplus kWh sent to the grid). Both data points are needed for accurate Scope 2 reporting: self-consumed solar kWh reduce Scope 2 at the full grid emission factor; exported kWh are netted against imported kWh on the bill but may need to be reported differently depending on the GHG accounting methodology chosen.
Document Generation Data for ISO 14064 Reporting
Maintain monthly meter readings for solar generation, grid import, and grid export for the full reporting period. These records are the primary audit evidence for Scope 2 claims under ISO 14064-1. The inverter monitoring system provides generation data; the utility bidirectional meter provides import/export data. Keep both data sources — they cross-check each other and demonstrate measurement accuracy.
Report Reduced Scope 2 to Competent Authority
In the annual GHG report, disclose total grid electricity consumed (from utility bill import data), total on-site solar generation consumed behind the meter, and the resulting Scope 2 emissions calculation. Identify the emission factor source (Ministry of Energy and Infrastructure or published UAE grid average), report year, and any uncertainty range. Third-party verification may be required depending on the entity size thresholds established in subordinate regulation.
VAT Zero-Rating for Solar Equipment
Solar power generation equipment is zero-rated for UAE VAT under the Federal Decree-Law No. 8 of 2017 on VAT (as amended) and the related Cabinet Decisions. Zero-rating means that VAT is charged at 0% — it applies to the supply (equipment sale) and, where specified, to the installation services associated with solar power generation.
The zero-rating applies to:
- PV panels (monocrystalline, polycrystalline, thin-film)
- Inverters and power conversion equipment used in solar generation systems
- Mounting structures and racking systems for solar panels
- String combiner boxes, disconnect switches, and other balance-of-system components directly associated with power generation
Items typically excluded from the zero-rating include general civil works (roofing, structural reinforcement), monitoring hardware not integral to generation, and energy storage batteries (VAT treatment of BESS is governed separately).
Invoice Compliance
Supplier VAT invoices must correctly classify zero-rated solar equipment as zero-rated (0% VAT), not standard-rated (5%). Receiving an incorrectly standard-rated invoice and paying the 5% VAT does not entitle the C&I buyer to an automatic refund — the buyer must request a corrected invoice from the supplier. For large C&I systems with procurement values in the range of AED 500,000–5 million, the VAT difference (0% vs 5%) represents AED 25,000–250,000. Verifying VAT treatment at the quotation stage is worth the time.
Businesses registered for VAT that incorrectly claim input tax deductions on standard-rated items that should have been zero-rated (or vice versa) face FTA audit exposure. UAE Federal Tax Authority guidance at tax.gov.ae confirms the solar zero-rating — reference the guidance document in internal procurement approvals.
Pro Tip: Confirm VAT Treatment in the LOI Stage
When issuing a letter of intent to a solar EPC contractor or equipment supplier, specify that solar generation equipment must be invoiced as zero-rated for VAT per UAE FTA guidelines. Addressing this at LOI stage prevents invoice correction disputes during project close-out. Include the zero-rating requirement in the commercial terms of the FIDIC contract as well.
FIDIC Contracts for UAE Solar Projects
Commercial and industrial solar EPC contracts in the UAE commonly use FIDIC standard forms. Understanding which form applies and what it changes about risk allocation matters at the contract signing stage — not after a dispute arises.
FIDIC Yellow Book (Design-Build)
The FIDIC Yellow Book (Plant and Design-Build, 1999 and 2017 editions) is used for C&I solar projects where the contractor carries design responsibility. Under the Yellow Book:
- The employer (C&I customer) provides an Employer’s Requirements document defining system performance, output targets, and technical standards
- The contractor designs the system, procures equipment, and builds to those requirements
- The contractor bears design risk — if the system underperforms against the specified requirements, the contractor is liable
- A performance security (typically 10% of contract value) is standard
This is the appropriate form for most UAE C&I rooftop solar projects where a specialist solar EPC contractor is carrying full design-and-build responsibility. DEWA Category C contractor approval should be a condition precedent in the contract for Dubai projects.
FIDIC Silver Book (EPC/Turnkey)
The FIDIC Silver Book (EPC Turnkey Projects, 1999 and 2017 editions) allocates even more risk to the contractor and is used for larger, more complex installations — utility-scale adjacent projects, multi-building campus solar installations, or integrated solar-plus-storage projects. Under the Silver Book:
- The contractor takes full turnkey responsibility from design through commissioning
- The employer takes no risk on ground conditions, design errors, or performance shortfalls
- Contractor bears greater exposure but typically commands a higher contract price in exchange
For typical C&I rooftop projects below 1 MW, the Yellow Book is the standard choice. For projects above 500 kW with complex multi-building scope, utility approval complexities, or significant storage integration, the Silver Book may be appropriate. UAE solar developers offering zero-capex PPA structures generally use bespoke project company agreements rather than FIDIC, because the PPA structure (developer ownership, long-term revenue from kWh sales) sits outside FIDIC’s build-and-hand-over framework.
The solar proposals workflow in SurgePV generates bankable project summaries and technical proposal documents that serve as the basis for Employer’s Requirements documents in FIDIC Yellow Book procurement.
Governing Law and Dispute Resolution
UAE solar EPC contracts should specify UAE law as the governing law and designate either DIAC (Dubai International Arbitration Centre) or ADCCAC (Abu Dhabi Centre for Commercial Conciliation and Arbitration) for dispute resolution — consistent with where the project is located. For free zone projects (JAFZA, DIFC, ADGM), the relevant free zone jurisdiction may have its own preferred arbitration forum. Specify this at contract signing — FIDIC contracts contain default dispute board and arbitration provisions that may not align with UAE institutional arbitration norms without amendment.
Frequently Asked Questions
What is the maximum commercial solar system size in Dubai under DEWA?
DEWA’s Shams Dubai Connection Conditions Version 4 (June 2022) sets a maximum of 1 MW per plot for grid-tied rooftop solar. Ground-mounted installations are not eligible under Shams Dubai. Systems above 400 kW require additional grid integration equipment and DEWA charges infrastructure costs. Systems above 1 MW require an MV grid connection with interface switches on both LV and MV sides. All commercial systems above 150 kW must use a Category C DEWA-approved contractor.
Can a UAE company sell solar power to a third party through the grid (wheeling)?
No. Grid wheeling is prohibited under DEWA, ADDC, AADC, and EtihadWE rules. There is no open retail electricity market in any UAE emirate. The only permitted structure is behind-the-meter generation: solar offsets consumption at the same premises where it is installed, with surplus credited through net metering or energy netting. Multi-site C&I portfolios require a separate solar installation and separate connection application at each premises.
What is a zero-capex solar PPA in the UAE context?
A zero-capex PPA is a structure where a solar developer builds and owns a system on the customer’s rooftop at no upfront cost to the customer. The customer signs a 15–20 year agreement to buy solar electricity at a rate discounted below the utility tariff. The developer holds the utility connection agreement and carries all capital, maintenance, and approval obligations. This is a behind-the-meter transaction — the generation and consumption occur at the same premises. It is not wheeling. It is widely used by commercial tenants who do not control the building freehold or who prefer not to deploy capex.
Does the UAE Climate Law require companies to install solar?
Federal Decree-Law No. 11 of 2024 does not mandate solar installation. It requires all UAE entities to measure and report Scope 1 and Scope 2 GHG emissions per the GHG Protocol or ISO 14064, with fines of AED 50,000–2 million for non-compliance. Because grid electricity is the primary Scope 2 source for most UAE businesses, behind-the-meter solar is the most direct and auditable mechanism to reduce reported Scope 2 emissions. The law is a strong indirect driver of C&I solar demand.
Is VAT charged on commercial solar equipment in the UAE?
No. Solar power generation equipment — panels, inverters, mounting systems, and associated components — is zero-rated for VAT. This applies to both supply and installation of generation equipment. Supplier invoices must correctly classify solar equipment as zero-rated (0% VAT). Businesses should verify VAT classification at the quotation stage for large C&I procurements to avoid overpaying VAT on contracts valued at AED 500,000 or more.
Do free zone companies need DEWA or utility approval for solar?
Yes. Federal Decree-Law No. 17 of 2022 explicitly includes free zones and investment zones. Companies in JAFZA, DAFZA, KIZAD, and all other UAE free zones must obtain prior approval from the relevant utility (DEWA for Dubai free zones, ADDC for Abu Dhabi free zones) and sign a connection agreement before energising any grid-tied solar system. No special free zone exemption applies.
