Venezuela is widely known for its vast oil reserves, estimated to be the largest in the world in terms of proven reserves. This oil wealth has been a key source of income for the country for decades, as Venezuela heavily relies on revenue from oil exports. However, the Venezuelan oil industry has faced various challenges in recent years. Despite these difficulties, oil remains a fundamental pillar of the Venezuelan economy, and the government is implementing policies and projects to revitalise the sector and increase production. Venezuela is currently not on par with other countries in the energy transition because its energy comes from fossil fuels rather than renewables. However, there are several cases of renewable energy production.
Despite Venezuela’s significant potential in renewable energy, the country has yet to make progress in transitioning to a more diversified energy matrix, both nationally and internationally. In this context, Venezuela ranks among the top ten megadiverse countries in the world, with a large portion of its territory protected by parks and reserves that could facilitate the development of renewable energy projects.
In addition to oil, Venezuela has other significant natural energy resources. The country has substantial potential for hydroelectric, solar and wind possibilities. The Guri Dam, located in the Bolívar state, is one of the largest in Latin America and provides a significant amount of electrical energy to the country.
However, despite this potential, Venezuela has faced problems in its energy sector in recent years. The lack of investment and maintenance in energy generation facilities has led to difficulties in electricity supply. Furthermore, regarding hydroelectric energy, the main problem is the transmission, not the generation of energy.
Over the past 28 years, the average share of renewable energy consumption in Venezuela, expressed as a percentage of total final energy consumption, has been approximately 15%. The highest value recorded during this period was 16.64% in 2007. The renewable energy market in Venezuela is projected to grow at a compound annual growth rate of over 3.5% from 2022 to 2027.
The most important types of renewable energy technologies in Venezuela are:
In this context, the Renewable and Alternative Energy Bill (“RAE Bill”) considers these sources as renewable energy resources. Additionally, the Law on Rational and Efficient Use of Energy (LREUE) defines alternative energies as those capable of generating electricity through means other than conventional energy sources, such as hydrocarbons and hydroelectricity. According to this law, renewable energy refers to energy obtained from natural primary sources that can regenerate, such as solar, wind, bioenergy, hydraulic, geothermal, tidal and biogas. This classification is commonly found in other legal systems. However, the LREUE notably does not specifically include nuclear energy in the definition of alternative energies.
Recent announcements indicate new activity in Venezuela’s renewable energy sector, particularly regarding solar power. These developments suggest an emerging focus on diversifying the country’s energy mix.
The main developments reported have been in the solar energy sector, involving both state-led and private commercial projects. According to an article published on the website of Venezolana de Televisión (VTV), plans have been announced for the installation of a large-scale solar facility at the Don Luis Zambrano plant in El Vigía, Mérida. The project, described as a collaboration with the Chinese firm Dalian Grain Full, is set to consist of 94,000 panels generating 50 MW. The same state media source noted other, smaller-scale solar installations in the state of Mérida, intended to power specific infrastructure, including a water pump, a cable car station, and a neonatal unit at a university hospital.
The online news outlet Banca y Negocios reported that Nestlé Venezuela has inaugurated a solar park at its factory in Santa Cruz, Aragua. This installation consists of 100 panels designed to generate 50 kW. The company stated that its objective is to reduce electricity consumption and CO₂ emissions.
Furthermore, during 2025, renewable energy use rose by around 25%, primarily in Caracas, La Guaira and Nueva Esparta, focusing on solar panels and electric mobility, according to the Second Venezuela Renewable Energy Congress.
Regarding international developments, information from the Embassy of Venezuela in India confirmed that the Venezuelan government has signed a Framework Agreement with the International Solar Alliance. The stated aim is to encourage co-operation on renewable energy. Following the Executive Vice President’s participation in India’s Energy Week, official statements detailed meetings with India’s Minister of Petroleum and Gas and the Secretary General of OPEC. Discussions reportedly covered energy co-operation and Venezuela’s export offerings to Indian trade organisations.
Venezuela lacks a specific regulatory framework for implementing renewable and alternative energy projects (such as solar, geothermal, wind and hydropower) that utilise new technologies in place of fossil fuels.
However, it is worth mentioning that the National Assembly has been reviewing a draft bill since December 2021, which was proposed by the Ministry of People’s Power for Electric Energy (MPPEE), namely the RAE Bill. The existing laws, including the Rational and Efficiency Use of Energy Law and the System and Electricity Service Organic Law, do not provide the legal basis for renewable and alternative energy projects.
The principal laws and regulations governing the energy market, among others, are:
The MPPEE is responsible for establishing guidelines and policies for rational energy use. When developing policies on efficient energy use, the MPPEE must co-ordinate the formulation, approval and implementation of policies with other public bodies with similar competencies. In this context, the MPPEE includes the Office of the Deputy Minister for New Sources and Rational Use of Electric Energy, which in turn comprises the General Directorate of Alternative Energy, the General Directorate of Atomic Energy, and the General Directorate of Rational and Efficient Use of Electric Energy.
Furthermore, the RAE Bill states that the MPPEE will be the governing body in this area.
In general, the Constitution does not reserve any activity, industry, exploitation, service or asset exclusively for the state, as such a reservation must be established through an organic law.
The Constitution establishes concurrent competencies regarding electric energy between the National Public Power and the Municipal Public Power. Moreover, the OLESS regulates the electrical system and the provision of electrical services at the national level, ensuring universal access and state control and oversight.
In this context, the Republic, citing considerations of security, defence, strategy and national sovereignty, has reserved for itself the activities of generation, transmission, distribution, commercialisation and dispatch within the electrical system. Under the OLESS, these activities are required to be conducted under state control, with the state-owned company Corporación Eléctrica Nacional S.A. (CORPOELEC) or its successor tasked with their operation and service provision. This includes subsidiary companies established specifically for these purposes.
Therefore, there are restrictions on the private sector’s ability to develop projects for the generation, transmission, distribution, commercialisation and dispatch of the electrical system using alternative energy sources, as these activities are reserved for the state as stipulated by the OLESS.
The state, through CORPOELEC (the operator and service provider established by the OLESS), may create joint ventures for the construction of infrastructure, and the production and supply of goods and services necessary for the activities of the national electric system. In any case, the state will retain control over the decisions and operations of these companies by ensuring a stake of at least 60% in their share capital.
On the other hand, the RAE Bill would establish that renewable and alternative energy sources, including the minerals thorium and uranium, are considered energy resources and are public domain assets under state regulation. It would also declare the development of renewable and alternative energies to be of public interest and strategic importance for the nation.
However, as previously mentioned, this is a draft law that may be subject to modifications.
Please see 2.3 Regulated Activities and 2.4 Ownership and Transfer of Control.
Venezuela has historically led the Andean region in electricity generation, reaching a peak capacity of 32,000 MW, sufficient to meet domestic demand and export surplus to neighbouring countries. However, the country’s hydroelectric generation is currently underutilised. Despite having a hydroelectric potential of around 20,000 MW, according to Observatorio Venezolano de Servicios Públicos, Venezuela currently generates only about 20% to 30% of this capacity.
The main applicable rules and regulations include the OLESS, the LREUE, regulations pertaining to the provision of electrical services, and quality standards specific to the distribution of electricity.
Currently, research and development of biogas are limited to isolated projects in rural areas, small-scale businesses and academic initiatives, and some state projects that have yet to see significant growth. The historical dependence on fossil fuels and affordable access to services have hindered the adoption of this technology, which offers socio-environmental and energy benefits. Agricultural producers, who could potentially produce biogas, cannot cover the costs independently and lack state incentives.
Moreover, the Waste Management Law states that released biogas must be reused to minimise its impact on global warming. Additionally, its use for energy purposes must have government approval.
Currently, there is no significant development in geothermal energy. However, the country has many locations where geothermal manifestations occur. These manifestations come in various forms, such as hot springs, mineral waters, thermomineral waters and sulphurous waters with different temperatures. So far, most of these thermal sources in Venezuela have been used for tourism and therapeutic purposes.
There have not been any significant developments in this area, nor have there been specific regulations on this issue.
Currently, no specific regulations are applicable to this matter (regarding renewable energy). However, the OLESS stipulates that both the generation and transmission of electricity must be carried out solely by CORPOELEC. CORPOELEC is responsible for installing and operating generation plants in independent systems, focusing on alternative and eco-friendly energy sources, per the National Electric System Development Plan.
Self-generation, intended exclusively for the producer, operates independently of the National Electric System (NES), and is regulated by law. According to current regulations, self-generation systems with a capacity of 2 MW or more require authorisation from the MPPEE. Energy transmission must also be carried out exclusively by CORPOELEC. The dispatch of the electric system is the responsibility of the National Executive through the MPPEE, per the law and its regulations.
Furthermore, the RAE Bill establishes that users of the NES must demonstrate the use of self-generation systems with renewable and alternative energy sources under the criteria and conditions determined by the governing authority.
NES users may install technologies, equipment, parts and components of self-generation systems with renewable and alternative energy sources, provided they do not cause disturbances, anomalies, failures, distortions, fluctuations, variations or any imbalance or irregularity in the NES. Any use change that implies a variation in concentrated load electrical demand must be reported and notified to the MPPEE for authorisation.
All alternative generation that delivers energy to the NES must comply with the applicable regulations and the guidelines established by the MPPEE.
All installations that use renewable and alternative energies must adhere to the technical standards of safety, quality, efficiency and security established by the MPPEE, to protect the health and well-being of people, ensure environmental protection and maintain optimal operation of the installations during their useful lives.
There are no specific provisions regarding the transportation and storage of electricity from renewable sources. Nonetheless, as mentioned in 2.3 Regulated Activities, the OLESS mandates that the state has exclusive control over the activities of generation, transmission, distribution, commercialisation and dispatch of the electrical system, justified on the grounds of security, defence, strategy and national sovereignty. The state-owned company CORPOELEC is tasked with carrying out these activities and is responsible for service operation and provision.
There are currently no specific regulations addressing these issues, as Venezuela has yet to witness significant developments in renewable energy sources such as wind and solar. Consequently, the intermittency associated with these energy types has not posed a notable challenge to date. That said, the country has faced instances of intermittent electricity supply, primarily due to issues within the transmission system rather than deficiencies in hydroelectric energy generation. This situation may present a promising opportunity for foreign investment to address infrastructure deficiencies.
There are no specific regulations on this matter due to the lack of significant developments in the renewable gas sector. The Organic Law of Hydrocarbons and the Organic Law of Gaseous Hydrocarbons, along with their respective regulations, provide the primary provisions concerning associated and non-associated gas.
There are no specific regulations on this issue due to the lack of significant developments in this area.
There are no specific regulations on this issue due to the lack of significant developments in this area.
Per the OLESS, electricity distribution must be carried out exclusively by CORPOELEC. CORPOLEC must provide the MPPEE with up-to-date information about the distribution networks that are accessible for state and private use. The MPPEE co-ordinates with municipalities to oversee public lighting services in compliance with applicable laws. Similarly, the commercialisation of electricity is the exclusive responsibility of CORPOELEC.
More significant advancements in gas from renewable sources need to be made from a legal and corporate standpoint.
Currently, there have been few significant developments in this area.
Currently, there have been few significant developments in this area.
The renewable energy certificate trading segment has not yet experienced substantial growth in Venezuela. However, the Venezuelan stock market presents a potential platform for attracting foreign and local investment in sustainable finance. For instance, the Caracas Stock Exchange could establish markets for bonds and financial instruments related to sustainable finance and market segments for other sustainable assets such as Carbon Removal Units (CRUs). In practical terms, the Venezuelan securities regulator (SUNAVAL) could authorise the Caracas Stock Exchange to create special market segments for trading these CRUs, catering to both local and foreign investors.
The Development Bank of Latin America and the Caribbean (CAF) has announced its goal to strengthen the carbon markets of its member countries and enhance the competitiveness of carbon credit supplies in the region. In this context, the Latin American and Caribbean Initiative for Developing the Carbon Market (ILACC) aims to boost the global competitiveness of carbon credits produced in Latin America and the Caribbean by improving the conditions for future voluntary and regulated markets. In any case, obtaining the necessary approval for carbon market certification credits in Venezuela has not been easy.
The renewable energy market in Venezuela remains underdeveloped, and its regulatory framework is not yet fully established. There is a lack of diversity among market participants, as well as an absence of significant projects or specific regulations to govern the development of onshore renewable energy projects. As a result, the regulatory environment does not currently provide comprehensive guidance in this area.
Similarly to onshore, offshore renewable energy development is hindered by the immaturity of the market. The regulatory framework remains underdeveloped, and there is no significant diversity among market players or projects. Consequently, no specific regulations currently address offshore renewable energy development.
There is no particular legal regime for the financing of renewable energy projects. However, the RAE Bill establishes that the MPPEE, in co-ordination with the competent bodies and entities, will promote the local production of equipment, components, and goods for using renewable and alternative energies and will promote national financing schemes.
The possibility of granting tax and other incentives in favour of investors is already embodied in the national legislation, in accordance with the Organic Tax Code, the LREUE, the Constitutional Law for Productive Foreign Investment and the Constitutional Anti-Blockade Law. In this regard, the Organic Tax Code provides for the legal stability contracts of tax regimes and the Constitutional Law of Productive Foreign Investment provides for investment contracts.
The Organic Law of Special Economic Zones provides for the creation of special economic zones for the development of diverse projects. The special economic zones must promote the dissemination of technical knowledge and the transfer of technology.
In this context, public, private, mixed and communal investors must sign economic activity agreements with the National Superintendence of Special Economic Zones, with the assistance of the International Centre for Productive Investment. These agreements must include economic, fiscal, financial and other incentives aligned with the zone’s development plan, as well as performance benchmarks, investment targets and other project obligations.
The RAE Bill further authorises the President of the Republic to grant incentives to entities subject to the law, as part of broader economic policy measures. These incentives are tailored to the economic, sectoral and regional conditions of the country and are subject to periodic evaluations by the National Executive. The evaluations will assess compliance with the goals underpinning the incentives, as defined in a specific decree that will outline the terms, frequency and parameters of such assessments.
There are no specific provisions regarding the cessation of activities, decommissioning and disposal of renewable energy installations. The Organic Law on the Promotion of Private Investment under the Concession Regime, the OLESS and the Expropriation Law for Public or Social Utility, among others, establish the general regime applicable to reversion, expropriation and asset disposal.
The National Assembly has developed multiple bills regarding renewable energy, though many remain unavailable for public scrutiny. The pending bills include the RAE Bill and the Green Hydrogen Bill.
Even though there have not been significant developments in renewable energy in Venezuela, the National Assembly’s standing committee on energy and petroleum has developed and published the RAE Bill.
To diversify the national energy matrix, the RAE Bill aims to promote and regulate renewable and alternative energies in all aspects, including development, production, research, generation, transformation, transportation, distribution, commercialisation and utilisation. The RAE Bill would apply to natural and legal persons, both public and private, national and foreign, involved in the processes and activities regulated by the law in Venezuela.
The RAE Bill describes the following as renewable and alternative energy sources:
It also designates renewable and alternative energy sources, along with energy minerals such as thorium and uranium, as public assets regulated by the state. Furthermore, the RAE Bill declares the development of renewable and alternative energies as a public and strategic interest for the nation, contributing to energy matrix diversification, strengthening national defence, and ensuring national independence and sovereignty.
The MPPEE is designated as the governing body responsible for regulating and promoting renewable and alternative energies. As such, it is tasked with developing the National Plan for Renewable and Alternative Energies in co-ordination with other relevant ministries. This plan will be integrated into the National Electric System Development Plan and aligned with the National Economic and Social Development Plan. It will set guidelines, goals, deadlines and mechanisms for monitoring and evaluation to ensure the effective development of renewable and alternative energies. The plan will include projects for the National Electric System, unserved communities, and various sectors based on national priorities.
Regarding self-generation and interconnection, the RAE Bill requires users of the National Electric System to implement self-generation systems using renewable and alternative energy sources, following the governing body’s criteria. Users may install technologies for self-generation as long as they do not interfere with the National Electric System. Any changes in electricity demand must be reported and authorised by the MPPEE. Alternative energy generation connected to the National Electric System must comply with the MPPEE’s regulations and guidelines.
For projects related to renewable and alternative energies, the RAE Bill mandates that such projects, whether by individuals or legal persons, must be registered in the National Registry. Registration requirements and operational guidelines will be published.
Priority projects include renewable energy generation systems for health centres, public services, agro-food sectors, tourism, education, indigenous communities, and other areas defined by the MPPEE.
In collaboration with the Ministry of Industries and the private sector, the MPPEE will promote the creation of industrial conglomerates for the sustainable manufacturing of parts and components for renewable energy systems, fostering integrated production. Users of self-generation systems with renewable and alternative energies must prioritise national technologies and components, except where local production is unavailable. Relevant ministries will establish conditions for cases where goods are not produced locally.
Avenida Francisco de Miranda
Centro Galipán
Torre B, piso 7
El Rosal
Caracas
Venezuela
+58 212 750 1200
info@interjuris.com www.interjuris.comBrief Introduction
For over a century, Venezuela’s oil reserves have significantly impacted its economy and political scene. Since the discovery of its first commercial oil well, Zumaque I (also known as MG-1), in 1914, Venezuela has become a major global oil producer.
With the largest oil reserves in the world – surpassing those of Saudi Arabia – Venezuela’s government estimates its proven reserves at 297.5 billion barrels. Notably, these reserves are primarily Orinoco Oil Belt extra-heavy crude oil (87%), which must be blended with light crude or chemical additives for commercialisation.
Venezuela’s proven natural gas reserves have risen to 195.28 trillion cubic feet, placing the country eighth globally in natural gas reserves. Of these reserves, 82% are associated gas, with the remaining 18% being non-associated gas, primarily located offshore to the east and west of the country.
Additionally, Venezuela is one of the five founding members of the Organization of the Petroleum Exporting Countries (OPEC). It has played a crucial role in the organisation’s history and the global energy sector. Despite facing numerous challenges in recent years and a reduced role in the global oil market, Venezuela’s vast energy resources position it as a potentially influential player in the industry.
Despite facing numerous challenges in recent years, the oil sector remains a central pillar of the Venezuelan economy, with the government actively pursuing policies and initiatives to revitalise the industry and boost production.
Although Venezuela has considerable potential in renewable energy, progress towards diversifying its energy matrix has been slow, both domestically and internationally. The country is among the top ten megadiverse nations globally, with a substantial portion of its land protected by parks and reserves, which could support the development of renewable energy projects.
Beyond oil, Venezuela possesses other significant energy resources. The country has notable potential for hydroelectric power due to its extensive network of rivers and waterfalls. The Guri Dam in Bolívar State is one of the largest dams in Latin America and supplies considerable electricity to the nation.
However, despite these advantages, Venezuela’s energy sector has encountered difficulties recently. Insufficient investment and maintenance in energy generation facilities have led to ongoing challenges with electricity supply.
Economic Outlook 2025
According to the United Nations Development Programme (UNDP) publication Macroeconomic Performance of Venezuela: Q4 2024 and Outlook for 2025, released on 22 April 2025, economic growth was expected to decelerate in 2025 compared to the previous year. Despite this forecast, the UNDP’s economic team estimates that the Venezuelan economy concluded 2024 with strong growth of 6.5%. This expansion was primarily driven by a significant 17.2% increase in the oil sector and a 4.7% growth in non-oil activities. Improvements in consumption and investment, alongside a positive performance in manufacturing and non-oil exports, indicated broad-based progress across the economy.
Inflation in 2024 stood at approximately 55%, a marked improvement on the previous year. Nevertheless, a resurgence of inflation towards the end of the year gave cause for concern regarding price and exchange rate stability, with monthly figures reaching 16.2% in November and 14.1% in December.
From an international trade perspective, Venezuela’s oil exports performed strongly, averaging 872,000 barrels per day in the final quarter – a 9.3% increase over the year. Revenues from these exports rose by 27.2%. Moreover, trade with both Colombia and the United States showed considerable growth.
Looking ahead to 2025, the economic forecast appears challenging. This is primarily due to several factors that could jeopardise Venezuela’s oil revenues. These include: the cancellation of licences for international oil companies; the potential imposition of a 25% US tariff on imports from nations purchasing Venezuelan oil or gas; and the impact of international trade tensions on commodity prices. For Venezuela, these tensions, coupled with a potential decrease in global demand, could lead to a fall in oil prices, a trend already observed recently. Such adverse factors are likely to put pressure on both oil production and prices, thereby hindering the country’s economic growth.
Venezuela’s economic performance in 2025 and beyond will largely depend on how these challenges are managed. The ability of the national oil industry to take over the operations of departing multinational companies will be crucial. Equally vital will be the maintenance of trade relationships in an increasingly complex global environment. The capacity of domestic firms to adapt and innovate will be key to mitigating these risks and bolstering the nation’s economic resilience.
Developments in Renewable Energy
In a related development, the Second Venezuela Renewable Energy Congress reported that the use of renewables grew by approximately 25% during 2025. This growth was concentrated in Caracas, La Guaira and Nueva Esparta, with a focus on solar panels and electric mobility.
The infrastructure for this transition is expanding. As of 2024, there were at least 13 registered solar panel installers and over 5,000 registered electric vehicles (EVs) in the country. A notable example is Verdi, which operates Venezuela’s first fully electric taxi fleet of 35 vehicles, serving routes between Maiquetía Airport, Caracas and Margarita Island.
The charging network is also growing. Swing Energy has installed 14 EV charging stations, including the country’s first DC fast chargers. Nine of these are located at Simón Bolívar International Airport in Maiquetía, comprising three fast and six slow chargers. In March 2025, the Universidad Católica Andrés Bello also contributed by inaugurating its own 7.4 kW charging station on campus, capable of fully charging a vehicle in approximately three hours.
The Venezuelan government reported that plans are in motion for a large-scale solar facility at the Don Luis Zambrano plant in El Vigía, Mérida. This project, a collaboration with the Chinese firm Dalian Grain Full, will consist of 94,000 panels generating 50 MW. The state is also pursuing smaller-scale solar installations in Mérida to power specific infrastructure, including a water pump, a cable car station, and a neonatal unit at a university hospital.
Furthermore, Nestlé Venezuela has inaugurated its own solar park at its factory in Santa Cruz, Aragua. This installation features 100 panels generating 50 kW, with the stated objective of reducing electricity consumption and CO₂ emissions.
US Economic Sanctions
The Venezuela-Related Sanctions programme, established by the President of the United States and enforced by the Office of Foreign Assets Control (OFAC), includes various measures targeting individuals named in Executive Orders (EOs) or on the OFAC’s Specially Designated Nationals (SDN) list, as well as certain prohibited transactions, including sector-specific or transaction-type sanctions. These blocking and sectoral sanctions represent the primary sanctions that all “US Persons” must follow, with violations potentially leading to monetary fines and criminal penalties, including imprisonment.
Generally, US government sanctions are directed at US Persons. Therefore, individuals or entities that do not qualify as US Persons are not usually required to comply with the economic sanctions related to Venezuela. However, there is a risk of secondary sanctions being applied to non-US Persons – regardless of nationality, domicile or residence – if they engage in prohibited activities.
According to the Venezuela Sanctions Regulations, “US Person” includes:
Regarding blocking sanctions, many individuals, companies and entities have been added to the SDN/OFAC list, with over 200 persons linked to the Venezuelan government and state-owned companies currently listed. It is important to note that sectoral sanctions were imposed on the Venezuelan oil industry per the Determination Under Executive Order 13850 (28 January 2019). Still, the gas sector has not faced similar sanctions. Most gas projects are not classified as “blocked” because neither PDVSA nor its affiliates are involved as majority stakeholders in these projects.
Being listed as an SDN or “blocked party” means that, without authorisation or a licence, no US Person, regardless of their location, may engage in transactions involving the SDN person or their property. Additionally, all property belonging to an SDN within the US or under the control of a US Person is considered “blocked”. While the title to the blocked property remains with the owner, using such property – including transfers or transactions – is prohibited without OFAC authorisation.
The scope of traditional sanctions can be broadened through general blocking measures, as seen with EO 13884 on 5 August 2019, which imposed a comprehensive blockade on the “Government of Venezuela”. This order established criteria for imposing “secondary sanctions”, which involve adding “non-US Persons” to the OFAC List, particularly those involved in specific sectors or activities, such as assisting blocked entities.
Secondary sanctions against non-US Persons are not automatic but are based on policy decisions. Their imposition is rare, involving discretionary judgements by the US Administration, and requires an individualised assessment and designation by the OFAC.
There are exceptions to the general framework of economic sanctions. These exceptions may be specified in an EO or granted through OFAC-issued licences, which could be general (applying to a broad category) or specific (tailored to individual cases).
In summary, the Venezuela-Related Sanctions programme, enforced by the OFAC, imposes comprehensive measures targeting individuals and entities associated with the Venezuelan government. These sanctions are primarily aimed at “US Persons”, with significant penalties for non-compliance. While non-US Persons are generally not required to adhere to these sanctions, they may still face secondary sanctions if they engage in prohibited activities. The regulations outline who qualifies as a “US Person” and detail the implications of being listed as an SDN or “blocked party”.
Venezuelan Legal Regime Regarding Renewable Energy
The principal laws and regulations governing the energy market are: (i) the National Constitution; (ii) Organic Law of the Electrical System and Service (OLESS); (iii) Law on Rational and Efficient Use of Energy (LREUE); (iv) Waste Management Law; (v) Organic Law of Special Economic Zones; and (vi) Organic Law of the Plan for the Homeland of the 7 Great Transformations 2025–2031, among others.
The LREUE defines alternative energies as those that can generate electricity in place of conventional sources like hydrocarbons and hydroelectric power. The law defines renewable energy as energy sourced from natural, renewable resources such as solar, wind, bioenergy, hydraulic, geothermal, tidal and biogas.
The recent introduction of the Renewable and Alternative Energy Bill (“RAE Bill”), presented to the National Assembly in December 2021 by the Minister of People’s Power for Electric Energy, is particularly significant. Recently the public consultation process was closed. Moreover, in June 2023, the necessary legal preparations started for the promulgation of the Draft Green Hydrogen Law; however, it has yet to be published.
The Ministry of People’s Power for Electric Energy (MPPEE) is tasked with setting guidelines and policies for the rational use of energy. In crafting these policies, the MPPEE must collaborate with other relevant public agencies to ensure their formulation, approval and implementation are aligned. Within this framework, the MPPEE includes the Office of the Deputy Minister for New Sources and Rational Use of Electric Energy, encompassing the General Directorate of Alternative Energy, the General Directorate of Atomic Energy, and the General Directorate of Rational and Efficient Use of Electric Energy.
Additionally, the RAE Bill designates the MPPEE as the regulatory authority in this field.
Renewable and Alternative Energy Bill
The RAE Bill aims to promote and regulate renewable and alternative energies in all aspects, including development, production, research, generation, transformation, transportation, distribution, commercialisation and utilisation, to diversify the national energy matrix. The RAE Bill would apply to natural and legal persons, both public and private, national and foreign, involved in the processes and activities regulated by the law in Venezuela.
The primary objectives of the RAE Bill are: (i) to promote the use of sustainable energy for electricity production and support sustainable development; (ii) to reduce dependence on fossil fuels; (iii) to diversify electricity generation to strengthen the service; (iv) to integrate alternative energies with territorial planning; and (v) to adapt to and mitigate climate change by reducing emissions and complying with international agreements.
The RAE Bill designates the following as renewable and alternative energy sources: (i) wind energy; (ii) solar energy; (iii) biomass; (iv) small-scale hydraulics; (v) geothermal energy; and (vi) tidal and wave energy, as well as other potential sources such as nuclear energy, gas and green hydrogen.
The RAE Bill establishes the MPPEE as the governing body responsible for regulating and promoting renewable and alternative energies. It also designates renewable and alternative energy sources, along with energy minerals such as thorium and uranium, as public assets regulated by the state. Furthermore, the RAE Bill declares the development of renewable and alternative energies as a public and strategic interest for the nation, contributing to energy matrix diversification, strengthening the defensive system, and ensuring national independence and sovereignty.
The MPPEE is tasked with developing the National Plan for Renewable and Alternative Energies in co-ordination with other relevant ministries. Such entity shall integrate this Plan into the National Electric System Development Plan, aligned with the National Economic and Social Development Plan. It will set guidelines, goals, deadlines and mechanisms for monitoring and evaluation to ensure the effective development of renewable and alternative energies. The plan will include projects for the National Electric System, unserved communities, and various sectors based on national priorities.
Regarding self-generation and interconnection, the RAE Bill requires users of the National Electric System to implement self-generation systems using renewable and alternative energy sources, following the governing body’s criteria. Users may install technologies for self-generation as long as they do not interfere with the National Electric System. Any changes in electricity demand must be reported and authorised by the MPPEE. Alternative energy generation connected to the National Electric System must comply with the MPPEE’s regulations and guidelines.
For projects related to renewable and alternative energies, the RAE Bill mandates that such projects, whether by natural or legal persons, must be registered in the National Register. Registration requirements and operational guidelines will be published. Priority projects include renewable energy generation systems for health centres, public services, agro-food sectors, tourism, education, indigenous communities, and other areas defined by the MPPEE.
Regarding co-ordination with other agencies, the RAE Bill promotes local production of renewable and alternative energy equipment and supports national financing schemes. Additionally, in collaboration with the Ministry of Industries and the private sector, the MPPEE will promote the creation of Industrial Conglomerates for the sustainable manufacturing of parts and components for renewable energy systems, fostering integrated production. Users of self-generation systems with renewable and alternative energies must prioritise national technologies and components, except where local production is proven to be unavailable. Relevant ministries will establish conditions for cases where goods are not produced locally.
Conclusion
Venezuela faces a defining moment, forced to reconcile its history as a dominant oil and gas exporter with the realities of today. While the nation’s vast hydrocarbons remain a cornerstone of its economy, a confluence of factors is forcing a strategic re-evaluation. The challenging economic outlook for 2025 has created a powerful incentive for diversification.
The proposed RAE Bill signifies a foundational attempt to regulate and promote alternative energy sources and integrate them into the national energy mix, providing a structured path for future development and investment.
Ultimately, Venezuela’s future economic resilience and energy security appear increasingly tied to its ability to navigate this complex transition. Successfully leveraging its abundant renewable resources will be crucial in mitigating the vulnerabilities of its oil-dependent economy and building a more diversified and sustainable energy landscape for the years to come.
Avenida Francisco de Miranda
Centro Galipán
Torre B, piso 7
El Rosal
Caracas
Venezuela
+58 212 750 1200
info@interjuris.com www.interjuris.com