The Utilities Regulatory Authority (the Authority) on 4th September 2026 has released its new Regulatory Guidelines for Independent Power Producers (IPPs) and Power Purchase Agreements (PPAs), establishing a clear framework for the development, licensing, regulation, and integration of renewable energy projects into Vanuatu's electricity networks.
The guideline follows the transfer of administrative responsibility for the Electricity Supply Act Cap.65 to the URA in May 2026 and reflects recent legislative amendments that strengthen the Authority's role in overseeing IPPs, PPAs, and electricity sector development.
The new framework is designed to support increased private sector investment in renewable energy while ensuring that electricity consumers continue to benefit from safe, reliable, and affordable electricity services. It establishes transparent licensing procedures, technical and financial assessment requirements, standard PPA provisions, and monitoring mechanisms for IPP projects.
In accordance with the guideline, renewable energy developers seeking to sell electricity to concessionaires shall be required to obtain an IPP license from the Authority and demonstrate full compliance with all financial, technical, legal, and safety requirements. The Authority shall assess applications within 60 working days and facilitate the establishment of PPAs between successful applicants and relevant utilities within a 6-month period.
A key feature of the framework is the requirement that all proposed projects satisfy the principle of Least Cost Generation, ensuring that wholesale power supplied under a PPA delivers value to consumers and does not exceed the fuel cost to generate. The guideline also ensures that the benefits of lower-cost renewable generation can be reflected in customer tariffs over time.
The guideline further introduces standardized PPA requirements and a model PPA template to provide greater certainty to investors, utilities, financiers, and development partners. It also establishes regulatory oversight for transmission arrangements, annual license renewals, compliance monitoring, and dispute resolution processes.
The guideline shall apply to all existing electricity concession areas, including Efate, Luganville, Tanna, and Malekula, as well as any future electricity concession areas throughout Vanuatu. Existing PPAs shall remain in effect under their current contractual arrangements and shall transition to the new framework upon renewal or expiry of the relevant agreements.
The URA believes the new framework will accelerate renewable energy deployment, strengthen investor confidence, and contribute to Vanuatu's long-term sustainable energy objectives while safeguarding the interests of electricity consumers.
A copy of the IPP/PPA Guideline can be found on the Authority's website: www.ura.gov.vu