Commercial and Industrial (C&I) Projects and off-grid projects now operational in Morocco: new perspectives for the energy transition

What you need to know

• Morocco has consolidated its regulatory framework for self-generation of electrical energy with the enactment of Law No. 82-21 and the adoption of Decree No. 2-25-100 (5 March 2026), setting the conditions and procedures for the construction and operation of self-generation facilities.
• Law 82-21 establishes three regimes depending on capacity and grid connection: (i) a declaration regime for off-grid facilities or those connected to the low-voltage grid; (ii) a connection agreement regime for facilities between 11 KW and 5 MW connected to the low- or medium-voltage grid; and (iii) an authorisation regime for facilities of 5 MW or more connected to the medium-, high- or very high-voltage grid.
• Self-generators must be the owner of the self-generation facility or have the "right to dispose of" it, which is a key eligibility condition under Article 2 of Law 82-21.
• Sale with retention of title appears to be the most suitable contractual mechanism for structuring C&I projects under Law 82-21, as the buyer benefits from the "right to dispose of" the installation even before full payment of the price.
• Lease with option to purchase and hire purchase present legal uncertainties, as during the rental phase the lessee only has a right of use over the property and does not hold the right to dispose of it.

The new legal and regulatory framework for self-generation projects

Morocco is taking a decisive step in terms of energy transition with the consolidation of the regulatory framework for self-generation products. Since the launch of the National Energy Strategy in 2009, Morocco has undertaken a series of reforms aimed at modernizing the legal framework applicable to the production of electricity from renewable energy sources with the ambition of becoming a reference country for the deployment of structuring projects in terms of energy transition.

It is in this dynamic that law no. 82-21 on the self-generation of electrical energy promulgated by Dahir No. 1.23.21 of 19 Rejeb 1444 (10 February 2023) (the "Law 82-21")¹  is inscribed. Law 82-21 establishes, for the first time, a specific legal framework for the self-generation of electrical energy. Indeed, before Law 82-21, Dahir No. 1-63-226 of 14 Rebia I 1383 (5 August 1963) establishing the National Office of Electricity had introduced the possibility, subject to the authorization of the administration, for natural or legal persons under public or private law to produce electrical energy by their own means, without specifying the terms and conditions for granting such authorization.

Law 82-21 established an adequate regime, the implementation of which has been strengthened since the adoption of Decree No. 2-25-100 of 15 Ramadan 1447 (5 March 2026) (the "Decree 2-25-100"), setting the conditions and procedures for the construction and operation of self-generation facilities. Law 82-21 and Decree 2-25-100 establish three main regimes, depending on the capacity of the self-generation project and whether or not the production and consumption sites are connected to the grid:

1. the declaration regime: the following are subject to the declaration regime:
   
   (i) self-generation facilities attached to self-consumption facilities, not connected to the national electricity grid; and
   
   (ii) self-generation facilities attached to self-consumption facilities when these self-consumption facilities are connected or intended to be connected to the low-voltage electricity grid;
2. the connection agreement regime: the construction or operation of self-generation facilities with a capacity equal to or greater than 11 KW, without this power exceeding 5 MW, attached to the self-consumption facilities when these self-consumption facilities are connected or intended to be connected to the low- or medium-voltage electricity grid, are subject to the connection agreement regime; and
3. the authorisation regime: the construction or operation of self-generation facilities with a capacity equal to or greater than 5 MW, attached to the self-consumption facilities when these self-consumption facilities are connected or intended to be connected to the medium-voltage, high-voltage or very high-voltage electricity grid, are subject to the authorisation regime.

Thus, and regardless of the applicable regime, Law 82-21 authorizes any natural or legal person under public or private law to produce electrical energy exclusively for his or her own consumption, provided that he or she is the owner of the self-generation facility or has the right to dispose of it. This requirement is a key element of the regime established by Law 82-21, insofar as it conditions the very eligibility of the self-generator and above all, the contractual structuring of C&I projects intended to supply industrial and commercial companies, including projects that are not connected to the national transmission grid (also known as "off-grid" projects).

Owning or having the right to dispose of a facility

If the condition of being an owner does not raise any difficulty, insofar as it is based on a fairly simple structuring in which the consumer is simply the owner of the self-generation facility, this modality can only be used in a very limited case of companies wishing to incur the capex necessary to own said facilities. Such a modality does not allow the deployment of C&I projects that could be deployed by developers with a view to supplying industrial and commercial companies, which assumes that the customer does not own the installation. The deployment of C&I projects can therefore only be possible if the customer, without owning the plant, has the right to dispose of it. Law 82-21 does not specifically define what is covered by the notion of "right to dispose of". It is therefore appropriate to apply the rules of general law.

This term is used in Dahir No. 1-11-178 of 25 Hija 1432 (22 November 2011) promulgating Law No. 39-08 on the Code of Real Rights, which defines in its article 14 the right of ownership, i.e. the right that confers on the owner of a building the power to use, operate and dispose of it. To be an owner is therefore to bring together these three prerogatives on the same property.

The right to dispose of property is considered to be the most characteristic attribute of property, as it allows the property to be disposed of, or encumbered by securities. In the case of usufruct, the usufructuary has the real right of use and operation (Article 79 of the Code of Real Rights), but it is the bare owner who retains the right to dispose of the property. Therefore, a usufructuary cannot, in principle, be considered to meet the condition laid down by Article 2 of Law 82-21 on the right to dispose of it.

Moroccan law contains a few rare cases in which a person can dispose of a property without being the owner. This is the case for any creditor benefiting from a security interest in an asset, allowing him to proceed with its sale in the context of the enforcement of the said security. The retention of title clauses is another since the reform introduced by law No. 21-18 on movable security interests promulgated by Dahir No. 1-19-76 of 11 Shaaban 1440 (17 April 2019). This law has considerably strengthened the regime of the retention of title clause, allowing the seller to retain ownership of movable property until the price has been paid in full. Qualified as an operation assimilated to movable securities, the retention of title clause must be written, precise and registered in the Morocco National Electronic Collateral Registry (RNESM) to be enforceable against third parties and in the event of insolvency proceedings.

Structuring a C&I project

In the light of the above, it is necessary to examine the different contractual schemes that may allow an operator to satisfy the condition set out in Article 2 of Law 82-21. Three structures deserve particular attention, as they are practiced in other jurisdictions (but under a different legal framework): sale with retention of title clause, rental with option to purchase and hire-purchase.

Sale with retention of title

A retention-of-title sale is a sale in which the transfer of ownership of the property is deferred until the buyer has paid the price in full. Unlike a forward sale or a sale subject to conditions precedent, the sale is immediately perfect as soon as the parties agree on the object and the price; only the transfer of ownership is suspended. The seller thus reserves ownership of the property as a guarantee, which is only transferred to the buyer at the time of full payment of the agreed price in accordance with article 618-21 of the Dahir of Obligations and Contracts.

However, while the buyer is not legally the owner of the installation, Article 618-25 of the Dahir of Obligations and Contracts (as resulting from the reform of the 2019 law on movable security interests) provides that in the event that the buyer proceeds with the sale of the movable property, the right of the first seller to recover the remaining amount of his receivable on the sale price is preserved or, where applicable, on the compensation to be paid by the insurance company to the buyer.

Article 618-25 of the Dahir of Obligations and Contracts therefore expressly provides for the right of the buyer to resell the property before having paid the full price to the initial seller. In this case, the seller only retains a preferential right to the proceeds of this resale. Consequently, it is clear that the purchaser in a sale with retention of title benefits from the "right to dispose" of the installation as required under the terms of Article 2 of Law 82-21, thus making him eligible for the self-generation regime. In a C&I project, the retention-of-title seller would be the developer and the buyer would be the customer.

Lease with option to purchase

The lease with option to purchase is an operation that allows the lessee to dispose of property in return for the payment of regular rents for a specific period. It also offers him the possibility, if he so wishes, to acquire the said goods at the end of or during the rental period, at a price that takes into account, at least in part, the rents already paid. For the duration of the contract, the lessor remains the owner of the property, the lessee being only the tenant.

As long as he has not exercised his option to purchase, the tenant only has a right to use and enjoy the property. He does not hold the property or any other right that gives him the right to alienate the thing.

Consequently, the use of a lease with purchase option scheme to develop a self-production project seems to us to be questionable in view of the eligibility conditions set out in Law 82-21.

Hire purchase

Hire purchase is a contract by which the tenant rents a property for a specific period, at the end of which he is obliged to acquire ownership of the said property. The hire-purchase then tends "to an essential purpose: the completion of a sale accompanied by a staggered payment of the price, a staggered payment constituting a credit transaction".²

Unlike leasing with an option to purchase, hire purchase implies a firm commitment to purchase on the part of the lessee. The transfer of ownership is not optional but is the natural and mandatory outcome of the contract and can even be triggered before the end of the contract in the event of early termination.

However, the tenant only becomes the owner of the property at the end of the rental period and after full payment of the price or, in advance, in the event of termination. During the rental phase, the tenant only has a right of use over the property. For the same reasons as those set out above concerning the lease with option to purchase applies, the tenant does not have the right to dispose of the property.

Therefore, the use of a hire purchase scheme to structure a self-generation project within the meaning of Law 82-21 presents, in our opinion, a legal uncertainty similar to that of a lease with option to purchase. Even in the presence of a firm commitment to acquire, the right to dispose of remains a future right, the triggering event of which does not occur until the end of the transaction.

Conclusion

In view of the condition set by Article 2 of Law 82-21, the sale with retention of title appears to be the most suitable contractual mechanism for structuring a C&I project in Morocco.

It should also be noted that Article 33 of Law 82-21 provides for a transitional regime applicable to natural and legal persons operating self-generation facilities before the date of entry into force of the said law, who must submit to the Ministry of Energy Transition and Sustainable Development within eighteen (18) months from that date a request for regularization of their situation. This deadline should expire on 5 September 2027³ . The position of the Ministry of Energy Transition and Sustainable Development in the context of the discussions on the regularisation of ongoing projects could give an indication of whether possible rental structures could be maintained. It seems essential to us to secure the legal structuring of C&I projects and to offer market players the visibility required for the deployment of these projects.

In the absence of other texts or a clear position from the authorities, the sale with retention of title seems to us to be the only legal structure that complies with Law 82-21 for the deployment of C&I projects in Morocco.