In brief: renewable energy projects in Türkiye

Projects

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

Legal persons that engage in electricity market operations can initiate their activities only after securing a separate licence for each activity and for each plant if those activities are to be conducted in more than one plant.

All legal persons subject to private law provisions must be incorporated as a joint stock company or limited liability company as per the Turkish Commercial Code, and all shares of joint stock companies must be registered, apart from public companies traded in exchange markets under the capital market legislation.

The company’s articles of association must be submitted, indicating that the minimum equity capital of the company has been increased by 5 per cent of the total investment amount anticipated by the authority for the generation plant. If the legal person is a joint stock company, the articles of association for the relevant company must include a provision that all the shares are registered and the company will not be entitled to issue bearer shares, with the exception of public companies traded in exchange markets under capital market legislation, as well as a provision that the company will not make any variations in the shareholding structure during the preliminary licensing period and it will seek the approval of the Energy Market Regulatory Authority (EMRA) if it intends to amend the articles of association to reduce the equity capital.

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

Plants that are not included in the renewable energy support mechanism (YEKDEM) system and those for which YEKDEM liabilities have expired may sell electricity to supply companies or end users through bilateral agreements subject to the provisions of private law just as conventional power generation plants. Also, they may engage in trade activities in day-ahead and day markets.

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

Long-term bilateral agreement market is open to development in Turkey owing to the inadequacy of the current market structure. The general trend is to trade the electricity in day-ahead and day markets or evaluate it under the YEKDEM system for renewable energy plants.

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

As a rule, legal entities that will engage in energy production from renewable energy sources should obtain a pre-licence and a licence. EMRA is authorised to give pre-licences to legal entities that wish to engage in production activities, provided their application is approved by EMRA. In the event that the legal entity holding the pre-licence obtains a generation licence, the pre-licence expires. The decision-maker regarding the licence application is also EMRA.MENR is more involved in renewable energy resource areas (YEKA). For example, a generation licence granted for YEKA is revoked if the shareholding structure of the licensee legal entity changes directly or indirectly without the written approval of MENR until the generation facility is put into operation, or in the event of the transfer of shares and transactions such as merger and division that will result in the transfer of shares.

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

If a licence holder intends to terminate its operations under the licence, a written application before EMRA must be filed along with justifications for termination at least six months before the intended termination date, whereas distribution companies and commissioned supply companies will be required to make the relevant application at least 12 months before the intended termination date. EMRA may, at its sole discretion, not require observation of this notice term based on the impact of the intended termination on the market. Under this application, it is mandatory to list the obligations of the licence holder towards the intended termination, as well as the measures to be taken for fulfilling those obligations.

If EMRA confirms the termination request after the assessment, the licence will be terminated on the date specified in the resolution rendered by EMRA. If EMRA becomes convinced that the termination will give rise to conditions that are to the detriment of consumers and the market, it may deny the request or postpone the termination by duly informing the licence holder of the justifiable reasons for the decision.

Decommissioning is not yet explained in detail under Turkish legislation. Therefore, this regulation is open to development for both renewable energy investments and conventional plants.