Turkey: The New Electricity Market Law

The new Electricity Market Law No. 6446 (“New EML”) was enacted by the Turkish Grand National Assembly on 14 March 2013 and published in the Official Gazette numbered 28603 on 30 March 2013. Surprisingly, Electricity Market Law No. 46281 was not abrogated with the enactment of the New EML, but its title was changed to “Law on the Organization and Duties of the Energy Market Regulatory Authority” (“Previous Law” or “EMRA Law” where appropriate) and was partially amended by the new law. Accordingly, the provisions regarding the organization and duties of the Energy Market Regulatory Authority (“EMRA”) remain in effect under the EMRA Law. According to the New EML, all references in the legislation to the repealed articles of the Previous Law shall be considered as references to the related articles of the New EML.

The New EML envisages some important changes and in this article those changes will be reviewed.

Activities and Licenses

Under the New EML, the licenses and the rules to be applied are based on the types of electricity market activities. In other words, the New EML is structured around types of activities rather than types of licenses. The electricity market activities which require a license are listed under Article 4 of the New EML as generation, transmission, distribution, wholesale, retail sale, market operation, export and import. The New EML does not mention retail sale service and trade activities, as did the Previous Law. However, in the New EML market operation is introduced as a new type of activity.

Article 14 of the New EML sets forth the activities that can be conducted without a licence. Whereas under the Previous Law 500 kW was the maximum installed capacity for a renewable energy plant to operate without a license, the New EML has raised that maximum to 1 mW. In addition, the Council of Ministers is authorised to increase the maximum installed capacity for a renewable energy plant to operate without a license to 5 mW.

The draft of the New EML previously announced by EMRA initially stipulated that transactions such as share transfer and change of control, which result in a change in ownership or usufruct rights, could be conducted without requiring the approval of, but by simply notifying EMRA. However, this change is not included in the New EML, and similar to the Previous Law, those transactions are still subject to EMRA’s prior approval under the New Law.

EPIAS and the Activity of “Market Operation”

The New EML defines a new activity called “market operation” as the operation of organized wholesale electricity markets and financial settlement of activities conducted in such markets, along with other related financial transactions.

Currently electricity market operation activities are conducted by the Market Financial Reconciliation Center (“MFRC”), organized under the Turkish Electricity Transmission Joint Stock Company (“TEIAS”). The New EML establishes a new company to assume the role of the MFRC, the Energy Market Operation Joint Stock Company (“EPIAS”). The permanent officials and equipment of the MFRC will be transferred to EPIAS, which will be a private legal entity acting under an EMRA issued market operation license. Pursuant to the New EML, EPIAS is to be incorporated and initiate its activities, and the relevant regulations will be enacted within six months from the date the New EML enters into force.

Preliminary License for Generation

As per Article 6 of the New EML, a preliminary license is required for commencement of generation activities. EMRA will issue a preliminary license for a specified term to the legal entities who apply to conduct electricity generation activities, during which period they must obtain the necessary permits, approvals and licenses, as well as acquire ownership or usufruct rights to the land where the generation facility is to be located. The term of the preliminary license cannot be more than twenty-four months excluding the occurrence of force majeure events. EMRA is entitled to increase the preliminary license term by half, for a maximum of thirty-six months, based on the energy source type and the facility’s installed capacity.

The New EML stipulates that legal entities that could not obtain the above-mentioned documents, certify the acquisition of the property or usufruct rights, or fulfil the other legal requirements shall not be granted a generation license. In addition, before a generation license is granted, where there are any direct or indirect changes in the shareholding structure (with the exception of inheritance), share transfers or non-fulfilment of other legal requirements, the preliminary licence will be cancelled. Moreover, if the preliminary license term expires or the legal entity holding the license files for or falls into bankruptcy, the preliminary licence will automatically become null and void. However, there is no express provision in the new EML stating when the preliminary licence becomes null and void.

Distribution License Holders and Other Market Activities

As per Article 9 of the New EML, electricity distribution companies can only operate in the territory indicated in their license, cannot conduct activities other than distribution activities and cannot directly become a shareholder in other legal active in the electricity market. Moreover, while generation companies are prohibited from becoming controlling shareholders under the Previous Law, the New EML completely prohibits legal entities active in the electricity market from becoming direct shareholders in a distribution company. As argumentum a contrario, indirect shareholding is not prohibited.

Supply License and Supply Companies

Wholesale and retail sale activities, which were regulated as different types of licences, “wholesale license” and “retail sale license”, under the Previous Law, are regulated as one licence type, a “supply license”, under the New EML. As per Article 10 of the New EML, supply companies can conduct wholesale and/or retail sale activities without territorial limitations. In addition, it is stipulated that supply companies may also import from and export to countries with which the interconnection condition is satisfied.

The Conversion of the Auto Producer License to the Generation Licence

The “auto producer” and “auto producer group” licences are not explicitly regulated under the New EML. Instead, temporary Article 7 of the New EML holds that generation licenses will be automatically issued to auto producer license holders within six months of the effective date of the New EML, and no licence issuance fee shall be charged. Moreover, any applications filed to obtain an auto producer license will be treated as generation license applications.

Provisions on Total Market Share

The Previous Law set forth restrictive provisions related to total market share or total sale amounts for companies active in the electricity market. These restrictions were 10% of the previous year’s total energy sales within Turkey for wholesale companies and 20% of the previous year’s calculated total installed capacity within Turkey for generation companies.

The New EML also regulates market share restrictions for license holding companies. Pursuant to its provisions:

  • Generation companies controlled by any real person or any private sector legal entity cannot hold a total installed capacity of more than 20% of the previous year’s calculated total installed capacity within Turkey (Art.7/para.5);

  • Private sector legal entities that hold supply licenses cannot purchase electricity from generation or export companies exceeding 20% of the previous year’s total consumption of electricity within the country (Art.10/para.6);

  • Supply companies cannot sell electricity on a wholesale or retail basis exceeding 20% of the of the previous year’s total consumption of electricity in Turkey (Art.10/para.6).

Changes related to Applicable Sanctions

As per Article 16 of the New EML, the monetary sanctions applicable as a result of non-performance of duties and non-fulfilment of the requirements arising out of the law or related legislation are increased.

Moreover, as per paragraphs 3 and 4 of Article 16 of the New EML, in the event that distribution or supply companies do not conduct their activities pursuant to the legislation, impede their services, decrease their service quality to an unacceptable degree, become insolvent or are in a position to become insolvent EMRA can dismiss some or all of their board members and appoint new ones. In such an event, EMRA will be deemed as the addressee (defendant) of any claims filed against the members it appointed to the board of directors of said distribution or supply companies. Where any such aforementioned claim results in compensation due to the plaintiff, such compensation will be borne by EMRA, with a right of recourse.

Exceptional Provision regarding Environmental Requirements

Pursuant to temporary Article 8 of the New EML, the state owned generation company, EUAS (Elektrik Üretim A.Ş. Genel Müdürlüğü), its subsidiaries and affiliates, as well as publicly owned companies that are to be privatised according to privatisation legislation, are granted a grace period until the end of 2018 to become compliant with environmental laws and acquire the required permits. Accordingly, it is stipulated that their activities cannot be cancelled and no sanction can be applied due to non-compliance with environmental laws during the grace period and even for the period prior to the grace period. This exceptional provision is very important for generation companies that are or will be subject to privatisation.

Temporary Articles and the Extension of Some Deadlines

Some deadlines set in the Previous Law are extended with the New EML. Some of them are as follows:

  • The price equalisation mechanism for distribution companies and supply companies, which was applied until the end of 2012, is extended until the end of 2015, and until such date the national tariff applies.

  • The corporate tax and VAT exemptions, which were applied until the end of 2010 to the mergers, spin-offs and transfers of generation and distribution companies subject to privatisation, are extended until the end of 2023.

  • A 50% discount on system utilization fees during the investment periods and for five years as of the operation start date, and the exemptions from stamp tax and duties granted to generation facilities are extended until the end of 2015.

Further to the aforementioned, pursuant to temporary Article 12 of the New EML, within one year of the New EML’s effective date, generation licenses shall be issued to the generation facilities and projects subject to existing agreements.2 The terms of such licenses will be subject to the same rights and obligations and limited by the term in the existing agreements.

Moreover, it is regulated under paragraph 1 of temporary Article 14 that new licenses shall be issued to former generation license holders who started the construction of power plants but whose licenses were cancelled or ceased before the entry into force of the New EML; provided that the Ministry of Energy and Natural Resources (“MENR”) decides the construction is irrevocable and there is public interest for continuance. However, this provision is not applicable to hydro-electric power plant facilities.


The New EML introduces some important changes in the current electricity market system. These include: amendments to license types, framing its provisions around each type of market activity, specific provisions for certain license types (i.e. distribution, supply and generation), the introduction of a preliminary licensing mechanism and investment incentives such as extended deadlines and grace periods for environmental compliance. The New EML also introduces EPIAS which will be an independent private company authorised for the market operation activity.

The principle reason for drafting the New EML was that the Previous Law was not sufficient to follow the factual progress achieved by the market actors and regulatory authorities since 2001. The goal is that the law, as the primary legislation, shall guide the market actors in the future and constitute a legal basis for secondary legislation. Harmonization with European Union legislation and the composition of a new market with a secure supply that generates investor interest are the other reasons behind the new law.

The systematic of the New EML is based on the market activities. Therefore, one can argue that it is neatly drafted when compared with the Previous Law. On the other hand, from a legal technical point, transformation of the Previous Law to EMRA Law and the lack of succession between its articles after this transformation can be criticized.


1 Official Gazette 3 March 2002, nr. Reiterated 24335

2 Existing agreements are defined as the contracts and concession and implementation agreements signed before the enactment of Previous Law in accordance with the terms and conditions of Law no. 3096 dated 04.12.1984, no. 3996 dated 08.06.1994, no. 4283 dated 16.07.1997 and no. 4501 dated 21.01.2000 and related regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions