As many other countries, Turkey also intends to increase the
rate of renewable energy resources to 30 % in its power generation
until 2031. In accordance with this, adequate legislative
amendments and legal reforms in energy have been made since 2010
which provide diverse incentives to investors. Recently, the
Council of Ministers passed a resolution concerning investments and
domestic production in renewable energy.
Tariff incentives for renewable energy investments extended
The tariff incentives for renewable energy manufacturing plants
have been extended until 2020 through a resolution of Council of
Ministers dated 05.12.2013. Accordingly, the feed-in tariff will
also be applicable for the manufacturing license owners which will
be put into operation between 2016 and 2020. As is known, the
investments in renewable energy has been supported in Turkey
regarding the energy resource types through the related legislation
since 2010. According to the recent law, manufacturers in renewable
energy may benefit from the feed-in tariff incentives of Renewable
Energy Resources Support Mechanism ("Support Mechanism")
under certain conditions. In addition to this, in the event that a
manufacturer uses local eqipment in its plant, a premium shall be
added into the tariffs. Also this incentive is extended until 2020
within the frame of the above mentioned Resolution. If the demand
and external dependence for the energy of Turkey is regarded, the
extension of feed-in tariffs in renewable energy may lead up new
investments in renewable energy sector and thereby as a factor for
meeting of the gap in the energy sector of Turkey for the long
Other incentives provided by laws
The incentives in renewable energy investments are not limited
with the feed-in tariffs and local equipment bonus. The Law on
Manufacturing of Electricity from Renewable Energy Resources
("Law") dated 10.05.2005 provides incentives to investors
also in the investment phase such as service charge exception for
projects which have been determined in the Law, energy
manufacturing plants, research and development investments. The
Moreover, the Law provides facilities regarding the land allocation
such as reduction of land use charges and tax reductions. In
addition to these incentives, not only licensed power generation,
but also unlicensed power generation has been made possible for
electricity manufacturers in Turkey. The conditions of unlicensed
power generation have been regulated by the Regulation on
Unlicensed Electricity Manufacturing which has been in force since
Efficiency of support mechanism instruments
A universal support policy does not exist in renewable energy.
The support mechanisms preferred in the world are feed-in tariff,
bid incentives, premium guarantiee, tax reductions or exemptions,
tax credits, net metering / flexible grid access. According to the
experts' opinion, support of each renewable technology through
convenient support instrument, use of a policy portfolio may be the
optimal resolution for renewable energy investments. Their costs,
government bugdet's amount, their incidence shall be
considered. Above mentioned support instruments which are provided
by turkish laws may be beneficial and attractive for investors in
Turkey, if the legal amendments and diversity of incentives are
considered as a whole. Through the premium for local equipment in
power generation will also attract the local investors and it will
contribute to technology development significantly in Turkey. Also
unlicensed electricity manufacturing plays an essential role in
increasing of the use of renewable energy in Turkey. Moreover, the
liberalisation of energy market and establishment of an energy
exchange (EPİAŞ) may contribute to increase of private
investments in Turkey.
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.
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Turkey has amended the Electricity Market Law numbered 6446 to promote use and security of domestic energy resources. Under the amendments, planned capacity mechanisms must give priority to local energy sources.
Turkey's energy regulator previously ruled (decision numbered 5709, dated 30 July 2015) that a total capacity of 2,000 MW would be reserved in the period up until 2020 for wind power pre-license applicants to connect to the grid.
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