Turkish Energy Market Regulatory Authority ("EMRA")
has announced on 1st October 2014 that the electricity
manufacturing license holders producing electricity from renewable
resources are required to submit their applications for Renewable
Energy Resources Support Mechanism ("YEKDEM") for the
year 2015 until 31th October 2014, in order to benefit from the
facilities regulated by the related legislation.
What is YEKDEM and what are the benefits of investors in
renewable energy production?
YEKDEM is a support mechanism for electricity manufacturers from
renewable energy resources, which has been regulated in the
Regulation on Documentation and Support of Electricity
Manufacturing from Renewable Energy Resources
("Regulation") which has entered into force in 2013.
Pursuant to the article (4) of the Regulation, the support
mechanism consists of feed-in tariffs (valid until 2020) for
electricity manufacturing license holders and unlicensed
electricity manufacturers producing electricity from renewables and
other opportunities for renewable energy. Within the frame of the
support mechanism, the retail companies assigned by EMRA are
required to purchase the produced electricity from the electricity
manufacturers which are subject to this mechanism on the tariffs
regulated by the legislation and the electricity manufacturer
cannot sell the produced electricity to other companies under the
open market conditions. These feed-in tariffs vary on the energy
resource, for instance, the tariffs for solar energy are 13,3 USD
Cent/kWh whereas these amount to 7,3 USD Cent/kWh for
In addition, the electricity manufacturer has the opportunity to
benefit from the local equipment support, in where cases local
equipment in the power plant is used. These prices are added to the
feed-in tariffs and paid to the electricity manufacturer. As in the
feed-in tariffs, amount of local equipment support depends on the
energy resource. Companies manufacturing electricity from renewable
energy resources are required to submit their applications until
the end of October of each year. For 2015, this application term
will end in one week.
Pros and cons of the YEKDEM
Support mechanism YEKDEM has been regulated in order to
encourage the investments in renewable energy. The feed-in tariffs
constitute a guarantee especially for electricity manufacturing
license holders which have started up recently. Therefore, the
risks of instability are minimized due to this mechanism. However,
since the feed-in tariffs are determined on the basis of foreign
currency, the currency risk might be consider either as a risk or
advantage. Moreover, the market prices may amount higher than
feed-in tariffs and it is recommended to make a detailled market
analyse in order to minimize the possible risks.
Situation of support mechanism after 2020: Future
The support mechanism had been regulated by the Regulation until
2015. These feed-in tariffs and additional payment for local
equipments in the power plant have been extended until 2020. The
question of the electricity manufacturing companies, how this
support mechanism will be regulated after 2020, has come to the
fore very frequently. This is not regulated by the legislation and
there is not a declaration about this question from an institution
yet. According to the experts' opinion, two possibilities
exist: Either the support mechanism will be extended with similar
incentives and feed-in tariffs for a longer term, since a term of
10 years is regarded as a short term to make profit from an
investment, or the tariffs would be changed. In this context, an
analyse and a comparison of legislation and practice in other
countries and other law systems would be helpful for the decisions
and practice in the future. Despite all plus and minus, the
existence of a support mechanism for electricity manufacturing from
renewable energy resources is essential in order to achieve the
target of renewables' share in the electricity
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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