Turkey: Turkish Renewable Energy Law

Last Updated: 19 November 2014
Article by Ozkan Law Office

1. Introduction

As a country with a rapidly growing economy, Turkey has an increasing energy need. At the moment, the energy need is mostly met by fossil fuels and a large portion of it is imported. Turkey, on the other hand, has a large potential for renewable resources. Within this context, Turkey has enacted important pieces of legislation to encourage the use of different renewable energy resources in order to increase the energy production from domestic energy resources, to decrease the use of fossil fuels and reduce of green house gas emissions in Turkey. Consequently, the share of energy production from renewable energy sources has increased considerably during the recent years. It is also important to underline that Turkey has recently acceded to the Kyoto Protocol. This paper outlines the Turkish legislation concerning renewable energy.

2. General Framework

The main piece of legislation governing the electricity sector in Turkey is the Electricity Market Law numbered 6446 ("Electricity Market Law")1. The Electricity Market Law was enacted in 2013 with the aim to liberalize the electricity market. The Electricity Market Law deals mainly with the following issues:

  • the actors of the electricity market, and
  • licenses required in order to operate in the sector

The general principles set forth in the Electricity Market Law are further detailed in the secondary legislation enacted based on this law. The secondary legislation governing the obtaining of the licenses is the Electricity Market Licensing Regulation (the "Licensing Regulation")2. Energy Market Law and Licensing Regulation set forth general principles related to renewable energy and have been amended various times in order to encourage more investment in the renewable energy projects, particularly the wind energy projects.

In addition to the main pieces of legislation outlined above, the Law on the Use of Renewable Resources for the Generation of Electrical Energy (the Renewable Energy Law")3 was enacted in 2005. The Renewable Energy Law governs the principles for the conservation of renewable resource areas and introduces further incentives for renewable energy projects. According to the Renewable Energy Law, the facilities within the scope of this law are required to obtain a Renewable Energy Source Certificate in order to benefit from the incentives provided under the law. The procedures for benefitting from the incentives are detailed in the Regulation on Certification and Support of Renewable Energy Sources ("the Renewable Energy Regulation")4.

3. Licenses

The entities have to obtain a license from the Energy Market Regulatory Authority ("EMRA") in order to operate in the electricity sector. The electricity market activities requiring a license are as follows: generation, transmission, distribution, wholesale, retail sale, market operation, export and import. Wholesale activity and retail sale activity are regulated as one license type under the name of supply license.

The procedure and requirements of license application are detailed in the Licensing Regulation. Accordingly, the entities applying for a license must be established in the form of a joint stock company or limited company under the Turkish Commercial Code. The major application and post approval requirements include the following:

  • the payment of the license fees,
  • provision of letter of guarantee,
  • amendment of the Articles of Association ("AoA") of the applicant company to adjust to the minimum share capital and other requirements envisaged by the Licensing Regulation
  • payment of the annual license fees determined by the EMRA

Legal entities shall obtain a preliminary license before applying for a generation license. A preliminary license can be given for 24 months except the force majeure. In this time period the legal entities shall fulfil the requirements anticipated by the provisions of preliminary license in order to obtain a generation license.

There are some activities based on renewable energy resources specified by Electricity Market Law which can be conducted without a license. These activities are as follows: production facility with installed power maximum at 1 mW based on renewable energy resources, production facility based on renewable energy resources which utilize all of their generated energy without giving it to the connection or distribution system and have the same measurement point of generation and consumption. The Council of Ministers is authorized to increase the installed capacity of production facilities based on renewable energy resources without a license up to fivefold, i.e. 5 mW.

At the stage of making up an opinion for connectivity during evaluation of license applications by the EMRA, production facilities based on Renewable Energy Resources within this scope will be given priority

As a consequence of the policy to encourage private investment in the renewable energy projects, the Licensing Regulation stipulates that the legal entities applying for licenses for the construction of facilities based on domestic natural resources and renewable energy resources do not pay annual license fee for the first 8 years following completion of the construction of the related facilities.

4. Renewable Energy Law

In addition to the incentives provided by the Electricity Market Law and the Licensing Regulation, the Renewable Energy Law, which came into force on 18 May 2005 was enacted in order to provide more incentives for renewable energy resources. The facilities must obtain a Renewable Energy Source Certificate ("REC") in order to benefit from the incentives provided under the Renewable Energy Law.

The renewable energy resources covered by the Renewable Energy Law are wind, solar, geothermal, biomass, biogas (including landfill gas), wave, stream, tidal, river and arc type hydroelectric generation facilities and hydroelectric generation facilities with a reservoir area of less than fifteen km².

The incentives provided by the Renewable Energy Law are as follows:

a. Minimum purchase prices varying between 7.3 US Dollar Cent/kWh to 13.3US Dollar Cent/kWh shall be applicable for electricity produced from different type of renewable energy resources.

b. In the event that the mechanical and/or electro‐mechanical equipment used in the production facilities of license holder entities based on the Renewable Energy Resources within the scope hereof and commissioned before 31/12/2015 are manufactured domestically; additional prices shall be added to the minimum guaranteed prices, for a term of five years as from the commissioning of the production facility for electrical energy produced and given in such facilities and given to the distribution system.

c. In the event that the forests and the lands under private ownership of the Treasury or under the control or disposal of the State are utilized for the generation of electricity from renewable energy resources, such lands shall be leased to or right of way or usufruct rights thereof shall be granted to the relevant entities.

d. There are certain incentives concerning the investment periods of the projects. For example, the service fees will not be collected from the individuals or legal entities willing to construct generation facilities to meet their own energy needs from renewable energy resources for the preparation of final project, planning, master plans, initial examination and initial studies to be performed by the State Hydraulic Affairs General Directorate or the Electricity Affairs General Directorate. In addition, the investments for energy generation facilities, procurement of electromechanic systems within the country, research, development and production investments concerning solar energy units, and research and development investments for biomass energy may benefit from the incentives upon a Council of Ministers' Decree.

e. The need for heat energy in the municipalities where there are sufficient geothermal energy resources will be primarily met by geothermal and solar thermal energy resources.

f. In addition to the above‐stated incentives, the Renewable Energy Law also provides that development plans, which might have a negative impact on the use and efficiency of renewable energy resource areas can no longer be created on public land.

This Memorandum provides a brief description of some of the important aspects of Turkish Renewable Energy Legislation. The information provided is not intended to serve as a legal advice. Before taking any action or relying on the information given, the addressees of this Memorandum should seek specific advice on the matters which concern them.

Footnotes

1 Published in the Official Gazette dated 30 March 2013 numbered 28603

2 Published in the Official Gazette dated 2 November 2013 numbered 28809

3 Published in the Official Gazette dated 18 May 2005 and numbered 25819 as amended by Law No: 6094 published in the Official Gazette dated 8 January 2011 numbered 27809

4 Published in the Official Gazette dated 1 October 2013 and numbered 28782

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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