Turkey: Unlicensed Electricity Generation: New System For Use Of Renewable Energy Resources

Unlicensed electricity generation is a unique system based on the use of renewable energy.

Currently, the use of renewable energy resources is becoming more popular globally in energy production for many reasons (e.g., environmental issues and energy security). Turkey also supports developments of renewable energy projects by adopting new legislation to (i) comply with environmental related international agreements and protocols (i.e., the Kyoto Protokol)1; (ii) increase use of its local resources as a country with a huge potential of electricity generation based on hydro, solar and wind; (iii) decrease dependence on foreign energy resources; and (iv) protect the environment, etc.

Unlicensed electricity generation is a unique system based on the use of renewable energy resources which gives the electricity subscribers the opportunity to produce their own electrical energy in limited amounts and to sell the surplus. The legal framework and its implementation are summarized below with respect to unlicensed electricity generation activities according to Turkish law.

Legal Framework

After the Electricity Market Law2 (the "Electricity Market Law") went into effect, the scope of activities which may be conducted without the requirement of obtaining a license has been limited. Article 14 of the Electricity Market Law provides a list of such activities.3

The secondary legislation for unlicensed electricity generation activity consists of two parts, the Regulation on Unlicensed Electricity Generation4 ("Regulation") and the Communiqué on the Application of the Regulation on Unlicensed Electricity Generation5 ("Communiqué") issued by the Energy Market Regulatory Authority ("EMRA").

Pursuant to Article 5 of the Regulation, the following generation facilities may be constructed without being subject to the requirements (i) to obtain license; and (ii) to incorporate a new company6:

  1. Emergency groups;
  2. Generation facilities which are isolated from the transmission or distribution networks;
  3. Renewable energy generation facilities with installed capacity up to 1 Megawatt or the capacity to be determined by the Council of Ministers;
  4. Renewable energy generation facilities which are at the same generation and consumption measurement points and which uses the whole amount of the generated energy itself without providing it to the transmission or distribution networks;
  5. Cogeneration facilities which fulfill the efficiency levels to be determined by the Ministry of Energy and Natural Resources;
  6. Micro-cogeneration facilities;
  7. Solid waste disposal facilities of municipalities and generation facilities which are established to dispose the sludge treatment; and,
  8. On the condition that it is technically available and approved by the General Directorate of State Hydraulic Works, generation facilities which are established over the water and waste water conveyance lines by the legal entities whose minimum 50% (fifty percent) of shares are owned directly or indirectly by municipalities.

Application Procedure

Under the legislation, every person or legal entity is entitled to establish an unlicensed electricity generation facility provided that that such person is an electricity subscriber.

The application process and procedures of the unlicensed electricity generation are quite simplified when compared to the licensed electricity generation. The electricity subscriber who intends to establish an unlicensed electricity generation facility should apply to its network operator (şebeke işletmecisi) in order to be connected to the distribution or the transmission network in accordance with Article 7 of the Regulation titled "Application for Connection." Once approved by the network operator, the applicant may construct the generation facility and establish a connection with the distribution or transmission network.

Consummation and Sale of the Generated Electricity

With regard to consumption facilities, the Regulation provides the following options: (i) a single generation facility to supply electricity to one consumption facility; (ii) a single consumption facility to supply electricity for more than one consumption facility owned by the same person; (iii) more than one generation facility to supply electricity to one consumption facility.

It is also possible for real or legal persons who are connected to the same connection point or whose electricity consumption may be measured with a single meter to combine their consumption and establish a generation facility or facilities in accordance with Article 23 of the Regulation. Article 24 of the Communiqué imposes its additional conditions of implementation of the combined consumption system. As per said Article of the Communiqué, it is mandatory that the facilities which will combine their consumption be located within the distribution region in which the generation facility will be established. In addition to the foregoing, the subscribers who aim to unite their consumption authorize one person among them with a representation contract for the purpose of benefiting from the provisions of the Regulation and this Communiqué. Pursuant to Article 23, par. III of the Regulation, such authorized subscriber will also be responsible for all applications, as well as the operation of the generation facility under the Regulation.

Article 19 of the Regulation allows generated electricity exceeding the needs of the consuming facility of the generator to be used at other consuming facility(ies) of the generator on some conditions (e.g., these consuming facilities are required to be located within the same distribution zone as the subject generation facility).

However, despite the above-referenced options, it should be noted that the primary objective of the legislation is to create opportunity for the consumers to meet their own electricity needs; the trade of the electricity by bilateral agreements is forbidden under the legislation.

Conclusion

Turkey aims to create new alternative mechanisms for the use of renewable energy resources and the support of renewable energy projects. Adoption of the legislation regarding unlicensed electricity generation is a small but important step to decrease Turkey's dependence on the import of energy resources and to take advantage of Turkey's potential in renewable energy resources.

Footnotes

1. Following the acceptance of The Code numbered 5386 on Approval of Participation of Turkey in the Kyoto Protokol regarding the United Nations Framework Convention on Climate Change by Turkish National Assembly on February 5, 2009, and the relevant Decree of the Council of Ministers dated May 13, 2009 and numbered 2009/14979, Turkey has become a party to such Protocol on August 26, 2009.

2. Law No. 6446 published in the Official Gazette on March 30, 2013 and numbered 28603.

3. The same list set forth in Article 5 of the Regulation on Unlicensed Electricity Generation.

4. Published in the Official Gazette on October 2, 2013 and numbered 28783.

5. Published in the Official Gazette on October 2, 2013 and numbered 28783.

6. The same are also set forth in Article 14 of the Electricity Market Law.

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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