Turkey: IPARD Incentives On The Renewable Energy Investments

Instrument for Pre-Accession Assistance in Rural Development Program (the "IPARD") is the agricultural component of the Instrument for Pre-Accession Assistance-IPA which is formed by European Union to support candidate and potential candidate countries. IPARD aims to develop rural areas of the candidate and potential candidate countries by supporting agricultural production, employment opportunities, sustainable use of natural resources and improving the rural environment.

Turkey is a recipient under the IPARD II program for the period between 2014 and 2020. IPARD II does not only support investors in agricultural and stock farming activities but also in renewable energy investments. Incentives are granted by the Agricultural and Rural Development Support Institution (the "ARDSI").

Granted measures for renewable energy investments can be separated to two types.

The first type covers renewable energy investments which are implemented for the self-consumption of the facilities operating in the agriculture sector. The second type covers renewable energy investments which are supported under the Farm Diversification and Business Development Measure with the Code number 302-7 (the "302-7 Measure") pursuant to which recipients can sell power to electricity distribution companies without making their facility connected to agricultural production.

The 302-7 Measure is granted for renewable energy investments (up to 1 MW of installed power) which are photovoltaic solar energy systems, concentrated solar energy systems, wind energy systems, geothermal, biomass, micro-cogeneration (for power and/or heat generation). Hydroelectric investments are not covered under the 302- Measure.

Amounts granted for renewable energy projects within the scope of the 302-7 Measure can only be used for certain type of expenses which are also listed in the applications documents of the 302-7 Measure. In general, these are as follows:

  • construction, modernization and extension of renewable energy facilities;
  • acquisition of stationary engines and equipment for renewable energy facilities; and
  • Acquisition of software and IT equipment for the commissioning of renewable energy facilities.

Investments that are implemented in the following 42 provinces are eligible to apply under the 302-7 Measure:

1. Afyonkarahisar 12. Çankırı 23. Karaman 34. Ordu
2. Ağrı 13. Çorum 24. Kars 35. Samsun
3. Amasya 14. Denizli 25. Kastamonu 36. Şanlıurfa
4. Aksaray 15. Diyarbakır 26. Konya 37. Sivas
5. Ankara 16. Elazığ 27. Kütahya 38. Tokat
6. Ardahan 17. Erzincan 28. Malatya 39. Trabzon
7. Aydın 18. Erzurum 29. Manisa 40. Uşak
8. Balıkesir 19. Giresun 30. Mardin 41. Van
9. Burdur 20. Hatay 31. Mersin 42. Yozgat
10. Bursa 21. Isparta 32. Muş
11. Çanakkale 22. Kahramanmaraş 33. Nevşehir

Further, grant rates vary depending on the province, varying between 65% and 50% of total investment cost. The details are as follows:

Province Amount that can be Financed under the 302-7 Measure Limit for each Project Minimum investment amount for the Project
Karaman 65% € 500,000 € 5,000
Hatay 65% € 500,000 € 5,000
Erzincan 65% € 500,000 € 5,000
Diyarbakır 65% € 500,000 € 5,000
Ardahan 65% € 500,000 € 5,000
Çankırı 65% € 500,000 € 5,000
Mersin 65% € 500,000 € 5,000
Yozgat 65% € 500,000 € 5,000
Muş 65% € 500,000 € 5,000
Ağrı 65% € 500,000 € 5,000
Isparta 65% € 500,000 € 5,000
Tokat 65% € 500,000 € 5,000
Erzurum 65% € 500,000 € 5,000
Balıkesir 65% € 500,000 € 5,000
Kars 65% € 500,000 € 5,000
Other 27 provinces in the list 55% € 500,000 € 5,000

The 302-7 Measure aims to increase investments in renewable energy particularly in developing rural provinces in Turkey. Such grants are co-financed by the Republic of Turkey and the European Union. Since 2014, within the scope of IPARD II, there have been three waves of grant issuances under the 302-7 Measure. The next and 4th wave for the 302-7 Measure grants is expected to be in the fall of 2018.

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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Can Özilhan
Zekican Samlı
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