New Regulatory Framework For Storage-Integrated RES/GES And Floating Power Plants

With the publication of the Regulation on the Use of Water Surfaces for the Installation of Floating Solar Power Plants in the Official Gazette dated 10 December 2025 and numbered 33103 (the "Floating GES Regulation"), followed by the amendments to the Electricity Market Licensing Regulation (the "Licensing Regulation") and the Regulation Amending the Regulation on Storage Activities in the Electricity Market (the "Storage Regulation"), published in the Official Gazette dated 29 December 2025 and numbered 33122, significant updates have been introduced to Turkish electricity market legislation. These regulatory amendments aim to clarify the legal framework governing storage integration, hybrid power plant structures, and the use of public resources—particularly water surfaces—which have long been debated in the context of energy investments. This article examines the impact of these amendments on licensing procedures, the revised definition of "Floating GES," and the new commercial arrangements introduced for storage-integrated power plants.

1. Amendment to the Definition of Floating GES

Through the amendments introduced by the Energy Market Regulatory Authority ("EMRA") to the Licensing Regulation, the definition of "Floating GES" has been expanded to include not only natural or artificial ponds but also water surfaces located within reservoir-based or regulator-based hydroelectric power plant ("HPP") sites. This amendment effectively paves the way for hybrid power plant investments.

In this context, Floating GES is legally positioned not as an entirely independent generation facility, but rather as a generation unit integrated into an existing power plant, particularly an HPP, operated either under the same generation license or within a hybrid plant structure. This regulatory development creates a significant opportunity for investors seeking to develop hybrid models integrated with existing HPP investments. However, it should be noted that the Licensing Regulation explicitly excludes reservoirs used for drinking and utility water supply, as well as areas falling within the scope of the Coastal Law. These exclusions, introduced on the grounds of public interest and environmental protection, require investors to distinguish carefully between areas that are legally permissible and those that are practically licensable.

At this stage, investors face an additional legal threshold. Obtaining an EMRA license or pre-license is no longer sufficient on its own. Pursuant to the Floating GES Regulation, the leasing of water surfaces within reservoir-based HPP sites for energy generation purposes are subject to a separate approval by the General Directorate of State Hydraulic Works ("DSİ"). This indicates that, in addition to the conventional licensing regime, an administrative process involving the allocation of a public resource has been introduced for floating GES projects.

A critical aspect of this process is DSİ's prioritization policy in allocation and permitting procedures, which gives precedence to agricultural irrigation and drinking water supply over energy generation. Furthermore, investors will be required to execute a separate "Water Surface Lease Agreement" with DSİ for the use of water surfaces for energy generation purposes. As such agreements are governed by principles of administrative law, DSİ's discretionary authority regarding renewal, termination, and revision of lease terms may constitute a material legal risk for investors.

2. "Free-of-Charge Contribution" in Storage Activities

Pursuant to the amendments introduced under the Storage Regulation, the portion of electricity supplied to the grid by storage-integrated power plants that cannot be monetized under the Renewable Energy Support Mechanism (YEKDEM) or market clearing prices shall be deemed a "Free-of-Charge Contribution" under the applicable legislation.

As defined in the Storage Regulation, a free-of-charge contribution refers to the amount of energy that is technically generated by the investor but cannot be converted into monetary value within the applicable market mechanisms. In other words, energy discharged from a storage unit that cannot be priced within the relevant market framework will no longer generate revenue for the investor.

This regulatory approach effectively imposes a legal limitation on the revenue items assumed in the feasibility studies of storage-integrated power plants and introduces an indirect risk of revenue loss for investors. Although the amendment appears to be driven by considerations of system security and market stability, investors are advised to carefully assess this arrangement considering property rights, vested rights, and the principle of freedom of contract.

3. Technical Update to the Definition of "Operational Readiness"

Another notable amendment under the Storage Regulation concerns the technical criteria required for storage units to be deemed "operationally ready." Under the revised framework, operational readiness no longer depends solely on the physical completion of the storage unit but also requires the ability to respond effectively and continuously to instructions issued by the system operator.

Accordingly, operational readiness is now defined not merely as a technical qualification but as an ongoing and active operational obligation. Storage units that fail to meet the operational readiness criteria may be deemed in breach of licensing obligations, potentially resulting in administrative sanctions and, ultimately, license revocation.

For this reason, enhanced coordination between technical teams and legal departments throughout the operational phase is critical for license holders seeking to mitigate regulatory and compliance risks.

4. Conclusion

The year 2026 is expected to mark a transition period for storage-integrated RES/GES and floating GES projects, shifting from development to installation and operation. Unlike previous periods, however, this transition will require not only technical expertise but also comprehensive legal and financial risk management.

In particular, the free-of-charge contribution mechanism, DSİ's leasing regime prioritizing non-energy uses, and the tightening of operational readiness criteria necessitate a thorough reassessment of financial models and contractual structures. In this evolving regulatory landscape, investors who adopt a forward-looking strategy that anticipates long-term legal risks, rather than focusing solely on regulatory compliance, are likely to be better positioned for success in 2026 and beyond.

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