July 2021 – In June 2021 there were few significant regulative changes after months of extensive regulative action. June was nevertheless eventful; two electricity markets became operational and long-awaited wind-power tenders were announced by the Ministry of Energy and Natural Resources ("MENR").

The regulative changes made in June are summarised below:

  • The Turkish Energy Market Regulatory Authority amended the Petroleum Markets License Regulation and the Liquefied Petroleum Gas (LPG) Market License Regulation to reflect changes made in May this year to the Petroleum Market Law and the Law on Liquefied Petroleum Gas, while also introducing certain new provisions. Our take on the amendments may be found here.
  • The list of components that will enable market actors to benefit from a local component payment if used in hybrid renewable energy plants was announced by the Ministry of Energy and Natural Resources. The concerned list may be found here (only available in Turkish).
  • The Procedures and Principles for the Technical Evaluation of Wind-Solar Hybrid Plants and the Procedures and Principles for the Technical Evaluation of the Solar Power Plants of Hybrid Plants were also published. The concerned procedures and principles may be found here and here, respectively (only available in Turkish). 

YEK-G and VEP markets became operational

Turkey's power futures market ("VEP market") became operational on 1 June 2021. Through the VEP market, market participants can conclude physically settled power agreements and hedge the price risk with respect to their price expectations against future price changes. The first transaction  realized in the VEP market is realized for an October base contract, as in 1 lot, with the fixed price of TL 405 per megawatt hour. Electricity supply and generation license holders that sign market participation agreements with the market operator, EPIAS, and deposit an entry collateral and default guarantee account contribution can participate in the market.

Turkey's green energy certificate system and market also launched in June. The Turkish green certificate (the YEK-G Certificate) is issued and traded through a system operated by the market operator, EPIAS, by electricity supply and generation license holders that sign market participation agreements with the market operator and deposit an entry collateral and default guarantee account contribution. YEK-G Certificates will be issued for each 1 MWh that is "certifiable" and remain in force for 12 months following the end of the generation term (12:00 a.m. of the last day of the invoicing term within which the generation activities are conducted), or until they are redeemed due to the allocation of the electricity to be consumed, or cancelled or repealed by the market operator. MENR announced that as of 21 June 2021, 127 renewable energy power plants owned by 100 market actors are participating in the system and the market, and that between 1 June and 21 June, YEK-G Certificates representing a total of 5.2 terawatt hours of electricity had been issued through the system.

Renewable energy tenders

Turkey has recently announced several renewable energy tenders:

  • Akköprü HEPP tender: The Akköprü hydroelectric power plant (HEPP) will be privatised by Turkey's Privatisation Administration by transferring its operational rights for 49 years. Akköprü HEPP is located on Dalaman Stream in Mugla, Turkey (in the country's south-western corner) and has an installed capacity of 115 MWe.

The tender will be held through negotiations with bidders, which will be followed by a public auction among interested parties willing to continue bidding after the negotiation process. To bid in the tender, the tender specifications must be obtained by paying a fee of TL 20,000 (approx. USD 2,300), signing a confidentiality undertaking, and submitting a tender guarantee of TL 15,000,000 (approx. USD 1,728,000).

The deadline for bids is 14 September 2021. Bids must be submitted in Turkish lira.

  • Wind RERA tenders: Another tender relates to the allocation of 2,000 MWe capacity to be allocated through 42 different mini projects/tenders for Wind Renewable Energy Areas ("RERAs").

RERAs were introduced in Turkey in 2016 as a new investment model to support renewable energy investments and as an alternative to licensing. There are two methods for the designation of RERAs, one of which is capacity allocation through a tender.

The bidding process for RERA projects is on the Dutch-auction basis starting from a price ceiling that is pre-determined. The lowest bidder wins the tender, is granted the right to sign an RERA Usage Right Agreement with the Turkish Ministry of Energy and Natural Resources and benefits from a purchase guarantee, while being obliged to either establish an equipment manufacturing company as well as an R&D Centre, or to use domestically manufactured or supplied equipment, up to a certain ratio.

For the Wind RERA tenders, the initial ceiling price applicable for each mini tender is determined as 45 TL/kWh (approx. USD 5.2/kWh). A purchase guarantee is foreseen as well. Accordingly, for each MW of allocated connection capacity, the first 35 GWh of electricity generated from the wind power plant since the date of the relevant wind power plant's formal acceptance will be purchased through the renewable energy support mechanism. The winner of the tender will be obliged to use domestically manufactured or supplied equipment, up to a certain ratio.

To participate in Wind RERA tenders, potential bidders must obtain tender specifications for each mini tender they wish to participate in by paying (for each tender) a fee of TL 2,000 (approx. USD 230) and submitting a tender guarantee of TL 500,000 (approx. USD 58,500) for each MW of installed capacity, with a maturity period of one year.

Bids will be collected on 12 October 2021 between 10:00 a.m. and 2:00 p.m. The concerned tenders are expected be concluded by end-2021, although the exact timeframe has not yet been announced.

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.