The Turkish renewable energy sector has been under the spotlight for years, particularly following the ratification of the Kyoto Protocol by the Republic of Turkey. The Ministry of Energy and Natural Resources (the "Ministry") has launched a new investment opportunity. Investors were already active in (i) the licensed market which is governed by the Electricity Market Licensing Regulation (the "Licensing Regulation"); and (ii) the unlicensed market for power plants with the maximum installed capacity of 1 MW, which is governed by the Regulation on the Unlicensed Generation of Electricity in the Electricity Market. The Regulation on Renewable Energy Source Areas1 (the "Regulation") has introduced a third market: large renewable energy areas ("RESA"s) on which power plants with high installed power capacities can be constructed and operated.
Initially, a RESA can be established in the following ways: (i) the General Directorate of Renewable Energy ("YEGM") will itself announce the appropriate land as a RESA; and (ii) the successful bidders of the capacity tender determine the potential RESA site and submit such for the approval of YEGM. The main difference between the licensed electricity market and the participation in RESAs is that the usage and/or the manufacturing of domestic equipment for the construction and development of the solar power plant is a pre-requisite for such investment. The interested parties may submit their bids as a joint-venture but not as a consortium. The successful bidder shall submit its preliminary licence application in accordance with the Licensing Regulation, the period of which is to be determined by the Ministry. The owner of the power plant is entitled to sell electricity at the prices determined2 in the right of usage agreement and for the period fixed in the tender specifications.
The mandatory undertaking in relation to the use and/or manufacturing of domestic equipment may entice interested applicants to incorporate joint ventures in order to fulfil the requirements set out in the Regulation. Consequently, the Regulation has created a brand new area of development in the Turkish renewable energy sector.
Footnotes
1. Published in the Official Gazette dated 9 October 2016 and numbered 29852.
2. These prices cannot exceed the relevant feed in tariff prices listed in the Table 1 attached to the Law No. 5346.
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