Turkey: Renewable Energy Under The Electricity Market Law

Under the "Law on Use of Renewable Energy Resources for Electric Energy Generation"¹ ("Renewable Energy Law"), renewable energy resources are listed as hydraulic, wind, solar, geothermal, biomass, biogas (including landfill gas), wave, current and tidal energy, which are non-fossil energy resources.

The new Electricity Market Law,² which entered into force on March 30, 2013 ("EML") contains some new provisions regarding renewable energy resources.

In this article, we will review the provisions of the EML specific to renewable energy resources, including solar and wind energy.

License Terms and Generation Activity based on Renewable Energy Resources

One of the most important provisions regarding renewable energy resources under the EML is related to licensing. Pursuant to the general provisions on licensing, legal entities, which will conduct market activities, shall obtain separate licenses before starting their operation, for each activity and for each facility when those activities will be conducted at different facilities. However, the EML sets forth an exception for generation facilities based on renewable energy resources under Article 5, paragraph 2(f). According to this provision, generation facilities based on the same type of renewable energy resources, which are located at the surface of more than one premises, can be considered under one generation license provided that they are connected to the system from the same point. The implementation terms and conditions of this provision will be determined by the Energy Market Regulatory Authority ("EMRA").

Article 7 of the EML sets forth the provisions related to generation activities based on renewable energy resources. According to this article, the legal entities generating electricity based on renewable energy resources can obtain a "renewable energy resource certificate" from the Ministry of Energy and Natural Resources ("Ministry"). In that regard the Ministry adopted the Regulation on Certification and Support of Renewable Energy Resources³ ("Certification Regulation"). And the detailed rules on the renewable energy resources certificate ("YEKBEL") and the support mechanism for the renewable energy resources ("YEKDEM") are regulated in this Certification Regulation.

The EML sets forth some incentives for electric generation activities based on renewable energy resources. Pursuant to Temporary Article 4 of the EML, facilities generating electricity based on renewable energy resources may apply to the relevant ministry for obtaining the necessary permit, right of lease or usufruct of immovable properties which are qualified as forest areas or owned by the treasury, or under the possession of the state in order to utilize those areas for energy transmission lines. For generation facilities which are already in operation or that will have begun their operation until December 31, 2020, the rents or fees of such aforementioned areas shall decrease 85% during the first ten-years of investment or operation.

Activities based on Renewable Energy Resources without a License

Article 14 of the EML regulates the activities which can be conducted without a license. Some of those activities are based on renewable energy resources. According to this article, generation facilities based on renewable energy resources,

• the installed capacity of which is maximum 1 mW, and
• which utilize all of their generated energy without giving it to the connection or distribution system and which have the same measurement point of generation and consumption,

can conduct their activities without a license.

The Council of Ministers is authorized to increase the installed capacity of renewable energy plants to operate without a license to 5 mW.

In accordance with Article 14 of the EML, the Ministry adopted the Regulation on Unlicensed Electric Generation⁴ ("Unlicensed Generation Regulation").

According to Article 5 of the Unlicensed Generation Regulation, generation facilities based on renewable energy resources, the installed capacity of which is maximum 1 mW or below the increased installed capacity by the Council of Ministers are not obliged to obtain a preliminary license or license and to incorporate a company. This provision is in compliance with Article 7 of the Electricity Market Licensing Regulation⁵ ("Licensing Regulation").

Provisions on Solar and Wind Energy Resources

Article 7 of the EML stipulates the terms of preliminary license application for generation facilities based on wind and solar energy. According to this article, in the event that an application is made by the owner of the immovable property on which the generation facility will be established, other applications are not taken into consideration for evaluation. During the applications, it is necessary to submit wind or solar measurements for a minimum term of one year, which have been obtained within the last three years and in compliance with the standards. By taking into consideration the technologies used by TEIAS⁶ and the relevant distribution company; only the applications, which receive positive opinion for compatible connection, shall be subject to evaluation. In the event that there is more than one application, which require connection to the same connection point or same connection area, a contest shall be organized for selection of the applicants who offer and undertake to pay the highest total contribution fee per unit megawatt.

Provisions on Hydroelectric Power Plants

Besides general provisions regarding the renewable energy resources, the EML also regulates a few provisions specific to the hydraulic resources.

As is known, signing a water utilization right agreement is required to obtain a license for electric generation activities based on hydraulic resources. Pursuant to Article 29, for the applications for signing a water utilization right agreement, the General Directorate of State Hydraulic Works ("DSI"⁷) is entitled to determine the legal entity, which will sign the water utilization right agreement. In case of more than one application for one resource, the legal entity, which offers to pay the highest hydroelectric resource contribution fee, shall be selected for signing the agreement and notified to EMRA. The contribution fee shall be paid every year by the end of January and recorded as revenue to the DSI's budget.

Temporary Article 15 of the EML sets forth a provision specific to idle hydroelectric power plants. According to this provision, the right holders of the hydroelectric power plants; which generated electricity before the previous Electricity Market Law No: 4628⁸ ("Previous Law") entered into force, and later on, stopped their activities or could not connect to the distribution system, may sign a water utilization rights agreement with DSI with a fee of TRL 0,01/kilowatt-hour without requiring an announcement by DSI, provided that an application shall be made within six months as of the date the EML entered into force and the application area does not coincide with already existing projects.

Conclusion

As reviewed within this article, there are very few provisions in the EML specific to renewable energy resources. Mostly, those provisions regulate either very general issues or temporary issues. Detailed rules have been regulated with secondary legislation and there is more than one regulation setting forth the applicable provisions on generation of electricity based on renewable energy resources.

The exemption set forth under Article 5 paragraph 2(f) of the EML, related to the activities of several generation facilities based on renewable energy resources under one license, may be considered as a positive development for market progress. In addition, increase of the maximum limit for the activities without requiring a license to 1mW is also a significant revision.

Footnotes

1. Official Gazette 18 May 2005, no. 25819.

2. Official Gazette 30 March 2013, no. 28603.

3. Official Gazette 1 October 2013, no. 28282.

4. Official Gazette 2 October 2013, no. 28783.

5. Official Gazette 2 Novemberr 2013, no. 28809.

6. The abbreviation is for Turkish Electric Transmission Joint Stock Company. It is the only company in Turkey which conducts transmission activities with a transmission licence.

7. The abbreviation is well known and accepted term in Turkish for the General Directorate of State Hydraulic Works.

8. Official Gazette 3 March 2002, nr. Reiterated 24335

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.