New Regulation on Renewable Energy Resource Areas Entered into Force

The use of renewable energy sources has considerably increased since the Law on Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy (“Renewable Energy Law”) was enacted in 2005, in order to promote utilization of Turkey’s significant renewable energy potential for electricity generation. However, the solar power generation, which has been introduced to the Turkish electricity market rather recently, was limited with a 600 MW total installed capacity for licensees; and the allocation to applicant companies was completed following multiple contests for small capacities constituting 600 MW in total across Turkey. Accordingly, no new generation license application for a solar power plant was possible until the Council of Ministers’ determination of the future limits for the companies wishing to obtain generation licenses based on solar power.

On the other hand, another method envisaged as an alternative to the above mentioned licensing option following contests for small capacities was to designate special areas called “renewable energy resources areas” (“RERAs” or “YEKA” in Turkish) suitable for electricity generation from renewable resources in the state owned lands and to enable the use of these areas by private parties for electricity generation. To that end, the legislation on the Principles and Procedures regarding the Determination, Rating and Protection of the Renewable Energy Resources for the Electricity Energy Generation (“Old Regulation”) had been published in May 2005. However, due to the lack of details regarding its implementation, no RERA was ever designated under such regulation until late 2015 and no RERA usage right (“RERA Usage Right”) could be allocated to date in the two areas published as RERAs (Konya-Karapınar and Niğde-Bor Energy Specialized Industry Zone) in late 2015. On 9 October 2016, the Regulation on Renewable Energy Resource Areas (“RERA Regulation”), which regulates the procedure and implementation of RERAs in more detail, was published in the Official Gazette and abrogated the Old Regulation.

Thus, with the entry into force of the new RERA Regulation, it will be possible to obtain generation licenses for the designated RERAs without having to wait for the Council of Ministers to announce new capacities for the solar generation. Another benefit compared to conventional licensing procedure is that the total installed capacity of a generation license to be issued for RERA is much higher than the capacities allocated by the Council of Ministers. For instance, the installed capacity of 1,000 MW to be allocated to the winner of Karapınar RERA in as single license is twice as big as the sum of the entire capacity allocated to the winners of the solar pre-license contests so far (600 MW in total).

Differently from the Old Regulation, the RERA Regulation enables the privately owned areas to be determined as RERAs in addition to the state owned lands. The RERA Regulation envisages two different methods for the determination of a RERA and sets forth details such as how a RERA usage right would be obtained, how the contest process for the usage of the RERAs by the private parties would be conducted, how the generated electricity would be sold and it requires that locally manufactured products will be used in the generation facility to be built in the RERAs; either through manufacture by the applicant itself or though supply from other local manufacturers, depending on the case.