Introduction
Turkey, with its abundant sunlight and increasing focus on renewable energy, offers significant opportunities for entrepreneurs and investors aiming to establish a solar energy company. However, the regulatory landscape is complex, and navigating through the establishment process requires a thorough understanding of both the procedural and legal requirements. This article provides a comprehensive guide to the steps, documentation, legal framework, and challenges associated with founding a solar energy company in Turkey.
1. Regulatory Framework for Solar Energy in Turkey
Turkey’s renewable energy market is primarily regulated by the following statutes:
- Electricity Market Law No. 6446
- Renewable Energy Law No. 5346
- Energy Market Regulatory Authority (EMRA/EPDK) Regulations
- Turkish Commercial Code No. 6102
- Environmental Law No. 2872
The Energy Market Regulatory Authority (EMRA or EPDK) is the main authority overseeing licensing, market entry, and operational compliance for energy companies, including those in the solar sector.
2. Choosing the Company Type
To conduct business in the Turkish solar energy market, a legal entity must be established. The most common forms are:
- Joint Stock Company (A.Ş.)
- Limited Liability Company (LTD. ŞTİ.)
Both types are allowed to apply for electricity generation licenses and can hold land and assets in Turkey. The Joint Stock Company format is generally recommended for larger-scale energy investments due to its suitability for public offerings and easier share transferability.
3. Steps to Establish a Solar Energy Company
a) Preparation and Planning
- Feasibility Study: Assess the potential site for solar energy generation, including radiation data, grid proximity, and environmental impact.
- Business Plan: Prepare a comprehensive business plan, including projected investment, technical specifications, and expected returns.
b) Company Incorporation
The process for incorporating a company in Turkey involves:
- Selecting a Trade Name: The proposed name must be unique and not previously registered.
- Drafting Articles of Association: Must include details about the company’s objectives (clearly stating involvement in solar energy generation), capital, shareholders, and management.
- Notarization: Articles of association and signatures must be notarized.
- Depositing Capital: The minimum capital must be deposited in a Turkish bank account (minimum TL 50,000 for Ltd., TL 250,000 for A.Ş.).
- Registering with the Trade Registry: Application is made to the local Chamber of Commerce.
- Tax Registration: Obtain a tax number and register with the relevant tax office.
- Social Security Registration: For employing staff.
c) Obtaining the Necessary Licenses and Permits
i) Pre-License Application (if required)
For solar power plants over 1 MW, a pre-license is mandatory. The application to EMRA includes:
- Company documentation
- Feasibility study
- Site selection documents
- Proof of financial capacity
- Grid connection opinion from TEİAŞ or relevant distribution company
ii) Environmental Impact Assessment (EIA)
Projects above certain capacity thresholds must undergo EIA as per Environmental Law. The Ministry of Environment reviews the project for ecological impact. A positive EIA report is a precondition for moving forward.
iii) Generation License
Once the pre-license period requirements are met (land acquisition, grid connection agreement, financial closure), the company may apply for a generation license from EMRA. This license is essential to legally produce and sell electricity.
iv) Building and Operational Permits
- Zoning and Construction Permits: Local municipality approval is required for construction.
- Occupancy and Operation Permits: Following construction, operational approval is obtained.
d) Grid Connection and Energy Sales Agreements
After licensing, the company must sign a grid connection agreement with the relevant distribution company or TEİAŞ. The company can then sell generated electricity via:
- Feed-in Tariff Mechanism (YEKDEM)
- Bilateral Power Purchase Agreements (PPAs)
- Spot Market Sales
e) Compliance with Technical and Safety Standards
Solar installations must comply with Turkish and international technical standards. Regular inspections by EMRA and other authorities are mandatory. Occupational health and safety (OHS) rules are strictly enforced during installation and operation.
4. Special Procedures for Small-Scale and Unlicensed Solar Generation
For solar energy facilities below 1 MW (unlicensed generation):
- No pre-license or generation license required, but
- Must apply to the local distribution company for grid connection
- Subject to simplified application and connection procedures
- Generated electricity can be self-consumed or sold at regulated tariffs
This regime has enabled widespread rooftop solar adoption for businesses and households.
5. Foreign Investment and Incentives
Foreign investors can fully own solar energy companies in Turkey. The government offers various incentives, such as:
- Customs duty exemptions on imported equipment
- VAT exemptions
- Investment location support
- Feed-in tariffs (YEKDEM) guaranteed for a fixed term for renewable energy producers
Certain strategic investment certificates may also allow for corporate tax reductions and social security premium support.
6. Legal Risks and Challenges
a) Land Use and Zoning
Land acquisition is a complex issue, especially for utility-scale projects. Using agricultural or forestry land requires additional permits and may involve expropriation risks. Diligent title checks and local legal advice are essential.
b) Licensing Risks
The pre-license and license processes are strict, and incomplete applications are typically rejected. Delays in grid connection or EIA approval may affect project timelines and financing.
c) Regulatory Compliance
Ongoing compliance with energy market regulations, reporting requirements, and technical standards is essential. The EMRA frequently audits licensees and may impose fines for violations.
d) Contractual Disputes
Long-term PPAs and EPC (Engineering, Procurement, and Construction) contracts should be carefully drafted under Turkish law, preferably with arbitration clauses to resolve disputes efficiently.
7. Taxation and Ongoing Obligations
Solar energy companies in Turkey are subject to:
- Corporate income tax (25% as of 2024)
- VAT (generally 20%, but certain equipment may be exempt)
- Annual regulatory fees to EMRA
- Environmental fees for land use
Ongoing obligations include regulatory filings, tax declarations, and compliance with labor law if hiring employees.
8. Termination and Sale of Projects
Project companies can sell their assets or shares, subject to notification to EMRA and other authorities. Foreign investors may repatriate profits, provided tax obligations are fulfilled.
Conclusion
Establishing a solar energy company in Turkey is a multi-layered process involving corporate establishment, licensing, environmental compliance, and adherence to technical and safety standards. While the regulatory framework is investor-friendly and incentives are available, detailed legal due diligence and professional guidance are crucial to mitigate risks and ensure compliance. Turkey’s solar energy sector remains a lucrative and strategically important area for both local and international investors.
INTERN LAW FACULTY STUDENT
YAĞMUR YORULMAZ
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