Introduction
The global energy transition has made renewable energy sources (solar, wind, geothermal, biomass, etc.) a strategic priority. Since the early 2000s, Turkey has been promoting renewable energy investments by offering special incentives, legal facilitations, and license exemptions. The Law on the Utilization of Renewable Energy Sources for the Purpose of Generating Electrical Energy (Law No. 5346), the Electricity Market Law (Law No. 6446), and related regulations form the legal backbone of these initiatives.
This article will examine state incentives, application processes, licensing procedures, and practical legal steps for renewable energy investments in detail.
1. State Incentives for Renewable Energy Investments
State incentives in renewable energy aim to reduce initial costs and provide long-term price guarantees. The key incentive mechanisms are as follows:
1.1. YEKDEM (Renewable Energy Support Mechanism)
- Purchase Guarantee: Under Article 6 of Law No. 5346, electricity generated from renewable energy plants is purchased at a fixed price by the state.
- Tariffs and Duration: For instance, solar and wind energy receive USD 0.133 per kWh, geothermal energy USD 0.105 per kWh. The support period is generally 10 years, with additional bonuses for local equipment use.
- Application: Investors apply to the Energy Market Regulatory Authority (EPDK) after obtaining a generation license to benefit from YEKDEM.
1.2. Domestic Equipment Incentive
- According to the additional Article 2 of Law No. 5346, an extra incentive of USD 0.4–3.5 cents/kWh is granted if the plant uses domestically produced equipment with a certified origin.
- For example, solar plants using locally manufactured PV modules receive an additional USD 0.8 cents/kWh.
1.3. Investment Incentive Certificates and Tax Exemptions
- Renewable energy projects benefit from general and regional incentive programs provided by the General Directorate of Incentive Implementation and Foreign Investment.
- Exemptions include VAT, customs duties, interest support, and allocation of investment lands.
1.4. Use of Treasury and Forest Lands
- Pursuant to Law No. 6292, Treasury lands can be leased for renewable energy projects with favorable conditions.
- Under Article 17 of the Forest Law, forest lands can also be used for energy projects with discounts and fast-track permits.
2. Legal Application and Licensing Processes
Renewable energy investments are shaped by the licensed and unlicensed production models under the Electricity Market Law (Law No. 6446).
2.1. Unlicensed Electricity Production
- According to Article 14 of Law No. 6446, renewable energy plants with a capacity of up to 5 MW can be established without a license.
- Application Process:
- Submit the project to the local distribution company (EDAŞ).
- Obtain connection approval from TEİAŞ or the relevant distribution company.
- Acquire a no EIA required document or, if applicable, a positive EIA report.
- Complete construction within 2 years after technical approval.
2.2. Licensed Electricity Production
- Projects over 5 MW generally require a license.
- EPDK Licensing:
- A pre-license period (24 months) allows investors to obtain permits (zoning, EIA, expropriation, etc.).
- A production license is then granted for up to 49 years.
- Required Documents:
- Company articles of association (must include energy generation).
- Financial capacity documents.
- Technical project and connection agreements.
- EIA report or exemption.
3. EIA Process and Environmental Permits
- Environmental Impact Assessment (EIA) is a crucial step in renewable energy projects.
- Under the EIA Regulation, solar plants above 1 MW require a no EIA required letter or a full EIA Positive decision for larger projects.
- EIA reports must include environmental impact analyses, flora-fauna studies, and mitigation measures.
4. Project Implementation and Contracts
- Grid Connection Agreements: Must be signed with TEİAŞ or the local distribution company.
- Investment Contracts: EPC (Engineering, Procurement, and Construction) contracts, O&M (Operation & Maintenance) contracts, and local equipment supply agreements require careful legal drafting.
- Power Purchase Agreements (PPA): Besides YEKDEM, bilateral agreements with private buyers should address termination conditions, penalties, and financial guarantees.
5. Common Legal Challenges in Practice
- Grid Capacity Limitations: TEİAŞ capacity restrictions often lead to rejected applications.
- Zoning Changes: Solar projects on agricultural land require approval from the Ministry of Agriculture.
- Expropriation Issues: Transmission line routes may involve expropriation lawsuits.
- Judicial Challenges: Environmental lawsuits or cancellation actions may delay projects.
6. Practical Recommendations
- Legal Due Diligence: A detailed review of land titles, zoning status, and regulatory requirements should be conducted before investment.
- Financial Structuring: YEKDEM tariffs and investment incentives serve as strong collateral for bank financing.
- Expert Legal Support: An energy law attorney should be consulted for license applications, EIA procedures, and EPC agreements.
Conclusion
Renewable energy investments in Turkey are highly attractive thanks to state incentives and international funding opportunities. The YEK Law, Electricity Market Law, and EIA Regulation provide a clear legal framework. However, any missteps or incomplete documentation during application processes may lead to project delays or rejections. Therefore, both theoretical knowledge and practical expertise are essential for success.
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