An Electricity Supply and Sales Agreement is the key commercial instrument through which electricity is supplied to industrial facilities, commercial consumers, or portfolio buyers. In Turkey, electricity trading operates within a regulated market structure, yet the contractual relationship itself remains fundamentally a private-law arrangement. This dual nature means the agreement must be drafted to achieve two objectives at once: enforceable commercial certainty between the parties and operational compatibility with market and licensing rules.
Regulatory context that shapes the contract
Electricity sales and supply activities are carried out by licensed entities under the Turkish electricity market framework. Accordingly, the contract should clearly state the parties’ regulatory capacities (supplier, eligible consumer, trader, etc.) and include representations and warranties confirming that each party holds the necessary authorisations for its role. It is equally prudent to address how regulatory status changes—such as a loss of eligibility or licence restrictions—affect continuation, pricing, and termination rights.
Delivery point, metering, and reconciliation
Because electricity is settled through measurement rather than physical “hand-over” in the traditional sense, the agreement should define the delivery point with precision: connection point, meter point, and the boundary of balancing responsibility. In addition, the contract should establish a metering and reconciliation protocol: which data source controls, when data becomes final, how corrections are applied, and whether audit rights exist. Many disputes arise from ambiguous reconciliation rules rather than from deliberate non-payment.
Pricing structures and indexation
Pricing clauses must be drafted with mathematical clarity. Common models include fixed price, index-linked price, and market-referenced price formulas. If an index or market reference is used, the agreement should specify the reference source, timing (hour/day/month), currency conversion method, rounding rules, and fallback mechanisms if data is unavailable. Without these details, minor interpretive issues can turn into major invoice disputes.
Imbalance and consumption risk allocation
Real-world consumption rarely matches forecasts. Therefore, an Electricity Supply and Sales Agreement should include a shaping or imbalance structure: forecasting obligations, tolerance bands, settlement of deviations, and the allocation of balancing costs. If these rules are incomplete, the supplier may price uncertainty aggressively, while the buyer may contest settlement adjustments—both outcomes reducing predictability.
Credit support and payment security
Continuous supply requires continuous credit management. A bankable agreement typically includes invoicing mechanics, dispute windows, default interest, and security instruments such as a cash deposit, bank guarantee, or parent guarantee. It should also define credit events (late payment patterns, financial distress indicators) and proportional remedies, such as increasing collateral, limiting volumes, or temporary suspension, before full termination.
Force majeure and change in law
Given the regulated environment, change in law provisions are often as important as force majeure. The contract should allocate the economic effect of new taxes, tariff adjustments, and regulatory rule changes. Force majeure should include strict notice and mitigation duties and clarify which obligations are suspended and which continue.
Termination, remedies, and continuity of supply
Termination should be structured as a last resort. The agreement should define events of default, cure periods, suspension rights, and—where commercially justified—early termination payments or liquidated damages. This is particularly important where supply interruption can halt production and create consequential losses.
Dispute resolution and evidence discipline
Electricity disputes are data-heavy. The agreement should standardise evidence: metering logs, reconciliation statements, written notices, and correction records. Clear governing law, language, and jurisdiction/arbitration choices prevent procedural uncertainty.
Conclusion
In Turkey, a well-drafted Electricity Supply and Sales Agreement succeeds when it combines regulatory awareness with contract-law precision. By defining delivery and metering rules, pricing formulas, imbalance settlement, and credit support in a measurable manner, the parties significantly reduce disputes while improving operational continuity and financial predictability.
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