Geothermal energy investment in Turkey has become a significant opportunity for foreign investors who are looking to enter the renewable energy market with projects that offer both sustainability and profitability. Turkey ranks among the top countries in Europe for geothermal resources, with more than 1,500 MW of installed capacity and vast untapped potential, especially in the Aegean, Central Anatolia, and Eastern Anatolia regions. Supported by government incentives, favorable licensing conditions, and a stable legal framework, geothermal energy projects can provide long-term revenue and environmental benefits.
1. Why Geothermal Energy Investment in Turkey is Attractive
Turkey’s geothermal potential stems from its unique geological position on the Alpine-Himalayan tectonic belt. High-temperature geothermal fields are abundant, making them suitable for electricity generation, while medium and low-temperature resources can be used for heating, agriculture, and industrial processes.
For foreign investors, geothermal energy investment in Turkey offers:
- Consistent baseload power generation (unlike solar and wind, geothermal is not weather-dependent).
- Access to government-backed incentives such as YEKDEM (Renewable Energy Support Mechanism).
- Opportunities in both electricity generation and direct-use applications.
- A clear regulatory framework through the Energy Market Regulatory Authority (EPDK) and the General Directorate of Mining and Petroleum Affairs (MAPEG).
2. Legal Framework and Key Authorities
Geothermal projects in Turkey are regulated by multiple institutions:
- Energy Market Regulatory Authority (EPDK) – issues generation licenses and regulates market operations.
- General Directorate of Mining and Petroleum Affairs (MAPEG) – grants exploration and operation licenses for geothermal fields.
- Ministry of Environment, Urbanization and Climate Change – manages environmental compliance and approvals.
- Local municipalities – handle zoning and construction permits.
The primary legislation includes:
- Law No. 5686 on Geothermal Resources and Natural Mineral Waters.
- Electricity Market Law No. 6446.
- Law No. 5346 on Renewable Energy Sources.
3. Pre-Investment Stage: Exploration and Feasibility
A successful geothermal energy investment in Turkey begins with obtaining an exploration license from MAPEG. This allows investors to conduct geological, geophysical, and geochemical surveys, as well as test drilling to assess resource capacity.
Steps include:
- Identify Potential Sites – Focus on regions with proven geothermal fields and existing infrastructure.
- Apply for Exploration License – Typically granted for 3 years, extendable in some cases.
- Conduct Feasibility Studies – Evaluate resource temperature, flow rate, and chemical composition to determine commercial viability.
4. Licensing and Permits
Once a viable resource is confirmed:
- Operation License: Required for the production phase, granted by MAPEG.
- EPDK Generation License: For electricity generation projects above certain capacity thresholds, a generation license from EPDK is necessary.
- Unlicensed Generation: Smaller-scale projects may operate without an EPDK license but still require connection approval and technical compliance.
These licenses often run for up to 49 years, offering long-term operational stability for geothermal energy investment in Turkey.
5. Environmental Compliance
Environmental considerations are critical:
- Environmental Impact Assessment (EIA): Large-scale geothermal plants require an EIA Positive Decision, while smaller projects may obtain an EIA Not Required Certificate.
- Water Use and Discharge Permits: Necessary to manage reinjection of geothermal fluids and protect local water resources.
- Land Use Approvals: For projects located in agricultural or forestry areas, additional permissions are required from relevant ministries.
6. Grid Connection and System Use
For electricity generation, a grid connection agreement must be signed with TEİAŞ or the local distribution company. This defines:
- Connection point and capacity.
- Technical requirements for integration.
- Timelines for connecting the geothermal plant to the national grid.
7. Construction, Installation, and Commissioning
After securing licenses and approvals:
- Drilling of production and reinjection wells begins.
- Installation of steam turbines, generators, and heat exchangers follows.
- Compliance with international engineering and safety standards is mandatory.
- Pre-commissioning tests are carried out before commercial operation.
8. Commercial Operation and Energy Sales
Investors can choose between:
- Selling electricity on the free market.
- Participating in the YEKDEM program, which offers fixed purchase prices for geothermal energy and additional incentives for using locally manufactured equipment.
Geothermal energy investment in Turkey benefits from YEKDEM’s stability, making revenue streams more predictable.
9. Incentives for Foreign Investors
Investment Incentive Certificate
Provided by the Ministry of Industry and Technology, this offers:
- VAT and customs duty exemptions.
- Corporate tax reductions.
- Interest rate support.
Double Taxation Agreements
Turkey’s treaties with numerous countries prevent double taxation on profits, allowing efficient profit repatriation.
10. Legal Considerations and Risk Management
- Ensure all contracts comply with Turkish geothermal and energy laws.
- Perform thorough due diligence on land rights and resource ownership.
- Secure experienced legal and technical consultants to navigate the licensing process.
- Address environmental and community engagement issues early to avoid delays.
11. Conclusion
Geothermal energy investment in Turkey provides foreign investors with a combination of high potential, consistent output, and strong state support. By following the correct legal pathway—exploration, feasibility, licensing, environmental compliance, construction, and commercial operation—investors can achieve long-term, stable returns while contributing to Turkey’s renewable energy transformation
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