What Is Energy Law and What Does It Cover?

Like in many other nations, energy law in Turkey is a specialist field of law that regulates the production, distribution, and use of renewable energy sources. It includes several legal facets pertaining to energy control, usage, and production. The following are some crucial topics relating Turkish energy law:

Regulatory Framework: The Electricity Market Law, Natural Gas Market Law, Petroleum Market Law, Renewable Energy Law, and several secondary rules and decrees are the main pieces of legislation that regulate Turkey’s energy law. The legal basis for Turkey’s energy industry is established by these laws.

Turkey’s market for energy has been liberalized, allowing the private sector to participate in energy production and delivery. To maintain equal competition and consumer protection, the energy market is supervised and regulated by the Energy Market Regulatory Authority (EMRA).

Energy Resources: Turkish legislation on energy covers a range of energy sources, including lighting, natural gas, oil, coal, and clean energy sources including wind, solar, and hydropower. The policies and methods for the discovery, exploitation, production, and transportation of these resources are described.

Renewable Energy: To diversify the source of its energy and lower greenhouse gas emissions, Turkey has been aggressively pushing renewable energy sources. The Renewable Energy Law offers feed-in tariffs and purchase guarantees as well as other incentives and support measures for renewable energy plants.

Environmental requirements: To guarantee that energy production and usage do not affect the environment, Turkish energy law also includes environmental requirements. This includes environmental impact analyses, pollution restrictions, and adherence to global environmental accords.

Energy law regulates a variety of contracts and agreements in the energy industry, including power purchase agreements (PPAs), contracts for the supply of natural gas, and agreements for the discovery and exploitation of petroleum and natural gas reserves.

Consumer Rights: The Turkish energy legislation includes clauses that safeguard customers’ rights. This covers regulations governing price, billing, service quality, and channels for resolving disputes.

Competition and antitrust: To prohibit monopolistic behaviors and foster equal competition in the energy sector, the legal system also covers competitiveness and antitrust concerns.

Infrastructure creation: Transmission and distribution networks, pipes, and power plants are all included in the creation and maintenance of energy infrastructure, which is covered by energy legislation.

International Treaties: Turkey is permitted to sign international agreements and conventions relating to commerce, environmental protection, and assistance in the energy sector. These agreements could have a legal impact on the nation’s energy industry.

What is the regulatory and legal setup for the selling of renewable energy produced at a utility scale?

To sell, export, import, and trade electricity, private supplier businesses and the publicly traded EÜA are primarily responsible for the provision of utility-scale renewable energy.

For the year 2022, holders of generation licenses are also allowed to sell the power they create to suppliers and end users whose annual usage surpasses 1,100 kWh.  Power producers can sell their energy on a variety of markets.  They have two options for selling their energy: either privately through bilateral contracts or through EPA’s spot markets (day-ahead and/or intraday).  Demand and supply laws govern spot market pricing, but prices for bilateral commerce between vendors and consumers are freely negotiated.

The RES Law offers renewable energy production facilities a YEKDEM, or optional support mechanism.  Participants in YEKDEM get the specified FITs for ten years following commissioning, and they are free to sell the power they produce on the open market.

Turkey has a system for the selling of renewable energy under YEKDEM that is partially FIT and partially feed-in premium.

rates for the FIT: The level of the FIT varies according to the renewable energy source, and the fixed rates are offered for 10 years following commissioning.  Renewables that are installed before June 30, 2021, inclusive, are eligible for the USD-denominated FIT.  While the new YEKDEM mechanism established by the Presidency Decision numbered 3453 applies to renewable energy sources that go into operation between July 1, 2021, and December 31, 2025.

Domestic content premium: If domestically produced equipment is used, the FIT pricing previously mentioned will be raised according to the quantity and kind of domestic equipment.  A period of five years after licensing is the lifespan for domestic premium content.

What is the legal and regulatory framework applicable to distributing/C&I renewable energy?

The License Exemption Regulation establishes the legal and regulatory framework for distributed/C&I renewable energy sources.

Renewable energy projects with a maximum installed capacity of 5 MW (apart from ground-mounted solar programs) and personal consumption projects are exempt from the licensing requirement and may be erected and operated without a generating license.

The incumbent supplier firm may acquire excess energy that producers using the license exemption will be supplying to the grid at FIT pricing for ten years starting from commissioning.  The License Exemption Regulation, however, prohibits the trading of electricity produced by renewable energy projects that share a measuring point for both production and consumption and that fully utilize all generated energy without releasing any of it to the grid.  Prior to May 10, 2019, projects that received the invitation letter are eligible for USD-denominated FIT pricing.  After May 10, 2019, customers who got an invitation letter will be subject to the project’s consumer class retail pricing, as published by EMRA.

Unlicensed generators are no longer allowed to sell all their extra energy to established supply businesses.  The sale price of any excess energy produced and injected into the grid that is greater than the sum of the energy consumed by the associated consumption facilities during the previous year will therefore not be paid to the generator for projects that received a connection invitation letter after May 12, 2019.  The residential subscriber group’s related generation facilities with consumption facilities that have an installed capacity of 50 kW or less are exempt from this selling limitation.

What are the main approvals and licenses needed to build, start up, and run utility-scale renewable energy facilities?

With several exceptions, renewable energy projects with installed capacities more than 5 MW must get a generating (and preliminary) license to be built and operated.  For the entities to start the building of a generation facility, a preliminary license is momentarily made available to them.  Construction of a generation facility cannot begin until a zoning plan has been finalized, the site’s land use rights have been established, and the project has received project approval.

Depending on the kind of renewable energy source and the specifics of the energy facility, requirements could change.

What are the main approvals and licenses needed to build, operate, and commission distributed/C&I renewable energy facilities?

except for ground-mounted solar projects, renewable projects must have an installed capacity of no more than 5 MW, have a single measuring point for generation and consumption, and use all energy produced without releasing any of it to the grid.

The actual output of these facilities is limited to multiple times the contractual power defined in the connection consensus for municipalities, industrial facilities, agricultural irrigation facilities, and other facilities, and microgeneration facilities. Renewable energy sources that have identical or different evaluation point(s) for generation and consumption are also acceptable.

The regulatory body, known as TEİAŞ, assesses and grants requests for connection to the communication and distribution network.  A renewable energy facility must sign an affiliation agreement and a system usage agreement with TEİAŞ.

   What is the legal and regulatory framework which applies to energy storage and specifically the storage of renewable energy?

The EML and its supporting secondary legislation govern the activities related to energy storage.  The Electricity Storage Regulation (“Electricity Storage Regulation”), which went into effect in May 2021, lays out the guidelines for installing electricity storage units or facilities, connecting them to transmission and distribution networks, and using them for market activities.

The Electricity Storage Regulation states that the following types of storage operations are permitted: (i) storage units that are incorporated with generation facilities; (ii) storage facilities that are incorporated with usage facilities; (iii) self-sufficient storage facilities; and (iv) storage facilities that will be established by network operators.

Owners of generating licenses who get funding from YEKDEM or a different source with a purchase guarantee may build storage facilities that are integrated with their generation facilities.  Storage facilities that are linked with consumption facilities may be set up by renewable energy-based, licence-exempted production facilities that use all of the power they produce without adding any to the grid and whose production and consumption are measured at the same place.

  Are there any special requirements or limitations on foreign investors investing in renewable energy projects?

Foreign investors are not subject to any additional conditions or restrictions when funding renewable energy projects.  Private legal enterprises engaged in the electrical market are required by the EML to be incorporated under Turkish law as joint stock or limited liability corporations.  However, there are no restrictions on foreign ownership, and they are allowed to own all shares.  It should be emphasized that the YEKA project tender requirements may specify a minimum ownership requirement for Turkish citizens in the bid organizations.

In connection with it, there are some limitations on how foreign organizations can use land.  Foreign organizations are prohibited from directly acquiring any property in Turkey by the Land Registry legislation number 2644, unless a different legislation specifically allows it.

However, Turkish companies with foreign investors are permitted to buy real estate in Turkey if the property in question is not situated in a military or security zone.