The Law Amending the Electricity Market Law and Other Laws No: 6719 (“Amending Law”) has been published in the Official Gazette, dated 17/06/2016.
The Amending Law has made extensive amendments regarding the generation of electricity through renewable energy and local coal resources under (i) the Electricity Market Law No: 6446 (“Electricity Market Law”) and (ii) the Law on the Utilisation of Renewable Energy Resources for the Purpose of Electricity Generation No: 5346 (“RES Law”). These amendments mainly provide new incentives to generate electricity from renewable energy and local coal resources and can be summarised as follows:
- The definition of biomass under the RES Law has been extended so as to allow the generation of electricity from municipal waste, derivatives of processed rubber waste by-products and industrial waste mud and sewage mud, provided that none of the wastes are imported.
- In accordance with provisions newly added to the Electricity Market Law, it will be possible for certain areas to be designated as renewable energy resource sites by the Ministry of Energy and Natural Resources (“Ministry”). With respect to these sites:
- If they are on private property then accelerated expropriation, which is a shorter expropriation procedure, shall be applied for investment or generation licence applications, in accordance with the Expropriation Law No: 2942.
- Zoning plans affecting the productivity and utilisation of these areas as renewable energy resource sites cannot be issued.
- The equipment that is used in the generation facilities to be established on these sites must be locally manufactured.
- The measurement data which is usually required when acquiring preliminary licenses for wind and solar energy plants shall not be required for those generation facilities which are to be established on these sites.
- The tender for the system connection shall, for those facilities to be established on each renewable energy resource site, be capped to the sum of the prices calculated according to Annexes (I) and (II) of the RES Law.
Other details such as the designation of renewable energy sites, the requirements for the legal entities which will use these sites, the issuance of connection evaluations by the Turkish Electricity Transmission Corporation and the allocation of capacity will be governed by a regulation to be issued by the Ministry.
- Under the amendment to the Electricity Market Law made by the Amending Law, the standard period of measurement data (i.e. 12 continuous months within a period of 3 years) to be provided when making the preliminary application for a licence to establish a wind and solar energy plant has been repealed and the total measurement period of 3 years has been increased to 5 years without referring to the above mentioned period of 12 continuous months. The further standards of measurement for preliminary licence applications will be determined by a new regulation.
- The Amending Law has made changes to the conditions of competition which are in place when two or more legal entities applying for preliminary licenses to wind and solar plants wish to link up to the same connection plant: A cap has now been set for bidding prices (these amounts are set forth under Annex I of the RES Law) and the period during which these prices may be passed on to consumers has been extended from 3 to 10 years.
- A new privatisation procedure has been determined for publicly owned (i.e. owned by Elektrik Üretim A.Ş (“EUAS”) or its affiliates) generation facilities, based on the renewable energy or local coal resources available and in accordance with the provision added to the Electricity Market Law. Under this procedure, the shares or assets of these facilities shall not be valuated and the procedures for negotiated tenders shall apply. The tender will be conducted through the reduction of the initial sales price for the electricity to be generated by the facility. At the end of the tender, an electricity sales agreement will be concluded between the tender winner and EUAS or the Turkish Electricity Trade and Contracting Corporation (TETAS), at the tender price.
- As a final note, Provisional Article 8 of the Electricity Market Law was cancelled by the Constitutional Court on 24/06/2015. This Article postponed the requirement that privatised generation facilities comply with environmental laws and regulations. The Amending Law has reinstated this provision and given privatised generation facilities a longer period in which to comply with the requirements and regulations of environmental law (i.e. by 31/12/2019, instead of by 31/12/2018). At the moment, it is not possible to assess how the Constitutional Court will approach to this new article.