Regulation of electricity utilities – power generation

Authorisation to construct and operate generation facilities

What authorisations are required to construct and operate generation facilities?

Market participants should obtain a generation licence from the Energy Market Regulatory Authority (EMRA) to construct and operate generation facilities (except for certain generation activities). The Electricity Market Law No. 6446 (EML) introduces a preliminary licence for generation activities. After obtaining the preliminary licence, investors are expected to fulfil certain requirements stated in the preliminary licences such as obtaining the necessary decisions, permits and approvals (eg, environmental impact assessment decisions for most of the application types, technical interaction permits for wind energy applications, approval of zoning plans for preliminary projects) or completing certain transactions such as property acquisition or establishment of usufruct right before applying for a generation licence. A preliminary licence can be given for a maximum period of 36 months.

As per the Electricity Market Licence Regulation of 2 November 2013 (EMLR), in both preliminary licence and licence applications regarding generation activity, applicants have to submit a letter of guarantee to the EMRA for the amount determined based on the resource type by the EMRA for each installed capacity in megawatts. The ceiling for letters of guarantee for preliminary licence applications is determined by the EMRA, provided that it does not exceed 5 per cent of the investment value. The letter of guarantee amounts to be submitted during the licence application will also be determined by the EMRA so as not to exceed 10 per cent of the investment value for generation licence applications.

To obtain a preliminary licence and a generation licence, an applicant must pay licence fees, the amount of which depends on the installed capacity of the generation facility, and must also pay annual licence fees depending on the generated electricity amount after obtaining the licence.

Concerning power plants based on domestic natural resources, the right to use such resources must be obtained. For instance, for hydroelectric power plants, private parties should sign an agreement on the right to use the water with the General Directorate of State Hydraulic Works (SHW) after obtaining the pre-licence from the EMRA. For local mines and geothermal, market participants should sign a resource agreement for the use of the energy resource. Finally, for power plants based on solar and wind power, solar power plant or wind power plant contribution agreements with the Turkish Electricity Transmission Company (TEIAS) should be signed. According to the EML, in licence applications to establish a power plant based on solar or wind power, applicants should submit a measurement of a certain period duly taken within the past eight years in the area where the power plant will be established, and the EMLR regulates the processes and principles for such measurements.

If the landowner where the solar and wind power plant is to be established applies for a licence, no other licence application can be made for the relevant land. If there is more than one licence application for a solar or wind power plant for the same region or the same transformer station or both, the companies wishing to establish a solar or wind power plant must participate in a contest to determine which one of them will connect to the system. The principles and procedures of the contest are regulated by the Regulation on the Contest regarding the Pre-licence Applications for Establishing Power Plants Based on Wind and Solar Power of 13 May 2017 (the Contest Regulation). As per the Contest Regulation, the applicants offer the electricity prices in a way that the highest price to be offered will be the incentivised price determined under the Law on Utilisation of Renewable Energy Resources for the Purpose of Generating Electrical Energy of 18 May 2005 (the Renewable Energy Law) for a period of 10 years. While the Contest Regulation is still in force, as it is structured taking into consideration the application of the incentives, and incentives will no longer be available for new conventional solar and wind pre-licence applications, we understand that the provisions of the Contest Regulation will no longer be applicable, and a new regulation concerning this matter will have to be introduced.

The capacity increase is allowed if the installed capacity is not exceeded and the opinion of TEİAŞ or the opinion of the relevant distribution company is positive. The legal entities holding electricity generation licences based on wind or solar energy that undertake to establish an electricity storage facility from the generation facilities can increase their generation capacity up to the installed capacity of the storage facility that they undertake to establish.

The EML provides that some activities may be conducted as being exempt from the preliminary licence and licence requirements. In line with the EML, the unlicensed generation activity was introduced with the Regulation on the Generation of Unlicensed Electricity in the Electricity Market of 2 October 2013 and the Communiqué on the Generation of Unlicensed Electricity in the Electricity Market of 2 October 2013. The regulation and communiqué were abolished and replaced by a regulation bearing the same name published on 12 May 2019 (the Unlicensed Electricity Regulation). The Unlicensed Electricity Regulation provides licence and company establishment exemptions for the following categories:

  • emergency groups and generation facilities that are not connected to transmission or distribution systems;
  • generation facilities based on renewable energy sources with a maximum installed capacity of 5 megawatts;
  • municipalities’ solid waste facilities and generation facilities established for the disposal of mud from treatment plants;
  • micro-cogeneration facilities (defined by the EML as cogeneration facilities that have a total installed capacity of 100 kilowatts and less);
  • renewable energy generation facilities are limited by the contractual capacity stated in their connection agreement;
  • cogeneration facilities (defined by the EML as facilities that simultaneously generate both heat and electricity) and trigeneration facilities (defined by the EMLR as facilities that electricity generation, heating and cooling processes are carried out simultaneously) that meet the efficiency figures to be determined by the Ministry;
  • renewable generation facilities that consume all the electricity that they generate, without feeding it into the transmission or distribution systems;
  • generation facilities owned by legal entities whose majority share capital is directly or indirectly owned by municipalities to be established on the water conveyance pipelines, sewage transport pipelines and the dams that are used for drinking water that are operated by the municipalities; and
  • generation facilities based on renewable energy sources established and operated by the SHW to meet the electricity needs of the agricultural irrigation facilities subscribed in the name of the SHW, provided that installed capacity is limited with the agreement power of the agricultural irrigation facility stated in the connection agreement or the sum of the agreement powers of the facilities stated in the connection agreement, if there are multiple agricultural irrigation facilities.

 

The Unlicensed Electricity Regulation prohibits share transfers in the companies establishing unlicensed generation facilities based on wind or solar energy with a maximum installed capacity of 5 megawatts before the acceptance of these generation facilities except in certain exceptions, such as foreign indirect share transfers or direct or indirect share changes made in a way that does not create a control change in the partnership structure.

With the Decision of the Energy Market Regulatory Board dated 16 May 2019 and numbered 8587, the information and documents required for unlicensed electricity generation applications are specified. To construct an unlicensed power plant, one should first apply to the relevant network operator (ie, the distribution company authorised in the region where the power plant will be located or TEIAS) with certain documents, such as land usage rights documents, an environmental impact assessment document or a single line diagram, depending on the energy resource.

If the relevant network deems the application sufficient, a call letter to invite the applicant to sign the connection agreement is sent. Upon the issuance of this document, the applicants have 90 days to apply for project approval to the institution authorised by the Ministry of Energy and Natural Resources and have 180 days for obtaining the approval. Investors sign a connection agreement with the network operator within 30 days following the fulfilment of all requirements and submission of all the required documents. However, for an unlicensed power plant to become operational, the system usage agreement should also be signed within one month following the start of commercial activity.

Under the Unlicensed Electricity Regulation, the acceptance of facilities must be made:

  • within three years for hydroelectric power plants connecting to the system from medium-voltage level;
  • within two years for power plants based on sources other than hydroelectric power plants connecting to the system from medium voltage; and
  • within one year for facilities connecting to the distribution system from a low-voltage level.

 

Failure to obtain acceptance within these timescales will result in the termination of the technical interaction permit, connection agreement, allocated capacity, and permits regarding water usage rights, except in cases of force majeure and delays owing to reasons acceptable to the EMRA.

In general, regardless of whether the generation facility is licensed or unlicensed, it must not exceed the limit on its connection agreement. With the new amendment to the Electricity Market Connection and System Usage Regulation, if requested by the Ministry on the grounds of security of supply, electrical energy exceeding the allowed capacity limit may be supplied to the system by the generation facilities for a period to be determined by the Board. In this context, the energy supplied to the system above the agreement power is not considered a power overrun.

Grid connection policies

What are the policies with respect to connection of generation to the transmission grid?

TEIAS has a legal monopoly regarding transmission activities. No other legal entity is allowed to construct and operate transmission networks. TEIAS must ensure that connection to the transmission system, and the system-use demands of real persons or legal entities, are met in a non-discriminatory manner.

According to the Electricity Market Connection and System Usage Regulation of 28 January 2014 (the Connection and System Usage Regulation), if any new transmission plant or transmission lines to connect such a plant to the system are required for the connection of the generation plants to the system and if TEIAS does not have the necessary financing for such an investment, the investment can be made or financed by the company or companies that request connection to the new plant. The ownership and operation responsibility of the facilities or lines built in this context belong to TEIAS. The investment amount regarding the transmission facility is calculated according to the methodology prepared by TEIAS and approved by the EMRA. The investment amount is fixed in Turkish lira and deemed as the system usage fee received in advance and it is subject to set-off with the system usage fee. The user does not pay the system usage fee (excluding value-added tax) until the investment amount is completed. If the total investment amount set off is not completed within five years, the remaining amount is paid to the relevant user in a lump sum at the end of the fifth year.

Alternative energy sources

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

The Renewable Energy Law provides a renewable energy support mechanism that covers different incentives and benefits for renewable energy projects including feed-in tariffs.

Feed-in tariffs (fixed minimum electricity sale prices) for the legal entities holding generation licences that started operations in the period between 18 May 2005 and 30 June 2021depending on the type of renewable energy projects are as follows:

  • Turkish lira equivalent of US$0.073 per kilowatt-hour for hydroelectric power plants;
  • Turkish lira equivalent of US$0.073 per kilowatt-hour for wind power plants;
  • Turkish lira equivalent of US$0.105 per kilowatt-hour for geothermal power plants;
  • Turkish lira equivalent of US$0.133 per kilowatt-hour for biomass power plants; and
  • Turkish lira equivalent of US$0.133 per kilowatt-hour for solar power plants.

 

The above-mentioned feed-in tariffs are applicable for 10 years from the operation date of the first installed capacity inserted in the generation licence if the whole facility entered into operation, and from the date the facility entered into the renewable energy support mechanism (RES mechanism) if it entered into operation partially (for generation facilities based on biomass obtained by processing waste tires, the period starts from the date the facility enters into the RES mechanism in any case and they have to provide the necessary documents regarding environmental permits to EMRA) and in any case until the end of 2030.

According to Presidential Decree No. 3453, feed-in tariffs for the legal entities holding generation licences that start operations between 1 July 2021 and 31 December 2025 depending on the type of renewable energy projects, are as follows:

  • 0.40 Turkish lira per kilowatt-hour for hydroelectric power plants;
  • 0.32 Turkish lira per kilowatt-hour for wind power plants;
  • 0.54 Turkish lira per kilowatt-hour for geothermal power plants;
  • 0.32 Turkish lira per kilowatt-hour for biomass plants based on by-products from waste tyre disposal and landfill gas;
  • 0.54 Turkish lira per kilowatt-hour for biomass power plants based on bio-methanation;
  • 0.50 Turkish lira per kilowatt-hour for biomass power plants based on thermal disposal; and
  • 0.32 Turkish lira per kilowatt-hour for solar power plants.

 

The above-mentioned feed-in tariffs are also applicable for 10 years and will be escalated in January, April, July and October each year according to a formula published in the Presidential Decree subject to certain thresholds.

To benefit from the RES mechanism, legal entities holding renewable energy generation licences and the renewable energy support certificate should apply to the EMRA by the 30 November of the year before they wish to benefit. YEKDEM is operated by the market operator on a calendar year locked-in basis.

Generators included in the RES mechanism remain in the concerned mechanism for the whole year. After the above-mentioned 10-year period provided to renewable energy generation facilities expires, facilities generating renewable energy will not be able to participate in the RES mechanism and will be only able to sell their electricity in the market at the market price or through bilateral agreements just like the other market participants at negotiated prices without benefiting from the incentives.

The Renewable Energy Law also features further incentives as bonus tariffs for licence holders that use locally produced mechanical or electromechanical equipment or both, or components of this kind in renewable energy facility for a five-year term provided that they commence generation activities between 18 May 2005 and 31 December 2020.

The Renewable Energy Law also authorises the President to determine these bonus tariffs (in terms of tariff amount, terms and the eligible energy sources) that will apply for facilities that commence generation after such date. It is also stated that after the mentioned 10-year period, procedures and principles regarding the operation of these power plants will be determined by the President. With the Presidential Decision of 18 September 2020, renewable generation facilities that started their operations between 1 January 2021 and 30 June 2021 will also be able to benefit from the bonus tariffs provided in the Renewable Energy Law for locally manufactured components used in these generation facilities for five years. Such bonus tariffs differ according to the type of renewable energy and the component manufactured from US$0.004 to US$0.035 per kilowatt-hour. The Regulation on the Support of the Local Components of 28 May 2021 (the Local Manufacture Regulation) stipulates the principles, standards and certification processes regarding locally manufactured mechanical and electromechanical components. The components used in the construction of the power plant and the parts that constitute these components and the percentage of each part in these components are outlined in the Local Manufacture Regulation. The Local Manufacture Regulation provides that the bonus tariffs shall apply in proportion to the percentage of each locally manufactured part in the components, provided that the locally manufactured parts constitute at least 55 per cent of the relevant components. According to Presidential Decree No. 3453 dated 30 January 2021, the bonus tariffs for the renewable energy facilities that will start their operations between 1 July 2021 and 31 December 2025 will benefit from a bonus tariff of 0.8 Turkish lira per kilowatt-hour regardless of the type of renewable energy project.

EMRA made an amendment to the Unlicensed Electricity Regulation aiming to balance the generation and the consumption amount concerning the surplus energy from the generated electricity from the unlicensed facilities. With the most recent developments in the electricity market, the amount of generated electricity exceeding the consumption will be considered a free contribution made by the unlicensed electricity facility to the YEKDEM system.

The EML permits capacity increases, modernisation, renewal investments and modifications under certain circumstances. On the other hand, if generation facilities based on renewable sources obtain approval for a capacity increase from the EMRA after 28 February 2019, the increased capacity will not be able to benefit from the incentives. Accordingly, the formula to calculate the RES Mechanism fee to apply has also been amended to reflect this change (by applying the ratio of the old installed capacity to the new install capacity to the generation amount).

To designate larger-scale special areas called renewable energy resources areas (RERAs), where electricity may be efficiently generated from renewable energy resources in the state-owned lands, and to enable the use of these areas by private parties for electricity generation from renewable resources in the EML under the Regulation on Renewable Energy Resource Areas (the RERA Regulation) of 9 October 2016. Currently, apart from larger-scale RERAs, RERA contests for small-scale areas are being held as well.

As opposed to the small capacities allocated for each generator in a conventional licence-obtaining process, under the RERA Regulation, high installed capacities can be allocated to one generator by granting a right of usage of the RERA (the RERA Usage Right). While the RERA Regulation sets forth two different methods for the designation of the RERAs, in both methods, the RERA Usage Right is granted through a contest, the procedures of which are regulated in the RERA Regulation. Different from the conventional licence-obtaining process, the RERA Regulation requires the use of locally manufactured components in the generation facility to be established in the RERA. The applicants of such contests will either be required to manufacture the components themselves in Turkey, in their own factory, or undertake to use components locally manufactured by third parties or both, depending on the specific requirements outlined in the specifications regarding the relevant RERA Usage Right. In cases where the RERA Usage Right-holder will be required to locally produce the components, it will also be required to perform research and development activities under the requirements to be stipulated under the specifications. As applicable to both methods, as per the RERA Regulation, the highest electricity purchase price that may be offered during the contest will be outlined in the specifications of each contest, taking into consideration the feed-in tariffs set forth for the generators subject to the RES mechanism in the renewable energy legislation. The winner and the purchase price of the electricity will be determined during the contest as the bidder offering the lowest price.

Unlicensed renewable energy generators are also directly subject to the RES mechanism for their electricity exceeding their consumption amount automatically without opting into the RES mechanism. As per the Decree dated 21 June 2018 amended by the Presidential Decree No. 1044 dated 10 May 2019, certain unlicensed generation facilities such as rooftop and façade solar renewable energy-based generation facilities up to 10 kilowatts installed capacity established for commercial, industrial, and lighting subscribers at the same measurement point with the consumption facility under the Unlicensed Electricity Regulation are subject to a price guarantee different than the feed-in tariffs, provided that these facilities obtained their right to call letter after entry into force of the relevant Decrees. With decision number 10832 of EMRA, installed capacity was increased to 25kW for the generation facilities based on solar system for residential usage. The surplus electricity will be purchased by the relevant authorised supply companies from the tariffs for 10 years from the start of electricity generation in such facility. However, while the licence holders may continue selling their electricity freely after the expiry of such 10 years, an unlicensed generator will not be able to sell the electricity it generates through the system and only continues to use it for its own consumption. With the Local Manufacture Regulation and the amendment in the Unlicensed Electricity Regulation in line, unlicensed facilities cannot benefit from bonus tariffs applied to the use of locally manufactured components.

Also with the amendments to the tax law, the revenues of the renewable source generation facility to be established up to 25 kW power will be tax-free if used for residential purposes.

Under the regime set forth with the RERA Regulation, on the other hand, the electricity that will be generated by the generation facility will be subject to a purchase guarantee under the RES mechanism at the price stated in the RERA Usage Right agreement (that will be signed by the Ministry and the winner), which is determined as per the contest results. The company obtaining the RERA Usage Right under a contest will not have an option to opt in or opt out of the RES mechanism. The purchase period will start from the date of execution of the RERA Usage Right agreement (not from the date of the licence issuance) and after the expiry of this period, the licensee may sell its electricity in the market with its generation licence.

Another incentive granted to renewable energy facilities regarding the use of state properties. If any state property is used for generating electricity from renewable resources or mines and minerals, the Ministry of Environment and Forestry or the Ministry of Finance shall permit the use of such properties concerning the facility and access ways and energy transmission grids up to the connection point of the grid in return for a fee. This permission may be in the form of permits, leases, rights of easement or rights of usage. For facilities that start operating before 31 December 2025, for access ways and energy transmission grids up to the connection point, a discount of 85 per cent shall be applied to the fees for permission, lease, right of easement and right of usage for the first 10 years of their investment and operation periods starting from the permit date. Additionally, with Presidential Decree no: 5209, a new incentive was granted for unlicensed solar power plants providing some exemptions, such as:

  • VAT exemption;
  • Customs Duty Exemption; and
  • if the Investment Contribution Rate is 30 per cent outside the Organized Industrial Zones (OIZ), 40 per cent is deducted from the corporate tax to be paid, and the portion exceeding 70 per cent is reduced from tax to be transferred to the following years.

 

Insurance Premium Employer's share support will be applied for seven years inside the OIZ and six years outside the OIZ. According to the EMLR, the legal entities applying for a pre-licence and licence for the generation facilities based on domestic natural resources and renewable energy resources shall only pay 10 per cent of the total pre-licensing and licence-obtaining fees. Generation facilities based on renewable and domestic energy resources shall not pay annual licence fees for the first eight years following the first provisional acceptance date of the power plant.

Also, TEIAS and distribution licensees must give priority to the system connection of generation facilities based on domestic natural resources and renewable resources.

Combined electricity generation facility, combined renewable electricity generation facility, supportive sourced electricity generation facility and joint-fired electricity generation facility concepts and related new provisions regulating and permitting the establishment of auxiliary generation units from another source in addition to the main generation power plant were also recently introduced in the Electricity Market Licence Regulation. While a ‘combined electricity generation facility’ is defined as a single facility established to generate electricity from multiple energy resources connected to the grid from the same connection point, a ‘combined renewable electricity generation facility’ is defined as a single facility established to generate electricity totally from multiple renewable energy resources connected to the grid from the same connection point. A ‘supportive sourced electricity generation facility’ is defined as a single electricity generation facility also benefiting from another energy resource in the thermal conversion process. Finally, a ‘joint-fired electricity generation facility’ is defined as a single electricity generation facility where a renewable auxiliary resource is fired in addition to the main resource, which is not a renewable energy resource. All these facilities are together referred to as ‘electricity generation facilities based on multiple resources’. As per the Licence Regulation, the auxiliary resource in the generation power plant cannot be transformed into the main source in the combined renewable electricity generation facility and combined electricity generation facility. The pre-licence application procedures for the auxiliary source in these two facilities are conducted under the same provisions of obtaining a conventional licence, except for the contest applied in the pre-licence application. The amount for obtaining a licence and the security amounts to be provided by the applicants of combined generation facilities are calculated by taking into consideration the sum of the installed capacities of the main source and the auxiliary source.

In line with these insertions in the Licence Regulation, certain amendments were also made in the Regulation on the Documentation and Support of the Renewable Energy Resources on the same date. Under this legislation, if generation facilities that are within the scope of the renewable energy support mechanism (RES Mechanism) are transformed into a supportive sourced electricity generation facility or combined renewable electricity generation facility using solely renewable resources, there will be no change in the period that the facility will benefit from the RES Mechanism. If all the resources used in a supportive sourced electricity generation facility are renewable, then this facility will be subject to the feed-in tariff applied to the main resource for the period remaining for the unit subject to the main resource. The same legislation also stipulates that the energy amount that is generated in a combined renewable electricity generation facility will be within the scope of the RES Mechanism at the lowest of the feed-in tariff prices determined for the renewable energy resources used in such a facility for the remaining period that the facility may participate to the RES Mechanism. The Regulation does not provide a new provision setting forth benefits for the RES Mechanism for a combined electricity generation facility where only the supportive resource is renewable.

Climate change

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

Government energy policy promotes renewable energy resources to tackle climate change. The government is also promoting energy efficiency to decrease the amount of power that is consumed. Turkey signed the Kyoto Protocol in February 2009; however, it is not listed in Annex B of the Protocol. Turkey signed the Paris agreement opened to the signature at the United Nations Climate Change Conference (COP 21) on 22 April 2016 and ratified the agreement on 11 October 2021. Turkey is now expected to update its commitments under the Paris Agreement. 

Also, after ratifying the agreement, Turkey declared that it is preparing a regulation regarding Climate Change under the terms of the Paris Agreement.

Storage

Does the regulatory framework support electricity storage including research and development of storage solutions?

Electricity storage

Electricity storage-related secondary legislation has been entered into force in May 2021. Electricity storage legislation’s scope excludes pumped hydroelectricity power plants and uninterruptible power supplies. The electricity storage facility is defined in the relevant regulation as ‘a facility that could store electrical energy and transmit the stored energy to the system’. The relevant regulation differentiates the storage facilities as:

  • storage facilities that may be established by grid operators (transmission system operators) and distribution system operators);
  • stand-alone storage facilities;
  • storage facilities integrated into generation facilities; and
  • storage facilities integrated into consumption facilities.

 

A separate licence for the storage facility is not needed as the storage facility can be established through an existing licence by the amendment. For the amendment for a storage facility, there are not any capital requirements or guarantee obligations. A positive opinion by the Ministry of Energy and Natural Sources regarding the environmental impact assessment is required.

However, TEIAS’s opinion on whether the storage unit complies with the technical criteria is necessary in all cases.

Government policy

Does government policy encourage or discourage development of new nuclear power plants? How?

To promote private sector nuclear energy investments, the Nuclear Energy Law, the first such law in Turkey, was published on 21 November 2007 as a legislative proposal and the Nuclear Energy Law was published on 8 March 2022 to try to cover the developments on the Nuclear Energy sector.

The purpose of the law is to stipulate the procedures and principles regarding the commissioning and operation of nuclear power plants for electrical energy production and energy sale under energy planning and policies.

The Turkish Atomic Energy Authority and the EMRA have published the vast majority of legislative documents and criteria regarding nuclear safety, licensing, reactor types, power plant lifetimes, proven technology, fuel technology, localisation, operational records and electrical power. In 2018, a regulatory authority, namely the Nuclear Regulatory Authority (NRA) was established and regulatory authorities of the Turkish Atomic Energy Authority have been transferred to the NRA.

The Turkish government promotes nuclear power plants. Currently, there are three nuclear power projects either in the process of realisation or being considered to be realised. One of those is the Akkuyu Power Plant, which is currently being built by one of the subsidiaries of Rosatom State Atomic Energy Corporation, Akkuyu NPP Joint Stock Company. The installed capacity of the Akkuyu Power Plant is expected to be 4,800 megawatts. 

An agreement on cooperation concerning the construction and operation of the second nuclear power plant in Sinop was signed on 3 May 2013 between Japan and Turkey. Turkey’s second nuclear power plant, which was envisaged to come into operation by 2025 and expected to have an installed capacity of approximately 4,400 megawatts, would be built at Sinop by a Japanese-French consortium; nevertheless, the project is, at the time of writing, at a standstill.

A third nuclear power plant is also expected to be built; however, its location has yet to be determined. In November 2014, an agreement was signed to begin exclusive negotiations to develop and construct a four-unit nuclear power plant between the Turkish Electricity Generation Company, Westinghouse Electric Company and China’s State Nuclear Power Technology Corporation; however, at the time of writing, the details of this project remain uncertain.

Regulation of electricity utilities – transmission

Authorisations to construct and operate transmission networks

What authorisations are required to construct and operate transmission networks?

The Turkish Electricity Transmission Company (TEIAS) has a legal monopoly on transmission activities. No other legal entity is allowed to construct and operate transmission networks. TEIAS also obtains a transmission licence from the Energy Market Regulatory Authority (EMRA) to conduct transmission activities. The transmission licence can be issued for a maximum of 49 years and a minimum of 10 years at a time.

Eligibility to obtain transmission services

Who is eligible to obtain transmission services and what requirements must be met to obtain access?

Legal entities engaged in generation activities, distribution companies and organised industrial zone distribution licence-holding companies, electricity storage facilities, unlicensed generation facilities and the consumers meeting the certain requirements stipulated in the concerned legislation (such as owning a consumption facility with a capacity of 50 megawatts or more, or, although having a capacity less than 50 megawatts, following the distribution company’s admission of its inability to meet the electricity demands of such a facility), may request access to the transmission grid.

  • connection and system usage requests of real or legal persons to the transmission and distribution system are met by TEIAS and the distribution company without any discrimination between equal parties. No negative opinion can be given about the connection of real or legal persons to the transmission or distribution systems operated by TEIAS or the distribution company, and the use of the system, except for the situations listed below. The technical features of the network at the required connection point are insufficient;
  • the standards concerning system connection, the condition of the facility to be connected to the system and the technical standards indicated in the relevant regulations have not been met;
  • TEIAS justifies that the intended connection would constitute an obstacle to public service obligations;
  • the values, such as the voltage drop, harmonic, electromagnetic interference, or flicker level at the entrance or exit point to the network and at the transmission and distribution stages, do not meet the limits specified in the relevant regulations;
  • the facility for which the connection is to be made makes the quality of the electrical energy of the system not within the standards specified in the relevant regulations; or
  • a connection point, which is more economical and provides fewer losses in power compared with the connection point applied to, is available in the case of applications for connection of wind or solar power generation facilities.

 

If TEIAS is of a negative opinion concerning the connection to the system and system use, it should justify such an opinion and such an opinion should also be approved by the EMRA. If the reasons for such an opinion are not deemed appropriate by the EMRA, TEIAS would be obliged to sign the related connection and system use agreements.

If multiple applicants wish to connect to the transmission system from the same connection point and it is not possible for the transmission system to meet all the applications, the following company types will have priority as set out in the following:

  • for consumption facilities:
    • the distribution companies; and
    •  organised industrial zone distribution licence-holding companies;
  • for generation facilities:
    • companies generating electricity based on domestic coal; and
    • companies generating electricity based on renewable energy.

 

Transmission system users shall sign connection and use-of-system agreements with TEIAS.

Government transmission policy

Are there any government measures to encourage or otherwise require the expansion of the transmission grid?

With a legal monopoly over the transmission grid, TEIAS is responsible for the grid’s expansion. According to the Electricity Grid Regulation of 28 May 2014 (the Grid Regulation), TEIAS prepares the 20-year statement report regarding the transmission system (long-term report).

Such a long-term report includes items such as investment plans regarding the transmission system and potential supply possibilities. In addition to the long-term report, TEIAS is also responsible for preparing and publishing a short-term (ie, one-year term) electricity energy supply and demand projection report for the following year with the participation of all the authorities and institutions and the cooperation of the Ministry of Energy and Natural Resources.

Enabling generation companies to finance and make investments for new transmission lines required for the connection of the generation facilities to the system when TEIAS does not have the necessary financing under the repayment plan regulated in the Electricity Market Connection and System Usage Regulation of 28 January 2014 (Connection and System Use Regulation) may also be interpreted as an encouragement for the expansion and improvement of the transmission grid.

Rates and terms for transmission services

Who determines the rates and terms for the provision of transmission services and what legal standard does that entity apply?

The transmission service is subject to regulated tariffs consisting of fees required to be collected for the performance of the transmission system usage activity by TEIAS. The transmission tariff includes the transmission system usage price, transmission system operation price (market operation included) and other fees that may occur under the legislation. Transmission system usage and operation tariffs are prepared and proposed by TEIAS.

TEIAS prepares the transmission tariff proposal and then submits it to the EMRA for approval. The tariff becomes effective for the tariff period once approved by the EMRA. TEIAS is obliged to announce its approved tariffs.

Entities responsible for grid reliability

Which entities are responsible for the reliability of the transmission grid and what are their powers and responsibilities?

The EMRA is responsible for preparing regulations for connection and reliability of the transmission grid, such as the Grid Regulation and the Electricity Market Connection and System Usage Regulation published in the Official Gazette, dated 28 January 2014, No. 28896. These regulations outline the technical and other standards to be met for the transmission system and also for connection to the transmission network.

According to these regulations, the general responsibility for assuring transmission grid reliability lies with TEIAS. TEIAS is obliged to meet the demands of third parties for connection to the transmission network and system use on a non-discriminatory basis and between equal parties. TEIAS is entitled to take necessary measures and actions in the case of any threat to the reliability and safety of the transmission grid. It is also responsible for the planning and development of the transmission system.