This year, the Ministry of Energy and Natural Resources ("MENR") and its General Directorate for Renewable Energy implemented a unique procedure for the solar and wind energy resource areas with the Regulation for Renewable Energy Resource Areas ("RERA").
RERA aims to create large-scale (1000MW) renewable energy resource sites in state and treasury owned properties and within privately owned properties in order to use renewable energy resources effectively and efficiently. The investor (the winning consortium) realizes a renewable energy investment of 1000 MWs of installed power, where the state grants, for a certain period, a purchase guarantee for the electricity power produced with the renewable energy resources generated within the scope of the project. The state and the investor also sign a RERA Usage Right Agreement, which enables the state to purchase the generated electricity for a fixed tariff, meaning price escalation is not possible.
Two RERA tenders were recently held and finalized in 2017 and the Minister for Energy and Natural Resources at the same time emphasized that more large-scale renewable energy projects were in the pipeline for the following years.
More large-scale energy investments are on the way for the coming decade
On 13 October 2017, Mr. Berat Albayrak, Minister for Energy and Natural Resources, stated that “the RERA model indicates the great importance that we attribute to renewable energy sources. Through RERA, we will add an additional 20,000 megawatts of electricity to our energy basket in the following 10 years.”
Refik Tiryaki, the Energy Market Regulatory Authority’s Head of Group, stated that, after the success of the RERA tenders, the Energy Market Regulatory Authority is planning to hold tenders for plants with a total capacity of 3,000 MW and 2,000 MW in April 2018.
Are small-scale renewable projects on the way?
In addition to the upcoming large-scale investments, Medium Sized Enterprises (“SMEs”) also showed an interest in applying RERA to small and medium renewable energy investments.
The participation of SMEs is essential for the generation of renewable energy, but the SMEs will not be capable of competing with global corporations as long as the tenders are held under current RERA legislation. The Energy Industry and Businessmen's Association Chairman Hüseyin Vatansever therefore stated that there should be small RERA tenders where SMEs can also participate on a kilowatt basis.
The RERA legislation is intended for large-scale projects and has been designed to monitor grid connections and balance the transmission systems, especially with regards to renewable energy power plants which are not base load power plants. Moreover, RERA also brings with it benefits such as a power purchase guarantee of 15 years and an electricity generation license for a 30 year period. Some legal and technical legislation needs to be put into place in order to provide an efficient framework and so that RERA can be applied to SMEs.
RERA for mining
On a different but a related note, Minister Berat Albayrak stated that there are plans for the RERA model to be implemented for mining. Furthermore, he explained that “our mines are of great importance as an energy source, therefore our Ministry is working on a plan similar to the RERA project for the management of our mines. The factories will be encouraged to use domestic resources in order to avoid economic losses nationwide.”
As the RERA legislation has been designed for renewable energy power plants, the way in which it is applied may need to be modified in order for the legislation to be compatible with the current legal situation. Thus, health and safety legislation need to be fulfilled and a more complex legal framework should be in place in order for RERA techniques to apply to coal mining.
Recent past: RERA tenders held in 2017
On 3 August 2017, a wind energy tender was held for the development of wind farm(s) with a total capacity of 1,000 MWe. A consortium made up of the German company Siemens and the Turkish holdings Türkerler and Kalyon Enerji was the winner of this tender by offering the lowest bid of $3.48 cents per kWh (which is guaranteed by MENR). The consortium will establish a factory, where RERA’s domestic wind turbines are to be produced. They will have a production capacity of at least 150 units and each wind turbine shall produce 400 MWs per year. The tender specifies that the factory must be set up within 21 months of the contract being signed. The specifications also set out that 65 percent of the wind turbines will be produced with domestic resources (local content ratio), which will be supplied and manufactured locally. This will contribute to the direct and indirect development of several industries.
Before the wind energy tender, a tender for a 1000 MW solar energy project was the first application of RERA. The tender was for the construction of a solar farm on Karapınar Energy Specialized Industrial Zone. By offering the lowest bid of 6.99 cents per kWh, the Kalyon-Hanwha Group Consortium (which is guaranteed by MENR) won the bid on 20 March 2017.