A. What is a “renewable energy resource area”?
The concept of RERAs was introduced in 2005 by the Law on the Use of Renewable Energy Resources for the Generation of Electrical Energy No. 5346 (the “Renewable Energy Law”) with an aim to identify the feasible areas for renewable energy generation. The RERAs are not confined under the legislation to certain renewable resources; however, the relevant developments and declarations signal that the main target of the Turkish government is to maximize the benefits of solar and wind power by RERAs.
B. Licensed or license-exempt?
The power plants to be established in the RERAs are subject to the licensing requirements in accordance with the Electricity Market Law No. 6446 and Electricity Market Licensing Regulation . Renewable Energy Resource Areas Regulation (the “RERA Regulation”), which has recently become effective, clearly states preliminary-license and generation license must be received to perform generation activities in RERAs.
C. How to invest?
The allocation of a project site located in a RERA to an investor will be made in accordance with the competition procedure to be determined by the relevant regulations. RERA Regulation provides the competition principles and procedures of RERAs.
D. Is there any existing RERA?
The Ministry of Science, Industry and Technology and the Ministry of Energy and Natural Resources (the “Ministry of Energy”) executed the Cooperation Protocol Concerning the Area Allocation for the Investors at Karapınar Energy Specialized Industry Region on 7 May 2015 (the “Protocol”). The Protocol has not been shared with the public; however, according to the press news, it provides the establishment of two specialized industry regions as RERAs in Karapınar province of Konya. The first one, which is Karapınar Energy Specialized Industry Region Part I with an area of 27,186,031 m2 (“Karapınar Part I”), has been declared as a RERA in accordance with the announcement of the Ministry of Energy published in the Official Gazette on 9 September 2015. The second one is Karapınar Energy Specialized Industry Region Part II with an area of 32,400,845 m2 (“Karapınar Part II”) but this area has not been declared as a RERA yet. The total capacity of these RERAs is expected to be 3,000 MW as 1,400 MW for Karapınar I and 1,600 MW for Karapınar II.
II. New Incentives for RERAs
The renewable energy based power plants on the RERAs can benefit from all incentives provided for the renewable energy based power plants. However, the recent amendments introduced by Law No. 6719 Amending the Electricity Market Law and Certain Other Laws (the “Amending Law”) to the Electricity Market Law on 4 June 2016 provided additional incentives to the power plants to be constructed in RERAs as follows:
• for such power plants, a separate domestic equipment usage threshold will be determined under a regulation to be issued by the Ministry, which is expected to facilitate the use of domestic equipment incentive by such power plants;
• prior to the Amending Law, in practice, the transmission lines required for the connection of renewable energy based power plants to transformers were constructed by the generation companies and the cost of construction was reimbursed by Türkiye Elektrik İletim Anonim Şirketi (“TEİAŞ”), the state-owned electricity transmission company. The Amending Law provides that these lines will be constructed by TEİAŞ itself prior to the date of operation of the relevant power plant;
• the Amending Law provides that measurement data will no longer be required with regard to power plants to be constructed on renewable energy resource areas.
III. RERA Regulation
RERA Regulation became effective on 9 October 2016 and its main features can be summarized as follows:
• The RERA Regulation provides a “full picture” in respect of RERAs, namely(i) determination of potential RERAs; (ii) feasibility and infrastructure studies in respect of RERAs, (iii) publication of final RERAs in the Official Gazette, and ex officio registration of RERAs in the relevant zoning plans; (iv) pre-requisites and procedures for the applicants that wish to invest in these RERAs, (v) competition procedures where there are multiple applications for a RERA; and (vi) the requirements that the investors of the RERAs should comply with during the preliminary license as well as the generation license stages.
• Reiterating the requirement introduced with the recent amendments to the Electricity Market Law, the RERA Regulation provides a minimum requirement for domestic equipment usage in the generation facilities to be established in RERAs. The RERA Regulation refers to the Communiqué on Domestic Products for the definition of domestic equipment and stipulates that the type and percentage of the domestic equipment to be used in the facility will be provided in the announcement to be made by the Ministry of Energy regarding the capacity allocation on RERAs.
• The recent amendments introduced to the Electricity Market Law stipulates that privately owned lands can be subject to expedited expropriation procedures, if such lands are determined as RERAs. In parallel, the RERA Regulation recognizes that the RERA studies can be conducted on privately owned lands.
• Based on the lowest bid submitted per kilowatt, the RERA Regulation stipulates specific rules pertaining to the competition procedures regarding the RERAs. This competition procedure is in parallel to the recent relevant amendments introduced by the Amending Law.
IV. What is Next?
The competition for Karapınar Part I, is expected to be announced in November 2016. The effectiveness of the RERA Regulation was a pre-condition for mentioned competition since there was no regulation regarding the competition rules before the RERA Regulation. Now that the RERA Regulation is effective, the competition is expected to be announced within the scheduled time.
According to press news, two other RERAs are expected to be declared after the competition for Karapınar Part I. Accordingly, the first one will be Karapınar Part II with a capacity of 1,600 MW, and the following one will be Niğde Bor Energy Specialized Industry Region with a capacity of 1,300 MW.