Recent amendments to the Electricity Market Law on June 4, 2016, introduced the general framework for the regulation of renewable energy resource areas (“RERA“). On October 9, 2016, the Ministry of Energy and Natural Resources (the “Ministry“) issued the Renewable Energy Resource Areas Regulation (the “Regulation“) superseding the previous one and providing the details on how the RERAs will be made accessible to investors.
RERAs are areas announced by the Renewable Energy General Directorate (the “Directorate“) or determined through a tender process (as explained below) where renewable energy power plants will be constructed and connected to the grid. Investors investing in RERAs must use domestic equipment, and in return, they will benefit from the cooperation of the Ministry with the administrative procedures associated with the enterprise (such as obtaining permits and licenses); investors will also be granted a purchase guarantee provided under the RERA Usage Right Agreement.
The Regulation aims to efficiently utilize renewable energy resources, accelerate investment procedures, and reinforce technology transfers through domestically manufactured equipment requirements.
Determination of RERAs
RERAs in privately owned or state owned lands will be determined by the Directorate. Alternatively, the Ministry may chose to announce the connection areas and capacities, and determine the RERAs following the tender for the connection capacity allocation, as explained below, and, upon the suggestion of the successful bidder, determine the RERAs within the designated connection area and capacity. In both cases, the determined RERAs will be published in the Official Gazette.
Tender Procedure and Conclusion of a RERA Usage Right Agreement
After the RERA tender is announced in the Official Gazette, the bidders satisfying the criterion provided in the Directorate’s tender specifications must submit their bids for the connection area and the entire connection capacity.
Certain key points regarding the tender process are as follows:
It is expected that the pre-determined purchase prices and terms provided under the RERA Usage Right Agreement and the accelerated investment procedures provided under the Regulation will generate great appeal for investors. This will increase the sustainable use of renewable energy for electricity generation.
Although an official announcement is yet to be made, it is expected that the first tender will take place in the last months of 2016, potentially for the already determined Karapınar RERA. The Regulation is an important step towards attaining Turkey’s goals of strengthening renewable energy generation and usage, and of creating a welcoming atmosphere for investors.