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Electricity Market Secondary Legislation is Updated

Legal Alerts
Energy, Mining & Infrastructure

New Developments

The Energy Market Regulatory Authority (“EMRA”) made an extensive update under the secondary legislation regarding the electricity market in line with the amendments made at the end of 2020.

New Regulations

The regulations below were published in the Official Gazette on 9 May 2021 and became effective on the same date:

  • Regulation Amending the Electricity Market Licensing Regulation
  • Regulation Amending the Regulation on License-Exempt Electricity Generation in the Electricity Market
  • Regulation Amending the Regulation on Certification and Support of the Renewable Energy Resources
  • Regulation Amending Electricity Market Connection and System Usage Regulation
  • Regulation Amending the Electricity Market Balancing and Settlement Regulation
  • Regulation Amending Electricity Market Grid Regulation
  • Electricity Market Storage Activities Regulation

Amendments regarding storage activities have been separately reviewed in our legal alert dated 17 May 2021 titled as “Electricity Market – Regulation on Storage Facilities Comes into Effect”. The relevant provisions are not covered in this alert.

Important provisions regarding other issues have been summarized below.

1. Licensing Regulation

Biomass facilities – waste tire treatment:  Biomass-based generation facilities using by-products from waste tire treatment can have pyrolysis facilities producing these by-products. However, no other biomass resources can be included in the preliminary licensing applications for projects using pyrolytic oil and gas.

Shareholding/control change notification requirement for generation license holders: The amendments made to the Electricity Market Law at the end of 2020 have repealed the approval requirement regarding direct and indirect shareholding and control changes in relation to electricity generation license holders. The amendments made to the Licensing  Regulation provided that such changes should be notified via the EMRA Application System within six months. Notifications can be made in writing (conventional method) until 1 June 2021. Where the notification is not made on time, the license holder will pay an amount equal to the license amendment fee.

Mechanical capacity amendments: The total mechanical installed power to be established within the scope of a capacity increase cannot be more than the electrical installed capacity, including the operational part, stated under the license.

Hybrid facilities: Partial or full acceptance of the secondary source facilities cannot occur without partial or full acceptance of the primary source facilities. EMRA will decide installed capacities of the secondary source for the compounded hybrid facilities through a board resolution.

2. License-Exempt Generation Regulation

New category: renewable energy based facilities not subject to installed capacity limit: Amendments made to the Electricity Market Law at the end of 2020 provided that renewable energy based electricity generation facilities can be established based on the installed capacity stated in the relevant connection agreement without being subject to any additional installed capacity limitations. This amendment is reflected in the regulation:

  • Additional generation facilities based on this new category can be established for consumption facilities that are already associated with license-exempt generation facilities subject to an installed capacity limit (currently 5 MW).
  • The monthly settlement provisions will also apply to this new category of facilities.
  • These facilities will be able to sell their excess energy to the system based on the purchase guarantee support system.
  • In contrast to the same type of facilities subject to the installed capacity limit (5 MW)

– the generation and consumptions do not have to be at the same measurement point
– permitting fees and costs will be paid by the facility owners (please also refer to the Connection and System Usage Regulation section).

Feed-in-tariff for the facilities to become operational after 30 June 2021: In line with the amendments made to the Electricity Market Law at the end of 2020, it is envisaged that this issue will be determined by the President.

Principles and procedures after the first 10 years of operation: In line with the amendments made to the Electricity Market Law at the end of 2020, it is envisaged that this issue will be determined by the President.

Temporary connection: License-exempt facilities can be established for consumption facilities at the construction stage.

Automatic meter requirement: The requirement to comply with the automatic meter reader system, which was only envisaged for facilities with an installed capacity of 50 kW or more, will now apply to the facilities with an installed capacity of more than 10 kW.

Consumption requirement as of the commissioning date: All consumption facilities that are connected to license-exempt generation facilities must consume electricity as of the commissioning date of the generation facility. Otherwise, no feed-in-tariff payment will be made for the excess energy.

Commissioning requirement for cases of merger or demerger: Commissioning will no longer be required for a merger or demerger where there is no change in the owner of the facilities and shareholding percentages.

Share transfer restriction: A new exemption is provided for share transfer restrictions applied to renewable energy based facilities subject to an installed capacity limitation (currently 5 MW) until their commissioning. Accordingly, share transfers between direct or indirect shareholders of the facility owner will be possible before commissioning, provided that the transfers will not result in a control change.

Facilities that can benefit from monthly set-off: A monthly set-off can be applied for renewable energy based generation facilities that have a call letter or connection agreement or were commissioned as of 12 May 2019, and meet either of the following conditions:

(i) their generation and consumption are at the same measurement point and they do not supply energy to the transmission or distribution system.
(ii) Their installed capacity is equal to or below 10 kW, established as subject to the installed capacity limitation (5 MW).
An application must be made within 60 days following 9 May 2021 to benefit from this opportunity.

3. Renewable Energy Resources Regulation

Feed-in-tariff for biomass facilities: Biomass based generation facilities to be commissioned after 1 July 2021 that include different process methods subject to different feed-in-tariffs will be subject to the lowest feed-in-tariff determined for the process methods.

Down-regulation instructions: If generation license holders registered to the feed-in-tariff support mechanism do not comply with the emergency and/or balancing down-regulation instructions of the system operator, no payment will be made to the license holder for the generation amount corresponding to the breached instruction.

Previously used main equipment: Facilities that use main equipment previously used in a facility that benefited from the support mechanism or a commissioned generation facility will not be able to benefit from the support mechanism.

4. Connection and System Usage Regulation

Distribution and transmission for the new license-exempt generation facility category: We touched on the new provisions regarding the opportunity to establish renewable energy based license-exempt generation up to the capacity stated under the relevant connection agreement without any installed capacity limitation under the License-Exempt Generation Regulation section above. In accordance with the amendments made to the Connection and System Usage Regulation, distribution and transmission facility investment amounts and immovable allocation and permitting fees related to such generation facilities will be paid by the generation facility owner.

Transmission asset securities: Securities given to cover transmission line investments, will continue to be held until the completion of the investment amount repayment through system usage fees (this period was previously 10 years following the last temporary acceptance of the transmission assets). In addition, users will be able to request a partial return of securities twice a year.

Conclusion

The amendments mainly aim to revise the secondary legislation in line with the amendments made to the laws at the end of 2020 and they have introduced certain procedural provisions as required in accordance with market practice.