Recent developments
The Regulation Amending the Regulation on the Procedures and Principles Regarding the Execution of Water Usage Rights Agreements for Generation Activities in the Electricity Market (“Amending Regulation“) was published in the Official Gazette dated 27 August 2026 and numbered 33353 and entered into force on the same date. You can access the text of the Amending Regulation here (in Turkish).
The Amending Regulation introduces several amendments to the Regulation on the Procedures and Principles Regarding the Execution of Water Usage Rights Agreements for Generation Activities in the Electricity Market (“Regulation“), published in the Official Gazette dated 15 June 2019 and numbered 30802. The Regulation sets out the procedures and principles regarding the content, execution, renewal, amendment and termination of water usage rights agreements concluded between legal entities and the General Directorate of State Hydraulic Works (“DSİ“) and also governs the procedures and principles concerning the establishment of hydroelectric power generation facilities by municipalities.
What does the Amending Regulation introduce?
The Amending Regulation (i) introduces definitions of the fees already payable to the DSİ by legal entities that are parties to water usage rights agreements, (ii) provides for the use of settlement data obtained from Energy Exchange Istanbul (“EXIST“) in certain hydroelectric resource contribution payment calculations, including additional contribution payments, (iii) introduces a specific provision applicable to legal entities that have existing build-operate-transfer (“BOT“) agreements and have not yet completed all procedures thereunder, in the event that such entities renew their water usage rights agreements, and (iv) introduces amendments to the standard-form water usage rights agreement set out in Annex 1 to the Regulation.
1.Scope of the Fees Payable to the DSİ Clarified
Pursuant to Article 18 of the Regulation, companies that enter into a water usage rights agreement with the DSİ and obtain a license from the Energy Market Regulatory Authority (“EMRA“) are required to pay to the DSİ, within the framework of the undertaking letter set out in Annex 5 to the Regulation, (i) the service fees specified in Annex 2 to the Regulation in accordance with the payment terms set out therein and (ii) the basin hydrological observation, assessment and control service fee on an annual basis, calculated based on the amount of electricity generated in the preceding year following the commissioning of the relevant hydroelectric power generation facility.
The Amending Regulation clarifies the scope of the basin hydrological observation, assessment and control service fee. The fee is defined as the amount payable annually to the DSİ in respect of basin-wide monitoring and hydrological activities carried out by the DSİ. Subject to the exemptions and discounts in Annex 2, it is payable by all operational hydroelectric power generation projects and is calculated based on the total annual amount of electricity supplied to the transmission or distribution system, using the fixed coefficient specified in the Regulation.
The Amending Regulation further provides that the term “service fee” refers to the fee payable to the DSİ upon the licensing of a facility, which is calculated according to the stage of the relevant report or project and announced at the project announcement stage for projects whose final design, planning studies, master plan, preliminary review or initial survey report has been prepared by the DSİ.
In addition, pursuant to the definition of “hydroelectric resource contribution payment” introduced by the Amending Regulation, it is explicitly stated that such payment becomes payable upon the partial or full provisional acceptance of the facility and must continue to be paid annually to the DSİ until the expiry of the license term.
Facilities serving multiple purposes, including hydroelectric power generation, irrigation water supply, potable and utility water supply, industrial water supply and flood protection, are classified as “shared facilities” under the Regulation. The Amending Regulation also introduces the definition of the “shared facility fee” (i.e., the energy share contribution payment), which refers to the contribution of hydroelectric power generation facilities, in proportion to their energy shares, to the investment costs of water structures constructed by the DSİ where such structures are used by hydroelectric power plant projects. This fee is collected in accordance with the procedures and principles set out in Article 17 of the Regulation.
2. EXIST Data to Serve as the Basis for Determining Energy Generation Amounts
The Amending Regulation revises certain parameters used in the calculation of the additional contribution payment payable where (i) in projects where the shared facilities are constructed by the DSİ and the hydroelectric power plant by the company, water required to be released downstream for environmental or other purposes is, subject to the approval of the DSİ, permitted to be utilized in an additional hydroelectric power generation facility, or (ii) an elevation increase or an elevation adjustment that increases the project head beyond its initial total head is approved by the DSİ. In this context, the “E” value, which is used in calculating the additional contribution payment and previously referred to the annual amount of electricity supplied to the system based on data obtained from the Turkish Electricity Transmission Corporation (“TEİAŞ“) or the relevant distribution company, has been amended to refer to the annual total settlement-based delivery amount supplied to the transmission or distribution system, based on data to be obtained from EXIST. The same change has also been reflected in certain hydroelectric resource contribution payment calculations under Article 40 of the standard-form water usage rights agreement in Annex 1, and the previous provision requiring differences between declared generation values and TEİAŞ or distribution company data to be reconciled in the following year has been removed.
3. Certain Annex 2-Related Exemptions for BOT Projects Are Set to Cease to Apply
Provisional Article 7, introduced to the Regulation by the Amending Regulation, sets out a specific regime for projects implemented under the build-operate-transfer (“BOT“) model. Accordingly, legal entities that have existing BOT agreements under which not all procedures have been completed and that notify the Ministry of Agriculture and Forestry and EMRA in writing that they have waived all of their rights under an existing BOT agreement, or will waive such rights if the granting of a license is approved by a decision of the EMRA Board following the review and assessment to be conducted under the Electricity Market Licensing Regulation, will lose any exemptions they benefit from in relation to Annex 2 to the Regulation if they renew their water usage rights agreements pursuant to the Regulation.
Although Annex 2 to the Regulation, which is referred to in Provisional Article 7, provides for certain exemptions or discounts regarding payment obligations for facilities operated by public legal entities or transferred to the private sector through privatization, it does not contain any specific exemption applicable to BOT projects. Likewise, the Amending Regulation does not provide any further explanation regarding either the exemptions applicable to BOT projects or the scope of the exemptions that would cease to apply under the new provision.
4. Commencement Date for Energy Share Contribution Payments Regulated
The Amending Regulation introduces a specific provision regarding the commencement date of the energy share contribution payments payable to the DSİ through an amendment to Article 23 of the standard-form water usage rights agreement set out in Annex 1 to the Regulation.
Under the current framework, the first instalment of the energy share contribution payment becomes payable at the end of five full years following the provisional acceptance date of the hydroelectric power plant. The Amending Regulation provides that, in the case of hydroelectric power plants consisting of three or more units, where a unit has been commissioned following partial provisional acceptance but the remaining units have not been commissioned or their commissioning is delayed, up to two full years are added to the five-full-year period, with the payment commencement date being determined by reference to the acceptance date of the unit that underwent partial provisional acceptance.
Conclusion
The clarification of the definitions relating to the fees payable to the DSİ under water usage rights agreements, together with the use of EXIST data as the basis for certain hydroelectric resource contribution payment calculations, including additional contribution payments, is significant in ensuring that the financial obligations of facility owners are calculated in a more objective and predictable manner. In addition, the amendments concerning multi-unit facilities and BOT projects contribute to a more predictable and systematic regulatory framework governing water usage rights agreements. Nevertheless, it remains unclear which exemptions available to BOT projects will be affected, and the practical implications of these provisions are likely to become clearer through future administrative practice.
