NEWS ON RENEWABLE ENERGY AREAS IN TURKEY

General Directorate of Renewable Energy (“GDRE”) of Republic of Turkey Ministry of Energy and Natural Resources (MENR) announced new candidate Renewable Energy Designated Areas (“YEKA”) on 23/03/2018. Three candidate wind YEKAs are located in Saros, Gelibolu and Kıyıköy. Similarly three candidate solar YEKAs are located in Hatay-Erzin, Niğde-Bor and Şanlıurfa. Under the framework of National Energy and Mining Policy, efficient use of national resources is projected through establishment of YEKAs.

The Regulation on YEKA (“the Regulation”) was published in the Official Gazette 29852, on 9/10/2016. GDRE is responsible of carrying out the envisaged work. Turkey has spent considerable efforts on production and usage of renewable energy. While Turkish Renewable Energy Resources Support Mechanism (“YEKDEM”) has been considered as an important tool since its introduction in 2011 for achieving the set goals, the allocation of YEKAs can also be classified as an additional method for efficient use of renewable energy sources.

YEKAs are intended to be established in the areas that are abundant in at least one of the renewable energy sources. With the aim of promoting renewable energy, the Regulation sets the objective as allocation of sizable areas to YEKA investors enabling them to achieve large volumes of energy production. The Regulation requires investors to use domestically manufactured equipment or to construct factories for production of the relevant equipment that would be a part of the power plants to be built in YEKAs. The Regulation also requires establishing of research and development centers within the areas.

The Regulation includes provisions regarding designation of areas, connection and capacity allocation tender, domestically manufactured equipment usage condition, the competition conditions and requirements for legal entity participants, conduct of the competition, letter of bank guarantees conditions, generation license applications and sale of generated electricity method and principles.

The eligible applicants complying with the requirements of the Regulation and the specifications regulating the technical and administrative conditions (“Specifications”) become entitled to take part in the YEKA right of usage competition. After the auction by underbidding takes place, the lowest five bids are identified and the process continues amongst the participants until the lowest bid is given by one of the participants. The winning participant is invited to sign the YEKA Right Of Usage Contract (“Usage Contract”).

The winning participant (a legal entity) must get a pre-license and a license respectively. When the requirements for the license are met and the factory starts to operate within a specified time, then the legal entity qualifies to apply for the production license. The regulation sets the duration of the production license as 30 years.

The generated electricity in YEKAs is considered under the framework of YEKDEM at the price specified in Usage Contract and the duration specified in Specifications.

Two YEKA Right of Usage Contract have already been signed since the publication of the Regulation. The first solar YEKA auction was concluded for Konya- Karapınar in March 2017, with the capacity of 1000MW while the first wind YEKA auction was concluded in August 2017 with the same capacity for an area which contains following 12 cities: Kayseri, Niğde, Sivas, Edirne, Kırklareli, Tekirdağ, Ankara, Çankırı, Kırıkkale, Bilecik, Kütahya, Eskişehir.

Now it is the time for prospective YEKA investors to follow the new developments closely for the upcoming YEKA of Turkey. The following step after the recent announcement of the candidate YEKAs, is having technical and economic analysis done in order to see whether the investment in the area would be feasible. If investing in the candidate YEKA is found feasible then the respective YEKA will be officially announced and published in the Official Gazette.