Solar Energy : Pre-licensing and Licensing Procedures in Turkish Electricity Market

In order to conduct production activities in the electricity market, companies must first obtain a pre-license, which must be followed by a production license provided that the applicant obtains the necessary approvals, permits and fulfill other requirements during the pre-license period.

Pre-Licensing: A pre-license must be obtained for each activity and for each facility in the event that the relevant activities will be conducted in more than one facility. Application is to be made to the Energy Market Regulation Authority (EMRA).

TEİAŞ (Turkish Electricity Transmission Company) notifies EMRA each year until 1 April regarding the production facility capacity based on solar energy for following 5 years and 10 years. EMRA accepts the applications for solar energy based facilities during the last 5 business days of October each year based on the declared capacity for the relevant year. Application file must contain a solar measurement of at least 1 year, which was obtained during the last 3 years.

Legal entity of the applicant: Applicant must be either a joint stock company (anonim şirket) or a limited company (limited şirket) incorporated under the Turkish Commercial Code and the shares of the joint stock company must be registered shares, unless they are listed

Bank letter of guarantee: A bank letter of guarantee must be submitted to EMRA in an amount to be determined based on each installed power in MW. Upper limit of the amount of the bank letter of guarantee is 5% of the total investment amount foreseen by EMRA. It is possible to submit more than one letter of guarantees provided by more than one bank. Pursuant to EMRA decision dated 21.11.2013, amount of the bank letter of guarantee for pre-license application is TL 10,000 per installed power in MW, provided that total amount shall not exceed TL 5,000,000.

Minimum Share Capital: Share capital of the applicant must be increased to an amount corresponding to 5% of the total investment amount foreseen by EMRA or the production facility.

Pre-Licensing Fee: Applicants for renewable energy based facilities are responsible only for 10% of the pre-license fee. Pre-licensing fees applicable for year 2015 are as follows (TL):

0 < P[1] ≤ 10 MW 5.500
10 < P ≤ 25 MW 11.000
25 < P ≤ 50 MW 16.500
50 < P ≤ 100 MW 27.500
100 < P ≤ 250 MW 55.000
250 < P ≤ 500 MW 110.000

500 < P ≤ 1000 MW

165.000
P > 1000 MW 275.000

Shareholding Structure: There shall not be any change on the shareholding structure of the applicant during the pre-license period and this rule should be inserted in the articles of association of the company.

Ownership of the Land: In the event that the area where the production facility will be established is the property of the applicant, a document confirming this ownership must be submitted with the application documents.

Evaluation of the Application: EMRA completes its review about the completeness of the application file within 10 business days following the delivery of the file by the applicant. In the event that there are missing documents in the application file, the applicant is invited to complete the said documents within 15 business days. Applications which are accepted for evaluation are announced on the website of EMRA and third parties may object to the announced application within 10 business days only for violation of an individual right.

During the evaluation of the application, EMRA asks TEİAŞ or other distribution company authorized in the region of the production facility to form an opinion with respect to the connection to the transmission and/or distribution system and usage of the system within 45 days. Such opinion is shared with the applicant within 10 business days, which must either accept it or object it with its reasoning within 10 business days. In the event that there is more than one application for the same connection point and/or connection region, TEİAŞ organizes a competition in order to determine the ones, which will be connected to the system.

Provided that all the legal requirements are fulfilled, the pre-license is issued and announced on the website of EMRA. Validity period of a pre-license cannot be more than 24 months except for force majeure events. However, depending on the type of the resource and the installed power, EMRA may decide to extend such period to 36 months.

Obligations of the pre-license holders: Holder of a pre-license is responsible to fulfill the following steps during the license period in order to be able to start the investment of the production facility.

  • If the area where the production facility is to be established is the property of a third party, holder of the pre-license must obtain either the ownership or usage right of the relevant area.
  • Development plans regarding the production facility must be approved.
  • Preliminary project necessary for the construction of the facility must be approved.
  • Application must be made to TEİAŞ or relevant distribution company for connection and system usage agreements.
  • Necessary opinions must be obtained in accordance with the Regulation on Military Prohibited Areas and Security Regions.
  • Necessary decisions must be obtained with respect to environmental impact evaluations. (Necessary applications must be made within 90 days for the environmental impact decision.)
  • Construction permit of the facility must be obtained.
  • Contribution agreement for solar energy based production facility must be signed with TEİAŞ.

Electricity Production Licensing Period: Holders of pre-licenses must apply for a production license before the expiry of the pre-license.

Bank letter of guarantee: A new letter of bank guarantee must be submitted with the application. Amount of the letter of bank guarantee submitted during the pre-licensing process is to be deducted from the new letter. Amount of the letter of guarantee is to be determined based on the below table, provided that the amount shall not exceed TL 157,200,000.

Installed Power (MWm) Percentage to be applied to the total investment amount

(%)

Formula
0 < P ≤ 10 6 P x TYT[2] x 0,06
10 < P ≤ 100 4 TYT x [0,6 + (P – 10) x 0,04]
P > 100 2 TYT x [4,2 + (P – 100) x 0,02]

Completion schedule: A project completion schedule must be submitted regarding the completion of the production facility.

License fee: (Only 10% of the license fee applies for applicants of solar energy) Production license fees applicable in year 2015 are as follows (TL):

0 < P ≤ 10 MW 5.500
10 < P ≤ 25 MW 11.000
25 < P ≤ 50 MW 16.500
50 < P ≤ 100 MW 27.500
100 < P ≤ 250 MW 55.000
250 < P ≤ 500 MW 110.000
500 < P ≤ 1000 MW 165.000
P > 1000 MW 275.000

Share capital: Share capital of the company must be increased to 20% of the total investment amount foreseen by EMRA.

Articles of association: Necessary amendments must be made in the articles of association of the applicant company.

Evaluation of the application: License application is rejected if one of the requirements foreseen for the pre-license period is not fulfilled. If all the requirements are duly fulfilled, license is granted.

Construction Period: Construction period and completion schedule is inserted on the license. Construction periods are determined by EMRA decision and announced on the web site of EMRA. Pursuant to EMRA decision dated 21.11.2013, construction periods applied for solar energy are as follows:

Installed Power (P) Range (MW) Construction Period (Month)
Solar Energy P≤10 22
10<P≤50 30
50<P 36

Production Amount: Maximum production amount that the relevant facility may produce annually with the existing installed power is also inserted on the license as the annual electricity production amount.

Progress report: License holder must submit a progress report each year on January and July until the facility completion date and complete the construction and start to operate the facility until the expiry of the construction period. Facility is considered completed on the date of the temporary acceptance of the Ministry of the energy and Natural Resources.

Renewal of License: Licenses may be renewed for at most 49 years each time. Application for the renewal of a license may be submitted earliest 12 months and latest 9 months prior to the expiry of the license.

Annual license fee: Facilities based on local natural resources and renewable energy resources are exempted from the annual license fee for the first 8 years following the facility completion date. First annual license fee is calculated based on the produced electricity energy amount between facility completion date and 31 December of the relevant year. Fee to be applied for following years is calculated based on the electricity energy amount produced previous year. Annual license fees are paid within 5 business days on February, June and October each year as three equal installments. Annual license fee applicable in year 2015 is Kr 0.003 per kWh produced.

 

[1] P: Installed power in MW.

[2] TYT: Total unit investment amount foreseen by EMRA (TL). According to EMRA decision dated 21.11.2013, TYT applicable for solar energy is TL 3,000,000.

 

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