• Pre-License Tender Regulation for Wind and Solar Energy Projects
  • November 6, 2015
  • Law Firm: Erdem Erdem Law Office - Istanbul Office
  • Introduction

    Technical insufficiencies of the transmission system in Turkey provide limited connection capacity to transmission systems. These limitations eventually prevent renewable energy generation facilities to be connected to the grid subject to the availability of the transformer station in a particular region. Over the years, Turkey’s Energy Market Regulation Authority (“EMRA”) has taken steps to overcome the shortcomings of capacity limitations by implementing a selection process through tenders.

    In accordance with the “Tender Regulation on pre-License Applications for Wind and Solar Energy Generation Facilities” issued by the EMRA dated 6 December 2013 (“Tender Regulation”), the EMRA sets forth the principles and procedures that are applicable to the tenders to be made under the mandate of the Turkish Electricity Transmission Corporation (“TEIAS”) for multiple applications submitted for the same transformer station and/or the same region.

    The Tender Regulation requires each participant to submit a contribution fee (“Contribution Fee”) to be paid for each unit’s MW by the winning participant to the TEIAS following the pre-approval of the operation of the energy generation facility for a maximum period of three years.

    Tender Process

    Renewable energy generation facilities may be constructed in designated regions with identified transformer stations or sub-stations. Tenders for renewable energy generation facilities will be held in the event of multiple license applications with respect to the same region[1] and/or the transformer stations[2] that are submitted to the EMRA.

    Announcement of the Tender. The EMRA will set up a list of pre-license applications for the same region, and/or for the same transformer station. The applications will be submitted to the TEIAS where the date and place of the tender and certain information concerning the application will be announced online including the name of the project, region and transformer stations, installed capacity of the project and the available capacity of the transformer station.

    Invitation Letter[3]. Following the Tender Announcement, the TEIAS will send the applicants invitation letters including (i) the standard form of proposal for the Contribution Fee; (ii) a standard form undertaking[4]; and (iii) a standard form of letter of guarantee that shall be irrevocable and unconditional.

    Bidding Process. Each tender participant shall submit its proposal for the Contribution Fee in Turkish Liras in a sealed envelope on the date of the tender as specified by the TEIAS.

    In the event the same Contribution Fee is submitted by more than one tender participant and hence requires a selection from among them, the participants are required to submit a second revised Contribution Fee in accordance with the foregoing, provided that the second revised Contribution Fee shall not be less than the first Fee submitted.

    Post Tender Process. It is critical to note that the winning participant does not automatically qualify for a pre-license by the EMRA. It is therefore required from the TEIAS and the winning participant to take the following actions prior to the granting of the pre-license by the EMRA:
    • The results of the tender shall be submitted by the TEIAS to the EMRA, including the official opinion received from TEIAS concerning the connection to the grid;
    • The TEIAS shall inform the EMRA of the companies that did not participate in the tender and those participants that were disqualified due to incomplete documentation, as well as the highest Contribution Fee offered;
    • The letter of guarantee of the tender participants that were not granted pre-licenses shall be duly returned to the disqualified participants;
    • The letter of guarantee of the winning participant shall be returned to the winning participant in the event thatthe pre-license is rejected by EMRA due to force majeure or other reasons deemed acceptable by EMRA. The letter of guarantee shall be recorded as revenue once the winning participant fails to fulfill its obligations under the Tender Regulations and/or fails to execute the Contribution Agreement;
    Contribution Fee Agreement

    Following the official announcement of the results of the tender and within 15 days of the receipt of the result of the tender by the winning participant, the winning participant shall apply to the TEIAS to execute the Contribution Agreement in the form attached to the Invitation Letter.

    The total contribution fee is calculated by multiplying the installed capacity with the Contribution Fee proposed by each unit’s MW. The total Contribution Fee may be paid in installments over a maximum period of three years.

    The letter of guarantee submitted by the winning participant for the tender process shall be replaced by the winning participant with an irrevocable and unconditional letter of guarantee corresponding to the total Contribution Fee on the date of the execution of the Contribution Agreement.

    Following the tender, the winning participant may apply for a capacity increase whereby the Contribution Agreement shall be revised in accordance with the increased installed capacity.

    [1] The same region is defined as the region that covers the connection line and the transformer station as announced by the EMRA for the purposes of renewable energy generation facilities or in the event of power plant fields that are defined by coordinates, the intersecting or overlapping regions.

    [2] The same transformer station is defined as a transformer station announced for which more than one license application is submitted.

    [3] The standard forms are attached to the Tender Regulation and shall be strictly complied with; and are not subject to negotiations.

    [4] The undertaking refers to accuracy of the information and documents submitted by the tender participant and the acknowledgement of the tender participant to that effect and that the letter of guarantee will be recorded as revenue if the tender participant does not comply with its obligations under the Tender Regulation.