• Key Points Regarding the Regulation on Certification and Support of Renewable Energy Resources
  • May 16, 2016
  • Law Firm: Erdem Erdem Law Office - Istanbul Office
  • Introduction

    Various investment incentives are adopted in order to encourage investments in the field of renewable energy resources, and to prevent potential investors’ hesitation to enter the electricity generation market due to high investment costs. Renewable Energy Resources Support Mechanism (“YEKDEM” or “YEK Support Mechanism”) has been established in an attempt to promote investments regarding renewable energy resources in Turkey. Within this context, the Regulation on Certification and Support of Renewable Energy Resources (“YEKDEM Regulation”) that was issued in accordance with the Law on the Use of Renewable Energy Resources for Electric Energy Generation numbered 5346 (“YEK Law”)[1], entered into force through publication in the Official Gazette dated 01.10.2013, and numbered 28872. This newsletter article examines the provisions of the Regulation in question.

    Renewable Energy Resources (“YEK”) Support Mechanism

    YEK Support Mechanism has been defined under subparagraph (s) of the 3rd paragraph of the YEKDEM Regulation. According to this definition, the YEK Support Mechanism is a mechanism setting forth principles and procedures regarding prices[2], terms and payment models to exclusively be applied to generation license holder legal persons operating within the scope of the YEKDEM Regulation, along with persons who engage in unlicensed electricity generation activities, via their affiliated distribution companies that are located within the same region.

    Who can benefit from YEKDEM?

    License holder generation facilities that can benefit from YEKDEM are generation resources based upon wind power, biomass power, solar power, geothermal power, gas power generated from biomass (including landfill gas), wave power, and flow energy, along with electric energy generation resources that are eligible to establish hydro-electric power plants based on canal, tidal power or run-of-river power, or having a reserve area less than fifteen square kilometers.

    In accordance with the 8th article of the YEKDEM Regulation, generation facilities that are based on renewable energy resources that are either fully or partially entered, or are to be entered into, service between the dates of 18.05.2005 and 31.12.2015, may benefit from YEKDEM for a period of 10 years:

    • as of the date of full operation of the initial installed power incorporated into their license, or
    • as of the initial date of adherence to YEKDEM, if the facility in question chooses to adhere to YEKDEM prior to its full operation.

    As it can be deduced from this provision, in order for the legal person license holder to apply for YEKDEM, it should already be either partially or fully in operation as of the date of such application.

    The unlicensed electricity generation facilities operating within the scope of the Regulation on Unlicensed Electricity Generation in the Electricity Market[3] may adhere to YEKDEM without requiring any further applications. As per Art. 5/II of the YEKDEM Regulation, official supplier companies are natural participants of YEKDEM throughout their license periods. Real and legal persons who are active in the unlicensed electricity generation market are also included in the YEKDEM for a period of 10 years, through their affiliated supply company located within the same region. The facilities engaging in unlicensed electricity generation activities are not required to make any additional applications in order to be included in YEKDEM for the next calendar year. As per Art. 4/II of the YEKDEM Regulation, such facilities are not allowed to leave YEKDEM.

    YEKDEM Application and Registration Process

    In regard to Art. 4/II of the YEKDEM Regulation, YEKDEM is a yearlong mechanism. Thus, as per Art. 6/II of the YEK Law, generation license holders that are willing to benefit from YEKDEM in the next calendar year are obliged to apply to the Electricity Market Regulatory Authority (“EMRA”) no later than October 31 of each year. Such applications shall cover the amount that is subject to the YEKDEM Regulation for hybrid facilities, and shall cover the amount within the scope of generation licenses for other facilities.

    The applications that are deemed to be full and complete shall be evaluated. As a result of the evaluation, the EMRA shall announce the pre-YEK list on its website, within first ten business days of November. Third parties (regarding violations of their personal rights) and license holders (with the intent to correct information or to remove deficiencies) may object to such list. The objections thereof shall be finalized by November 25 by the EMRA.

    In consequence of these evaluations, no later than November 30 of each year, the EMRA shall announce the final list of facilities that have been qualified to attend the YEKDEM, along with information on their commencement of the date of operation, yearly electric energy generation capacities, and yearly generation programs. Generation periods of the facilities enumerated under the final list, upon which YEKDEM predicates, shall initiate at the first day, and shall end on the last day of each year.

    Records and Energy Generation Estimations Within the Scope of YEKDEM

    In accordance with Art. 9 of the YEKDEM Regulation, the Market Operator shall embody a YEKDEM portfolio in order to perform operations envisaged under the relevant legislation, with the aim to reconcile energy within the scope of YEKDEM. Power supply/draw units constituting the basis of reconciliation and electricity meters within the scope of the legislation governing the balancing and reconciliation operations of the licensed generation facilities set forth in the final YEK list, shall be recorded in the YEK portfolio. Power supply/draw units constituting the basis of reconciliation and electricity meters of the unlicensed electricity generation facilities shall also be recorded in the YEKDEM portfolio on behalf of their affiliated supply companies.

    Article 10 of the YEKDEM Regulation introduces a notification obligation for market participants. According to such provision, generation license beneficiary market participants and the supply companies shall respectively be obliged to inform the National Load Dispatch Center (“LLDC”)[4] of their hourly generation estimations and their hourly exempt generation estimations (including the amounts generated by the unlicensed electricity generator market participants) at exactly 09:00 a.m. of the prior day.

    Every day, the LLDC shall evaluate such estimations and shall make new hourly generation estimations predicated on the units that constitute the basis of reconciliation. Within the same day, the LLDC shall provide such estimations to the Market Operator no later than 10:30 a.m. The Market Operator shall then publish the final estimations by 11:00 a.m. As per Article 11 of the YEKDEM Regulation, the estimated amount of generated energy that is provided by the LLDC, and which is deemed to be purchased by the suppliers, shall be reported to the day-ahead electricity market, by 11:30 a.m., in order to be considered as an offer that is independent of the energy market prices.

    Conclusion

    Demand to apply to the YEKDEM is increasing each and every year in direct proportion to the applications concerning electricity generation based on renewable energy resources. Within this context, market participants who wish to benefit from such incentive, increases each year, as well. All players that are active in the licensed or unlicensed electricity generation market should take the provisions of the YEKDEM Regulation into consideration in order to benefit from the terms and prices determined within the scope of the YEK Supporting Mechanism.


    [1]       The Law on Use of Renewable Energy Resources for Electric Energy Generation has been published in the Official Gazette dated 18.05.2005 and numbered 25819.

    [2]       The prices to be applied to the facilities within the body of YEKDEM, are numerated under the Schedule Number I of the YEK Law. As per Art. 6 of the YEK Law, such prices are determined by the Council of Ministers.

    [3]        Regulation on Unlicensed Electricity Generation in the Electricity Market was published in the Official Gazette dated 02.10.2013 and numbered 28783.

    [4]        National Load Dispatch Center is the center incorporated within the body of TEIAS and is responsible of system operation and real-time stabilization of supply and demand of electricity energy.