REGULATORY AND FINANCIAL INCENTIVES FOR DISTRIBUTED RENEWABLE ENERGY
-What is the legal and regulatory framework applicable to distributed renewable energy?
Under the Turkish energy market, renewable energy projects are divided as (i) licensed, and (ii) unlicensed facilities.
Pursuant to the Law No. 6446, it is mandatory that the legal entities which will operate in the energy market must be incorporated either as a joint stock company or a limited liability company. Furthermore, in order to conduct market activities legal entities are obliged to obtain the relevant licence.
However, renewable energy generation facilities with installed capacity of up to 5 MW and installed mainly for self-consumption purposes are exempt both from obtaining a licence and forming a company. Along with the main aforementioned electricity legislation, Unlicensed Electricity Generation Regulation shall apply to distributed (unlicensed) renewable energy projects.
-Are there financial or regulatory incentives available to promote investment in distributed renewable energy facilities?
In 2019, fundamental amendments were made to the Unlicensed Electricity Generation Regulation and a monthly settlement mechanism was introduced for distributed renewable energy.
As the core of the unlicensed projects are the self-consumption principle, only the surplus energy is incentivised.
Furthermore, the Unlicensed Electricity Generation Regulation explicitly prohibits merchandising of such electric power to be generated. Accordingly, any surplus electric power shall be purchased by the appointed supplier company that is to be handled within Renewable Energy Sources Support Mechanism determined under the Law No. 5346.
-What are the main sources of financing for the development of distributed renewable energy facilities?
Distributed energy facilities are generally financed through leasing of the facility components by the investor. As mentioned, it is explicitly determined that the power generated under the Unlicensed Electricity Generation Regulation cannot be merchandised. Furthermore, since the generation and the consumption facilities must be connected by the same connection point, the facilities cannot be owned by different persons and the investor has to bear the costs of such facility installation.
-What is the legal and regulatory framework that applies for clean energy certificates/environmental attributes from renewable energy projects?
Parallel to the developments in international markets, the Regulation on Renewable Energy Resource Guarantee Certificate in Electricity Market, issued by EMRA on the same subject, was published in the Official Gazette, dated 14th November 2020. The Regulation entered into force on 1st June 2021. It has been stated by EMRA that the guarantee of origin structure was taken as a model in order to facilitate compliance with the system used in the European Union while structuring Turkish renewable energy certificate system, YEK – G.
Currently, power consumers in Turkish market preferring to obtain green energy opt to follow the origin of the energy they bought with International Renewable Energy Certificate – I-REC.
-Are there financial or regulatory incentives or mechanisms in place to promote the purchase of renewable energy by the private sector?
There are no financial or regulatory incentives to promote the purchase of renewable energy by the private sector. The purchase of green energy is mostly preferred by multinational companies. Furthermore, the possibility that the EU will apply a carbon border tax leads companies to explore possibilities to procure renewable energy.
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