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Essential Corporate News – Week ending March 31, 2023
On March 30, 2023 the Pensions and Lifetime Savings Association (PLSA) published their updated Stewardship and Voting Guidelines.
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Global | Publication | January 23, 2017
By Ekin İnal and Merve Akkuş
The tender for the Karapınar Resource Area, a solar-power energy zone with an allocated capacity of 1 GW, will take place on February 21, 2017. This tender is the first under the new legislation designed to promote large-scale renewable energy investments in Turkey. The project will be developed by one investor with the requirement to set up a manufacturing facility and conduct research and development activities.
New legislation[1], namely the Regulation on Resource Areas for Renewable Energy passed on October 9, 2016, sets out the legal framework to streamline the process of allocation of land for large-scale renewable energy projects. The legislation structures the establishment of “renewable energy resource areas” (yenilenebilir enerji kaynak alanları or YEKA) to be made available to bidders via tender process. This legislation supports the 3 GW target capacity for licensed solar power projects announced by the Ministry of Energy and Natural Resources.
Although the Regulation covers all renewable energy resources, the first and only tender to be launched to date under this Regulation is for solar power. It remains to be seen if and how other renewable energy types (e.g. wind) will be developed on Resource Areas.
We expect large-scale solar power investments be undertaken in Resource Areas. Of Turkey’s capacity target for licensed solar power plants of 3 GW, only 600 MW has been allocated in 2015 by way of tenders. The remaining capacity will likely be allocated through Resource Area allocations.
The tender announcement for Karapınar Resource Area (announced as a Resource Area in 2015) was published by the Ministry on October 20, 2016. Some of the important features of this Resource Area are:
The application deadline is February 14, 2017 for the February 21, 2017 tender.
Review and analysis of the tender announcement and statements made by Ministry officials indicate that the tender will include stringent financial and technical criteria, such as a requirement of 75% domestic manufacturing. The criteria, when combined with the strict tender and realization timelines, set a high benchmark for subsequent tenders and project proposals. Whether setting such high benchmarks is a successful strategy for development of target renewable energy capacities remains to be seen.
Ekin İnal and Merve Akkuş both practice with the Bilgiç Attorney Partnership, Chadbourne's affiliate in Turkey. Ekin İnal is admitted to the New York and Istanbul Bar Associations. Merve Akkuş is admitted to the Istanbul Bar Association.
[1] This Regulation is not the first piece of legislation relating to large scale renewable investments. In 2013, the Ministry enacted a regulation designed to promote the development of large-scale renewable energy facilities on lands allocated by the state. Although the 2013 legislation covered all renewable energy resources, the first and only Resource Area allocation made under it was for solar power investment: the Karapınar Energy Industry Zone in Konya province was announced to be a Resource Area in September 2015.
[2] In addition to feed-in rates, the renewable energy legislation provides for incremental price incentives for generators using certain domestically manufactured mechanical and electromechanical components in their facilities. The above table assumes that the relevant facility uses all locally manufactured equipment listed in the legislation, and therefore is granted the maximum incentive available.
The Regulation imposes on the investors the obligation to use domestically manufactured components. Therefore, for an investment on a Resource Area, the use of domestic components is not an option, but an obligation. The Regulation also makes it clear that no separate domestic component incentive will be provided, although it is factored in the calculation of the feed-in rate ceiling.
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