Recent development
On December 23, 2015, the Energy Market Regulatory Authority (“EMRA“) amended the Electricity Market License Regulation. While some of the amendments only clarify existing rules, others bring significant changes for pre license applications, license holder obligations, and pre-license amendments.
What the Regulation says
Amendments related to the pre-license applications:
• Applicants must now submit an environmental impact assessment (“EIA”) decision for the project along with the pre-license application. Wind, solar, geothermal and hydroelectric power plant applicants are exempt from this obligation and may obtain an EIA decision during the pre-license period and submit it to EMRA before the expiration of the pre-license period. In the previous version of the regulation, all EIA decisions were to be submitted to EMRA during the pre-license period.
• Application documents for wind and solar power plants must now be submitted within 90 days following an affirmative opinion for grid connection.
• EMRA will now have 20 business days to evaluate a pre-license application, an increase from 10 business days. Wind and solar power plant applicants will no longer be granted 15 business days to submit missing documents or permits and will have their application immediately rejected; other license applicants will continue to have this cure period. In any case, the pre-license application fee will be returned to the applicant if the application is rejected by EMRA.
• Generation license applicants for power plants using domestic coal are now required to have share capital of 1% (down from 5%) and 5% (down from 20%) of the total investment cost for pre-license and license applications, respectively.
• The applicant must now identify all of the direct and indirect shareholders of the company.
• The amendment introduces a resource-based priority among renewable energy resources for multiple pre-license applications for the same site. Accordingly, if there is more than one pre-license application for the same project site, EMRA will prioritize the applications and grant pre licenses in the following order: (i) geothermal power plants, (ii) hydroelectric power plants, (iii) wind power plants, and (iv) solar power plants.
Amendments related to the pre-license period and related obligations:
• All shareholders in a pre-licensed or licensed company are now not permitted to have been (i) a shareholder holding 10% or more of the capital of a licensed company, (ii) a director of a joint stock company, or (iii) a manager of a limited liability company, whose license has been cancelled. This requirement previously applied only to shareholders with a shareholding percentage exceeding 10% of the company (or 5% if the license owner was a public company).
• Capital decreases during the pre-license period are now subject to EMRA approval.
• The amendment restricts unlicensed power plants from being permitted in the same area for which there is a pre-license or generation license application. However, unlicensed power plants of the site’s owner that do not affect other licensed power plants may be allowed with the approval of the General Directorate of Renewable Energy.
• EMRA will no longer require pre-license holders to obtain approvals from the Joint Chiefs of Staff or the National Intelligence Organization in relation to restricted military and security zones. However, licensed wind power plants must comply with the requests of Joint Chiefs of Staff or the National Intelligence Organization during times of crisis, insurgency or war.
• During the pre-license period, EMRA now allows changes to shareholding rights as a result of initial public offerings of the applicant or its parent(s) or the exercise of pre-emptive rights of the shareholders of the applicant.
• Changes to the pre-license were not previously explicitly regulated, and provisions regarding changes in licenses were applied to pre-licenses mutadis mutandis. The amendments introduce a detailed procedure and list the documents to be submitted for pre-license amendment applications. EMRA will evaluate the applications within 10 business days, and applicants will be granted a period of 15 business days to submit missing documents or permits, if any.
• If the installed capacity provided under the pre-license will be increased, the applicant is required to (i) increase its share capital and provide a letter of guarantee at the prescribed amount for the increased capacity within the period determined by EMRA if the installed capacity changes more than 10%, and (ii) obtain an EIA decision within the pre-license period.
• Pre-license holders can install additional mechanical capacity provided that (i) the extension works fall within the project site, (ii) the total installed electrical capacity in the pre-license is not exceeded, (iii) the approval of the General Directorate of Renewable Energy is obtained, (iv) the share capital is increased, (v) a letter of guarantee for the additional capacity is submitted, and (vi) an EIA decision (if necessary) is obtained.
• The project site of a pre-licensed power plant project can be changed if (i) the change is due to force majeure or circumstances approved by EMRA, (ii) the change does not violate property and/or other ownership rights of third parties, (iii) the applicant obtains the approval of the General Directorate of Renewable Energy, and (iv) the grid connection point and/or grid connection area does not change.
Other amendments:
• The regulation now requires pre-license and license applicants to submit a registered electronic email for official notifications and license holders to serve their notifications in accordance with the Energy Market Notification Regulation.
• Transmission, market operation, distribution and supply license holders are now required to obtain TS EN ISO 9001, TS ISO 10002 and TS ISO/IEC 27001 quality standard certifications from the Turkish Accreditation Agency (“Quality Standard Certifications”).
• The Turkish Electricity Transmission Company (Türkiye Elektrik İletim A.Ş., TEİAŞ) will announce the available capacity for the grid for wind power plants by October 1 and solar power plants by May 1, each year. TEİAŞ was previously obligated to announce the available capacities by April 1 for both wind and solar power plant pre-license applications.
• Pre-license applications for (i) wind power plants will now be filed within the first five business days of April, and (ii) solar power plants within the first five business days of November, each year. The deadline was previously the first five days of October for both wind and solar power plant pre-license applications.
Implementation of the amendments:
• Pre-license applicants (except wind, solar, geothermal and hydroelectric power plants) currently being evaluated by EMRA are required to submit EIA decisions within 24 months starting from December 23, 2015. Pre license applications that have not yet been evaluated by EMRA will be returned to the applicants if no EIA decision was submitted.
• Transmission, market operation, distribution and supply license holders are now required to obtain their Quality Standard Certifications within 24 months starting from December 23, 2015.
• TEİAŞ will announce, within three months following the date of the amendment to the regulation, the wind energy connection capacity for a connection point and/or area for 2017 and the following five- and ten-year intervals. EMRA will accept wind power plant pre-license applications for such connection points and/or areas within the first five days of the sixteenth month following such announcement.
Conclusion
In the light of the recent practical problems experienced with application procedures, EMRA is now aiming to clarify the procedures and processes. While these changes will relieve power generation companies from experiencing many practical problems, they will also be subject to stricter rules, such as the obligation to obtain an EIA decision before the pre-license application.
Please contact us if you have questions about how these changes might affect your company.
