New Renewable Energy Support Mechanism Announced

New Developments

As reported in our Legal Alert dated 4 December 2020, the industry awaited the President of Turkey’s decision regarding the renewable energy support mechanism (“YEKDEM“) for renewable energy based electricity generation facilities commissioned after June 2021.

The President’s Decision No. 3453, which introduces relevant regulations on the support mechanism, was published in the Official Gazette on 30 January 2021 (“Decision“).

What Does the Decision Introduce?

YEKDEM will be applicable for electricity generation facilities holding a renewable energy resource certification and commissioned between 1 January 2021 and 31 December 2025 as follows:

Period: 10 years for feed-in tariff and 5 years for domestic production incentives.

Feed-in tariff and domestic production incentives: The prices are determined in Turkish lira, as listed in Table 1 below. They will be subject to an escalation mechanism calculated quarterly and based on the producer price index, consumer price index, US dollars purchase rates and euro purchase rates.

First escalation: The first escalation will occur on 1 April 2021 based on the prices listed in Table 1.

Feed-in tariff caps: The Decision provides caps for feed-in tariffs in US dollars, as listed in Table 1. Accordingly, the corresponding value of an updated feed-in tariff cannot exceed the relevant cap. The corresponding value will be calculated based on the average daily US dollar purchase exchange rates published by the Turkish Republic Central Bank for the second, third and fourth months prior to the first month of the relevant calculation period.

Conclusion

The Decision sets forth a new YEKDEM for facilities commissioned after June 2021, and does not foresee any changes regarding facilities commissioned before that date.

Table 1