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    Better Late Than Ever: New Ruling For Electric Vehicle Charging Stations In Turkey


    January 21, 2022 - By Mr Sahin Ardiyok

     

      Article by Sahin Ardiyok, Busra Nazli Yaldir and Nadide Akdag

      It is beyond doubt that there is a positive correlation between the number of electric vehicles ("EVs") and the availability of charging infrastructure. As the number of EVs increases, it incentivizes charging infrastructure providers to escalate their investments. In return, the availability of charging infrastructure also motivates consumers' purchase intention of EVs. However, before reaching this feedback loop, the "chicken and egg problem" needs to be overcome. As consumers wait for the technology and the system to mature, manufacturers abstain from investing until they see demand in the market. We believe that the amendment made in Electricity Market Act No. 6446 ("Electricity Market Act") last December will serve as a step closer to addressing the preceding problem, if not solved immediately.

      Although total sales of EVs in the Turkish market was 2849 between January 2021 and December 2021,1, it is believed that there is a compelling potential for EVs with the launch of domestic electric vehicle production (TOGG) soon. The rapid spread of EVs due to global developments aiming to prevent climate change inevitably requires radical changes, especially for the transportation sector. To meet the energy needs of this rapid spread, the infrastructure of electric charging stations must be developed. According to figures, more than 85% of EV charging occurs at home2. However, it must be noted that in an effort to mitigate the range anxiety3 of the EV users, the availability of public charging infrastructure plays an essential role in extending EV adoption. Considering the complementary economic relationship and the causation between EVs and their charging stations4 , the foregoing radical changes in the transportation sector also lead to quite a few essential changes in the legal world.

      In Turkey, the references on the subject are primarily included in strategy and policy documents such as the National Intelligent Transportation Systems Strategy Document and the National Energy Efficiency Action Plan5. Moreover, the regulations related to the tax law were the first legal regulations in our country regarding EVs6. In order to adapt to the developments in practice to meet the needs of charging stations for EVs, some changes have been made in the zoning legislation, the Electricity Market Distribution Regulation, the ruling on increasing efficiency in transportation, and the parking lot legislation7.

      What Does the Amendment Bring?

      First and foremost, although we must state that the Electricity Market Act is a long way of addressing the dynamics specific to the charging infrastructure, it constitutes a way towards it. Within the amendments' scope, we initially see the definitions of certain terms such as EV, charging network, charging network operator, charging station, charging station operator, and interoperability. As the EV is defined as "a motor vehicle that uses an electric motor alone or as an ancillary and can be charged externally with electric energy," the scope of the Electricity Market Act not only covers "all-electric vehicles" but also "plug-in hybrid vehicles." Furthermore, it is seen that the Turkish legislator aimed for an interconnection between the charging stations by including the term interoperability to the amendment as "interactive, harmonious and effective way of charging stations operating independently or connected to the charging network, electricity transmission or distribution networks, and the software systems that support them to be working connectedly." The introduction of interoperability requirement creates question marks in relation to the networks such as Tesla Supercharger where currently only Tesla vehicles can be charged. It is not clear from the amendment whether networks such as Tesla Supercharger would be able to establish their own networks and provide free service solely to their EV users.

      The following sub-sections will look at the novelties introduced to the EV ecosystem.

      Electricity: Is It a Good or a Service Within the Meaning of EV Charging?

      1152804a.jpg

      Analyzing the amendment provisions that regulate the "charging service," it is understood that, unlike fuel, electricity will not be bought and sold at EV charging stations. In other words, at the charging stations, electricity will be served to the EVs that allow them to be charged.

      A close examination of the term charging service shows that a service supply chain consisting of the "charging network operator" to operate under the license to be obtained from Energy Market Regulatory Authority ("EMRA") and the "charging station operator" to operate within the scope of the "certificate" to be obtained from the charging network operator has been established. The charging network operator license holder is primarily responsible for the charging service. Accordingly, the charging network operator is held jointly and severally liable for the activities of the charging station operator.

      What Are the Obligations of the Charging Network Operator?

      The Electricity Market Act sets forth the scope of the charging network operators' obligations that create legal certainty for the license holders and EV users. Accordingly, the charging network operators must provide continuous, uninterrupted, and high-quality charging services and make the charging service accessible to all EVs. Whereas charging network operators shall determine and announce the charging service fee, whose calculation method will be mentioned below, and the conditions of access to the charging service of EVs in accordance with the procedures and principles to be published by the Authority, they are not entitled to charge a separate fee under any name from EV users.

      Furthermore, regarding the foreseen interoperability of the charging infrastructure, charging network operators are given the duty to establish, maintain and operate the necessary management, inspection, and registration system in accordance with the procedures, principles, and technical conditions determined by EMRA.

      How to Determine the Charging Service Fee?

      Concerning the determination of the charging service fee, some rules must be followed. While determining the charging service fee, the following criteria must be taken into account:

      1. investment and operating costs for establishing a charging station and establishing a charging network,
      2. electrical energy purchase costs and similar costs
      3. legal obligations such as taxes, shares, funds
      4. reasonable profit.

      The determined charging service fee must be announced at the charging stations and through digital channels by the charging network operator licensee. Herein, it is criticized that the foregoing criteria and rules contain certain uncertainties, but it is possible to eliminate them with prospective EMRA secondary legislation.

      Although the lawmaker has stated that the charging service fee will be determined freely within the procedures and principles to be put forward by EMRA, in the light of the explanations made above, it would be essential to state that there are important limitations in determining this price. Meanwhile, significant uncertainties in the provisions draw attention. First of all, "reasonable profit," one of the criteria to be followed while determining the price of the charging service, is not very clear due to its subjectivity. Likewise, the term "digital channel" requires further clarification. Last but not least, whether the certificate holders or the charging network operators are free to make a bilateral agreement to supply the electricity to be used in the charging stations would benefit from additional explanation.

      1152804b.jpg

      This heavy regulation/involvement of the pricing seems to be an extension of the government policy adopted during the Covid-19 pandemic to control the price level in all markets, regardless of any finding of economic reasons to regulate the price. As in other similar markets, we believe this policy would create uncertainties for the entrepreneurs to invest in charging infrastructure and most probably leave this investment burden to electricity distribution companies.

      What is the Role of EMRA?

      In addition to the explanations regarding the charging service fee, it must not be anti-competitive or restrictive or impair or disrupt the charging service generation. In the event of such violations, EMRA has the authority to apply a ceiling or floor price at the regional or national level for a period of not exceeding three months. Considering the relationship between the price parameter and competition law, the regulation to be made on this particular issue is of paramount importance. On the other hand, it is striking that in relation to the establishment of the charging station infrastructure and the charging fee determination, EMRA is empowered and mandated with broad areas of competence. Although EMRA has discretion in this matter, it should be emphasized that this discretion is not unlimited. Essentially, it is limited by "public interest" and its jurisprudence.

      Furthermore, EMRA has the authority to determine the special conditions for the charging network operator license, including the following:

      • License term, amendments, and price,
      • Matters to be included in the license,
      • The rights and obligations undertaken by the license,
      • Restriction of the operations within the scope of the license,
      • Quantitative restrictions on the issuance of the license and the execution of the license operations,
      • Commercial and technical obligations, including establishing charging stations, consider the prevalence of charging stations.

      Conclusion

      When we analyze the complementary economic relationship between EVs and their charging stations, it is seen that the invisible hand of the current economic system regarding climate change and environmental protection is inadequate to solve the problem of negative externalities. In contrast to the rapidly developing technology, the transition from fossil fuels to EVs cannot be attained on its own accord. Consequently, instead of waiting for the markets to reach the balance, the governments make use of regulations as the second-best solution8. As we witness altogether in this article, Turkey is one of them.

      Furthermore, the ratification of the Paris Agreement on 6 October 2021 has sparked low-carbon solutions and new markets. In an effort to achieve the targets, zero-carbon solutions are becoming apparent in the power and transportation sectors. In this sense, although Turkish lawmakers introduced a novel framework for the EV ecosystem by an amendment in primary legislation, stakeholders are waiting for EMRA to enact the relevant secondary regulations in the forthcoming three months.

      In accordance with the initial sectoral commentaries9, within the scope of the determined regulatory framework, an acceleration in investments and a widespread network of EV charging infrastructure is expected through smooth licensing, permit, and certification procedures. Moreover, it appears that a relatively short period of four months is allowed for those currently providing charging services to adjust their situation to the amendments. Therefore, the issuance of first licenses for charging network operators and relative certificates is just around the corner.

      Footnotes

      1. https://www.tehad.org/2022/01/16/2021-yili-elektrikli-ve-hibrid-satis-rakamlari-belli-oldu/Last Access:19.01.2022.

      2. Chen F, Feng M, Han B, Lu S. Multistage and Dynamic Layout Optimization for Electric Vehicle Charging Stations Based on the Behavior Analysis of Travelers. World Electric Vehicle Journal. 2021; 12(4):243. https://doi.org/10.3390/wevj12040243 Last Access: 16.01.2022

      3. Range anxiety is a common term heard among actual or potential EV users that is defined as "worry on the part of a person driving an electric car that the battery will run out of power before the destination or a suitable charging point is reached": https://www.lexico.com/definition/range_anxietyLast Access: 16.01.2022

      4. Köksal, Emin and Ardiyok, Sahin and Ikiler, Bora, Elektrikli Araçlar için Sarj Altyapisi - Türkiye için Firsatlar ve Öneriler (Charging Infrastructure for Electric Vehicles - Opportunities and Suggestions for Turkey) (October 04, 2021). Baseak CORE Papers No:11, 2021, Available at SSRN: https://ssrn.com/abstract=3933614 Last Access: 16.01.2022

      5. Ibid. p.11.

      6. For a comprehensive review on the previous legislative developments in Turkey regarding the electric vehicles and charging stations, please see: Köksal, Emin and Ardiyok, Sahin and Ikiler, Bora, Elektrikli Araçlar için Sarj Altyapisi - Türkiye için Firsatlar ve Öneriler (Charging Infrastructure for Electric Vehicles - Opportunities and Suggestions for Turkey) (October 04, 2021). Baseak CORE Papers No:11, 2021, Available at SSRN: https://ssrn.com/abstract=3933614 Last Access: 16.01.2022

      7. Köksal, Emin and Ardiyok, Sahin and Ikiler, Bora, Elektrikli Araçlar için Sarj Altyapisi - Türkiye için Firsatlar ve Öneriler (Charging Infrastructure for Electric Vehicles - Opportunities and Suggestions for Turkey) (October 04, 2021). Baseak CORE Papers No:11, 2021, p.11. Available at SSRN: https://ssrn.com/abstract=3933614 Last Access: 16.01.2022

      8. Köksal, Emin and Ardiyok, Sahin and Ikiler, Bora, Elektrikli Araçlar için Sarj Altyapisi - Türkiye için Firsatlar ve Öneriler (Charging Infrastructure for Electric Vehicles - Opportunities and Suggestions for Turkey) (October 04, 2021). Baseak CORE Papers No:11, 2021, p. 1. Available at SSRN: https://ssrn.com/abstract=3933614 Last Access: 16.01.2022

      9. Bayram, B., Sarj Istasyonlari kanun metni Meclis'ten geçti. Sarj kanunu neler getiriyor?, Eelktrikli ve Hibrid Araçlar Dernegi (TEHAD), https://www.tehad.org/2022/01/10/sarj-istasyonlari-kanun-metni-meclisten-gecti-sarj-kanunu-neler-getiriyor/Last Access: 17.01.2022

      The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

      Mr Sahin Ardiyok

      Balcioglu Selçuk Ardiyok Keki Attorney Partnership

      Sirketi

      Büyükdere Caddesi, Bahar Sokak No.13,

      River Plaza Kat 11-12, 34394 Levent, Sisli

      Istanbul

      TURKEY

      Tel: 2123293030

      Fax: 2123293030

      E-mail: hbasar@baseak.com

      URL: www.baseak.com/

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