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    Legal Aspects Of Renewable Energy In Turkey


    November 22, 2022 - By MGC Legal

     

      Renewable energy is getting more and more responses in human life day by day because the concept of a "sustainable world" within the scope of renewable energy has gone far beyond being just a statement of intent.Many countries and large and small companies are now targeting sustainability within the scope of renewable energy, which is both a vital issue and a practical process.While continuing the road at full speed without slowing down, at the same time, all sectors are being restructured and adapted from the ground up.Humanity stands right on a historical turning point stretching from the past to the future.

      Renewable Energy in The Scope of Sustainability in Turkey

      "Let's turn our backs to the wind. You won't get tired if you take the wind at your back. We will also turn our faces to the sun." These words, which sound like a wise Indian said them, belong to Mustafa Yilmaz, President of the Energy Market Regulatory Authority (EMRA).

      Despite the fact that SPDK Chairman Yilmaz's remarks on renewable energy at the opening ceremony of the 11th Turkey Wind Energy Congress, which the Turkish Wind Energy Association (TUREB) hosted on November 1-2, 2022, were inspired by the past, they nevertheless indicate a tactical course for Turkey's future.

      However, true to its name, energy is a highly dynamic and multi-layered sector. As a result, it is very difficult to follow the developments regularly and to take a position on time. Especially when it comes to renewable energy, which is constantly updated both technologically and in terms of legislation; in this respect, acting with hearsay or invalid information can lead to risks as well as missed opportunities.

      Considering all these, we have summarized the legal dimensions of renewable energy in Turkey and its reflections on different sectors in general terms for you at the last stage we have reached.

      Is The Global Energy Crisis Actually an Opportunity?

      At first glance, it may seem ethically strange to see a crisis that negatively affects all humanity as an opportunity. However, when we look at the issue through solution-oriented approaches and the possible long-term consequences of these approaches, it can be seen that what is meant is an opportunity related to humanity and social interests.

      The war between Russia and Ukraine, which broke out while trying to heal the wounds of the global epidemic and disperse the atmosphere created by it, quickly deepened the already ongoing energy crisis. This is an impressive lesson that life itself teaches us all about the importance of taking the wind behind us and turning our faces to the sun.

      At this very point, those who know that misfortune is better than a thousand pieces of advice are aware that the global energy crisis is a vital opportunity in terms of both social and economic development and sustainability.

      Renewable energy resources, which are the fundamental dynamics of this opportunity, can be defined as natural values that can survive from yesterday to tomorrow within the cycle of nature in the most general terms. In fact, humanity owes its progress throughout history to correctly using these natural values, and to the inspiration it receives from nature.

      The Netherlands, one of the largest agricultural producers in the world, stands out as a striking example in this regard. The reclamation of areas below sea level, which is the reason why the country is called "Nederland", that is, "low lands", was achieved thanks to wind energy. Since the 13th century, windmills have been used to produce many needs, such as timber, paper, and paint, as well as the discharge of water in these areas. In other words, even in the works of Dutch artists, which are among the most precious pieces of expensive collections today, the energy provided by nature plays a role.

      The most important factor that enabled the geographical discoveries that changed the course of history was the ships called "Caravel". Pioneering sailors, who used the currents effectively, sailed across the oceans with their Latin triangular sails, which made optimum use of wind energy. Christopher Columbus' knowledge of the trade winds was also very influential in his discovery of America.

      Today, we are rediscovering nature's renewable energy, so to speak, by evaluating the same information in light of technological developments and modern engineering methods.

      Although current electricity generation is mainly based on imported natural gas and coal, the wealth we have in terms of natural resources is the biggest weapon in renewable energy investments. With the shortening of the depreciation period of the investment cost, this wealth will be utilized much more efficiently.

      The prevalence and diversity of associations and similar organizations related to renewable energy in Turkey will provide a great advantage in overcoming society's difficulties by acting more organized. As the relevant experience and expert workforce increase, it is inevitable to travel faster in this regard.

      When all these are summed up, the result is; that the global energy crisis has created a great opportunity for renewable energy. For the sake of the productivity expansion of Turkey and a sustainable way of life for all, we as a society and as a human race must not miss this opportunity.

      Of course, policies and strategic steps in the energy field must be compatible with these favorable conditions. It can be said that the legislation shaped by laws, regulations, and communiqués has become much more supportive of renewable energy in recent years. Reducing bureaucratic obstacles to licensing production facilities, Renewable Energy Resources Support Mechanism (YEKDEM), grant support and incentive loans, and public procurement guarantee are the first examples that come to mind.

      After this general framework, which we have tried to explain its benefits, let's continue to examine the issue of renewable energy with its legal dimensions and reflections on different sectors.

      Climate Change Draft Law and Renewable Energy

      The Kyoto Protocol and the Paris Agreement impose certain obligations on Turkey and other signatory countries to reduce the use of fossil fuels and increase renewable energy sources.

      The Climate Change Draft Law (Law), which has been prepared by the Ministry of Environment, Urbanization and Climate Change for more than a year, has great importance in meeting these obligations. The bill is expected to be submitted to the Turkish Grand National Assembly (TBMM) by the end of 2022 and become law. When the draft is examined, first of all, four main points stand out:

      The first of these is that Turkey's fight against climate change will have a comprehensive legal and institutional framework for the first time. Within this framework, the "net zero emission target" specified in the purpose article of the Law reveals the future potential of renewable energy.

      The second issue is hidden in the ministries that have obligations other than the Ministry of Environment, Urbanization, and Climate Change in implementing the Law. The Ministries of Energy and Natural Resources, Industry and Technology, Transportation and Infrastructure, Agriculture and Forestry, Interior, Health, Culture and Tourism, Family and Social Services, Treasury and Finance, Trade, National Education and local administrations are in different directions within the scope of the Climate Change Draft Law. It is quite remarkable that they are held liable, albeit at different levels.

      Even looking at this situation alone, it is possible to say that with the implementation of the Law, almost the entire country will enter the process of total mobilization on the basis of the fight against climate change. Investments to be made in this area should also be considered as a part of this mobilization. In this context, the contributions of both countries and large or small companies are of great importance.

      Another point to be underlined about the bill is; perceiving the issue from a socioeconomic perspective beyond a mere environmental issue. The concept of "Green Development Vision", which is frequently emphasized in the draft text, including the purpose of the law, is an indicator of this. Renewable energy is one of the most important components of this vision.

      The Capital Markets Board (CMB), the emission trading system under the obligation of Borsa Istanbul, carbon tax, climate finance, and the Carbon Market Board to be established are among the economic institutions and instruments of the transition to net zero emissions. In order for this transition to take place in a fair way, "preventing unemployment and economic fluctuations and providing green job opportunities" is specifically mentioned in the bill.

      The last point to be emphasized regarding the Climate Change Draft Law is that there will probably be a lot of action plans and regulations in the implementation phase of such a comprehensive and very subjective process.

      This means that more will be put on the Law itself and renewable energy in the coming years. In particular, market-based mechanisms, which are described as economic institutions and instruments above, require a more detailed examination as they take shape depending on the Law.

      A New Era in The Storage of Renewable Energy

      The storage of renewable energy is as critical as its production. Because storage capacity is naturally the limit of production, this limitation is a factor that may adversely affect both the adequate utilization of resources and the distribution of energy.

      In the last days of October, EMRA made an important regulation that will guide the future of renewable energy. The storage arrangement, which is stated to be made according to Turkey's conditions and potential, also facilitates energy production investment.

      Pursuant to this regulation, anyone who undertakes to establish a storage facility will also be entitled to the privilege of being an energy investor. A pre-license application can be made to establish a wind and solar power plant at the power capacity of the promised storage facility. Existing power plants will also be able to increase capacity at the rate of the storage facility they will establish, and depending on this increase, and they will be able to benefit from additional YEKDEM incentives.

      The new regulation, which creates an investment expectation of 20 to 25 billion dollars from domestic and foreign sources in energy storage, is expected to increase employment opportunities in this field. It can be said that these investments will reflect positively not only on wind turbines and solar panels but also on domestic electric vehicle battery technology.

      "Unlicensed renewable energy generation facilities", which will be discussed in the next article, will also be able to establish electricity storage facilities within the scope of this regulation.

      All this is an announcement to the whole world that a brand new era has been entered, which will also increase the storage and production of renewable energy.

      Unlicensed Renewable Energy Generation For a Sustainable Industry

      In accordance with the Climate Change Draft Law; it is aimed to develop renewable energy use infrastructures in an organized industrial zone, industrial zone, technology development zone, free zone, and industrial sites.

      This target for renewable energy was set in last August. When interpreted with the New Unlicensed Electricity Generation Regulation (Regulation) published in the Official Gazette, it will be seen that it will positively reflect the sustainability of industrial production at various scales under more favorable conditions.

      In the relevant Regulation prepared by EMRA, it is stated that it is the primary target for all consumers who have the opportunity to produce the energy they consume from the sun. With this regulation, it will be ensured that real electricity consumers will establish an electricity generation facility to meet their consumption and that they will get a return on their investment within a reasonable period by selling what they consume.

      In other words, all corporate generation areas, whose renewable energy usage infrastructures are aimed to be developed in the Draft Law, can both produce the electricity they need unlicensed and provide input for themselves thanks to the energy they offer by selling the surplus at the same rate as their consumption. The only critical point here is that the surplus production does not exceed the consumption calculated compared to the previous year.

      Industrial establishments outside such organized production areas are also within the scope of this application. Moreover, it can meet its consumption in the investment area, which is registered in a different measurement area than its own renewable energy production facility, with the electricity it produces.

      It is worth noting that EMRA, which has declared that "the main thing is to meet the consumption needs" regarding unlicensed production since 2019, is open to all kinds of project proposals that will contribute to this idea.

      Considering this approach and legal regulations, it can be easily said that unlicensed generation investments in renewable energy will create a great advantage for developing the industrial sector.

      The Effect of Renewable Energy on Export Revenues

      CBAM, or "Carbon Border Adjustment Mechanism", is an application that the European Union (EU) plans to implement in conjunction with the Paris Agreement and the European Green Deal, which aims to reach a climate-neutral continent by 2050.

      CBAM is actually a comprehensive article on its own, with its complex implementation aspects and its controversial provisions in terms of international trade both inside and outside the EU. At this stage, it would be healthier to mention only the possible impact of the issue on Turkey's export revenues.

      The purpose of the application is to impose additional costs and obligations on importing products with a risk of carbon leakage and high carbon emissions to EU countries. In this respect, it can be compared to a kind of punishment mechanism, so to speak.

      However, this penalty is not imposed on the companies in the countries where the export is made; it is applied to the importing companies within the borders of the EU. In this case, it is inevitable for importing companies to turn to alternatives.

      EU countries are in first place with a ratio of more than 40% in Turkey's exports for 2021. If the fine were imposed on Turkey's exporting companies, it would only mean a loss of income. However, the fact that the importers in the EU are turning to alternatives means a serious loss of market for Turkey.

      What needs to be done against this is; following the developments on CBAM carefully, enacting the Climate Change Draft Law as soon as possible, and fulfilling the requirements of the Green Reconciliation Action Plan published by the Ministry of Commerce in 2021. Whether Turkey can maintain its competitive power in the field of exports depends on these.

      Even if there are some involuntary palliative developments, such as postponing the CBAM implementation or narrowing its scope, the only long-term, permanent solution is to develop renewable energy sources that will reduce carbon emissions to protect export revenues.

      Electric Vehicle Charging Stations and Battery Technology

      The Regulation on the installation of electric vehicle charging stations and energy supply services in Turkey entered into force after being published in the Official Gazette in April of this year. Thus, the first charging network operator licenses began to be issued.

      Although it can be considered the beginning of the road in this regard, it is predicted that 1 million electric vehicles will be in traffic and 100,000 charging stations will be in service within ten years. The Ministry of Industry and Technology is trying to accelerate this process with the support it has allocated to charging stations within the scope of the Technological Product Investment Support Program.

      The fact that charging stations will reach an economic volume of 1 billion dollars in 2030 and the expected developments in domestic battery technology with new regulations for the storage of renewable energy are the factors that will increase investments in this field. In terms of sustainability, the use of solar panel systems as an energy source in the charging stations of environmentally friendly electric vehicles will become more widespread with these investments.

      You may be interested in: The License Requirements For Roof Type Solar Power Plants in Turkey.

      The New Golden Key of The Construction Industry: Renewable Energy

      The construction sector, which is one of Turkey's dynamic investment areas, is also within the scope of the Climate Change Draft Law. The Ministry of Environment, Urbanization, and Climate Change prepared the draft; by making the concept of "Near Zero Energy Building" (NSEB) with very high energy efficiency and using renewable energy mandatory, providing an average of 25 percent improvement in the energy performance and carbon emissions of new buildings, and by 2025, new buildings will provide 10 percent of their energy from renewable energy sources.

      Unlike its other provisions, the bill includes the public-private sector-citizen tribunal in practice. In this respect, it is a good example of total mobilization on the basis of the fight against climate change. On the other hand, renewable energy seems to add value and bring a breath of fresh air to the construction industry, which may experience periodic difficulties.

      In Turkey, it can be said that there is a high interest in new living spaces in the size of small towns with high energy consumption. It is also an important opportunity for these living spaces; they will be able to meet their own consumption from renewable energy sources and sell their surplus energy generation within the scope of the new Unlicensed Electricity Generation Regulation.

      Use of Renewable Energy Resources in Flueless Industry

      Currently, there is no regulation or bill obliging the use of renewable energy for tourism areas in Turkey, even partially. However, if we refer to blue flag beaches or natural protected areas, it will be better to understand how this has great prestige potential in terms of international tourism.

      The Sustainable Energy-Based Tourism Application Center (SENTRUM), which was established in Ayvalik-Kucukkkoy by Enerjisa and Sabanci University in cooperation with the United Nations Development Program (UNDP), is an exemplary and expandable initiative in this regard.

      SENTRUM, the first experience of the "Green Destination Model", also enabled clear data to be obtained in the fight against climate change and has been effectively used for this, from a renewable energy source to a solar power plant to electric vehicle charging infrastructure.

      Sabanci Holding Chairman of the Board Guler Sabanci stated that the concepts of "scalable, repeatable, and sustainable" summarize the approach towards renewable energy. The formula is clear; "we will scale, iterate and sustain".

      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.

      MGC Legal

      MGC Legal

      Buyukdere Cad. No:127, Astoria B Kule 5. Kat

      Istanbul

      34394 Sisli

      TURKEY

      Tel: 850333 86 60

      Fax: 212215 25 84

      E-mail: mustafa.gunes@mgc.com.tr

      URL: www.mgc.com.tr/

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