Updated: Nov 10, 2021
As an ever-growing and industrializing country with a population reaching nearly 82 million, Turkey continuingly increases its’ energy consumption each year, and accordingly, renewable resources become more of an exigency. The country has significantly increased its capacity regarding renewable energy over the recent years to reduce its import dependency. In this regard, solar energy has become by far the most important alternative clean energy resource and has started drawing attraction lately.
Coupled with the perfect geographical location in the sunbelt, experiencing an average of 200 days of sun per year, Turkey is deemed highly favourable for the utilization of solar energy. According to the Solar Energy Potential Atlas (GEPA Report) formed by the General Directorate of Renewable Energy, Turkey’s annual average of total insolation duration is reported to be 2.736,89 hours (7,5 hours/day) while its annual average solar radiation is reported to be 1.524,18 kWh/m2 per year (4,18 kWh/m2 per day). These statistics indicate that Turkey has a strong appetite for solar power applications. Nevertheless, the country still heavily relies on imported energy that consists of mainly fossil fuels.
Among other renewable sources of Turkey, the potential of using solar energy outclasses. Furthermore, the country’s total solar energy capacity has reached 6,667 Megawatts (MW) by 2020 and 1,500 MW capacity is expected to be added in 2021. Considering the Renewable Energy Strategic Plan for 2018-2029, Turkey aims to raise its solar power capacity to 17.300 MW by the end of 2029. To that end, the country needs strong regulative background and attractive incentive policies for solar power.
Regarding the legal aspects of the sector: the primary legislation for the electricity sector is Electricity Market Law ("EML") and concerning the investments in solar energy resources in Turkey, the main legislation is the Law on Utilization of Renewable Energy Sources for Generating Electrical Energy (“RES Law”). RES Law has identified several certificates and approvals which allow investors to utilize incentives and to operate within the scope of the RES Law.
In order to operate in the solar energy market by generating electricity having over 5 MW in a solar power plant, a license must be obtained from The Energy Market Regulatory Authority (“EMRA”), which is the competent authority that supervises the energy market and monitors market performance to ensure compliance with the rules. Briefly, EMRA is responsible to issue and renew licenses; audit the license holders; enforce and supervise regulations; prepare, modify and execute regulated tariffs, and to ensure that the market activities are conforming with the Electricity Market Law.
The regulations governing solar energy license obtaining procedures are provided under the Electricity Market Licensing Regulation. Accordingly, after applying to EMRA, the companies are required to obtain a pre-license for a maximum 24 months of period before obtaining a solar power license. On the other hand, facilities maintaining solar electricity generation activities under 5MW, are exempt from licensing requirements. Herewith, natural persons and legal entities generating electricity from solar energy for their exclusive use, can pursue electricity generation activities without engaging in licensing processes.
Solar Energy facilities can also benefit from several incentives such as 10 years of purchase guarantee, feed-in tariffs, tax exemptions, and discounts in terms of VAT, customs tariff, and corporate income tax. Additionally, the Ministry of Food, Agriculture and Livestock provides grant supports to companies that are engaged in agriculture and livestock activities and generating electricity for the company needs.
It is beyond question that Turkey has a rich potential of solar energy due to its geographical location and rapidly growing energy demand. Renewable energy sources have become more crucial over the last decades and it is expected to gain more importance with more incentives from the government as a policy to reduce the effects of climate change. Although the country’s growing potential and government’s incentive policies towards investors in this field, still the greater part of the country’s energy consumption is met by imports and Turkey has still a long way to go in terms of benefiting its renewable energy sources as an alternative to fossil fuels.