New tender procedures for wind and solar farms

Introduction

On 13 May 2017, the Energy Market Regulatory Authority (“EMRA”) published a new regulation on tenders relating to pre-licence applications to develop a wind or solar farm (“New Regulation”). The New Regulation has repealed and replaced the previous tender regulation which was published in the Official Gazette dated 6 December 2013 and numbered 28843 (“Repealed Regulation”).

As per the Electricity Market Law No: 6446 (“EML”), the EMRA accepts applications to allocate connection capacity announced by Türkiye Elektrik İletim A.Ş. (Turkey Electricity Transmission Corporation) (“TEİAŞ”) for the development of wind and solar farms only on pre-set application dates (i.e. on the first five business days of April and November, respectively). Where there are two or more applications to develop (i) an aggregate capacity exceeding the capacity announced in relation to a connection region and/or (ii) on the same site, TEİAŞ shall run a tender process for the allocation of such capacity and/or development on such site.

Under the Repealed Regulation, such tender had been held by way of underbidding over a contribution amount to be paid to TEİAŞ for 3 years from commissioning, which was in line with then-applicable provisions of the EML. Recently, the EML has also been amended to change the bidding process, and the New Regulation follows such change. Accordingly, TEİAŞ shall award the tender to the applicant offering the lowest purchase price below a ceiling corresponding to the feed-in tariff provided under the Law on the Utilisation of Renewable Energy Resources for the Purpose of Electricity Generation No: 5346 (“RES Law”), i.e. 7.3 USD Cent/kWh for wind and 13.3 USD Cent/kWh for solar farms. The winning bidder shall nonetheless be entitled to benefit from an additional feed-in tariff in accordance with the RES Law if it uses domestic components in the development of the wind or solar farms.

Application and Tender Processes

The application and tender processes can be summarized as follows:

Renewable Energy Resources Areas

It is worth mentioning that the New Regulation shall only apply to the development of wind and solar farms for which the EMRA receives applications on pre-set application dates. The tender process relating to the renewable energy resource area[3] (“RERA”) is subject to a separate regulation (i.e. the Renewable Energy Resource Area Regulation published in the Official Gazette dated 9 October 2016 and numbered 29852).

The first ever RERA tender for the development of a solar farm with a total installed capacity of 1,000 MWe was held on 20 March 2017. Recently, an announcement has been published in the Official Gazette dated 13 April 2017 with respect to an upcoming tender for the development of wind farm(s) with a total capacity of 1,000 MWe on renewable energy resource areas to be designated within the connection region specified in a non-disclosed tender specification document. Potential bidders are required to submit their offers until noon on 27 July 2017. The Ministry of Energy and Natural Resources shall further notify the bidders of the date and place of the tender.

[1] There must be at least 30 calendar days between the publication of the tender on the website of the TEİAŞ and the date of the tender.

[2] It may be the case that two or more applicants bid equal purchase price. In such a scenario, TEİAŞ shall run the tender on the basis of underbidding and award the capacity to the applicant with the lower purchase price offer.

[3] RERA is a recent initiative of the Turkish government to promote electricity generation from renewable resources introduced by an amendment to the EML in June 2016. It is a government-designated site for the development of large-scale renewables projects with 1 GW or more capacity.