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EU-IPA12/CS02
Development of the Renewable Energy Sector
TASK 1 Assessment of Current Situation, Barriers and Road Map
SubTask1A
Assessment of Current Situation
REGULATORY FRAMEWORK (01) Activities 1A, 1B and 4
Deliverable D2 – Final Report
Task Leader: Jordi Dolader
June 2017
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TASK 1 – SUBTASK 1A DELIVERABLE D2 – FINAL REPORT
ACTIVITIES 1A, 1B, 4
Project Title : Consulting Services for Development of the Renewable Energy Sector
Project Number : Contract MENR EU IPA12/CS02
Country : TURKEY
Date of report: 06/06/2017
Date of last revision: 14/06/2017
Author of report: Jordi Dolader, Luca Napolitano
Approved by,
• Project Manager: Antonio Moretti
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2 Contents TABLE OF ACRONYMS ........................................................................................................................... 5
TABLES INDEX ....................................................................................................................................... 8
FIGURES INDEX ..................................................................................................................................... 9
1 REFORM OF THE TURKISH ELECTRICITY SECTOR .......................................................................... 10
2 INSTITUTIONS IN THE TURKISH ELECTRICITY SECTOR .................................................................. 13
2.1 MINISTRY OF ENERGY AND NATURAL RESOURCES (MENR) ................................................................... 13 2.2 ENERGY MARKET REGULATORY AUTHORITY (EMRA) ........................................................................... 14 2.3 TURKISH ENERGY MARKETS OPERATIONS COMPANY (EPİAŞ) ................................................................ 14
3 MARKET PLAYERS IN THE TURKISH ELECTRICITY SYSTEM AND COMMERCIAL SCHEMES .............. 15
3.1 ELECTRICITY TRANSMISSION SYSTEM .................................................................................................. 15 3.2 ELECTRICITY DISTRIBUTION SYSTEM ................................................................................................... 16 3.3 ELECTRICITY GENERATION SYSTEM (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”) ....................................................................................................................... 19
3.3.1 Electricity Generation Company (EÜAŞ). .............................................................................. 20 3.3.2 Long-‐Term State-‐Contracted Producers ............................................................................... 23 3.3.3 Suppliers ............................................................................................................................... 26 3.3.4 Consumers ............................................................................................................................ 29
3.4 WHOLESALE ELECTRICITY MARKET MECHANISM (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”) ........................................................................................................... 31 3.5 ELECTRICITY MARKET PRICE ASSESSMENT (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”) ....................................................................................................................... 33 3.6 ELECTRICITY PRICING SUPPORT MECHANISMS (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”) ........................................................................................................... 34
4 LEGISLATIVE AND REGULATORY FRAMEWORK ........................................................................... 38
4.1 RENEWABLE ENERGY LAW ............................................................................................................... 38 4.2 DEFINITION OF RENEWABLE ENERGY SOURCES .................................................................................... 38 4.3 SUPPORTIVE MECHANISM FOR RENEWABLES ....................................................................................... 38 4.4 SUPPORTIVE MECHANISM FOR DOMESTIC MANUFACTURING ................................................................. 39 4.5 REGULATION ON THE CERTIFICATION AND SUPPORT FOR RENEWABLE SOURCES ......................................... 41 4.6 REGULATION ON THE DETERMINATION AND UTILIZATION OF RENEWABLE ENERGY FIELDS ............................ 41 4.7 OTHER SUPPORTS FOR RENEWABLES ................................................................................................. 43 4.8 TURKISH ELECTRICITY MARKET LAW (EML) ........................................................................................ 43
5 LICENSING REGULATION FOR RES POWER PLANTS. TASK 1A – ACTIVITIES 1A AND 1B. ............... 44
5.1 LICENSING REGULATION FOR RENEWABLES (>1 MW). ......................................................................... 44 5.2 REGULATION ON THE COMPETITION BETWEEN WIND/SOLAR PRE-‐LICENSE APPLICATIONS ............................ 45 5.3 REGULATION ON THE TECHNICAL ASSESSMENT OF THE WIND POWER PROJECTS ........................................ 46 5.4 SUPPORTS FOR RENEWABLES IN THE LICENSING REGULATION ................................................................. 47 5.5 REGULATION FOR UNLICENSED ELECTRICITY GENERATION (<=1 MW) ..................................................... 47
5.5.1 Procedure for Connection Agreement .................................................................................. 47 5.5.2 Procedure for the Construction ............................................................................................. 49 5.5.3 Procedure for the Provisional Acceptance ............................................................................ 50 5.5.4 Procedure for the Final Acceptance ...................................................................................... 50
5.6 SUPPORT FOR RES ......................................................................................................................... 51 5.7 PROCEDURES ON LICENSING AND LICENSE CANCELLATION ...................................................................... 51
5.7.1 Licensing Procedure for Wind and Solar ............................................................................... 52 5.7.2 Cancellation of the Licenses .................................................................................................. 53 5.7.3 Procedure for the Small-‐Scale Generation ............................................................................ 53
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5.8 DISTRIBUTION GRID REGULATIONS AND DISTRIBUTION SYSTEM OPERATION PROCEDURES IN RENEWABLE ENERGY 54
5.8.1 Regulation on the Unlicensed Electricity Generation ........................................................... 54 5.8.2 Regulation on the Connection and System Usage ................................................................ 54 5.8.3 Distribution Regulation ......................................................................................................... 55 5.8.4 Grid Regulation ..................................................................................................................... 55 5.8.5 Determination of the Renewable Capacity ........................................................................... 55 5.8.6 Transmission and Distribution Tariffs ................................................................................... 58
5.9 SUMMARY OF THE RES PROCEDURES ................................................................................................ 59
ANNEX-‐1: LIST OF THE APPLICABLE LAWS AND REGULATIONS ............................................................ 61
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TABLE OF ACRONYMS
Acronym Definition
BO Build Operate
BOT Build Operate and Transfer
BOTAŞ Petroleum and Natural Gas Pipeline Company
CAPEX Capital Expenditure
CCGT Combined Cycle Gas Turbine
CSP Concentrated Solar Plant
DSO Distribution System Operator
EDCO Electricity Distribution Company
EIA Environmental Impact Assessment
EML Electricity Market Law
EMRA Energy Market Regulatory Authority
ENTSO-‐E European Network of Transmission System Operators -‐ Electricity
EPIAS Energy Market Operations Company
EÜAŞ Electricity Generation Company
EU European Union
EUR Euro Currency
FACTS Flexible Alternating Current Transmission System
GDRE General Directorate for Renewable Energy
GW Gigawatt
GWh Gigawatt hours
HEPP Hydro Power Plant
HV High Voltage
IMF International Monetary Fund
IEA International Energy Agency
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IPP Independent Power Producer
kWh Kilowatt hour
LV Low Voltage
MENR Ministry of Energy and Natural Resources
MTA General Directorate of Mineral Research and Exploration
MW Megawatt
MWh Megawatt hours
NREAP National Renewables Energy Action Plan
OIZ Organized Industrial Zone
OPEX Operating Expenses
PMUM Market Financial Settlement Centre
PP Power Plant
PPA Power Purchase Agreement
PTF Market Clearing Price (Day-‐ahead Market)
REF Renewable Energy Fields
REL Renewable Energy Legislation
RES Renewable Energy Source
SMF Market Clearing Price (Balancing Power Market)
TAEK Turkish Atomic Energy Authority
TEAŞ Turkish Electricity Generation and Transmission Company
TEDAŞ Turkish Electricity Distribution Company
TEK Turkish Electricity Institution
TKİ General Directorate of Turkish Coal Operations
TETAŞ Turkish Electricity Trading and Contracting Company
TOR Transfer of Operating Rights
TPAO Turkish Petroleum Corporation
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TSE Turkish Standards Institution
TSO Transmission System Operator
TTK Turkish Hard Coal Institution
TÜBİTAK Scientific and Technological Research Council
TWh Terawatt hours
VAT Value-‐Added Tax
YEGM General Directorate for Renewable Energy
USD United States Dollar
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TABLES INDEX
Table 1: Privatization Process and the Current Situation of the Distribution Regions ............................... 17
Table 2: Consumer and Consumption Data for Assigned Retail Co.s ......................................................... 18
Table 3: Privatization of EÜAŞ Power Plants. ............................................................................................. 21
Table 4: EÜAŞ Thermal Power Plants ......................................................................................................... 22
Table 5: EÜAŞ Hydro Power Plants ............................................................................................................. 22
Table 6: Build-‐Operate Plants ..................................................................................................................... 23
Table 7: Build-‐Operate-‐Transfer Plants ...................................................................................................... 23
Table 8: Transfer of Operational Rights Plants ........................................................................................... 24
Table 9: Expiration of the Long-‐term PPAs (MW) ...................................................................................... 25
Table 10: TETAŞ Purchases in 2015 ............................................................................................................ 27
Table 11: Expiration of the TETAŞ Contracts (MW) .................................................................................... 28
Table 12: TETAŞ Sales in 2015 .................................................................................................................... 28
Table 13: Comparison of Current and Past Balancing Prices ...................................................................... 32
Table 14: RES purchase Price in the wholesale market .............................................................................. 33
Table 15: YEKDEM Supoort Mechanism Cost for 2016 .............................................................................. 35
Table 16: RES production costs. ................................................................................................................. 36
Table 17: Feed-‐in-‐Tariff for RES technologies in Turkey. ............................................................................ 38
Table 18: Additional incentives for the use of domestic manufactured equipment. ................................. 39
Table 19: Announced 600 MW Solar Capacity by TEİAŞ ............................................................................ 57
Table 20: Transmission System Usage and Operation Fees ....................................................................... 58
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FIGURES INDEX
Figure 1: Historical Development of Unbundling of the State-‐Owned Turkish Electricity Institution ........ 11
Figure 2: Distribution Regions in Turkey .................................................................................................... 17
Figure 3: Installed Capacity by Ownership (01 May 2016). ........................................................................ 20
Figure 4: Installed Capacity Development from 2005 to 2016 (May) by Ownership. ................................ 20
Figure 5: IPPs by Type (MW). ..................................................................................................................... 26
Figure 6: TETAŞ Sale Prices (Tariffs) ........................................................................................................... 28
Figure 7: Eligible Customer Limit and Theoretical Market Opening Ratios ................................................ 30
Figure 8: Electricity market structure and relationship among the Turkish electricity system players. .... 31
Figure 9: Evolution of the Electricity Market Mechanism .......................................................................... 32
Figure 10: Steps in the Day-‐Ahead Market Mechanism ............................................................................. 32
Figure 11: Turkish Annual Electricity Market Prices (USD/MWh) .............................................................. 33
Figure 12: Pre-‐License Application Procedure for Wind/Solar Plants ........................................................ 52
Figure 13: Licensing Procedure after Pre-‐License until COD ...................................................................... 52
Figure 14: Procedure for Unlicensed Power Plants .................................................................................... 53
Figure 15: Transformer Loading Projection of TEİAŞ for Summer 2017 (red: >80%) ................................. 56
Figure 16: Published New Wind Power Plant Capacities until 2018 (as of 30/11/2013) ........................... 56
Figure 17: Published New Wind Power Plant Capacities until 2020 (as of 07/05/2015) ........................... 57
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1 REFORM OF THE TURKISH ELECTRICITY SECTOR
Until 1994, the Turkish Electricity Market was dominated by a single state-‐owned vertically integrated company, the Turkish Electricity Institution (TEK).
From the early 1980s, the government intended to attract private participation into the industry in order to reduce the pressure of investments on the public budget. For the first time in 1982, the private sector was also allowed to build power plants of their own and to sell electricity to TEK1. The first law, which set up the legal basis for private participation in the electricity industry, was enacted in 1984 through Build Operate and Transfer (BOT) contracts for new generation facilities, Transfer of Operating Rights (TOR) contracts for existing generation and distribution assets and the auto producer system for companies to produce their own electricity2.
In 1993 TEK was separated into two state-‐owned companies;
1. Turkish Electricity Generation and Transmission Company (TEAŞ) -‐ generation and transmission activities,
2. Turkish Electricity Distribution Company (TEDAŞ) -‐ Distribution and retail sales activities.
During the liberalization process, Turkey enacted the Electricity Market Law No.4628 in 2001. Also, in 2013 this law was further revised with the Electricity Market Law No. 6446 which took place the previous version. Below, there are explanations about the bringing of these laws.
Law No. 4628.
The first Electricity Market Law, No. 4628 and enacted in 2001, was a milestone for the liberalization of the electricity market. The aim of the law is written in the first article and it states to establish a financially strong, stable, transparent and competitive electricity market the changes to Turkish electricity market can be summarized as institutional changes and provisions below.
Institutional Changes of Law No. 4628:
By this law, Turkey created an autonomous regulatory body -‐ Energy Market Regulatory Authority (EMRA) -‐ initiating a major electricity market reform program. Also, TEAŞ was further unbundled into three entities:
1. Turkish Electricity Transmission Company (TEİAŞ) – Transmission,
2. Electricity Generation Company (EÜAŞ) – Generation,
3. Turkish Electricity Trading and Contracting Company (TETAŞ) – Ongoing long-‐term contracts.
1 Amendment to Law No: 1312. 2 Law No:3096, 19.12.1984
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Figure 1: Historical Development of Unbundling of the State-‐Owned Turkish Electricity Institution
Source: Own Elaboration.
With these liberalizations; transmission, generation and wholesale entities have been unbundled to form a competitive market.
The EML includes the following provisions:
• A licensing framework for market participants, • A centrally run wholesale electricity market primarily based on bilateral contracts
between market participants, and • Eligible consumer concept to ensure freedom for eligible consumers to choose their
own suppliers. • Non discriminatory pricing and tariff mechanisms, • Regulated third party Access to tramnsmission and distribution grids in a non-‐
disciminatory manner
With the concept of licensing, private sector can build and operate power plants. Before this revision, private sector could build power plants only with BO, BOT and TOR contracts with the government or auto-‐production plants for self consumption.
Law No. 6446.
The new Electricity Market Law No. 6446, enacted on 14th of March 2013, was the second appropriate step to determine the legal and institutional framework and further development of the sector. The goal of Law No. 6446 is to liberalize the electricity market in Turkey establishing a financially strong, stable, transparent and competitive electricity market, similar to the previous Law No. 4628.
Institutional Changes brought with the Law 6446:
In line with the new EML, a further unbundling and reorganization of TEİAŞ took place by separatingmarket operations from TEİAŞ and transferring to new Market Operator Company EPİAŞ. Prior to Law No. 6446, Market Operator was within TEİAŞ, as PMUM Department. With this law, TEİAŞ is responsible for only balancing market and ancillary services, while day-‐ahead and intraday market activities are transferred to EPİAŞ.
Borsa İstanbul also authorized for electricity derivatives market.
Other Provisions of Law No.6446.
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The new EML No. 6446 brought the following main changes: • Pre-‐License: Licensing procedure separated into two parts: pre-‐licensing and licensing.
Pre-‐construction stage is defined as pre-‐license period. • Unlicensed Generation: No need for a ‘generation license’ if installed capacity is under
1 MW for renewables. This can be increased up to 5 MW by the Council of Ministers. • Extended deadlines for 50% discount on the transmission system utilization fee and
stamp duty exemption. • Changes in types of licenses:
o Wholesale licenses and Retail licenses are removed and they are combined under the Supply License.
• A proposal to allow generation companies also to have retail and export licenses, so that no new companies will have to be created.
At present, only transmission activity is wholly state-‐owned. Others are carried out by state-‐owned and EMRA-‐licensed private establishments at the same time. EÜAŞ is the state-‐owned entity in the generation segment and TETAŞ is the state-‐owned entity in the wholesale segment. With the EÜAŞ privatizations and the expiration of TETAŞ contracts, their share will reduce in the market.
The reform, although not finalized yet, has introduced significant changes to the Turkey’s electricity sector:
• New institutions, and redefined roles of previously existing institutions, • Well operating wholesale markets: day-‐ahead, intraday and balancing markets, • Decrease in limits for eligible customers for further competition (in 2016, 3.600
kWh/year, in 2017 2400 kWh/year). Although, EU legislation requires full opening of the market (all customer freely chose their suppliers), as of 2017 market opening ratio is 90% for Turkey.3
• Privatization of the 21 EDCOs completed, • Distribution and Retail Sales are unbundled, • Privatization of EÜAŞ generation assets are on-‐going, • New generation investments are done by private sector, • Renewable Energy Law enacted and feed-‐in tariff mechanism for renewables is
established. • Last resort suppliers are defined as the requirements of EU acquis.
3 Source: http://www.epdk.org.tr/TR/Dokuman/7414
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2 INSTITUTIONS IN THE TURKISH ELECTRICITY SECTOR
2.1 MINISTRY OF ENERGY AND NATURAL RESOURCES (MENR)
MENR has the following duties and responsibilities: o Strategic planning. o Policymaking. o Annual budget preparation and follow up of the budget expenditures of the
state companies and other establishments under the control of the ministry. o Preparation of major energy standards codes and regulations. o Dealing with environmental, climate, and energy investment matters. o Preparing views for proposed laws related to the energy and related topics and
following them through the parliament. o Audit and supervision of the distribution companies.
There are five major General Directorates under the Ministry: • Directorate of Energy Affairs, • Directorate of Mining Affairs, • Directorate of Petroleum Affairs. • General Directorate of Renewable Energy (GDRE), • Directorate of Foreign Affairs and EU Relations,
Institutions directly connected to the Ministry:
These instutions are formed by law to maintain the main tasks of the Ministry. Ministry have control and audit over these entities.
o General Directorate of Mineral Research and Exploration (MTA) o Turkish Atomic Energy Authority (TAEK).
Affiliated institutions: Affiliated institutionsare public economic companies which are formed by law or statu. Ministry have control and audit over these entities.
o Turkish Electricity Transmission Company (TEİAŞ), o Electricity Generation Company (EÜAS), o Turkish Electricity trade and Contracting Corporation (TETAŞ), o Turkish Electricity Distribution Company (TEDAŞ) o General Directorate of Turkish Coal Operations (TKİ), o Turkish Petroleum Corporation (TPAO), o Petroleum and Natural Gas Pipeline Company (BOTAŞ), o General Directorate of ETİ Mining Operations (ETİ MADEN), o General Directorate of Turkish Electromechanical Industry o Turkish Hard Coal Institution (TTK),
Related Institutions: Related institutions are independent authorities which are established with law. Ministry does not have control over these entities.
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• Energy Market Regulatory Authority (EMRA), • National Boron Research Institute (BOREN),
2.2 ENERGY MARKET REGULATORY AUTHORITY (EMRA)
EMRA is the autonomous Authority for the energy markets in Turkey. It had been established by Law No. 4628 and it was later renamed as the Energy Market Regulatory Authority as per the provisions of Natural Gas Market Law No. 4646. With the enactment of the Petroleum Market Law No. 5015 and Liquefied Petroleum Gas (LPG) Market Law No. 5307, EMRA has been commissioned to regulate and supervise the petroleum and LPG markets.
EMRA’s responsibilities are defined in Law No. 4628: Organization and Duties of the Energy Market Regulatory Authority Law:
• Setting secondary legislation, • Granting licenses to market participants and authorization of investment in new
facilities, • Market establishment, • Forecasting, • Planning, • Supervising the licensed bodies financially and operationally, • Review and approval of gas and electricity tariffs and transport tariffs, • Defining performance standards and monitoring of quality of services, • Handling complaints and settling disputes, • Auditing market activities, and • Preparation of the market regulations and follow up of the market rules’ compliance.
Decision making body of the EMRA is the Board, which consists of 7 members.
2.3 TURKISH ENERGY MARKETS OPERATIONS COMPANY (EPİAŞ)
Organized wholesale electricity markets, day-‐ahead and intraday, are operated by EPİAŞ.
Rights and responsibilities of EPİAŞ are as follows:
• Developing and operating the organized wholesale electricity markets, • If found fit by the Ministry; participating to international electricity markets for purposes
of operating organized electricity wholesale markets, • Determining market operating tariffs under the frame of the principles and procedures
prescribed by EMRA and submit to EMRA for approval.
For the day-‐ahead market, hourly/block/elastic bids and offers are entered to the EPİAŞ system and the clearing price is formed for the following day per the supply-‐demand balance. For the intraday market, no clearing occurs but the system depends on the matching of the available bids and offers. EPİAŞ sets the rules for these markets and submits to EMRA for approval.
Standardized electricity and capacity derivatives contracts are traded in Istanbul Stock Exchange Corporation.
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3 MARKET PLAYERS IN THE TURKISH ELECTRICITY SYSTEM AND COMMERCIAL SCHEMES
3.1 ELECTRICITY TRANSMISSION SYSTEM
TEİAŞ
TEİAŞ is the state-‐owned transmission operator in Turkey and owns all the related assets in the electricity grid above 36 kV. Transmission investment plans are prepared and realised by TEİAŞ alone4. When the generation pre-‐license applications are submitted to EMRA, EMRA sends these applications to TEİAŞ whether it is possible to connect these plants to the grid or not. According to the decision of TEİAŞ, licensing procedure continues or stops.
The income of the entity comes from the transmission fees paid by the parties connected to the transmission lines. Prior to the following year, TEİAŞ prepares its budget for investments and operating costs. Per the required budget, EMRA determines the system usage fees and system operation fees for the participants.
In Turkey, medium and long-‐term electricity generation and transmission planning are done by TEIAŞ5 as per the mandate of the Electricity Market Law (Article 2 b).
“Legal entities to be engaged in Transmission Activities: The Turkish Electricity Transmission Co. Inc shall conduct the electricity transmission activities. Turkish Electricity Transmission Co. Inc. shall be responsible for taking over all transmission facilities owned by the public, developing transmission investment plans for the proposed new transmission facilities and building and operating new transmission facilities….
Turkish Electricity Transmission Co. Inc. prepares generation capacity projection based on demand forecasts prepared by the distribution companies within the framework of the applicable regulations and submits for Board approval.”
The planning processes conducted by TEIAŞ comprise, therefore, three different activities:
o Demand Forecast; o Generation Planning; and o Transmission Planning
TEİAŞ is also responsible for the operation of balancing market (real-‐time market). The Market Financial Settlement Centre (previously PMUM, now EPİAŞ) has been created within TEİAŞ’s organization. Thus, in addition to being a physical system operator, TEİAŞ also acts as the (wholesale) market operator for balancing market.
Several types of entities and end-‐users have direct access to the transmission grid. These are generally, the large generation units (on the generation side) and large industrial facilities (on the consumption side).
According to the current energy policy and energy sector development, there is no sign of privatization of TEİAŞ, thus transmission operations will stay as state-‐owned.
4 Electricity Market Law, No.6446, Article 8. 5 For completeness, TEIAS perform this activity in coordination with the DISCOs and with the MENR. The coordination with the MENR is usually executed when TEIAS and MENR already join their activities to approve the generation expansion plan. The latter, as explained in this paragraph, is one of the key activities of the planning process.
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According to the EU acquis, unbundling of the sector should be finalized. However; TEİAŞ (transmission), EÜAŞ (generation) and TETAŞ (wholesale) are all state-‐owned companies and they are in the control of the Ministry of Energy. This may be stated as a gap between the EU acquis, however since the board of directors for the companies comprise of different people, a significant level of unbundling may be said to be satisfied.
As per the EU acquis, transmission grid access can be said to be transparent and equal to other market players. TEİAŞ can reject a connection request only when:
o Technical inadequacy of the system, o Unable to satisfy the necessary standards when the connection is done, o The connection prevents public services, o Unable to satisfy the voltage stability, harmonic, electro-‐magnetism, flicker
level requirements, o There is a more economical connection point than the requested point, for wind
and solar applications,
For this reason, access to the grid can be said to be conforming to EU acquis.
3.2 ELECTRICITY DISTRIBUTION SYSTEM
Turkish distribution grid can be defined as all assets which energized lower than or equal to 36kV. However, DSOs can build and operate higher voltage lines within their territories with prior consent of TEİAŞ.
There are 21 distribution regions in Turkey, all of which are operated by private companies. Besides, Organized Industrial Zones (OIZs) also have the right to operate as DSOs within their regions. If the OIZ does not use this right, then the distribution activity is carried out by the regional DSO.
Electricity Distribution Companies (EDCOs).
All the existing 21 EDCOs have been privatized. Privatization method in Turkey follows the process of auctioning off using the transfer of operating rights, also known as the TOR model, of the distribution assets in the respective territories, usually for 30 years. TEDAŞ will continue to own the distribution assets operated by the private companies.
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Privatization Process.
With approximately 28.5 million customers and 98% of the market share in electricity distribution across Turkey in 2005, TEDAŞ and its EDCOs were together one of the largest organizations in Turkey. Because of the geographical distribution, consumption concentrations, and the “existing contracts” 21 separate distribution regions have been determined throughout the country. The map of these 21 companies can be seen in the next Figure. As of 01 Oct. 2013, all the DSO privatizations were completed.
Figure 2: Distribution Regions in Turkey
Source: TEDAS.
Table 1: Privatization Process and the Current Situation of the Distribution Regions
Company Main Provinces Date of takeover
1.Dicle Diyarbakır, Şanlıurfa, Siirt, Mardin, Batman, Şırnak 28/06/2013
2.Vangölü Bitlis, Hakkari, Muş, Van 29/07/2013
3.Aras Erzurum, Ağrı, Ardahan, Bayburt, Kars, Erzincan, Iğdır 28/06/2013
4.Çoruh Trabzon, Artvin, Giresun, Rize, Gümüşhane 30/09/2010
5.Fırat Elazığ, Bingöl, Malatya, Tunceli 06/01/2011
6.Çamlıbel Sivas, Tokat, Yozgat 31/08/2010
7.Toroslar Adana, Gaziantep, Hatay, Mersin, Kilis, Osmaniye 01/10/2013
8.Meram Nevşehir, Niğde, Konya, Karaman, Kırşehir, Aksaray 30/10/2009
9.Başkent Ankara, Kırıkkale, Zonguldak, Kastamonu, Çankırı, Bartın, Karabük 28/01/2009
10.Akdeniz Antalya, Burdur, Isparta 28/05/2013
11.Gediz İzmir, Manisa 14/06/2013
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12.Uludağ Balıkesir, Bursa, Çanakkale, Yalova 31/08/2010
13.Trakya Edirne, Kırklareli, Tekirdağ 03/01/2012
14.Ayedaş İstanbul Asean Side 01/08/2013
15.Sedaş Sakarya, Bolu, Düzce, Kocaeli 11/02/2009
16.Osmangazi Eskişehir, Afyon, Bilecik, Kütahya, Uşak 31/05/2010
17.Boğaziçi İstanbul European Side 28/05/2013
18.Kayseri Kayseri Since 1990
19.Menderes Aydin, Denizli, Muğla 15/08/2008
20.Goksu Adıyaman, Kahramanmaraş 31/12/2010
21.Yeşilırmak Samsun, Amasya, Corum, Ordu, Sinop 30/12/2010
Source: TEDAS, EMRA. The last two columns are based on 2012 data, which is the last year for which TEDAS has published data.
Number of consumers within the regions and the total consumptions of the consumers who get electricity from the assigned retail companies are shown in below table.
Table 2: Consumer and Consumption Data for Assigned Retail Co.s
Regional Assigned Retail
Co.
Number of Consumers Consumption (2015 -‐ MWh) Consumption Share
(%)
İstanbul – Europe 4.732.112 22.934.366 14,7%
Başkent 3.969.789 13.926.855 8,9%
Toroslar 3.505.182 13.757.501 8,8%
Gdz 2.971.756 13.236.147 8,5%
Uludağ 2.893.903 10.393.432 6,7%
İstanbul -‐ Asia 2.676.318 10.784.202 6,9%
Akdeniz 1.941.193 7.893.063 5,1%
Meram 1.889.687 7.456.608 4,8%
Yeşilırmak 1.884.597 4.694.534 3,0%
Adm 1.778.772 7.694.876 4,9%
Osmangazi 1.611.585 5.703.744 3,7%
Sakarya 1.578.224 8.880.089 5,7%
Dicle 1.531.664 5.695.623 3,6%
Çoruh 1.237.935 3.245.679 2,1%
Trakya 968.459 5.994.621 3,8%
Aras 906.537 2.034.402 1,3%
Çamlıbel 898.618 2.266.011 1,5%
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Fırat 858.178 2.299.737 1,5%
Kayseri 654.578 2.090.192 1,3%
Akedaş 631.557 3.624.014 2,3%
Vangölü 599.921 1.561.156 1,0%
Total 39.720.565 156.166.852 100%
By comparing the above tables’ figures it is clear where the bulk of electricity consumption is recorded in Turkey, in the west part of the country.
Unbundling of DSOs and retail sales are first initiated with the accounting separation and now they are legally separate companies. Although there are some practical problems, EU acquis may be said to implemented at this subject.
Distribution Tariffs.
Distribution tariffs are determined for five-‐year tariff periods and current period is 2016-‐2020. Used tariff methodology for DSOs is the Revenue Cap, which aims to cover all CAPEX and OPEX costs of EDCOs and provide a constant rate of return.
Prior to the tariff period, DSOs prepare their consumption forecasts and investment requirements. These requirements are controlled and approved by EMRA. Also the operational cost requirement of the DSOs is determined by EMRA, based on the data of previous years. According to the total requirements, revenue cap is determined. Unit distribution fee is calculated by the revenue cap divided by the expected consumption. The deviations are corrected in the next years by adding to or subtracting from the revenue caps.
Organized Industrial Zones (OIZs).
Organized Industrial Zones (OIZs) function as distribution entities that operate within one of the 21 distribution territories. Distribution tariffs for OIZs, which can be different from the tariffs of the EDCOs, are determined by the regulatory authority EMRA on a basis comparable to distribution utilities.
If an OIZ does not get DSO license, then the distribution activity is carried out by the regional EDCO.
3.3 ELECTRICITY GENERATION SYSTEM (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”)
In Turkish electricity system, generation companies can be separated in three classes:
1. State-‐Owned Plants (EÜAŞ), 2. Long-‐term state-‐contracted Plants (TETAŞ), 3. Independent Private Plants (IPPs).
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Figure 3: Installed Capacity by Ownership (01 May 2016).
Source: TEÍAS.
EÜAŞ share is decreasing due to the privatizations and TETAŞ contracts will be mostly expired until 2020. For this reason, the weight of the IPPs will be likely higher in the following years.
The following figure shows that the generation investments in Turkish electricity sector are mostly done by the private sector.
Figure 4: Installed Capacity Development from 2005 to 2016 (May) by Ownership.
Generation companies also have the right to buy electricity up to the level EMRA determines, to perform its supply obligations. This level is determined as the total annual generation stated in the license of the plant.6
The details of the generation companies are given below.
3.3.1 ELECTRICITY GENERATION COMPANY (EÜAŞ).
State-‐owned hydropower plants and thermal power plants are owned and operated by EÜAŞ. Besides, the ownership of the TOR and BOT plants will be passed to EÜAŞ after the expiration of these contracts.
However, due to the liberalization process in the sector, while the major hydropower plants are considered to be strategic assets and are envisaged to remain under EÜAŞ (state) ownership,
6 EMRA Board Decision, 27/03/2014 dated and 4935-‐18 numbered.
EÜAŞ; 19.997; 27%
Long-‐term
Contracted;
9.683; 13%
IPP; 44.947; 60%
23
106
24
107
24
97
24
10 8
24
10 11
24
10
16
24
9
19
25
9
2324
9
31
22
9
38
20
9
43
20
10
45
EÜAŞ BO-‐BOT-‐TOR IPP
Installed Capacity (x 1000 MW)
21
the thermal power plants and the smaller hydropower plants are planned to be privatized.
MENR has decided to privatize some public generation units by portfolios or individually. As per the Privatization High Council Decision, 27.12.2006 dated and 2006/100 numbered, some hydro plants, a geothermal plant and a gas turbine plant are decided to be privatized. The privatization of these 9 power plants with 141 MW installed capacity was completed in 2008.
With the privatization, High Council Decision, 19.10.2009 dated and 2009/59 numbered, 56 hydropower plants were separated into 19 groups and decided to be privatized by the transfer of operational rights. The privatization of 10 groups (98.8 MW) were completed. One group was not realized because of its disaster area situation and tender of the 8 groups were cancelled.
With the 08.02.2011 dated and 2011/10 numbered Privatization High Council Decision, Kısık HEPP; and 30.04.2012 dated and 2012/60 numbered decision Berdan and Hasanlar HEPP included in privatization portfolio. With these plants and the previously remained hydropower, new portfolio of ten groups was formed and tendering process initiated. All the groups’ privatizations were completed as of June 2013.
The privatization process of thermal power plants listed in below table is completed. Aliağa CCGT (180 MW) and Bursa CCGT (1460 MW) and a group of hydropower plants are currently under privatization process.
Table 3: Privatization of EÜAŞ Power Plants.
Name Company Province Date of
Takeover Installed Capacity
(MW) Fuel
Hamitabat CCGT Limak Tekirdağ 01/08/2013 1,156 Natural gas
Seyitomer Çelikler Kütahya 17/06/2013 600 Lignite
Kangal Konya Şeker Sivas 14/08/2013 457 Lignite
Çatalağzı Bereket Zonguldak 22/12/2014 300 Hard Coal
Yatağan Bereket Muğla 01/12/2014 630 Lignite
Kemerköy IC Holding
Muğla 23/12/2014
630 Lignite
Yeniköy Muğla 420 Lignite
Orhaneli Çelikler
Bursa 22/06/2015
210 Lignite
Tunçbilek Kütahya 365 Lignite
Soma B Konya Şeker Manisa 22/06/2015 990 Lignite
Since 2009, it is decided that DSI will no longer construct new hydro plants (except for the existing ones under construction). The ones under construction will also be privatized after commencement of operation.
As of June 2016, current portfolio of EÜAŞ is around 20.000 MW, which are given in the following tables. Since the privatization is continuing, the portfolio is shrinking.
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Table 4: EÜAŞ Thermal Power Plants
Plant Fuel Installed Capacity (MW)
Afşin – Elbistan A Lignite 1.355
Afşin-‐Elbistan B Lignite 1.440
18 Mart Çan Lignite 320
Bursa CCGT Natural Gas 1.432
İstanbul CCGT (A) Natural Gas 1.351
İstanbul CCGT (B) Natural Gas 816
Aliağa CCGT Natural Gas 180
İstanbul Fuel-‐Oil 330
Hopa Fuel-‐Oil 50
Hakkari (Çukurca) Fuel-‐Oil 1
Soma A -‐ Lignite Lignite 44
TOTAL 7.319
Table 5: EÜAŞ Hydro Power Plants
Plant Province Installed Capacity (MW)
Plant Province Installed Capacity (MW)
Atatürk Şanlıurfa 2.405 Kılıçkaya Sivas 120
Karakaya Diyarbakır 1.800 Akköprü Muğla 115
Keban Elazığ 1.330 Muratlı Artvin 115
Altınkaya Samsun 703 Dicle Diyarbakır 110
Deriner Artvin 670 Torul Gümüşhane 103
Berke Osmaniye 510 Kralkızı Diyarbakır 95
Hasan Uğurlu Samsun 500 Köklüce Tokat 90
Ermenek Karaman 302 Kürtün Gümüşhane 85
Borçka Artvin 301 Çamlıca-‐1 Kayseri 84
Sır K.Maraş 284 Kesikköprü Ankara 76
Gökçekaya Eskişehir 278 Doğankent Giresun 75
Obruk Çorum 211 Kadıncık 1 Mersin 70
Batman Diyarbakir 198 Suat Uğurlu Samsun 69
Karkamış Gaziantep 189 Demirköprü Manisa 69
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Özlüce Elazığ 170 Adıgüzel Denizli 62
Çatalan Adana 169 Seyhan 1 Adana 60
Sarıyar h.p. Ankara 160 Derbent Samsun 56
Alpaslan-‐1 Muş 160 Kadıncık 2 Mersin 56
Gezende Mersin 159 Kapulukaya Kırıkkale 54
Aslantaş Osmaniye 138 Kılavuzlu K.Maraş 54
Hirfanlı Kırşehir 128 Şanlıurfa Şanlıurfa 51
Menzelet K.Maraş 124 Other-‐24 (<50 MW) 428
TOTAL 12.986 MW
Because of the higher hydro portfolio, average generation cost of EÜAŞ is very low. For this reason, generation of EÜAŞ plants are purchased by TETAŞ to reduce its mix cost. Otherwise, TETAŞ average cost would be higher because of the long-‐term contracted natural gas plants.
3.3.2 LONG-‐TERM STATE-‐CONTRACTED PRODUCERS
Long-‐term contracted producers have power purchase agreements with TETAŞ. These power plants are mainly constructed before the liberalization of the electricity market and the expiration dates for most of the contracts is the 2020.
As of June 2016, total capacity of long-‐term contracted plants is 9,684 MW and they constitute 13% of the total generation capacity. The distribution of these capacities by contract type is shown in the following tables.
Table 6: Build-‐Operate Plants
BO Plants
Company Plant Capacity Fuel
İskenderun En. İskenderun İ.K.S. 1.210 Import Coal
Baymina Ankara DGKÇ 770 Natural Gas
Izmir Elk İzmir DGKÇ 1.520 Natural Gas
Adapazari Elk. Adapazarı DGKÇ 770 Natural Gas
Gebze Elk. Gebze DGKÇ 1.540 Natural Gas
TOTAL BO 5.810 MW
Table 7: Build-‐Operate-‐Transfer Plants
BOT Plants
Company Plant Capacity Fuel
24
Ova Elk. Ova Doğalgaz 253,4 Natural Gas
Doğa En. Esenyurt DGKÇ 180 Natural Gas
Uni-‐Mar En. Uni-‐Mar Doğalgaz 478 Natural Gas
Trakya Elk. Trakya Doğalgaz 478 Natural Gas
Kayseri Elk. Yamula HES 100 Hydro (Dam)
Birecik Birecik HES 672 Hydro (Dam)
Bores Bozcaada RES 10,2 Wind
Ares Alaçati RES 7,2 Wind
Gaziler En. Gaziler HES 11,1 Hydro (River)
Altek Alarko Tohma-‐Medik HES 12,5 Hydro (River)
Sütçüler En. Sütçüler HES 2 Hydro (River)
Gönen HES Elk. Gönen HES 10,6 Hydro (River)
İçtaş En. Girlevik-‐II Mercan HES 11,6 Hydro (River)
Metak En. Dinar -‐II HES 3 Hydro (River)
Limak En. Çal HES 2,2 Hydro (River)
Aksu En. Aksu-‐Çayköy HES 13 Hydro (River)
Ahiköy En. Ahiköy-‐II HES 2,5 Hydro (River)
Ahiköy En. Ahiköy-‐I HES 2,1 Hydro (River)
TOTAL BOT 2251,4 MW
Table 8: Transfer of Operational Rights Plants
TOR Plants
Company Plant Capacity Fuel
Bilgin Elk. Hazar I-‐II HES 29,8 Hydro (Lake)
Park Termik Çayırhan TS 620 Lignite
TOTAL TOR 649,8 MW
As of 2020, 88% of the long-‐term contracts will expire.
BOT and TOR plants will be owned by EÜAŞ and then privatized. BO plants will turn directly to IPPs. Especially with the expiration of CCGT contracts, merit order in the wholesale market will shift by 6.000 MW which will cause an increase in the market prices.
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Table 9: Expiration of the Long-‐term PPAs (MW)
2016 2017 2018 2019 2020 2021 2022 Expiration Capacity 672 253 4632 2351 630 14 41 Cumulative Expired Capacity 672 925 5,557 7,908 8,538 8,552 8,593
Soon, long-‐term contracts are planned to be made with nuclear power plants. TETAŞ will be the government side party of these contracts. Akkuyu nuclear power plants with a capacity of 4,800 MW and Sinop nuclear power plant with a capacity of 4,480 MW will have 15 year PPAs when they will be operating. However, the first nuclear power plant is not foreseen to be built before 2025 in optimistic scenario.
Second form of long-‐term contracts is planned to be big solar projects. For example, Karapınar/Konya region is assigned as a solar energy field with 3.000 MW capacity. The tender for this field will be done by decreasing the contract price. Electricity generated from the plant will be priced at the rate identified by the tender and for the period identified by the contract within the RES Support Mechanism. The winning company will sign a long-‐term contract with TETAŞ.7
It is expected that, after the expiration of the long-‐term contracts, government will make contracts only up to the expired level. Therefore, the share of long-‐term contracts is not assumed to be increased.
3.3.2.1 Independent Power Producers (IPPs)
IPPs are generally defined as non-‐utility generators that sell their output freely on the market, either directly to eligible customers or to the wholesale marketers via bilateral contracts or to the centrally organized markets such as EPİAŞ. The power plants other than state-‐owned EÜAŞ power plants and long-‐term contracted TETAŞ power plants are defined as IPPs. As of June 2016, installed capacity of the IPPs is 46,329 MWs. The distribution of this capacity among fuel types are shown in the below Figure.
7 South Korea’s Hanwha Q Cells and local Turkish firm Kalyon Enerji have won the Konya tender (1,000MW), offering to sell the generated electricity at a feed-‐in tariff of $0.0699 per kWh. Turkey’s energy minister Berat Albayrak said recently that the plant “will have a 15-‐year purchase guarantee without any currency risk”. https://www.pv-‐magazine.com/2017/03/20/turkeys-‐1-‐gw-‐konya-‐solar-‐pv-‐tender-‐concludes-‐at-‐0-‐0699-‐per-‐kwh/.
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Figure 5: IPPs by Type (MW).
Source: TEÍAS.
3.3.2.1.1.1 Unlicensed Generation (<1 MW)
All RES generation units with an installed capacity less than 1 MW and micro-‐cogeneration units (<0.1 MW) do not require getting license.8 These plants can sell their excess generation to the incumbent supplier company for 10 years with the incentive prices stated in RES Law.
As of June 2016, unlicensed capacity reached 513 MW of which 443 MW solar and 8 MW wind.
3.3.3 SUPPLIERS
Suppliers take part in the market between the generators and consumers. Generators may sell their production directly to the consumers or via supply companies.
Suppliers may be wholesale or retail traders or both. Prior to the Law no.6446 (before 2013), supply licenses were divided into two segments, wholesale and retail companies, however with the amendment to the law, these two licenses are combined into a single supply license.
As the generation sector, electricity trading is also getting liberalized.
Previously, the sector was dominated by state-‐owned wholesale company (TETAŞ), however this situation is changing as the consumption increases. Currently, suppliers can be classified into three segments:
1. State-‐owned Wholesale Company (TETAŞ), 2. Assigned Retail Companies, 3. Independent Suppliers,
By law9, distribution companies cannot have a direct share in other market players and other market players cannot have a direct share in the distribution companies. For this reason, suppliers and distributors cannot have a direct relationship.
8 Electricity Market Law, No.6446, Article 14. 9 Electricity Market Law No.6446, Article 9/1.
Coal11.633
Natural Gas16.295
Geothermal712
Hydro12.371
Wind4.930
Solar506
Biomass391
Other679IPPs (June-‐2016)
27
Changing of a supplier for an eligible consumer last on the average 39 days and this is much more than the EU acquis which states 3 weeks for the transition.
3.3.3.1 Turkish Electricity Trade and Contracting Company (TETAŞ)
TETAŞ is the seller of electricity generated by the units built by the private sector under the Build-‐Operate-‐Transfer (BOT), Build-‐Operate-‐Own (BOO) and Transfer of Operating Rights (TOR) contracts. BOT, BOO and TOR contracts involve long-‐term power purchase agreements, with the state being the sole buyer of the output.
TETAŞ supplies electricity to the assigned retail companies for non-‐eligible consumers and to EDCOs for losses and street lighting.
TETAŞ was founded in 01.10.2001 in order to continue long-‐term contracts and the aim was that TETAŞ will not be required after the expiration of these contracts. However, as time passed new roles have been given to TETAŞ with Law No.6446 Article 27, to continue its operation in the market. The roles of the TETAŞ are:
• Carrying out the active long-‐term contracts,
• Supplying electricity for the last-‐resort customers,
• Supplying electricity to EDCOs for street lighting,
• Supplying electricity to EDCOs for technical/non-‐technical losses,
Tariffs for TETAŞ sales are approved by EMRA according to the foreseen liabilities and operational costs of TETAŞ.
As of 2015, TETAŞ is the biggest buyer/seller in the market, comprising the 43% of the electricity purchases in Turkey, with 113 billion kWh electricity. As reported by the following Table, TETAŞ purchases are mainly composed of EÜAŞ and long-‐term contracts.
Table 10: TETAŞ Purchases in 2015
Customer Sold Electricity (kWh)
Share (%)
EÜAŞ 53.000.387 46,9%
Build-‐Own Contracts 41.554.410 36,8%
Build-‐Own-‐Transfer Contracts 12.122.664 10,7%
Transfer of Operational Rights 2.697.915 2,4%
Organized Electricity Market 3.663.783 3,2%
Total 113.039.160 100%
By June 2016, TETAŞ portfolio consists of 29.630 MW of which EÜAŞ plants comprise 19.946 MW and long-‐term contracted plants comprise 9.684 MW. The expiration of the long-‐term contracts is shown in below table and it can be seen that by 2020, 8.538 MW capacity will be out of the
28
purchasing guarantee and will exit TETAŞ portfolio.
Table 11: Expiration of the TETAŞ Contracts (MW)
2016 2017 2018 2019 2020 2021 2022
Expiration Capacity 672 253 4.632 2.351 630 14 41
Cumulative Expired Capacity 672 925 5.557 7.908 8.538 8.552 8.593
TETAŞ sales are done mainly to the incumbent last-‐resort retail companies and DSOs. As the eligibility limit decreases and more customers moves to other suppliers, last-‐resort sales will be decreased. As of 2015, TETAŞ sales comprises 42% of the market.
Table 12: TETAŞ Sales in 2015
Customer Sold Electricity (MWh) Share (%)
Electricity Retail Sales Co. 76.469.474 68,4%
Electricity Distribution Co. 32.070.049 28,7%
Direct Customers 1.720.660 1,5%
EPİAŞ (Market) 1.554.456 1,4%
Total 111.814.639 100%
Starting from January 2016, the 1st, TETAŞ tariff was determined as 177,5 TL/MWh and after April 2016 it is determined as 163,5 ($58) TL/MWh.
Figure 6: TETAŞ Sale Prices (Tariffs)
Source: TETAS/EMRA.
3.3.3.2 Assigned Retail Companies (Last-‐Resort Suppliers)
Assigned retail companies are the suppliers that are unbundled from the DSOs. Previously, DSOs were responsible for the sales of electricity in their regions. However, with the current legislation, distribution and retail sales operations have been legally separated. DSO and assigned retail company operations must be done under different legal entities. For this reason, currently there are 21 DSOs and 21 assigned retail companies.
Assigned retail companies are also defined as the last resort suppliers for the consumers who do not chose their suppliers. With the adoption of last resort suppliers in the law, EU legislation
101,5 82,1104,6 93,8 78,6 64,1 59,1
152,8 138,3188,4 178,4 172 174,3 172,7
2010 2011 2012 2013 2014 2015 2016
USD TL
29
requirement is met in this subject.
They have to purchase electricity from TETAŞ according to their sales share. If TETAŞ supply is not sufficient, then they may buy electricity from generators, other suppliers or wholesale markets.
Unlicensed generation have to be purchased by the related Assigned Retail Company in the region. The payments are get from the Market Operator and distributed to the unlicensed generators according to their share. Assigned Retail Companies are subject to imbalance costs if there is more than 2% deviation between the forecast and the unlicensed generation.10
3.3.3.3 Independent Suppliers
Independent suppliers are private companies which operate in the market without any legal obligation to buy electricity from certain suppliers or sell to any certain customers. As of June, there are 190 such suppliers. Generators also perform as suppliers without the need of getting a separate supply license. For this reason, number of generators may also be added to this number.
Previously suppliers were separated into two classes, Wholesale and Retail traders. With the Law No. 6446, wholesale licenses and retail licenses are combined to form a single supply license.
Suppliers have the right to get electricity from generators and other suppliers and sell to eligible customers, DSOs, other suppliers and in the market.
3.3.4 CONSUMERS
3.3.4.1 Eligible Consumers
As of 2017, all consumers with a consumption greater than 2,400 kWh per year or directly connected to the transmission system have the right to choose their supplier and the theoretical market opening ratio11 is above 90%12.
As of July 2016, number of eligible customers is 2.352.062 and consumption of the eligible customers constitutes around 50% of the total consumption.
10 Amendment to Certification and Support of Renewable Energy Regulation, Official Gazette dated 11.05.2017. 11 Market opening ratio: Total consumption of the eligible consumers with respect to the total consumption. 12 Source: http://www.epdk.org.tr/TR/Dokuman/7414
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Figure 7: Eligible Customer Limit and Theoretical Market Opening Ratios
If eligible consumers do not make a contract with a supplier, assigned retail companies must supply their electricity as the last-‐resort supplier. This last resort supplier concept is fully compatible with the EU acquis.
When an eligible consumer want to change his supplier, new supplier should inform EPİAŞ about the subject before the last working day prior to the 6th day of the month. The information submitted by the new supplier is informed to the old supplier on the last working day prior to the 20th day of the month. At the end of the month, supplier switch is completed. Obviously, this procedure lasts at least 24 days and at most 53 days, on the average 39 days. However, EU legislation requires that a supplier can be changed within 3 weeks. This time delay is a gap between the Turkish legislation and EU acquis.
3.3.4.2 Non-‐Eligible Consumers
As of 2017, all consumers with less than 2,400 kWh consumption per year are non-‐eligible consumers and they cannot change their supplier. These consumers must get electricity from the assigned retail companies in their region.
3.3.4.3 Consumer Related Gaps between Turkish and EU Acquis
In Turkish legislation, there is no systematic concept of vulnerable consumers. However, the tariffs for family of martyrs and veterans are lower (48% of normal households). Also, it is prohibited to disconnect the sick customers who requires electricity for their health equipment. The definition and systematic of vulnerable customers is a gap between the Turkish legislation and the EU acquis.
In Turkey, customers may acquire their previous monthly consumptions’ data for the last 12 months without any charge. However, the bills do not contain any information about the renewable mix of the used electricity or its environmental impacts. This may also stand as a gap between Turkish legislation and EU acquis.
Eligible Customer Lim
it (M
Wh)
Eligible Customer Limit Theoretical Market Opening
Theo
retical M
arket O
pening
Rat
io (%
)
31
In case of a dispute or complaint, customers in Turkey may apply to the call centres of the DSOs, directly to EMRA or to the Consumer Courts. However, there is not a single entity or a a contact point as the EU acquis suggests.
Before the tariffs are changed, assigned retail companies are obliged to inform the customers. Also, other suppliers are informing their customers about the tariff changes even there is no legal obligation. In case of a contractual change, eligible customers can change their suppliers free of charge, if they do not accept the new contract. The information procedure is compatible with the EU acquis with the exception that the informing of the customers is not stated legally.
3.4 WHOLESALE ELECTRICITY MARKET MECHANISM (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”)
In the Turkish Wholesale electricity market, electricity is aimed to be traded by bilateral contracts. Only the imbalances remaining from the bilateral contracts are aimed to be traded within the organized markets.
Figure 8: Electricity market structure and relationship among the Turkish electricity system players.
Source: World Bank (2015), Turkey’s Energy Transition Milestones and Challenges, July 2015.
State-‐owned wholesale company TETAŞ is responsible for buying the long-‐term contracted generation and the state-‐owned generation. This generation is sold to the DSOs for technical/nontechnical losses and to the incumbent retailers.
Supportive mechanism for the RES plants are out of the market mechanism and they get fixed prices. Remaining power plants, other than long-‐term contracted or RES in supportive mechanism, are trading electricity freely on the Turkish market platform.
Turkish wholesale market consists of three main markets:
1. Day-‐Ahead Market, 2. Intra-‐Day Market, 3. Balancing Power Market.
Day-‐Ahead and Intra-‐Day Markets are operated by the market operator, EPİAŞ, while the Balancing Power Market is operated by the system operator, TEİAŞ.
32
Figure 9: Evolution of the Electricity Market Mechanism
Source: Own Elaboration.
Electricity is traded on an hourly basis. Bids and offers are stated before the gate closure times and the market settlement occurs. Gate closure for the Day-‐Ahead Market is at 11:30 for the following day. Intra-‐day market bid and offers may be entered the system from 18:00 previous day to one and a half hours before the real time. Balancing Power market starts after the Day-‐Ahead Market settles at 14:00 and bids/offers may be stated until 16:00.
Bids and offers may be hourly, block hours or flexible for the Day-‐Ahead Market. Optimization program runs and determines the hourly market prices. Day-‐Ahead market prices are the reference electricity market prices since they form based on supply and demand. However, Balancing power market prices reflects the unpredicted supply and demand shocks.
Figure 10: Steps in the Day-‐Ahead Market Mechanism
To join the balancing power market, the generation of the power plant must be controllable. For this reason, renewable sources, other than hydropower with reservoirs, are not suitable for this market. Market participants may bid the amount of their extra generation that can be supplied within 15 minutes.
Imbalances in real time are punished financially, i.e. extra generations are given lower price and extra consumptions are incurred higher prices. The mechanism is follows:
Table 13: Comparison of Current and Past Balancing Prices
Imbalance System Imbalance Price
Generation Surplus / Consumption Deficit min(PTF, SMF) x 0,97
Generation Deficit / Consumption Surplus max(PTF, SMF) x 1,03
For the system stability, all generation units of power plants, except RES, with an installed capacity above 50 MW are obliged to be available to provide primary frequency control services to the system. TEİAŞ establishes the margin of primary control to be provided by each participant
Aug 2006-‐Dec 2009•Balancing Mechanism•Monthly three-‐period Settlement
Dec 2009 -‐ Dec 2011•Day Ahead Planning•Balancing Power Market•Hourly Settlement
Dec 2011 -‐ July 2015•Day Ahead Market•Colletarel System•Balancing Power Market•Hourly Settlement
July 2015 -‐ Today•Day Ahead Market•Collateral System•Balancing Power Market•Intra-‐day Market•Hourly Settlement
33
(currently 1%), who in turn can transfer the obligation (through a bilateral agreement) to another qualified participant.
3.5 ELECTRICITY MARKET PRICE ASSESSMENT (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”)
With 80%-‐85% of all sales in the electricity market made through bilateral contracts, what is effectively traded on the electricity market is energy from “excess” capacity that comprises day-‐ahead sales, spot sales and balancing “sales”.
The hourly SMP generally varies anywhere from zero to USD0.08 per kWh, although spikes of up to close to USD 0.20 per kWh have happened at various and seemingly random points in time. The annual average price since 2010 has ranged from about USD 0.046 per kWh up to USD 0.083 per kWh. If a generator elected to forgo bilateral agreements altogether and decided to sell all output on the wholesale market at the SMP, obtaining average prices in this range in any given year would have been the result.
Figure 11: Turkish Annual Electricity Market Prices (USD/MWh)
The Renewable Energy Law stipulates that each facility within the scope of the law is required to obtain a Renewable Energy Source Certificate to benefit from RE oriented incentives.
Resources covered by the Renewable Energy Law include wind, solar, geothermal, biomass, biogas (including landfill gas), wave, stream, tidal, river and “arc type” hydroelectric generation facilities and hydroelectric generation facilities with reservoir areas of less than 15 square km.
The incentives provided by the Renewable Energy Law include:
• Minimum purchase prices in the wholesale market, valid for a period of ten years from commissioning, is provided by the table below:
Table 14: RES purchase Price in the wholesale market
Type of Production Facility Based on Renewable Energy Resources Prices Applicable (US c$/kWh)
a. Hydroelectric production facility 7.3
b. Wind power based production facility 7.3
80,8 74,583,1 78,7 74,9
50,9 46,2
2010 2011 2012 2013 2014 2015 2016
Turkish Day-‐Ahead Market Prices ($/MWh -‐ Annual Avg)
34
c. Geothermal power based production facility 10.5
d. Biomass based production facility (including landfill gas) 13.3
e. Solar power based production facility 13.3
• Additional prices on top of the minimum guaranteed prices above, for domestically manufactured equipment that has been commissioned before December 31, 2020. These prices are applicable for a period of five years from the date of commissioning of the production facility and vary by component for each particular RE technology. For example, a photovoltaic (PV) panel manufactured in Turkey will add USD 0.8 cents per kilowatt-‐hour (kWh) to the minimum price, while a locally manufactured PV module will add another USD 1.3 cents per kWh. These additional prices may add up to USD 9.2 cents per kWh on the minimum solar purchase price of USD 13.3 cents per kWh, or as little as USD 2.3 cents per kWh in the case of hydropower.
• Additional incentives such as for the leasing of lands, exemptions from certain service fees and the use of certain RE sources for heating purposes.
For licensed projects, the RES investor can either take the purchase prices above or sell to third parties through the distribution network. Many licensed projects do, in fact, take the legislated prices, although significant numbers also sign contracts with third parties. All unlicensed RE generators (those having generating capacities below 1 MW) are automatically subject to the legislated prices.
All wholesale market participants holding retail licenses are obligated to purchase electricity generated by RE generators opting for the legislated tariff on the day-‐ahead market. These purchases are then bundled into the costs of the retailers and passed on to consumers through the retail tariffs.
In case of RES plants that will operate in identified Renewable Energy Fields and included in the list of RES Investment Areas as per the Section 4.6 of this Report and under the term specified in the tender specifications of these special zones, the electricity produced can only be sold to the Renewable Energy Resource Mechanism13, for the prices in the Usage Right Agreement14. When the purchase term expires, the applicant can begin operating within the free market.
Energy facilities built under a Usage Right Agreement, hence part of the Investment Areas, cannot benefit from the domestic goods incentives under the Law on the Use of Renewable Energy Resources for the Generation of Electrical Energy No. 5346.
3.6 ELECTRICITY PRICING SUPPORT MECHANISMS (TASK 1A – ACTIVITY 4 – “RES GENERATION COMMERCIAL SCHEME ASSESSMENT AND SUPPORT”)
Since the 1990s, many countries, especially in the EU, have considered various policy instruments to promote renewable energy production, mainly to reduce air pollution and greenhouse gas emissions and to reduce dependency from fossil fuels import. When successful,
13 Portfolio of the RES plants that are benefiting from the feed-‐in tariff mechanism. 14 Agreement signed between the Ministry of Energy and the RES plant, indicating the terms, duration and feed-‐in-‐tariff for the new invetsment.
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these policy instruments have brought notable expansion of renewable energy generation and large cost reductions in the technologies.
Policies supporting renewables can be distinguished in two main groups:
o price-‐based regulations, such as feed-‐in tariffs (FiT) or o quantity-‐based regulations, such as green certificates (GC), also known as
renewables obligation certificate (ROC).
Both models have their advantages and drawbacks in terms of ecological effectiveness and economic efficiency; FiT are generally deemed to be useful to attract investment in the sector, since they provide a high degree of insurance, while it is believed that RO lead to higher economic efficiency15.
In its continuing natural gas and electricity markets reform, Turkey is moving towards a fully cost-‐reflective tariff structure in energy markets. Wholesale prices for the gas and electricity markets are already cost-‐based. No subsidies exist at this level.
The most significant policy supporting energy production in Turkey is the financial assistance provided to the coal industry. Most support is provided through transfer payments from the Turkish treasury to Turkish Hard-‐Coal Enterprises (TTK). The country also supports research and development in relation to clean-‐coal technologies, including coal gasification, CO2 storage and transport, and fuel production from biomass and coal blends. Total subsidies benefitting coal in 2013 have been estimated to be USD $730 million16. Although this number cannot be substantiated through other sources, there is no doubt that support to the industry is in the hundreds of millions of dollars.
With respect to RE, the most significant price support mechanism is the feed-‐in tariff, where the difference between market prices and the tariff is ultimately borne by Turkish electricity consumers. Other support mechanisms include: (i) the guarantee of purchase of electricity through the feed-‐in tariff, (ii) VAT exemptions, (iii) customer duty exemptions, (iv) no licensing fees paid in the first eight years of operation, (v) a discount of 85% on land use and rent fees; and (vi) forestation and erosion control fees not payable in the first ten years of operation.
Cost of YEKDEM support mechanism in 2016 is shown in below table. Unit cost of YEKDEM is the feed-‐in tariff minus the electricity market price, which is the subsidy given for renewables per MWh. Therefore, in 2016 YEKDEM support mechanism cost 409 million dollars.
Table 15: YEKDEM Supoort Mechanism Cost for 201617
YEKDEM Generation (MWh)
Unit Cost of YEKDEM (TL/MWh)
Total Cost (TL)
Total Cost (USD)
3.583.425 18,5 66.304.113 ₺ $22.101.371 4.165.547 32,4 134.947.061 ₺ $45.900.361 5.213.867 37,5 195.410.521 ₺ $67.382.938 4.955.887 32,4 160.793.754 ₺ $56.617.519
15 For more details on instruments to enhance RES at a European level please check the Attached document to TASK 1A for project EU-‐IPA 12CS02 on “Renewable generation in Europe: an overview of the regulatory framework”. 16 Global Subsidies Initiative (GIS) and International Institute for Sustainable Development (IISD) report, “Coal and RES Incentives in Turkey”, March 2015, p.11, https://www.iisd.org/gsi/sites/default/files/ffsandrens_turkey_coal_tk.pdf 17 Source: EPİAŞ website (https://seffaflik.epias.com.tr/transparency/)
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4.769.815 34,1 162.550.525 ₺ $55.477.995 4.035.396 23,3 93.839.099 ₺ $32.136.678 3.867.056 24,6 94.978.762 ₺ $32.196.191 3.160.391 15,5 49.020.825 ₺ $16.505.328 2.763.905 19,9 54.940.904 ₺ $18.561.116 2.611.545 20,9 54.630.910 ₺ $17.795.085 5.166.570 21,8 112.837.889 ₺ $34.507.000 2.980.415 11,5 34.301.596 ₺ $9.828.538 47.273.819 25,7 1.214.555.958 ₺ $409.010.118
The table below, summarizes the estimated production costs from various generation sources. This table also provides estimated amounts of subsidy to Turkey’s renewable energy sector in 2015 via the country’s electricity consumers. Thus, the calculated amount of USD 580 million in 2015, may be seen as that RE sources displace of natural gas production.
Table 16: RES production costs.
In the case of hydropower, it has been assumed that only 25% of current hydropower capacity is eligible for the feed-‐in tariff and, of that capacity, only 25% of hydropower owners opt for the feed-‐in tariff, or 6% in total. However, because of the large amount of hydropower generated in the system, this represents a sizable amount despite the low percentage participation rate. The maximum hydro feed-‐in tariff is USD 9.6 cents per kWh, which means that, in all hydro pricing scenarios, in comparison with the natural gas price of USD 10 cents per kWh, it is less expensive to pay the hydro feed-‐in tariff than generate with natural gas. Therefore, there is no subsidy. However, this would be true if all hydropower capacity was “firm” – i.e., besides the kWh displaced, a kW of new hydro capacity installed would result in the benefit of a kW of thermal capacity being delayed to a later date. This, however, is not the case. In reality, only some of the thermal capacity is delayed as the result of new hydropower, but not all of it. For the purpose of this exercise, it is assumed that the firm portion is 50% – i.e., there is no subsidy in the feed-‐in tariff (there is actually a benefit). For other 50%, there is actually a subsidy, which,
SourceEnergy
production (GWh)
Estimated mid-‐point cost (USD cents per kWh)
% subject to FITSubsidy based on natural gas displacement (USD millions)
Conventional thermal
Natural gas 98,193 10.0
Coal 73,873 8.0
Renewable Base Maximum Mid-‐point
Hydropower 66,903 6.5 6% 7.3 9.6 8.5 112
Wind 11,552 6.5 33% 7.3 11.0 9.2 346
Solar 0.6 10.0 100% 13.3 20.0 16.7 0
Biomass 1,463 8.2 90% 13.3 18.9 16.1 80
Geothermal 3,369 unknown 67% 10.5 13.2 11.9 42
Other 4,336
Total 259,690 580
Feed-‐in tariff (USD cents per kWh)
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on a per kWh basis, is equal to the difference between the “average” feed-‐in tariff (0.085) and the previously estimated variable cost component of natural gas production (USD 7 cents per kWh). Applying the difference between the “average” hydro feed-‐in tariff of USD 8.5 cents per kWh (taken as the mid-‐point between the base tariff and the maximum tariff) and the variable natural gas cost of USD 7 cents (i.e., USD 1.5 cents per kWh) to only 3% of hydro production results in a subsidy of USD 112 million for the hydro tariff.
In the case of wind power, only about one-‐third of wind generators opt for the feed-‐in tariff. As in the case of hydropower, the maximum possible feed-‐in tariff is again lower than the estimated natural gas cost, which would mean no subsidy is required. However, none of this capacity can be considered firm, as the Turkish electricity supply industry will not incur any capacity benefit as the result of wind power. Only energy is displaced, meaning that the “average” feed-‐in tariff of USD 9.2 cents per kWh is considerably higher than the actual (energy-‐only) benefit of USD 7 cents per kWh. Applying the difference of USD 2.2 cents to 33% of wind production results in a subsidy of USD 346 million for the wind tariff.
In terms of providing firm capacity, solar power is the same as wind power, i.e., there is no capacity benefit. The “average” feed-‐in tariff of USD 16.7 cents per kWh is substantially higher than the benefit of displaced energy (USD 7 cents per kWh), resulting in a relatively large subsidy per kWh, but not very large in absolute terms (less than half a million dollars) because of the relatively small amount of solar energy generated in 2015 -‐ even when it is assumed that the uptake of the feed-‐in tariff is 100%.
In the case of biomass and geothermal, the uptake rates for the feed-‐in tariff are about 90% and 67%, respectively. As opposed to wind and solar, these two sources provide firm capacity to the power system. Accordingly, the full natural gas cost of USD 10 cents per kWh is subtracted from the “average” feed-‐in tariffs of USD 16.1 and 11.9 cents to derive the subsidy attributable to biomass and geothermal respectively, applicable to 90% and 67% of 2015 production. The resulting subsidies are USD 80 million for biomass and USD 40 million for geothermal. Annex II of this report displays more details of what reported in the above sections.
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4 LEGISLATIVE AND REGULATORY FRAMEWORK
4.1 RENEWABLE ENERGY LAW18
The aim of the Renewable Energy Law (REL) is defined as;
• promoting renewable energy in electricity generation, • Allocating these sources reliable, economical and in good quality, • Increasing the source variety, • Decreasing greenhouse emissions, • Utilizing wastes, • Saving the environment, • Development of manufacturing sector for the use of these sources,
To achieve these goals, the details are given in the articles of the Law, as summarized below.
4.2 DEFINITION OF RENEWABLE ENERGY SOURCES
In the Renewable Energy Law (REL), renewable energy generation sources are described as the non-‐fossil sources, such as:
• Hydros o Run of river o With reservoir (only reservoir area less than 15 km2 is in the support mechanism,
exception is for some selected big hydros), • Wind, • Solar, • Geothermal, • Biomass, • Biogas, • Wave, flow, tidal energy.
4.3 SUPPORTIVE MECHANISM FOR RENEWABLES
Renewable electricity power plants that will be operational until 31/12/2020 will benefit from the purchase and price guarantee for 10 years. The feed-‐in tariff prices are as in the following table.19
Table 17: Feed-‐in-‐Tariff for RES technologies in Turkey.
Plant Type Feed-‐in Tariff (US ¢/kWh)
Hydro PP 7,3
Wind PP 7,3
18 Law No. 5346, Utilization of Renewable Sources for Electricity Generation 19 Yenilenebilir Enerji Kaynaklarının Elektrik Enerjisi Üretimi Amaçlı Kullanımına İlişkin Kanun, Official Gazette 18.05.2015, No:28782 (the same law as above).
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Geothermal PP 10,5
Biomass / Biogas 13,3
Solar 13,3
Source: Official Gazette 18.05.2015, No:28782.
The power plants that would like to benefit from the Supportive Mechanism for the following years, should apply to EMRA until 31 October of the previous year. The PPs that enter the supportive mechanism cannot get out of the mechanism in that year and cannot sell their electricity out of the mechanism.
EPİAŞ determines the total RES production within the supportive mechanism and the market share of retail sales companies each month. Each retailer has an obligation to buy this electricity per their market share.
The power plants that do not want to benefit from the supportive mechanism can sell their generation freely in the market. However, unlicensed plants cannot sell their electricity out of the supportive mechanism.
Tenders to get the connection right will be done by reducing the feed-‐in-‐tariff prices. Whoever accepts the lowest feed-‐in-‐tariff will be given the capacity.20
With the amendment in Regulation on Documentation and Support of Renewable Energy, which was published in Official Gazette on April 29, 2016, participants in the renewable energy support mechanism have the responsibility for electricity sales and imbalances. They can sell to the day-‐ahead market, intraday market and through bilateral contracts. The support amount is determined by feed-‐in-‐tariff plus the difference between the sales and the produced amount multiplied by 98% of Day Ahead Market price.
4.4 SUPPORTIVE MECHANISM FOR DOMESTIC MANUFACTURING
If the domestic manufactured parts are used for the RES power plants, then an extra incentive is given to the plants in addition to the feed-‐in tariff for 5 years.21 To be a domestic manufactured part, at least 55% of the part should be manufactured in Turkey. The incentive is given according to the ratio of the domestically manufactured section to the whole sections of a part. For example, if 70% of a part is manufactured in Turkey, then 70% of the incentive is given to the plant. The details of the domestic manufacturing incentives are as per the following table.
Table 18: Additional incentives for the use of domestic manufactured equipment.
Plant Type Domestic Manufacturing Additional Incentive
(US cent/kWh)
Hydro Turbine 1,3
Generator 1,0
20 Electricity Market Law, No. 6446, Article 7/4/ç 21 Renewable Energy Law, No. 5346, Article 6/B.
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Wind
Blade 0,8
Generator 1,0
Tower 0,6
Rotor and Nacelle 1,3
Solar (Photovoltaic)
PV Panel and mechanical parts 0,8
PV modules 1,3
PV cells 3,5
Invertor 0,6
Focusing material on PV cells 0,5
Solar (CSP)
Radiation Collection Tubes 2,4
Reflective Surface Panel 0,6
Solar Tracking System 0,6
Mechanical parts of Heat Storage 1,3
Mechanical parts of Boiler 2,4
Stirling Engine 1,3
Panel integration 0,6
Biomass
Fluid Based Boiler 0,8
Boiler 0,4
Gasification Group 0,6
Steam or Gas Turbine 2,0
Internal Combustion Engine or Stirling Engine 0,9
Generator 0,5
Cogeneration System 0,4
Geothermal
Turbine 1,3
Generator 0,7
Steam Injector or vacuum compressor 0,7
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4.5 REGULATION ON THE CERTIFICATION AND SUPPORT FOR RENEWABLE SOURCES22
Framework of the RES Supportive mechanism is described in the REL, and the details of the calculations, allocation of costs and application procedure are given in this Regulation.
Applications to join the supportive mechanism for the following year is made until 31 October in the previous year. Unlicensed plants join automatically to the mechanism. There after the procedure is as follows:
• EMRA announces the initial list in the first 10 days on November. • Objections and correction requests may be done within 5 days. • Objections and corrections are taken into account until 25 November, • EMRA finalizes the final list on 30 November.
Licensed RES plants may join the supportive mechanism annually for the next calendar year starting at 1 January. They cannot enter or exit from the mechanism during the year.
Retailers buy the generated electricity within the mechanism according to their share of market purchases. Accordingly, the sales revenue of supportive mechanism in the market is distributed among the retailers in the same ratios. Imbalance costs are also distributed among the retailers in the same manner.
Payments of the supportive mechanism is done on a monthly basis.
Power plants within the mechanism are exempted from primary and secondary frequency control liability. They cannot take part in the Balancing Power Market and are exempted from the market operation fees.
RES Certificate is granted to the renewable plants for the certification of their sources to take part in the supportive mechanism and emission markets.
4.6 REGULATION ON THE DETERMINATION AND UTILIZATION OF RENEWABLE ENERGY FIELDS23
The aim of this regulation is the determination of the renewable sources in the state-‐owned lands so that they can be utilized. On this topic, Renewable Energy Resource Areas Regulation was published in the Official Gazette number 29852 on 9 October 2016, entering effect on the same date. The Regulation outlines detailed rules for operation, investments and licence procedures in Investment Areas, identified as Renewable Energy Fields (REF).
Investment Areas can be developed by either:
• The Renewable Energy General Directorate. • Third parties, after a tender process by the Renewable Energy General Directorate,
allocating capacity to specifically establish an Investment Area
22 Yenilenebilir Enerji Kaynaklarinin Belgelendirilmesi ve Desteklenmesine İlişkin Yönetmelik, Official Gazette 01.10.2013, No:28782 28782 (revised by the Official Gazette 29.04.2016, no 29698). 23 Elektrik Enerjisi Üretimine Yönelik Yenilenebilir Enerji Kaynak Alanlarının Belirlenmesi, Derecelendirilmesi, Korunması ve Kullanılmasina İlişkin Usul ve Esaslara Dair Yönetmelik, Official Gazette 27.11.2013, No:28834. As updated by the Regulation contained in the Official Gazette 9 October 2016 n. 29852 (http://www.resmigazete.gov.tr/eskiler/2016/10/20161009-‐1.htm).
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The Regulation includes detailed tender procedures for allocating capacity to third parties:
• A tender is announced for each type of resource and relevant connection area, including tender specifications for such site.
• Applicants provide their offers for development of an Investment Area in such connection area, in accordance with the tender specifications.
• The tender is conducted via a reverse auction procedure. Therefore, the tender is awarded to the applicant which offers the lowest electricity purchase price per kilowatt-‐hour, over the government-‐determined price ceiling. The winning bidder is awarded the right to execute a Usage Right Agreement.
• The applicant must determine the usable power plant stations in the connection area, in accordance with the relevant legislation, then notify the Renewable Energy General Directorate within 90 days.
• If the Renewable Energy General Directorate approves these power plant stations, these are announced in the Official Gazette as being Investment Areas.
• The applicant must complete the prerequisites, licenses and approvals for the approved Investment Area, in accordance with the Usage Right Agreement and tender specifications.
If the Technical Commission of the General Directorate of Renewable Energy finds a project site suitable, a report is prepared and sent to the Inter-‐Ministry Assessment Commission.
This Commission examines and states their opinions about the suggested field. Necessary revisions are made per these opinions. As stated above final REF is published in the official gazette and added to the zoning plans.
Measurement obligation is not required for the REF licenses.24 Investments in the REF should be done by using locally manufactured equipment.25 Locally manufactured equipment is defined in the Domestic Goods Communique26. According to this communique, domestic contribution rate should be at least 51%.
The right to continue activities in an Investment Area will only be granted to persons which undertake to produce domestic goods and/or use domestic goods, as specified in the tender specifications for such site.
Applicants must present Domestic Goods Certifications (as stipulated under the relevant legislation), The tender specifications will identify the types of domestic goods required to be used in a specific Investment Area.
Successful bidders must obtain an electricity generation pre-‐licence and licence from the EMRA.
Applicants must also complete the conditions for production or use of domestic goods, specified under the Usage Right Agreement. If the applicant will produce domestic goods in the Investment Area, it must present documents to the Renewable Energy General Directorate which show completion of the production facility within the pre-‐licence period.
24 Electricity Market Law, No. 6446, Article 7/4/b. 25 Electricity Market Law, No. 6446, Article 5/12. 26 Published in Offical Gazette No.29118, 13.09.2014
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During the term stipulated in the tender specifications, energy produced in Investment Areas can only be sold to the Renewable Energy Resource Mechanism, for the prices in the Usage Right Agreement. When the purchase term expires, the applicant can begin operating within the free market.
Energy facilities built under a Usage Right Agreement cannot benefit from the domestic goods incentives under the Law on the Use of Renewable Energy Resources for the Generation of Electrical Energy No. 5346.
4.7 OTHER SUPPORTS FOR RENEWABLES
The main support for the RES other than the feed-‐in tariff is the land utilization. According to the Renewable Energy Law, if the RES site is in forestry or state-‐owned lands, permission to use the lands will be given by the related authority with remuneration. Also, the remuneration of the land usage is discounted by 85% for the first ten years.
RES plants can be installed in the national parks, natural parks, nature reserve areas, protection forests, wildlife parks, specially protected environment areas with the positive opinion of the related Ministry, and in archaeological areas with the positive opinion of the Regional Board. Normally, building permits are restricted for these areas.
While the license applications are evaluated, RES plants will be given priority by EMRA.
Also, in the assessment of transmission connections, renewable energy sources are given priority upon other sources.
4.8 TURKISH ELECTRICITY MARKET LAW (EML)27
General outlook of the Electricity Market Law is given in the first paragraph of this report. In this paragraph, only the legislative and regulatory framework related to the renewable energy sources will be mentioned.
Per the EML, all RES plants greater than 1 MW must get license from the EMRA. However, smaller power plants are exempted from this obligation.
Licensing procedure has two separate and sequential parts:
• Pre-‐Licensing and
• Licensing.
All the permissions and approvals to construct the power plant should be obtained in the pre-‐licensing period, and then the construction may begin with the Licensing period. Normally the Pre-‐licensing period is 24 months, but it could be extended depending on the plant type by the EMRA Board.
Licensing procedure for large power plants and the procedure for smaller power plants (unlicensed RES) are in line with the EU acquis.
27 Electricity Market Law, Official Gazette 30.03.2013, No:28603
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5 LICENSING REGULATION FOR RES POWER PLANTS. TASK 1A – ACTIVITIES 1A AND 1B.
5.1 LICENSING REGULATION FOR RENEWABLES (>1 MW)28.
Per the EML and the Licensing Regulation, every participant in the electricity sector and every power plant must get a license to take its part in the market. The market players who want to build a power plant must be a legal entity.
To apply for a license for geothermal and hydro power plants, firstly the resource allocation rights must be taken for the resource. These rights are obtained by tender from the related institution, i.e. General Directorate of State Hydraulic Works for hydropower and Provincial Special Administration29 for geothermal.
For wind and Solar:
o TEİAŞ informs EMRA about the maximum wind and solar capacity that can be connected to the grid for the following 5 and 10 years separately for the regions.
o Wind PP applications are taken in the first 5 days of April and Solar PP applications are taken in the first 5 days of November according to the announced capacity for that year.
o 1 year of Wind and Solar measurement data is required for pre-‐license applications to be measured during the last 5 years preceding the application.
o Firstly, applications are sent to the General Directorate of Renewable Energy for technical assessment by EMRA.
o If the technical assessment is positive, then the applications are sent to the TEİAŞ.
o If there is sufficient connection capacity for the applicants, then they are allocated to them.
o If there is no sufficient capacity; o Tender is made for the connection capacity by TEİAŞ. o Whoever accepts the lowest feed-‐in tariff price, claims the connection right. o Licensing procedure continues with the company holding the connection right.
For PPs other than Wind/Solar, there is no bidding procedure for the connection rights and these applications can be made any time in the year. After the application is made, EMRA asks TEİAŞ or DSO if there is sufficient connection capacity for the application in the related region. If there is no capacity, then the application is rejected, otherwise licensing procedure continues.
After the liabilities for letter of guarantee, minimum capital and amendments to articles of organizations are completed within 90 days, the applicant is given the pre-‐license.
During the pre-‐license period, the company must complete these tasks:
o Obtaining the land usage rights, o Getting permissions for forestry lands, state-‐owned lands and expropriation for
private properties,
28 Regulation on the Electricity Market Licenses, Official Gazette 02.11.2013, No:28809 29 For the cities that do not have Provincial Special Administration, this refers to Investment Monitoring and Coordination Directorate.
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o Approval of Zoning Plans from the Municipality or the Ministry of Urbanization, o Approval of PP Project from the Ministry of Energy, o Application to the TSO/DSO for Grid Connection Agreement, o Technical Assessment Report for Wind PPs, o Environmental Impact Assessment decision from the Ministry of Environment, o Obtaining Construction Permit for the site, o Completion of the Resource Allocation Agreements for hydropower, o Completion of Contribution Agreement with TEİAŞ for the grid connection
tender,
After the tasks of pre-‐license is completed, the company can apply for the License. In this step, below liabilities are required to get the license:
o The documents showing that each pre-‐license task is completed, o Increase in the amount of letter of guarantee, o Construction Plan, o License Fee, o Only 10% of the fee is applied for the RES plants, o Increase in the amount of minimum capital of the company,
When the License is granted, allowable maximum construction period is stated in the License certificate. If the plant is not built or understood that it cannot be built within the specified time, then the License is cancelled.
5.2 REGULATION ON THE COMPETITION BETWEEN WIND/SOLAR PRE-‐LICENSE APPLICATIONS30
Since the connection capacities by regions are announced by the TEİAŞ and the applications are taken at the same time, a competition is inevitable for the projects in the same area.
The regions for the connection capacities are determined generally by the city boundaries. In some situations, a few cities are combined for a connection region or a city may be divided into separate connection regions.
For the license applications, site measurement is mandatory. The measurements should be at most five years old. For this reason, the firms that are making measurements in the same connection region are competitors for the license application.
When the applications are made and the connection capacity is not sufficient for the appliers, then the competition procedure is done by TEİAŞ as follows:
o The competition date and the list of competitors are announced in the TEİAŞ website,
o Competitors gives letter of guarantee to TEİAŞ before the tender date, o Letter of guarantee amount is 50.000 TL31 for each MW.
30 Regulation on the Tenders for the Pre-‐license Applications of Wind and Solar Power Plants , Official Gazette 06.12.2013, No:28843 31 Letter of guarantee amount was increased from 10.000 TL/MW to 50.000 TL/MW with the amendment to Regulation on 13.05.2017.
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o Bids are given for the committed feed-‐in tariff. o Negative bids can be given, indicating a fee will be paid to TEİAŞ per kWh for 10
years. o Domestic manufacturing support is not in the context of competition regulation.
These supports will be taken in addition to the bidding prices. However, to take advantage of these support, power plant should be within the YEKDEM portfolio.
o Bids are taken in closed envelopes, o After all the bids are collected, the envelops are opened in the tender date, o Connection capacity is allocated in the order of the lowest bid to the highest
bid, until all the connection capacity is assigned,
The competition procedure was changed by Law in 04/06/2016, and the regulation is amended on 13.05.2017. Prior system was suggesting bids for each connected MW to be paid in the first 3 years of operation. This application was changed to the reduction of feed-‐in tariff.
5.3 REGULATION ON THE TECHNICAL ASSESSMENT OF THE WIND POWER PROJECTS32
The technical assessment of the Wind power projects is negative, if,
o Measurement point is outside of the project site, o Wind power density of the site is less than 150 W/m2,
o 𝑃𝑜𝑤𝑒𝑟 𝐷𝑒𝑛𝑠𝑖𝑡𝑦 = 0.5 ∗ 23∗ 𝜌5 ∗ 𝑉573
582
o Installed capacity density less than 2 MWm/km2, o All of the project site corners is within currently operating power plants, o All of the project site corners are within the regions where wind turbines cannot
be erected, o Wind measurement data is not supplied to the General Directorate of
Renewable Energy, o Turbine distances are more than 2.800 m. to each other,
The technical assessment is not negative but the mistakes are determined in the Report if,
o Project site boundary should be at most 1.000 m. away from one of the turbines, o 300 meters distance to the project site boundary is for safety zone and no
turbine can be located in that region, o If there are separate turbine groups, then the distance between the boundary
of the groups shall be at most 1.400 meters. o Coordinates of a turbine affects the wind of another turbine, o 3D x 7D rule o The project site within another project site, o The project site is within a region where no turbines can be located,
32 Regulation on the Technical Assessment of Wind Power Plant Applications, Official Gazette 20.10.2015, No:29508
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5.4 SUPPORTS FOR RENEWABLES IN THE LICENSING REGULATION
In the EML and Licensing Regulation, the supports supplied to the RES plants are as follows:
o Pre-‐license application fee is 10% of the normal fee, o License application fee is 10% of the normal fee, o Annual license fee is not charged for the first 8 years of operation, o Priority on licensing after domestic and import coal power plants, o Transmission system usage fee is 50% discounted for all plants operating before
2020.
5.5 REGULATION FOR UNLICENSED ELECTRICITY GENERATION (<=1 MW)33
RES plants with less than 1 MW installed capacity are exempted from the licensing procedure and they apply directly to the DSO for getting the connection right. The main procedural advantages of the unlicensed plants are:
o Unlicensed plant applications can be made any time in the year, while license applications are taken at 5 days in a year (for wind and solar but not for biomass),
o Unlicensed applications are not subject to tendering procedure for the connection rights and they do not pay extra fee for the connection right,
o Unlicensed applications are exempted from on-‐site wind/solar measurement, while license applications require at least one year of measurement data,
o Unlicensed applications can be made by a real person, while the license application requires a legal entity,
However, a disadvantage in comparison to the licensed projects is that, there is no expropriation process for the unlicensed projects. Therefore, the applicant should obtain the land for the site and the connection line by himself.
5.5.1 PROCEDURE FOR CONNECTION AGREEMENT
5.5.1.1 Non-‐Hydro Power Plants
The procedure for installing an unlicensed RES plant, other than hydro, is as follows:
• For installed capacity; o <0,5 MW, connection line distance cannot be above 5 km (air distance) and 6
km (project distance), o >=0,5 MW, connection line distance cannot be above 10 km (air distance) and
12 km (project distance), • Installed capacities;
o <11 kWe are connected to LV (1 kV) o >11 kWe are connected to LV (1 kV) or HV (> 1kV)
• Total installed capacity connected to a distribution transformer in low voltage (<1 kV) cannot exceed 30% of the transformer power (unless the transformer is owned by the applicant),
33 Regulation on the Unlicensed Electricity Generation in the Electricity Market, Official Gazette 02.10.2013, No:28783
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• The project site has to be purchased or rented, • Any company or person can have at most 1 MW installed capacity in a distribution region
regardless of their consumption, • There should be a consumption point for the applicant in the same DSO region with the
project site, • Installed capacity cannot be more than 30 folds of the consumption capacity, • For the installations having less than 10 kW capacity and for the Plants in Agricultural
Development programs, TEİAŞ reserves 5 MW capacity in each transformer, • Cooperatives can have at most 1 MW for each consumption point and their upper limit
is; o <100 members: 1 MW, o >100 and <500 members: 2 MW, o >500 and <1000 members: 3 MW, o >1000 members: 5 MW,
• For solar projects in the ground, positive opinion of the Provincial Directorate of Agriculture must be obtained, stating that the project site is not efficient for agricultural use,
• Environmental Impact Assessment (EIA) decision should be taken, o Solar plants less than 1 MWe are exempted from EIA decision, o Wind plants less than 10 MWm are exempted from EIA decision, o Geothermal plants less than 5 MWt are exempted from EIA decision,
• Single line diagram of the connection is prepared, • 1/25.000 scaled map of the site is prepared, • Application form is filled, • For geothermal applications, exploration or operating license is required, • With the above stated documents, application to the DSO is made, • DSO, takes the applications for the related month and examines them by a committee
of at least three members, • DSO announces the suitable/unsuitable applications on the fifth day of the next month, • DSO examines the suitable applications for technical assessment, • The applications with the positive technical assessment are considered according to
their priorities. Priorities are given according to: o Renewable sources, o Cogenerations, o Consumption of the applicant for the last year, o Generation and consumption point distance, o Consumption aggregation, o Applicant’s first plant,
• Application results are announced on the 20th day of the next month, • The accepted applications apply for the Call for Connection Agreement in a month and
takes the official letter, • Wind applications are sent to the General Directorate of Renewable Energy for technical
assessment and if the result is positive, the application procedure continues, • Applicants are given 180 days after the Letter of Call for Connection Agreement. Within
this period:
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o In the first 90 days, applicant have to apply to the Ministry of Energy for the approval of the plant project and the connection line project,
o Plant and Connection Line Projects have to be approved, o For Wind projects, Technical Assessment Analysis have to be completed,
• After the above liabilities are completed within the period, DSO makes the Connection Agreement within 30 days,
• Construction period for the unlicensed projects are as follows: o Connections above 1 kV are given 2 years, o Connections below 1 kV are given 1 years,
• If the plants cannot be constructed within these periods, then the Connection Agreement is cancelled.
5.5.1.2 Hydro Power Plants
The procedure for installing an unlicensed hydro plant is as follows:
• The project site has to be purchased or rented, • There should be a consumption point for the applicant in the same DSO region with the
project site, • Environmental Impact Assessment (EIA) decision should be taken,
o Hydro plants less than 1 MWm are exempted from EIA decision, • Single line diagram of the connection is prepared, • 1/25.000 scaled map of the site is prepared, • Information requested by DSİ is completed (i.e. feasibility reports), • Application form is filled, • With the above stated documents, application to the Provincial Special Administration
is made, • Provincial Special Administration collects the applications in a month and sends them to
the DSİ in the first 5 days of the next month, • DSİ sends his opinions to the Provincial Special Administration until the 20th day of the
following month, • Provincial Special Administration send the application to the DSO in the first 5 days of
the following month, • The procedure continues as in the non-‐hydros thereafter,
5.5.2 PROCEDURE FOR THE CONSTRUCTION
After the project approval is done and the Connection Agreement is signed, the plant should be constructed within the specified time periods:
• Hydropower connecting over 1 kV are given 3 years, • Non-‐hydropower connecting over 1 kV are given 2 years, • Plants connecting below 1 kV are given 1 years,
Certainly, these times are not for only construction but also for the permits and approvals to start the construction.
Main permit in this stage is the Approval of the Zoning Plans. If there is already a zoning plan for the project site, it should be revised as the energy generation field. If there is no zoning plant
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for the project site, then the zoning plans must be made and approved by the Municipality or the Ministry. For the zoning plan initiation, Municipality or the Ministry takes the opinions of the related institutions for the project site. For example, overlapping with irrigation projects for DSİ, military zones for General Staff, cultural properties for the related Ministry, etc. If all the opinions are positive, then the zoning plans are made and announced for objections. If the procedure is completed without any problem, then the zoning plans are approved.
After the zoning plans are approved, construction permit is obtained from the Municipality with the required construction projects.
After the construction permit is obtained, then the construction may begin.
5.5.3 PROCEDURE FOR THE PROVISIONAL ACCEPTANCE34
After the construction of the plant and the connection line is completed, Provisional Acceptance of the Ministry of Energy is required to start generating electricity.
The procedures for the Provisional Acceptance is defined in the Electrical Facility Acceptance Regulation. The main documents required for the acceptance is as follows:
• Project Approval documents, • Connection Agreement, • Contract of the Project owner and the construction firms, • Test Reports and Certificates for the used materials and equipment, • Soil Resistance Measurement Report, • Fire Department report, • Field Test Reports, • System Compatibility Report, • Zoning Plan approval documents,
These documents are given to the DSO for the application and DSO sends the application to the Ministry or the authorized institution for the Provisional Acceptance.
Ministry or the authorized institution forms a committee for the site visit and controls the installation for the compliance of the approved Project, Connection Agreement, construction permit, and related legislation. An official report is signed and is sent to the Ministry or to the authorized institution and it is approved or rejected within 30 days.
With the confirmation of the committee, the plant may begin generating electricity before the approval of the authorized institution. However, if the authorized institution rejects the official report, generation halts, otherwise it continues its operation.
5.5.4 PROCEDURE FOR THE FINAL ACCEPTANCE
Final acceptance can be done after 1 year of the operation. Its aim is to detect the defects after provisional acceptance, controlling if the stated deficiencies are omitted or not after the provisional acceptance and seeing the performance of the equipment.
If the stated defects are omitted and the plant is operating in good performance per the provisional acceptance, then the final acceptance of the plant is completed. 34 Regulation on the Projects of Electricity Utilities, Official Gazette 30.12.2014, No:29221 and Regulation on the Acceptance of Electricity Utilities, Official Gazette 07.05.1995, No:22280
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5.6 SUPPORT FOR RES
Looking at the Turkish power system, to summarize the supports of the RES power plants in the Electricity Market Law and RES Law, the benefits that the RES plants take advantage of are:
§ Purchase guarantee and Feed-‐in Tariff for the first 10 years of operation, for the plants installed until 31/12/2020,
§ Additional incentive for local manufactured equipment in the first 5 years for the licensed projects,
§ State-‐owned lands shall be utilized for the RES plants, § State-‐owned land usage fees are at a discount of 85% during the first 10 years of the
investment and/or operation period, provided that such plant starts its operations before the end of 2020,
§ Forest Villagers Development Revenue and Erosion Control Revenue will not be charged, § Transmission system usage fee is 50% discounted for all plants operating before 2020, § Pre-‐license and license application fees are at a discount of 90%, § Exemption from annual license fee payments for the first eight years following the plant
completion date, § Priority in connecting to the transmission or distribution grid, § 2% tolerance for the imbalance costs,
Also, energy investments are eligible to benefit from the General Investment Incentive Program which allows investors to be exempt from customs duty and VAT.
5.7 PROCEDURES ON LICENSING AND LICENSE CANCELLATION
Licensing procedure is required for the plants greater than 1MW installed capacity. Lower capacities are exempted from the licensing procedures. Licensing procedure is separated into two steps:
1. Pre-‐Licensing and
2. Licensing.
The main licensing procedures are displayed in the following paragraphs.
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5.7.1 LICENSING PROCEDURE FOR WIND AND SOLAR
Figure 12: Pre-‐License Application Procedure for Wind/Solar Plants
Source: own elaboration.
Figure 13: Licensing Procedure after Pre-‐License until COD
Source: own elaboration.
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5.7.2 CANCELLATION OF THE LICENSES
Pre-‐Licenses or Licenses can either be terminated by the Company on its own request or cancelled by the Energy Market Regulatory Authority.
The Pre-‐License or the License is terminated when;
• The pre-‐license/license period expires, • The Company requires for the termination, • The Company bankrupts,
The Pre-‐License is cancelled when;
• The shares of the Company are changed, • The liabilities are not completed within the given time,
The License is cancelled when;
• The Plant is not constructed within the given time, or it is understood that the Plant will not be completed until the end of the given time,
5.7.3 PROCEDURE FOR THE SMALL-‐SCALE GENERATION
Power plants under 1 MW installed capacity is exempted from the above-‐mentioned licensing procedures. The procedure for a small-‐scale wind/solar power plant is shown in below Figure.
Figure 14: Procedure for Unlicensed Power Plants
Source: Own elaboration.
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5.8 DISTRIBUTION GRID REGULATIONS AND DISTRIBUTION SYSTEM OPERATION PROCEDURES IN RENEWABLE ENERGY
5.8.1 REGULATION ON THE UNLICENSED ELECTRICITY GENERATION
Main rules for the connection of the small scale (<1 MW) renewable energy to the Distribution System is given in the “Regulation on the Unlicensed Electricity Generation” as follows:
• Connection line distance cannot exceed; o 5 km (air distance) and 6 km (project distance) for <0,5 MW installations, o 10 km (air distance) and 12 km (project distance) for [0,5 – 1] MW installations,
• Connections are done to the; o Low Voltage level (1 kV) for installations less than 11 kWe, o Low Voltage or High Voltage (>1kV) Level for installations above11 kWe,
• Total installed capacity connected to a distribution transformer in low voltage (<1 kV) cannot exceed 30% of the transformer power (unless the transformer is owned by the applicant),
• Any company or person can have at most 1 MW installed capacity in a distribution region regardless of their consumption,
• Installed capacity cannot be more than 30 folds of the consumption capacity, • For the installations having less than 10 kW capacity and for the Plants in Agricultural
Development Programs, TEİAŞ reserves 5 MW capacity in each transformer,
5.8.2 REGULATION ON THE CONNECTION AND SYSTEM USAGE
Main issues for the grid connection and system usage of the producers and consumers are stated in this regulation, however the unlicensed generation is not included within this regulation. The summary and the main points of the Regulation is as follows:
• In the regulation, lines below 36 kV are defined as distribution lines, while the lines above 36 kV are defined as transmission lines.
• The connection request to the system can only be rejected, if: o The technical properties of the connection point is insufficient, o The plant project is not conforming with the Grid Regulation and Distribution
Regulation standards, o The connection prevents the public service of the grid operator, o The connection causes the system electricity quality below the standards, o There is another economical way to be connected to the grid for wind/solar
connections, • If the connection request is rejected, rejection reasons are informed to the applicant
within 45 days, • TSO and DSOs are obliged to publish the maximum allowed capacity in their region for
the following 5 years and 10 years. • DSOs give priority to the renewable and domestic electricity generation connections, • When a connection request arrives to the DSO, DSO informs the Applicant for the
realization time of the connection, not exceeding 5 years. In this situation, applicant may finance the distribution facility investment to fasten the process. Later, according to the connection plan of the DSO, DSO pays back the facility investment to the Applicant.
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5.8.3 DISTRIBUTION REGULATION35
This regulation aims the planning and operation of the distribution system in good quality and economically. Basic points of the regulation are as follows:
• Main technical conformations of the turbines and generators, such as; o Units should satisfy the nominal power generation for the power factor of 0,85
in over-‐excited and 0,95 in under-‐excited situation. o Nominal power generation should be satisfied within 49,5 -‐ 50,5 frequency
levels, o The main standards are TSE, CENELEC and IEC for the facilities,
• Planning rules are defined in Article 22; o Demand forecasts, o Technological developments and flexibility for the demand, o Quality of the system at the lowest investment, o Reducing of the technical/non-‐technical losses, o Coordination with the transmission investments,
5.8.4 GRID REGULATION36
This regulation is the main regulation for the technical operation of the transmission system. It includes standards and technical specifications for the generation units to be operated safely for the system, like the
• voltage deviations, • wave quality, • phase deviations, • current harmonics, • reactive power, • system constraints, • performance specifications, • ancillary services, • etc.
This regulation is mostly technical so that it cannot be summarised within the content of this report. It should be used as a technical book of the transmission system.
5.8.5 DETERMINATION OF THE RENEWABLE CAPACITY
According to the Electricity Market Law Article 8/2/a, TEİAŞ, the system operator, is responsible for the investments in the transmission system. By this responsibility, renewable energy connection capacity to the grid is determined by TEİAŞ. Small scale unlicensed capacities are determined according to the total capacity for licensed projects and the planning of Special Energy Zones. As of January 2016, maximum available unlicensed capacity is 7.902MW of which 6.801 MW is already allocated.
Load flow analysis are done by TEİAŞ and TÜBİTAK according to the projected power plant capacity. By this analysis, maximum possible renewable connection capacities are determined and informed to EMRA to get license applications.
35 Electricity Market Distribution Regulation, Published on Official Gazette 02.01.2014 and no. 28870. 36 Electricity Grid Regulation, Official Gazette 28.05.2014, No:29013
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Figure 15: Transformer Loading Projection of TEİAŞ for Summer 2017 (red: >80%)
Source: TEİAŞ.
In 30/11/2013, TEİAŞ announced that 3.000 MW new wind capacity can be connected to the system until 2018. Total application made was 42.274 MW by 1.096 individual projects, 14 folds of the available capacity.
Figure 16: Published New Wind Power Plant Capacities until 2018 (as of 30/11/2013)
Source: TEİAŞ.
In 07/05/2015, TEİAŞ announced that 2.000 MW new wind capacity can be connected to the system until 2020 in addition to the 3.000 MW announced previously. The allocation according to the regions are shown in Figure 3.6. EMRA announced that the applications for this capacity will be taken in 2016.
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Figure 17: Published New Wind Power Plant Capacities until 2020 (as of 07/05/2015)
Source: TEİAŞ.
For the licensed solar capacity, 600 MW is announced by TEİAŞ and the license applications are taken by EMRA on 10-‐14 June 2013. Total application capacity was 7.873 MW by 496 individual projects, 13 folds of the available capacity. The regions of the available capacity are shown in below Table 19.
Table 19: Announced 600 MW Solar Capacity by TEİAŞ
No Region Solar
Capacity (MW)
No Region Solar
Capacity (MW)
No Region Solar
Capacity (MW)
1 Konya-‐1 46 10 Niğde Nevşehir Aksaray
26 19 Şırnak 11
2 Konya-‐2 46 11 Kayseri 25 20 Adana Osmaniye 9
3 Van, Ağrı 77 12 Malatya Adıyaman 22 21 Muş 9
4 Antalya-‐1 29 13 Hakkari 21 22 Siirt Batman Mardin
9
5 Antalya-‐2 29 14 Muğla Aydın 20 23 Sivas 9
6 Karaman 38 15 Isparta Afyon 18 24 Elazığ 8
7 Mersin 35 16 Denizli 18 25 Şanlıurfa Diyarbakır 7
8 K. Maraş
Adıyaman 27 17 Bitlis 16 26 Erzurum 5
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9 Burdur 26 18 Bingöl Tunceli 11 27 Erzincan 3
Source: TEİAŞ.
5.8.6 TRANSMISSION AND DISTRIBUTION TARIFFS
All generation and consumption units (including larger RES or small unlicensed plants) are subject to the transmission or distribution fees. Transmission/distribution connection and system usage fees are suggested by system operators to EMRA. After EMRA examines these fees, he approves them as it is or after revisions.
Transmission tariffs are determined regionally and currently there are 14 tariff regions. If there is excess generation capacity in a region, generation system usage fee is high and consumption system usage fee is low in that region. If there is lacking generation capacity, then vice versa. A tariff region is not a geographical region but rather a collection of transformer substations. A substation in the west part of the country and a substation in the eastern part may be in the same tariff region.
Transmission system usage fees consist of constant and variable parts, per MW and per MWh. System operation fee is consisting of only variable part, per MWh. The transmission tariffs are shown in below table.
Table 20: Transmission System Usage and Operation Fees37
Region Generation System Use Tariff
System Operation
Tariff
Consumption System Use Tariff
System Operation
Tariff
TL/MW-‐year TL/MWh TL/MW-‐year TL/MW-‐year TL/MWh TL/MW-‐year
1 14.901,10 6,26 3,19 24.846,95 5,14 3,09 2 16.245,30 6,26 3,19 24.140,14 5,14 3,09 3 16.393,68 6,26 3,19 24.190,57 5,14 3,09 4 16.605,85 6,26 3,19 23.938,23 5,14 3,09 5 17.387,96 6,26 3,19 23.562,36 5,14 3,09 6 18.209,12 6,26 3,19 22.933,27 5,14 3,09 7 18.313,61 6,26 3,19 22.375,17 5,14 3,09 8 20.172,19 6,26 3,19 21.705,30 5,14 3,09 9 20.964,72 6,26 3,19 20.972,45 5,14 3,09 10 23.279,50 6,26 3,19 19.979,67 5,14 3,09 11 24.519,67 6,26 3,19 19.226,54 5,14 3,09 12 25.567,59 6,26 3,19 18.545,76 5,14 3,09 13 26.663,51 6,26 3,19 18.070,38 5,14 3,09 14 28.600,95 6,26 3,19 16.652,35 5,14 3,09
To be an example, let’s say there is a 1 MW solar power plant in tariff region 7. If the capacity factor is 18%, annual generation is 1.577 MWh. For this plant, transmission fee will be 18.314 TL + (6,26 + 3,19) x 1.577 TL = 33.214 TL ~ $9.22638 per year. If all is assumed as variable, it can be assumed as 0,585 cent/kWh.
Distribution tariffs are the same for all regions. Even they are calculated separately by the EMRA, at the final step, lacks and surpluses of each region are determined and the tariffs are applied equally to all regions.
37 EMRA Board Decision, 29.12.2016 dated and 6818 numbered. 38 USD/TL=3,60
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For unlicensed generators, the fees are applied only for the net metering generation if the production and consumption are located in the same place. As of May 2017, the tariff for unlicensed generators is;39
• 2,5628 krş/kWh (~0,712 cent/kWh), if they are in operation before 31.12.2017 • 10,2510 krş/kWh (~2,847 cent/kWh), if they are in operation after 31.12.2017.
For licensed generators which are connected from the distribution system, plants may choose one of the two tariffs:
• 11.786 TL/MW/year + 0,6612 krş/kWh (~$3.274 + 0,18 cent/kWh), or • 0,8969 krş/kWh (~0,25 cent/kWh)
When we compare the distribution fee for licensed generators (0,25 cent/kWh) and unlicensed (small) generators (2,847 cent/kWh) that are built after 31.12.2017, we see an approximately 11 folds’ difference against the unlicensed generators. Below comments may be said about this issue:
• EMRA requires the unlicensed generators to generate their own consumption and not aim selling,
• Investment appetite of the unlicensed generators will decrease, because people mostly interested in this subject due to the high feed-‐in tariffs,
• Since the feed-‐in tariff is determined by law and cannot be changed by regulations, price adjustments are done by side payments like this,
Since the unlicensed plants will be built mostly for self-‐consumption, system imbalances caused by small generators will decrease,
5.9 SUMMARY OF THE RES PROCEDURES
Subject Turkey Application Explanation
Incentive Mechanism Feed-‐in Tariff
Constant for the first 10 years for the plants that are installed until 31/12/2020.
Wind: 7,3 $cent/kWh,
Solar: 13,3 $cent/kWh
Hydro: 7,3 $cent/kWh
Geothermal: 10,5 $cent/kWh Biomass: 13,3 $cent/kWh
Incentive Duration 10 years No incentive after 10 years.
Domestic Equipment Incentive Yes Additional feed-‐in tariff for domestically manufactured
parts for the first 5 years of operation.
Market Operator EPİAŞ Private and independent market operator.
Day-‐Ahead Market Yes Bilateral contracts are encouraged.
Intraday Market Yes Until 1,5 hours ahead of real time.
39 EMRA Board Decision, 29.03.2017 dated and 7007 numbered,
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Balancing Market Yes Operated by System Operator (TEİAŞ).
Imbalance Costs for RES Yes Subject to imbalance costs but 2% tolerance for RES in YEKDEM portfolio.
Eligibility Limit >2.400 kWh Decreased by EMRA each year.
License Exemption Limit 1 MW Installed capacities below 1 MW are exempted from licensing procedure.
Capacity Threshold for One Solar Project 50 MW No limit for other renewables
Capacity Assignment (>1 MW) Auctioning By TSO
Capacity Auction Method Reducing feed-‐in tariff Winning bidder gets the bid price for 10 years. .
Capacity Assignment (<1 MW) First Come First Serve By DSO
Construction Time According to Installed Capacity and Technology
Wind: 22 – 46 months
Solar: 22 – 36 months
License and connection right cancelled after the end of duration if not installed.
Area Limit for Solar max. 20 decare/MW
Net Metering Yes Electricity bills are paid by reducing self-‐generation from total consumption.
Transmission System Usage Fees Constant + Variable
Fees are varying across the transmission region. A constant part per installed capacity (MW) and a variable part for generation (MWh)
EIA Requirement
detailed EIA:
>10 MW Solar
>50 MW Wind
Brief EIA:
1-‐10 MW Solar
10-‐50 MW Wind
<1 MW Solar and <10 MW Wind PP are exempted from Environmental Impact Assessment.
TSO State-‐Owned State-‐Owned TEİAŞ, ENTSO-‐E Observer
DSO Private Operators 21 DSOs. Unbundled from TSO and Retail Sales
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ANNEX-‐1: LIST OF THE APPLICABLE LAWS AND REGULATIONS
Year Type Legislation Amendment Dates
03.03.2001 Law
Electricity Market Law (No. 4628)
Renamed to “Law on the Institution and Duties of Energy Market Regulatory Authority” after Law No. 6446 (30.03.2013)
02.05.2001, 11.07.2001, 27.10.2001, 18.04.2002, 20.12.2003, 13.03.2005, 21.07.2005, 24.05.2006, 02.05.2007, 08.02.2008, 26.07.2008, 25.02.2011, 15.06.2012, 02.07.2012, 01.01.2013, 30.03.2013, 17.06.2016
18.05.2005 Law Law on Utilization of Renewables in Electricity Generation (No. 5346)
02.05.2007, 26.07.2008, 08.01.2011, 25.02.2011, 12.07.2012, 30.03.2013, 17.06.2016
02.05.2007 Law Energy Efficiency Law (No. 5627) 26.07.2008
13.06.2007 Law Geothermal Energy Law (No. 5686) 21.11.2007, 01.03.2014
21.11.2007 Law Law on Installation, Operation and Energy Sales of Nuclear Power Plants (No. 5710)
2013 Law Electricity Market Law (No. 6446)
02.08.2013, 01.01.2014, 11.09.2014, 01.01.2015, 15.04.2015, 24.06.2015, 01.01.2016, 17.06.2016, 07.09.2016, 01.01.2017
19.03.2008 Regulation Regulation on the Tendering and Contract for the Nuclear Power Plants that are in the concept of Law No 5710
14.10.2008 Regulation Regulation on the Utilization of Geothermal Resource Areas for Electricity Generation
05.12.2008 Regulation Regulation on Energy Performance for Buildings
01.04.2010, 30.06.2010, 19.02.2011, 20.04.2011
27.12.2008 Regulation Electricity Market Ancillary Services Regulation
13.05.2010, 19.08.2010, 15.10.2010, 17.12.2011, 04.06.2015
14.04.2009 Regulation Electricity Market Balancing and Settlement Regulation
Replaced the prior regulation, dated 03.11.2004
01.10.2009, 26/11/2009, 17/4/2010, 6/11/2010, 20/2/2011, 3/11/2011, 3/3/2012, 18/9/2012, 30/12/2012, 5/1/2013, 28/3/2015, 15/7/2015, 29/4/2016, 28/5/2016, 30/10/2016, 14/1/2017
19.06.2011 Regulation Regulation on Solar Power Plants
27.10.2011 Regulation Regulation on Increase of Efficiency for the Generation and Usage of Energy
Replaced the prior regulation, dated 25.10.2008
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25.03.2014, 03.09.2014
21.12.2012 Regulation Regulation on the Service Quality for Electricity Distribution and Retail Sales 09.10.2013, 31.03.2016
14.03.2013 Regulation Regulation on the Audit of DSO Operations and Inspection
01.06.2013 Regulation Regulation on the Technical Assessment of Solar Power Plant License Applications
01.10.2013 Regulation Regulation on the Support and Certification of Renewable Energy Sources
Replaced the prior regulation, dated 21.07.2011
29.04.2016, 28.10.2016, 23.02.2017
02.10.2013 Regulation Electricity Market Unlicensed Generation Regulation
Replaced the prior regulation, dated 21.07.2011
23.03.2016, 22.10.2016
02.11.2013 Regulation Electricity Market Licensing Regulation
Replaced the prior regulation, dated 04.08.2002
28/1/2014, 26/12/2014, 4/2/2015, 23/12/2015, 22/10/2016, 24/2/2017
13.05.2017 Regulation Regulation on the Tendering Procedures for Wind or Solar Power Plant Pre-‐license Applications
Replaced the prior regulation dated 06.12.2013. Before that, regulations were separate for wind (22.09.2010) and solar (29.05.2012).
02.01.2014 Regulation Electricity Market Distribution Regulation Replaced the prior regulation, dated 19.02.2003
28.01.2014 Regulation Regulation on Electricity Connection and System Usage 23.03.2016, 30.07.2016
08.05.2014 Regulation Electricity Market Consumer Services Regulation
Replaced the prior regulation, dated 25.09.2002
18.03.2015, 16.09.2015, 25.02.2016, 04.08.2016, 20.10.2016
17.05.2014 Regulation Electricity Market Import and Export Regulation 28.02.2014
18.05.2014 Regulation Regulation on the Institution of Energy Market Regulatory Authority
Replaced the prior regulation, dated 12.12.2001
28.05.2014 Regulation Electricity Market Grid Regulation
Replaced the prior regulation, dated 22.01.2003
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06.01.2015 Regulation Regulation on the Acceptance of Electricity Power Plants
Replaced the prior regulation, dated 07.05.1995
03.12.2016
22.08.2015 Regulation Electricity Market Tariff Regulation Replaced the prior regulation, dated 11.08.2002
13.12.2016
20.10.2015 Regulation Regulation on the Technical Assessment of Wind Power Plant License Applications
Replaced the prior regulation, dated 09.11.2008
08.11.2016
24.06.2016 Regulation Regulation on the Support Mechanism for Domestic Products that are used in the Renewable Power Plants
Replaced the prior regulation, dated 19.06.2011
09.10.2016 Regulation Renewable Energy Resource Fields Regulation
Replaced the prior regulation, dated 27.11.2013
11.04.2017
