Turkey's new rules on electricity storage are expected to pave the way for new investments

On November 19, 2022, several amendments (the Amendments) were made to the Electricity Market License Regulation (the Regulation) to complement the existing rules with respect to the development and operation of electricity storage units within the boundaries of generation plants. The Amendments are expected to have a positive impact on both renewable power generation and electricity storage activities.

Electricity Market Law

The Amendments aim to provide further details with respect to the earlier amendments to the Electricity Market Law numbered 6446 (the Electricity Market Law) that were implemented in July 2022 in order to pave the way for electricity storage plant developers to apply for a pre-license to develop new solar or wind power projects within their project site without participating in grid connection competitions organized by Türkiye Elektrik Üretim A.Ş. (or TEİAŞ).

To be able to benefit from the new regime, the installed capacity of the power plant needs to be up to the installed capacity of the storage plant. The power plants developed in accordance with the amended provisions of the Electricity Market Law are also allowed to benefit from the feed-in tariff mechanism (YEKDEM). Furthermore, they are also exempt from the measurement requirements which normally exist for solar or wind projects.

Likewise, recent amendments to the Electricity Market Law also enable the solar or wind-powered electricity generation plants, which are partially or fully operational and undertake to build storage plants on the same site to increase their capacity, so long as the capacity increase meets certain conditions set forth under the legislation and the increased capacity of these power plants is also allowed to benefit from YEKDEM.

Amendments to the Regulation

In accordance with the above-mentioned amendments, the most noteworthy points introduced by the Amendments are as follows:

License and pre-license applications

As a rule of thumb, each activity in the electricity market is subject to a separate license. Electricity storage activities at electricity generation plants with storage units is accepted as an exception to the general rule and a single pre-license/license is sufficient for this type of plants to conduct both electricity generation and storage activities.

Additional pre-license requirements for the electricity generation plants with storage units are as follows:

• ratio of the installed capacity of the generation unit to the installed capacity of the storage unit must be equal to maximum one;
• for the wind power plant applications, the installed capacity must be minimum 20 MWe, whereas for the solar power plant applications, the installed capacity must be minimum 10 MWe and maximum 250 MWe;
• ratio of the electricity storage capacity undertaken to the installed capacity of the electricity storage unit must be equal to minimum one;
• the electricity storage unit should be located within the boundaries of the power plant; and
• the mechanical installed capacity specified in the pre-license application form should not exceed the double of the electrical installed capacity.

Since no competition for grid connection is organized, early applications are prioritized during the process of granting a connection opinion.

Until 30 June, 2023, the requirements to inject relevant minimum capital and provide a security deposit/letter of guarantee will not be applied at the time of application.

Amendments to licenses

So long as the following conditions are met, electricity generation license holders may also request amendment of their license to develop and operate a storage plant within the same project site:

• receipt of an affirmative grid connection opinion;
• not exceeding the total project site area stipulated in the license;
• receipt of an affirmative opinion from the General Directorate of State Hydraulic Works and a positive technical assessment;
• payment of the minimum share capital; and
• receipt of the necessary permits within the scope of Environmental Impact Assessment Regulation.

Furthermore, Temporary Article 37 of the Regulation provides that supply license holders that are entitled to develop a separate electrical storage plant may also apply for developing a generation plant with storage so long as the new conditions set out under the Regulation are met.

Cancellation of licenses

Except for force majeure events, failure to make the storage units operational within the deadline determined by the Energy Market Regulatory Board results in the cancellation of the license and the forfeiture of the security deposit/letter of guarantee.

Right to expropriation

Storage units to be developed within the boundaries of generation plants are specifically mentioned among the activities for which an expropriation request may be made in relation to the land on which the relevant units are planned to be located.