As many other countries, Turkey also intends to increase the rate of renewable energy resources to 30 % in its power generation until 20231. In accordance with this, adequate legislative amendments and legal reforms in energy have been made since 2010 which provide diverse incentives to investors. Recently, the Council of Ministers passed a resolution concerning investments and domestic production in renewable energy.
Tariff incentives for renewable energy investments extended until 2020
The tariff incentives for renewable energy manufacturing plants have been extended until 2020 through a resolution of Council of Ministers dated 05.12.2013. Accordingly, the feed-in tariff will also be applicable for the manufacturing license owners which will be put into operation between 2016 and 2020. As is known, the investments in renewable energy has been supported in Turkey regarding the energy resource types through the related legislation since 2010. According to the recent law, manufacturers in renewable energy may benefit from the feed-in tariff incentives of Renewable Energy Resources Support Mechanism (“Support Mechanism”) under certain conditions. In addition to this, in the event that a manufacturer uses local eqipment in its plant, a premium shall be added into the tariffs. Also this incentive is extended until 2020 within the frame of the above mentioned Resolution. If the demand and external dependence for the energy of Turkey is regarded, the extension of feed-in tariffs in renewable energy may lead up new investments in renewable energy sector and thereby as a factor for meeting of the gap in the energy sector of Turkey for the long term.
Other incentives provided by laws
The incentives in renewable energy investments are not limited with the feed-in tariffs and local equipment bonus. The Law on Manufacturing of Electricity from Renewable Energy Resources (“Law”) dated 10.05.2005 provides incentives to investors also in the investment phase such as service charge exception for projects which have been determined in the Law, energy manufacturing plants, research and development investments. The Moreover, the Law provides facilities regarding the land allocation such as reduction of land use charges and tax reductions. In addition to these incentives, not only licensed power generation, but also unlicensed power generation has been made possible for electricity manufacturers in Turkey. The conditions of unlicensed power generation have been regulated by the Regulation on Unlicensed Electricity Manufacturing which has been in force since 02/10/2013.
Efficiency of support mechanism instruments
A universal support policy does not exist in renewable energy. The support mechanisms preferred in the world are feed-in tariff, bid incentives, premium guarantiee, tax reductions or exemptions, tax credits, net metering / flexible grid access. According to the experts’ opinion, support of each renewable technology through convenient support instrument, use of a policy portfolio may be the optimal resolution for renewable energy investments. Their costs, government bugdet’s amount, their incidence shall be considered. Above mentioned support instruments which are provided by turkish laws may be beneficial and attractive for investors in Turkey, if the legal amendments and diversity of incentives are considered as a whole. Through the premium for local equipment in power generation will also attract the local investors and it will contribute to technology development significantly in Turkey. Also unlicensed electricity manufacturing plays an essential role in increasing of the use of renewable energy in Turkey. Moreover, the liberalisation of energy market and establishment of an energy exchange (EPİAŞ) may contribute to increase of private investments in Turkey.
1 Strategical Plan of the Ministry for Energy and Natural Resources for 2010-2014, http://www.enerji.gov.tr/yayinlar_raporlar/ETKB_2010_2014_Stratejik_Plani.pdf