ABSTRACT
Within this developing World, the rapid increase in the energy requirement has triggered the significance of and tendency towards the renewable energy sources. However, the fact that conversion of the renewable energy sources into consumable energy is costly somewhat prevents the expansion of these sources’ utilization. In this respect, the realization of such conversion via cooperatives would be highly advantageous given the processual facilitations and cost reductions provided thereby. Based on their respective advantages, the renewable energy generation cooperatives have been granted numerous privileges in our country such as the ability to generate without a licence and to benefit from consumption merger, exemption of corporate tax and risturn exemption. Herein this article, the renewable energy generation cooperatives have been examined in a way that involves the cooperatives and the renewable energy sources, in general.
I. INTRODUCTION
Cooperatives which are defined as the third sector alongside the public and private sectors in many developed countries have surfaced as self-sufficient financial social solidarity organizations. The cooperative structures which have filled in the socioeconomical gap grandly have already been operating in almost all fields of economy such as education, health and energy1.
Energy cooperatives, accordingly, is a structure which enables the local generators to gather and realize the electricity generation activities under the same roof of cooperative. Clearly, with the ability to meet their energy needs via local generators at lesser cost, the cooperatives’ active role in the renewable energy market which considerably is costly than other energy sectors would contribute as much to the local economy as it would to their partners. In this respect, the renewable energy generation cooperatives which have been also leaned towards in our country upon the awareness of this contribution are empowered to operate without the necessity to obtain a pre-license and license based on the Regulation on Unlicensed Electricity Generation at the Electricity Market2 (“Regulation on Unlicensed Electricity Generation”).
In this article, first the definition and features of those cooperatives will take place whereupon the renewable energy sources and renewable energy generation cooperatives will be examined.
II. COOPERATIVE
A. Definition and Features
Pursuant to article 1 of the Cooperatives’ Law no. 1163 (“Law”), “a cooperative is defined as a partnership with variable partners and capital, established by real persons or legal entities with the aim to supply and preserve their certain economic interests and especially professional and subsistent needs via their labour and financial contributions and mutual support, solidarity and surety.” Cooperatives are such formations that are established by persons to meet their personal yet common needs at minimum cost3.
The establishment of a cooperative requires minimum 7 (seven) founders. Public and private legal entities shall be able to support or lead the establishment of and participate in a cooperative they are interested in for its purpose. In other words, both the real persons and legal entities can join a cooperative. Each partner would own at least 1 (one) share, but no more than 5,000 shares. Value of a share will correspond to TRY 1.00.
Cooperatives shall operate subject to the articles of association formed and signed by the founders and that may be amended from time to time. Although in practice, the founders tend to draft such articles based on the sample published by the Ministry Customs and Trade on December 18, 20134. the said sample is not an obligatory application5. In fact, many subsequent amendments to the applicable legislation have not yet been reflected to this sample, as far as we are concerned. The founders are enabled to draft the articles in whatever form they desire, provided that such bears the conditions specified in article 46 of the Law and complies with the mandatory provisions of the legislation.
In cooperatives, the capital will increase so much in parallel to the number of partners. Furthermore, capital in kind may be put as capital and another facility or inkind-assets may be transferred to the cooperative, as per article 20 of the Law7.
Cooperatives distribute the operational surplus income gained as a result of their annual activities to their partners. Risturn8 distribution shall be realized after the reserves, private funds and capitalized interests specified in laws and articles are set aside. The risturn shall be distributed to partners in line with the provisions of the articles of association and by taking into account the trades between such partner and the cooperative9.
When it comes to the liability of the cooperatives, it will be limited to the assets thereof, unless otherwise is stated in the articles. Accordingly, unless otherwise is also contemplated under the articles, partners will only be liable with their subscription amounts.
Each partner is vested with the right to exit the cooperative which power is required by the open door principle that will be examined below. Such right cannot be prevented in any manner whatsoever. To do that, unless otherwise is specified in the articles, the partner will have to apply to the board at the end of the financial year and at least 6 months prior to the exit date. Partners also are able to transfer their shares to others to the extent permitted by the Law. In this case, the transfer should be realized with all assets and liabilities and before a notary public. The new partner should also apply to the board upon the transfer is completed. If the transferee bears the partnership conditions, the board cannot deny his partnership. Finally, it will be possible to remove a partner from the cooperative once the situation that would require his removal as mentioned in the articles occurs.
B. General Principles of Cooperatives
The cooperation principles were first determined as definitive and secondary principles in 1937 by the International Cooperative Alliance (ICA)10. Moreover, the principles of free entrance, democratic management, and proportional distribution of surplus incomes became mandatory as definitive principles by the ICA11. At the 31st ICA Congress convened on September 20 to 23, 1995 in Manchester, England, the 7 (seven) principles applicable today were approved by the ICA12. The said principles have been described in the official web site of the General Directorate of Cooperation of Ministry of Customs and Trade of the Turkish Republic as follow13;
1. Voluntary and open partnership: Cooperatives are such voluntary institutions that are open without allowing to any generical, social, racial, political and religious discrimination to anyone who would benefit from the services of and would recognize his responsibilities in the cooperative.
2. Democratic Audit of the Partners: Cooperatives are such democratic institutions that are audited bytheir partners who participate in the policy-making and decision-making processes thereat. The designated representatives shall be liable against the partners. In unit cooperatives, partners will have equal voting rights (one voting right to each partner). In cooperatives at other level, the voting right shall be ascertained with a democratic approach.
3. Economical participation of partners: Partners will participate in the cooperatives’ capital fairly and manage the same democratically. This capital, at least some of it will generally be the common property of the cooperative. The partners mostly earn a limited amount of income (if any) over the capital due to their commitments as required by their membership. Partners will set aside the surplus income for the purposes such as to develop the cooperative, to provide partners with profit pro rata to the transactions between such partners and the cooperative and to support other activities approved by partners, probably by forming “at least partially undividable sources”.
4. Autonomy and independence: Cooperatives are institutions that are self-reliant, self-sufficient and managed by their partners. Cooperatives should, if they will, make agreements with governments and other institutions or increase their capitals via outsources, in such a way that would preserve their autonomy and democratic management of their partner.
5. Education and information: Cooperatives shall assure their partners, designated representatives, managers and personnel with education that would enable them to contribute thereto efficiently. Cooperatives shall inform the public –especially the youth and those that form the public opinion- regarding the manner and profits of the cooperation.
6. Cooperation between cooperatives: Cooperatives shall serve to their partners more efficiently by working with the local, national, regional and international organizations and shall strengthen the cooperation movement.
7. Responsibility for the community: Cooperatives shall work for the sustainable development of their community through the rules approved by their partners.
III. RENEWABLE ENERGY GENERATION COOPERATIVES
A. Renewable Energy
Energy which may be derived from same currents continuously and repetitively in natural environment and may renew itself as used is defined as renewable energy14. Most important characteristic of renewable energy sources is the said sustained repetition; in other words, its ability of renewal faster than their consumption. However, utilization of renewable energy sources cannot become widespread adequately due to the facts that such utilization requires an advanced technology and high rates of cost and it takes a long period of time to get the returns15.
Renewable energy sources refer to hydraulic energy, solar energy, wind power, geothermal energy, biomass energy, biomass-derived gas (including landfill gas), wave and flow energy and non-fossil based energy sources such as tidal energy all of which render several advantages as well as some disadvantages. The inconsumable nature of and the unnecessity to pay an additional fuel surcharge for these sources along with the clean energy generation free of poisoned gas emission could be given as examples to such advantages16. The renewable energy also enables generation at microscale level.
As for the disadvantages of renewable energy sources, inconsistent energy generation, in other words, the variability of the generated energy sets the examples. Besides, since certain facilities such as wind power plants should be located far from the residential areas, the transmission of energy produced thereby may be indicated as a disadvantage as well17.
B. Renewable Energy Generation Cooperatives
Within most countries, the cooperatives play significant parts in the creation of a clean energy community by virtue of incentives towards the renewable energy source based generation. Especially the petroleum crisis experienced in the 70s followed by the changes in the energy politics, the threatening environmental problems and increasing energy prices lead to the cooperation of the conscious citizens in this field. Specifically with the support of those incentive mechanisms such as the Feed-in Tariff, the renewable energy generation cooperatives have become highly applicable in many developed countries all around the world such as, particularly Deutschland, England and Denmark and further in Canada, USA, and Australia. In fact today, more than half of the renewable energy plants are operating under the roof of cooperatives in Deutschland and Denmark18. By virtue of the incentive mechanism called the Feed-in Tariff (FIT) which means the utilization of renewable energy sources as long as the respective utilization is sustainable economically, and which is deemed to have been the reason behind the success of such countries within the sector19, the government warrants its purchase of electricity energy produced from renewable energy sources for a price above the market value and for a long period of time20.
In Turkey, on the other hand, the renewable energy generation cooperatives are primarily enabled to operate without it being necessary to obtain a generation license. Indeed, pursuant to the Electricity Market License Regulation21, any legal entity that wish to operate in the market are in principle obliged to be awarded with a pre-license and licence for their operation and facilities from the Electricity Market Regulatory Authority prior to their commencement to business. However, the renewable energy generation cooperatives may, prorata to the number and consumption needs of their partners and provided that each installed capacity of the generation facility associated with each consumption facility shall not exceed 1 MW, operate without a license subject to such capacity allocation that is up to;
• 1 MW for those that have up to 100 partners,
• 2 MW for those that have more than 100 but less than 500 partners,
• 3 MW for those that have more than 500 but less than 1,000 partners, and
• 5 MW for those that have more than 1,000 partners.
Besides, while in principle the construction of one or more unlicensed electricity generation facilities by one or more real and/or legal persons through consumption merger shall in principle be conditional upon those persons’ connection to the same connection point or the measurement over a common indicator of their consumptions, the Regulation on Unlicensed Electricity Generation also exempts those renewable energy generation based facilities constructed through cooperatives of the respective condition. However, save for the roof applications, the capacity that may be allocated to each substation will be maximum 1 MW at such consumption mergers for these generation facilities.
In addition, to the extent permitted by the Regulation on Unlicensed Electricity Generation, the renewable energy based surplus electricity may be purchased during 10 years for the price specified in Table I annexed to the Law on Utilization of Renewable Energy Sources for Electricity Generation22 (“Law on Renewable Energy Sources”/ “Law on RESs”)23. In addition, the renewable energy source based unlicensed electricity generation facilities may benefit from the support price payment of local component envisaged in Table II of the Law on RESs for 5 years, starting from the commissioning date of the generation facility24.
Furthermore, the renewable energy generation cooperatives are exempt from corporate income tax under certain conditions as per the Corporate Tax Law (“CTL”). Briefly, the first condition is that the articles of association of a cooperative should include such provisions that would:
• Proscribe the dividend distribution over capital,
• Proscribe the dividend share allocation to chairman and members of the board,
• Proscribe the distribution of reserves to partners, and
• Oblige the cooperative to do business only with its partners25
and further the foregoing provisions should be de facto applied.
Similarly, the management cost subscriptions returned to the partners and the risturns are also kept exempt of the corporate tax. The distribution of risturns to the partners is not regarded as a dividend distribution. Even the payment of risturn in cash or in kind will not impede the application of the said exemption26.
Having said that, given the socioeconomic and ecological profits of the renewable energy generation cooperatives, additional incentives may be considered to expand the tendency to this structure. To this end, extension of purchase warranty term envisaged for the surplus energy under the Law on RESs, assurance of solid loan incentives such as Treasury guarantee, and encouragement of cooperation in not only unlicensed generation but also licensed generation and also in electricity distribution and transmission sectors may be counted as examples.
IV. CONCLUSION
Cooperatives are such legal entities formed to satisfy the needs of people by mutual aid, solidarity and surety and further at the minimum cost. The persons will therefore become able to gather and jointly overcome the economical and other obstacles in performing such activities that would be challenging when performed individually, and in the meanwhile, they contribute to the national economy as their cooperation will result in decrease in the level and costs of the public consumption.
The structure of renewable energy generation cooperatives further delivers one of the most efficient and beneficial ways to ensure the utilization of renewable energy sources and the participation of community to the economic life. Indeed this way, the deprivation rates will be reduced, the employment level will increase, the public will have a voice and participation in the economy, a non-monopolised energy community will be created, the energy costs will decrease, and the ecological order will somewhat recover27.
Should the cooperatives come to the fore in renewable energy production, distribution and transmission, this will also take a grand part in minimization of the external dependence in and transparency and thus democratization of the sector28. Accordingly, the current regulations and incentives should be regarded as the first step towards achievement of the target for increase of the cooperatives in renewable energy and in the upcoming period, the legal and economic studies should be the weighted focus by also taking into account the global examples.
BIBLIOGRAPHY
Ayşe Rüya Ataman, Türkiye’de Yenilenebilir Enerji Kaynakları, LLM Thesis, Ankara 2007
Enerji Enstitüsü, Lisanssız Elektrik Üretim Rehberi, http://enerjienstitusu.com/ elektrik-piyasasi-lisanssiz-elektrik-uretimi-rehberi/
Revenue Administration, Muafiyetler,
http://www.gib.gov.tr/fileadmin/user_upload/Tebligler/5520/4.html
Gülsüm Gözde Ayanoğlu, Enerjide Yerel Kalkınmanın Anahtarı; Enerji Kooperatifleri, Tematic Ticaret ve Mevzuat Araştırmaları Dergisi - January 2014, No: 2013/2
Haydar Aras, Nükleer Çözüm Değil, http://www.haydararas.com/blog/nukleercozum-degil/
Hüseyin Polat, Yenilenebilir Enerji Kooperatifleri İle İlgili Düzenlemenin Getirilerinin Yanında Eksiklikleri, http://www.koykoop.org/roportaj. aspx?id=3#sthash.aPkNByPx.dpuf
J. Lipp, Lessons for Effective Renewable Electricity Policy from Denmark, Germany and United Kingdom in Energy Policy, No. 35, p. 5481-5495, 2007.
J.J. McMurtry & J. Lipp, Renewable Energy Co-op Review: Scan of Modals & Regulatory Issues, January 2012
Muhammet Selçuk Bayındır, Yenilenebilir Enerji Kaynakları Avrupa Birliği ve Türkiye Uygulamaları, LLM Thesis, 2010
General Directorate of Cooperation of Ministry of Customs and Trade of the Turkish Republic, Enerji Yatırımlarında Yeni Alternatif; Yenilenebilir Enerji Kooperatifleri, http://koop.gtb.gov.tr/kooperatifler-hakkinda/yenilenebilir-enerjikooperatifleri
General Directorate of Cooperation of Ministry of Customs and Trade of the Turkish Republic, Kooperatifçilik İlkeleri, http://koop.gtb.gov.tr/kooperatifler-hakkinda/kooperatifcilik-ilkeleri
Ministry of Energy and Natural Sources, Sample Articles of the Renewable Energy Generation Cooperatives, http://koop.gtb.gov.tr/data/52b18e46487c8ec1a8fccebd/yenilenebilir%20 enerji%20kooperatifleri%20anas%C3%B6zle%C5%9Fmesi.pdf, 18.12.2013.
Ministry of National Education of the Turkish Republic, Muhasebe ve Finansman – Kooperatifler, http://koop.gtb.gov.tr/data/539a9f45487c8e06f4401cb5/Kooperatifler,koopgep%20meb%20kitap.pdf, Ankara 2014
Zehra Baykal Karaca, Tüketici Kooperatifleri, LLM Thesis, İstanbul 2007
FOOTNOTE
1 General Directorate of Cooperation of Ministry of Customs and Trade of the Turkish Republic, Enerji Yatırımlarında Yeni Alternatif; Yenilenebilir Enerji Kooperatifleri, available on the official web site: http://koop.gtb.gov.tr/kooperatiflerhakkinda/yenilenebilir-enerji-kooperatifleri (Last access: 22.04.2017).
2 Official Gazette dated 02.10.2013 and numbered 28783.
3 Zehra Baykal Karaca, Tüketici Kooperatifleri, LLM Thesis, İstanbul 2007, s. 5.
4 Ministry of Energy and Natural Sources, Sample Articles of Renewable Energy Generation Cooperatives, available at the official web site: http://koop.gtb.gov.tr data/52b18e46487c8ec1a8fccebd/yenilenebilir%20enerji%20kooperatifleri%20 anas%C3%B6zle%C5%9Fmesi.pdf, 18.12.2013. ((Last access: 21.04.2017).
5 Karaca, ibid, p. 29.
6 Article 4 of the Cooperatives’ Law: “The following provisions should take place in the articles of the cooperatives: 1. Name and center of the cooperative, 2. Purpose and scope of work, 3. Terms that enable acquirement or that require deprivation of partnership, 4. Share amount of partners and payment method of the capital along with the statement that at least ¼ of the capital in cash was paid in advance, 5. As to whether the partners were able to subscribe with capital in kind, 6. Status and nature of the partners’ liabilities for the liabilities of the cooperative, 7. Duties, powers and obligations and the selection methods of the managing and auditing bodies, 8. Provisions as to the representation, 9. Calculation and utilization methods of the annual income-cost gap, 10. Name, surname, business and residential addresses of the founders.”
7 Article 20 of the Cooperatives’ Law: “Subscription via capital in kind or take-over by the cooperative of an existing facility or real assets may be agreed in the articles.”
8 Risturn: Surplus income allocated to partners pro rata to their trades with the cooperative.
9 Ministry of National Education of the Turkish Republic, Muhasebe ve Finansman – Kooperatifler, available on the official web site: http://koop.gtb.gov.tr/data/539a9f45487c8e06f4401cb5/Kooperatifler,koop-gep%20meb%20kitap.pdf, Ankara 2014 (Last access: 22.04.2017)
10 Karaca, ibid, p. 9.
11 Karaca, ibid, p. 4.
12 Karaca, ibid, p. 11.
13 General Directorate of Cooperation of Ministry of Customs and Trade of the Turkish Republic, Kooperatifçilik İlkeleri, available on the official web site: http://koop.gtb.gov.tr/kooperatiflerhakkinda/kooperatifcilik-ilkeleri (Last access: 22.04.2017).
14 Muhammet Selçuk Bayındır, Yenilenebilir Enerji Kaynakları Avrupa Birliği ve Türkiye Uygulamaları, LLM Thesis, 2010, p. 4.
15 Ayşe Rüya Ataman, Türkiye’de Yenilenebilir Enerji Kaynakları, LLM Thesis, Ankara 2007, p. 7.
16 Bayındır, ibid, p. 5.
17 Ataman, ibid, p. 8.
18 By transfer from Gülsüm Gözde Ayanoğlu, Enerjide Yerel Kalkınmanın Anahtarı; Enerji Kooperatifleri, (Enerji Kooperatifleri) Tematic Ticaret ve Mevzuat Araştırmaları Dergisi - Ocak 2014, N. 2013/2, available at the private web site: http://www.cevrecienerji.org/site_document/ files/dosya/ENERJ%C4%B0DE_YEREL_KALKINMANIN_ANAHTARI-ENERJ%C4%B0_KOOPERAT%C4%B0FLER%C4%B0_28450.pdf (Last Access: 23.04.2017) to J.J. McMurtry. & J. Lipp, Renewable Energy Co-op Review: Scan of Modals & Regulatory Issues, January 2012.
19 By transfer from Ayanoğlu, Enerji Kooperatifleri to J. Lipp, Lessons for Effective Renewable Electricity Policy from Denmark, Germany and United Kingdom in Energy Policy, No. 35, p. 5481-5495, 2007.
20 Ayanoğlu, Enerji Kooperatifleri.
21 Official Gazette dated 02.11.2013 and no. 28809.
22 Official Gazette dated 18.05.2005 and no. 25819.
23 Though it is unclear as to what would happen to the surplus energy after such 10 years, the subject is expected to be clarified upon the necessary amendments to be made to the relevant legal provisions.
24 Enerji Enstitüsü, Lisanssız Elektrik Üretim Rehberi, available on the private web site: http://enerjienstitusu.com/elektrik-piyasasi-lisanssizelektrik-uretimi-rehberi/(Last Access: 19.04.2017).
25 Revenue Administration, Muafiyetler, “The transactions where the generation cooperative sells the products to third parties upon purchasing the same from its partners and without effecting any variations thereon are not deemed partnerexcluded transactions.”available on the official web site: http://www.gib.gov.tr/fileadmin/user_upload/ Tebligler/5520/4.html(Last Entrance, 22.04.2017).
26 Article 5/1/i of the Corporate Tax Law on. 5520.
27 Haydar Aras, Nükleer Çözüm Değil, available at the private web site: http://www.haydararas.com/blog/nukleer-cozumdegil/(Last Entrance, 22.04.2017).
28 Hüseyin Polat, Yenilenebilir Enerji Kooperatifleri İle İlgili Düzenlemenin Getirilerinin Yanında Eksiklikleri, available at the private web site: http://www.koykoop.org/roportaj.aspx?id=3#sthash.aPkNByPx.dpuf (Last Access: 22.04.2017).
