ABSTRACT
Natural and legal persons carrying out operations for the purpose of establishing a generation facility based on solar energy are subjected to various liabilities and obligations. These liabilities and obligations appear both in the preliminary license and license application procedure and conditions as well as the review of these applications. In this context, electricity market legislation which natural and legal persons carrying out operations are subject to and the license application procedure and qualification conditions as mentioned in the Electricity Market Law numbered 6446 and License Regulation will be explained in detail in this article.
I. INTRODUCTION
Energy resources continue to maintain their importance especially due to the necessity in daily life. In today’s energy market, due to their sustainability, renewable energy sources are in the picture as a competitor to fossil fuels. Solar energy, especially with the downward slope in the cost of installation, is becoming one of the prominent sources among renewable energy sources in recent years. Even though due to its geographical position Turkey has an advantage in terms of having solar energy capacity compared to many other countries, this potential is not realized effectively and extensively enough. One of the underlying reasons for this situation has been identified as the deficiencies in the legal system and in order to extend the generation of solar energy in Turkey, legal regulations have been adopted. As parts of these regulations, Electricity Market Law,1 numbered 6446 (“Law”), and also Electricity Market License Regulation2 (“License Regulation”) published in the Official Gazette numbered 28809 and dated 02.11.2013 cover provisions regarding solar energy generation licenses.
License is an authorization document that a legal entity is obliged to obtain from Energy Market Regulatory Authority (“EMRA”) in order to carry out activities in the market. As per the Law and License Regulation, license is compulsory for some activities that are within the scope of the electricity market legislation. Accordingly, in order to carry out mentioned activities, a license must be obtained from EMRA pursuant to provisions of License Regulation. Mentioned activities are determined by the Law as follows; “(i) generation activity, (ii) transmission activity, (iii) distribution activity, (iv) wholesale activity, (v) retail sale activity, (vi) market operation activity, (vii) import activity and (viii) export activity” (Art.4).
According to Article 5 of License Regulation, a separate license must be obtained for every market activity, and in cases where the activity is carried out in more than one plant, a separate license must be obtained for each plant where the activity is being executed. Energy Market Regulation Board (“Board”) can evaluate units of multiple projects within the scope of one preliminary license or one license depending on the junction points and the physical conditions of the plant. Besides, in case that the generation activity is carried out in more than one plant, a separate preliminary license must be obtained for each plant as well. The procedures and qualification conditions for preliminary license application will be examined below in detail.
II. PRELIMINARY LICENSE APPLICATION
A. Preliminary License Application Procedure and Conditions
“Preliminary license is a permit granted for a specific period of time to the legal entities desiring to carry on generation activities, by which they will be able to obtain the license, permits and approvals etc. required to commence generation facility investments3.” Pursuant to Article 12 of License Regulation, persons seeking to obtain a preliminary license must apply to EMRA with the letter of application which is enclosed in the appendix of License Regulation along with the other information and documents requested by the Board. Legal persons, subject to private law provisions in their preliminary license applications, are required to be established as a joint stock or limited liability company pursuant to Turkish Commercial Code numbered 61024 (“TCC”) and if they have been established as a joint stock company, according to capital market regulations, all of their shares shall be registered as share certificates except for the publiclytraded shares and it shall not issue bearer share certificates. Also, the legal person that has applied for a preliminary license itself or, natural or legal persons who have direct or indirect shares in the company or the chairman and members of the board of directors and managers in limited liability companies, shall not be prohibited5.
1. Additional Criteria
In preliminary license applications, there are also additional criteria to be met by the applicant legal person. Mentioned additional criteria6 are explained below:
a. For each installed power in terms of MWm, a security in the amount which is determined by the Board will be presented. Upper limit of security amount calculated with this method is determined by the decision of the Board provided that it does not exceed 5% of total investment of generation facility which is envisaged by EMRA. The sum of the letter of guarantee to be submitted to EMRA within the scope of License Regulation could be also provided with letters of guarantee procured from different banks.
b. Articles of association regarding the increase of minimum capital of the corporation to 5% of the cost of the total investment as foreseen by EMRA for the generation facility must be presented.
c. Submission of the document recording the cost of the preliminary license is deposited to EMRA account is compulsory. Moreover, only 10% of the preliminary license cost will be collected from the legal persons applying for preliminary license to establish a power plant based on local natural resources or renewable energy resources.
d. It is compulsory that the provisions regarding the matters listed below be indicated in the articles of association of the applicant legal person:
i. In case that the legal person is a joint stock company, all its shares, except for the publiclytraded shares, shall be registered share certificates and it shall not issue bearer share certificates,
ii. Shareholder structure cannot be changed during preliminary license period, due to the provision regulated in License Regulation and approval of EMRA is required in case of amendment of articles of association in order to decrease the amount of company capital.
2. Criteria for Calculating the Minimum Capital
Following issues must be considered in calculating the minimum capital for the company;7
a. In case that a legal person makes more than one preliminary license or license applications, the capital cannot be less than the total of the envisaged capital for each preliminary license or license applications,
b. In case the license or preliminary license holder applies for a new license or a preliminary license, the capital of the corporation cannot be less than the total of the envisaged capital by EMRA for the new applications and for each separate license for power plants without a temporary acceptance, and if there are any, for current applications.
3. Other Conditions and Criteria
Additionally, within the scope of preliminary license applications, if the establishment of a solar power plant is requested and the applicant legal person has the ownership of the land where the power plant will be built, the ownership documentation of the land must be submitted. However, in preliminary license applications based on solar power plants, unlike other preliminary license applications, there is no obligation to submit the decision to be taken within scope of the Environmental Impact Assessment Regulation9.
On the other hand, the procedure of preliminary license applications for the purpose of establishing a solar power plant is also regulated under Article 12 of License Regulation10. Within the scope of Article 23 of the Law, the Turkish Electricity Transmission Company (“TETC”) will notify EMRA regarding the generation capacity of the solar power plant on a basis of junction point and/ or region for the following five and ten years for those applying based on wind energy until October 1st and for those applying based on solar energy until May 1st. EMRA will receive preliminary license applications on the first five working days of November each year within the scope of the declared capacity. Also, in the application appendix, within the scope of License Regulation, there must be solar measurements, confirming the standards, of at least one year obtained from the last three years.
According to Article 13 of the License Regulation, the examination regarding the appropriate submission of the documents requested from the legal persons during preliminary license applications will be completed within twenty working days following the submission date of the documents to EMRA records. In case the information and documents submitted upon preliminary license applications for solar energy are incomplete or do not meet the conditions set forth by the legislation, the application will be deemed unexecuted and the application folder will be returned to the sender. In this case, if it is prepaid, the cost of the preliminary license will be returned upon the request of the applicant. The applications which are verified as complete according to the principles of preliminary license applications will be deemed taken under review starting from the date of submission. The information regarding the preliminary license applications under review will be announced on the EMRA website11. Third parties may object in writing to the applications that have been announced within ten working days and based on personal right violations only.
B. The Analysis and Evaluation of Preliminary License Applications
1. First Examination
Following the submission of the documents within the scope of the application to EMRA, mentioned documents will be examined for the relevance to the provisions in the legislation and this examination will be completed within twenty working days following the documents’ submission to EMRA records.
In case it is determined that the preliminary license applications do not comply with the legislation, the applicant will be notified in writing indicating that unless the deficiencies remedied in fifteen working days, the documents submitted within the frame of the application will be returned. If the deficiencies are not remedied within the given time, the application will be deemed unexecuted and the application documents will be returned upon the request of the applicant. In this case, if already paid, the cost of the preliminary license will be returned upon the request of the applicant.
Applications that are verified as complete will be reviewed. According to Article 15 of License Regulation, the following actions will be taken regarding the completed applications that will be reviewed:
a. An opinion regarding the connection of the generation facility to be established to the transmission and/or distribution system and the system usage will be requested by EMRA from TETC and/or from the distribution license owner legal entity within the distribution area where the generation facility is situated.
b. The legal entity whose opinion is requested will submit his/her opinion regarding the substation which is requested to be connected to the generation facility and the connection capacity, formed within the scope of relevant legislation, within forty-five days starting from date of submission to EMRA.
c. Submitted opinions to EMRA will be reported to the applicant within ten business days. In case the applicant accepts the opinion(s) regarding the connection and system usage, the document regarding the acceptance and undertaking of mentioned opinion(s), if not his/her objection with reasons must be submitted to EMRA within ten business days. Otherwise, the opinion(s) regarding the connection and system usage shall be deemed accepted and undertaken by the applicant.
2. Principles for Evaluation of Preliminary License Applications Made for the Establishment of Solar Power Plants
The principles for evaluation of preliminary license applications made for the establishment of solar power plants have been indicated in Article 7 of the Law12. Accordingly, in case the owner of the land where the power plant will be established is the applicant, other applications made for the same land will not be taken into account.
Moreover, it is required that there should be fixed term measuring data of the land and/or representing the land that the plant will be built on from the last five years that conform to standards in applications. The applications that have been awarded an appropriate connection opinion by TETC or the relevant marketing company, by considering the effects in terms of the network of the technology to be used, will be reviewed. If there is more than one application for the same connection point and/ or the same connection area in the review; TETC will run a contest among the applications in order to determine who will be connected to the system up to the declared capacity within the scope of Law on Usage of Renewable Energy Sources for the Purpose of Electricity Generation Numbered 5346. The contest will be based on the lowest bid offered according to prices annexed to this law. The procedure and conditions regarding the technical review of solar energy license applications are regulated under the Regulation13 issued by the Ministry of Energy and Natural Resources.
Preliminary license applications for the establishment solar power plants that have been reviewed within the frame of personal right of objection are reviewed as follows:
a. For each facility, only one connection point or area can be selected within the framework of the relevant legislation by preliminary license applicants from declared connection points or areas. Installed power based on the application cannot exceed the declared capacity in selected connection point and/ or connection area.
In preliminary license applications based on solar power plants, in case the plant field is within more than one connection area, the plant field will be considered in the connection area where it occupies the most space.
b. The information and documents requested for the technical review of preliminary license applications within scope of relevant legislation are submitted to the General Directorate of Renewable Energy. This institution completes the technical review and notifies EMRA the results. In this context, preliminary license applications that are considered appropriate after the technical review are sent to TETC and/ or relevant distribution company for the formation of connection remarks.
c. Connection point and voltage level of generation facility, which is within the scope of mentioned application, will be determined by TETC and/or relevant legal entity.
d. If there is more than one application for the same connection point and/or same connection area, TETC will run a contest among the applications in order to determine which one will be connected to the system up to the declared capacity.
e. Connection remarks for applications which are not within the scope of the above statement will be submitted to EMRA and preliminary license process will be carried out by EMRA in accordance with the provisions of License Regulation. In preliminary license applications based on solar power plants, the security submitted to EMRA will be recorded as a revenue if legal entities who acquire connection right as a result of the contest run by TETC waive from preliminary license application or if their application is rejected due to a reason other than force majeure and cogent grounds which do not arise from the applicant14.
Any type of additional information and document needed for concluding the review process may be requested from the applicant, likewise, persons authorized to represent the applicant legal person may be summoned for direct interviews. It should be noted that taking the preliminary license into review does not necessarily constitute an entitlement to a preliminary license.
III. LICENSE APPLICATION
A. License Application Procedure and Conditions
According to Article 20 of the License Regulation, the persons willing to obtain a license are required to make an application to EMRA with the letter of application in the appendix of License Regulation and the information and documents specified by the Board. In their license applications, legal persons who are subject to private law provisions are required (i) to be established as a joint stock or limited company pursuant to TCC, (ii) if they have been established as a joint stock company, all of their shares shall be registered share certificates except for the publicly-traded shares and they shall not issue bearer share certificates. Furthermore, the legal person that has applied for a license or the natural or legal persons who have direct or indirect shares in the legal entity or the chairman and members of the board of directors and managers in limited companies shall not be prohibited15.
A legal person who is the holder of a preliminary license and wants to apply for a generation license should, on the grounds that s/he has completed his/her obligations, shall apply for a generation license to EMRA in a manner set forth in License Regulation16 within the preliminary license period. Otherwise, the obligations owed in the preliminary license period will be considered unfulfilled.
On the other hand, provided that the information and documents indicating the obligations17 set forth within the scope of License Regulation have been met are presented, a generation license can be applied for directly without obtaining a preliminary license first. In the event that the generation facility subject to the generation license application has been given a provisional acceptance, stated obligations, and the minimum capital and deposit conditions set forth in License Regulation for applications will not be sought18.
B. The Analysis and Evaluation of License Applications
Following the presentation of the documents within the scope of the application to EMRA, the documents in question will be ascertained as to whether they are consistent with the provisions in relevant legislation, and the relevant ascertain will be completed within ten working days following the date the documents submitted to EMRA. In case it is determined that the applications are not conforming to the legislation, the applicant will be notified in writing that the deficiencies shall be remedied in fifteen working days, otherwise, the presented documents will be returned to the sender. The information and the presented documents which remain within this framework will be examined within ten working days. If deficiencies are not remedied or EMRA is notified in writing about the waiver of application during this period, the application will be deemed unexecuted and the documents presented during the application will be returned19.
In the analysis and evaluation executed by EMRA, the criterion of conformity to purposes which is envisaged for all licenses in related legislation will be taken into consideration. To conclude the analysis and evaluation process, EMRA may ask for any type of additional information and/or documents from the applicant.
Applications found complete according to the license application principles will be taken into review on the date of application, while applications found incomplete will be taken into review on the date of completion and the information and documents for remedying the deficiencies are submitted to EMRA. Also, in the review of generation license applications, whether the obligations within the scope of preliminary license applications are met in the preliminary license period by the legal person applicant is taken as a basis20.
IV. CONCLUSION
A number of regulations have been adopted to increase the utilization of the solar energy potential in Turkey and to disseminate solar energy usage. Among these regulations, solar power generation license application procedure and competence conditions are regulated by the Law and License Regulation. In accordance with these regulations, solar energy generation license can be obtained by satisfying the conditions of a preliminary license followed by satisfying the conditions of a license, or it can also be obtained directly by satisfying the relevant obligations designated in the Licensing Regulation. Preliminary license and/or license applications will be reviewed by EMRA and the applications which are complete and made in accordance with the legislation will be entitled to obtain a preliminary license and/or license. Moreover, as indicated in the legislation, an extension will be given to applicants to remedy the deficiencies in submitted applications. Applications will be deemed unexecuted if their deficiencies are not remedied within a given time. In such case, the documents will be returned and license/preliminary license costs which have been paid will be returned upon the applicant’s request.
FOOTNOTE
1 Official Gazette (OG), dated 30.03.2013, numbered 28603.
2 OG, dated 02.11.2013, numbered 28809.
3 License Regulation, Art. 4.
4 OG, dated 14.02.2011, numbered 27846.
5 According to sub-article 8 of Art. 5 of the Electricity Market Law, legal entities whose licenses are revoked, the partners of such legal entity that hold a share of 10% or over and the chairman and members of the board of directors, including those who left office within one (1) year prior to the revocation of license may not obtain, or apply for, license, nor may them directly or indirectly hold shares in legal entities which applied for license, or take office in the boards of directors thereof for a period of three (3) years following the revocation.
6 License Regulation, Art. 12/5.
7 License Regulation, Art. 12/9.
8 License Regulation Art. 12 Para. 6.
9 Published in the OG dated 25.11.2014 and numbered 29186.
10 License Regulation Art. 12 Para. 7.
11 http://www.epdk.org.tr, Last Access: 22.08.2016.
12 Law numbered 6446, Art. 7/4.
13 Regulation regarding Technical Evaluation of License Applications Based on Solar Energy published in the OG dated 11.06.2013, numbered 28664.
14 License Regulation, Art. 45.
15 Please see footnote numbered 5.
16 License Regulation, Art. 20/6.
17 License Regulation, Art. 15.
18 License Regulation, Art. 20/8.
19 License Regulation, Art. 21/1.
20 License Regulation, Art. 21/2.
