ABSTRACT
As the Unlicensed Electricity Generation Regulation in the Electricity Market1 (“Regulation”), which is prepared by the Energy Market Regulatory Authority (“EMRA”), entered into force on 12 May 2019, the current regulation2 and communiqué3 have been regulated under the single legislation. The Regulation in question provides many incentives for investors. Accordingly, it is aimed to pave the way for electricity production for self-consumption of the producer and to increase the roof application under the license exemption by netting mechanism.
I. INTRODUCTION
Turkey is one of the most favorable countries for solar power generation on the roof application since it has building stock more than nine million. Turkey has experienced significant progress in the energy field in order to reveal this potential in the past months. The Regulation on Unlicensed Electricity Generation in the Electricity Market (“Regulation”), which entered into force on 12 May 2019 by the Energy Market Regulatory Authority (“EMRA”) allows electricity consumers to be electricity investors and enable investors to acquire licenses and provides exemptions from company establishment for investors. This study evaluates the regulation in question and the innovations envisaged.
I I . CHANGES INTRODUCED BY THE REGULATION
The purpose of the Regulation published according to the announcement made by EMRA is to make unlicensed production for consumption in producing the consumed energy on its place and to minimize the need for the network.4Under this regulation, it is aimed to bring small-scale facilities to the country's economy with energy production. Turkey Electricity Transmission Corporation ("TEIAS") will not announce capacity for applications and will give opinions only in the fault current limit for the substation subject to application5. These are evaluated significant developments. The changes introduced by the regulation and differences from the current system will be evaluated in this section.
A. Licensing and Company Establishment Exemption
The Regulation does not require a license as the most crucial change as can be understood from the title of the regulation. The Electricity Market Licensing Regulation6, which must be complied with to apply for a license, proposes a procedure involving more than a procedural process for those involved in the licensing process. With this regulation, it is envisaged to provide convenience to people who will produce electricity on a small scale with unlicensed electricity production. Unlicensed generation is limited to the facilities determined by the regulation. According to Article 5 of the Regulation, license exemption is granted to nine different facilities. Those are; “generation facilities based on renewable energy sources with a power generation capacity of up to one megawatt or the upper limit of installed power determined by the President in accordance with article 14 of the Law” and “generation facilities based on renewable energy sources that use all the energy they produce without delivering it to the transmission or distribution system, whose production and consumption are at the same measurement point.” These are presumably the most important facilities which are applied commonly.
B. Netting
The netting is defined in the Regulation as “the process of reaching a net production or net consumption value in kWh as a result of the reduction of production and consumption from each other within a certain period of time”. Within the scope of the Regulation, there is a calculation between the amount of electricity produced by the electricity producer and the amount of electricity consumed.
The Regulation includes the procedures and principles of the netting transaction in Article 26, titled “Monthly Netting Practice”. Under the provisions, persons or legal entities are allowed to generate electricity. Also, the provision regulates how the payments to these people or entities will be calculated. Accordingly, the relevant network operator specified in 4/1 (l) shall notify the total production and total consumption amount in the meters to the Energy Markets Operation Joint Stock Company ("EPIAS"). The surplus electricity to be included in the notification will be purchased for ten years by the electricity supply company. According to Article 26/6 (a) of the Regulation, the calculation of the payment to be made in an invoicing period shall be calculated by multiplying the amount of surplus production by the determined price, which is the basis of the above-mentioned purchase. The commissioned supplier company will collect the amounts determined by following this route for each producer in its field of duty as “total price to be paid to unlicensed producers” and he will notify EPIAS. Upon this notification, payment will be made to him, and the payment will be made to the producers with this payment until the fifth day of the following month in which the payment system is explained above. If there is energy withdrawal in the system, which means if consumption is more than production, it will be collected according to the contract between the supplier and the consumer as per Article 26/7.
Pursuant to Article 27 of the Regulation, persons defined as producers shall object to the works and transactions carried out by the supplier company as per Article 26 within three days from the date of notification. The supplier company shall respond to this objection in five days under Article 27/2. Pursuant to the Regulation, all new applications are now included monthly netting system.It is stated that the 50% discount from the consumer distribution tariff for the production within the scope of netting arrangement, consumption in this scope and the discount applied to the distribution tariff for the production surplus after the netting is the incentives that will pave the way for the sector7. It is stated that this legal regulation encourages solar energy production in electricity production, and Turkey will make a considerable profit and every 1,000 MW of GES will take place of the $ 110 million natural gas imports8.
This method, which supports the self-consumption of institutions and enables them to use the electricity they produce commercially, will constitute a legal basis for contracts such as the Corporate Power Purchase Agreement ("PPA") implemented in many countries9. Although the hourly netting is being practised, the implementation of the monthly netting with this regulation is highly welcomed by the investors. Due to the fact that factories do not work on public holidays and weekends, and most of the businesses in tourism work seasonal, there is no consumption in factories and therefore hourly netting system affects feasibility negatively. For this reason, monthly netting may be evaluated a significant step. However, there is an expectation for the transition to annual netting in the sector. If such a development is implemented, companies whose monthly consumption values change shall consider to generation electricity by unlicensed production10.
C. Prohibition of Expropriation
Under Article 32 of the Regulation, it is clearly regulated that the electricity activity produced without a license shall not be expropriated or shall not be subject to limited real rights. With this regulation, manufacturers who seek to generate electricity are almost provided assurance. However, it should be noted that the compliance of the regulation with the upper norms is controversial. For instance, administrations shall expropriated when required by public interest pursuant to Article 46 of the Constitution. Likewise, pursuant to the Expropriation Law numbered 2942, when it is necessary in terms of public interest, the administration shall acquire the ownership of the immovable property of persons or legal entities. Thus, the provision in question may contain an unlawful provision without a legal basis.
D. Audit of Unlicensed Electricity Generation
The Regulation stipulates that under Article 31, the activities of persons or legal entities producing unlicensed electricity will be audited by EMRA. Accordingly, the fact that this audit activity is not given to any other institution indicates that the audit of this issue is given to a public institution, for instance the Ministry, which is the central organization. It would be relevant to state that a wide range of action is left to EMRA. In considering that the upper limit stipulated in the regulation is 10 kW as a rule, the amount of assurance can be understood more clearly under the calculation in 2019, a consumer who pays an average of 124 TL in a month will use approximately 2.372 kW/hour of electricity per year. The same consumer having a solar panel with a power of 10kW/hour will produce an average of 28.500 kW/hour of electricity per year11. If the Regulation on Procedures and Principles Regarding Real Estate Supply Operations Executed by the Energy Market Regulatory Authority12 is also taken into consideration, this provision may restrict EMRA against persons and legal entities producing unlicensed electricity under this regulation. In addition, the authority of the rejection of EMRA is restricted and this is also a major incentive factor for the investors.
I I I . APPLICATION PROCEDURES AND PRINCIPLES OF UNLICENSED ELECTRICITY
A. Generation Facilities Within the Scope of Unlicensed Production
Article 11 of the Regulation, facilities states that the application is to be made. A general limit of up to 10kW, including 10kW, is set for the facilities specified in paragraph 1 of the provision. These facilities are granted license exemption under Article 5. The facilities envisaged in this context are exempted from obtaining a license and establishing a company. In this article, it is accepted that the facilities designed on solar energy have only roof and frontage applications with some exceptions. One of these exceptions is the production facilities based on solar energy “which will be established for the purpose of agricultural irrigation in some of the agricultural lands” under Article 11/4. At the same time, a reference is made to Article 14 of the Electricity Market Law13 and thus the facilities here are also applicable14.
B. Application Procedure
The procedure is as follows: the applications are received and compiled, then the evaluation of the documents, the evaluation results are announced on the website, the deficiencies are notified to the applicant, the opinion of the TEIAS regarding the short circuit current limit is requested, the opinion of the TEIAS regarding the short circuit current is received, technical evaluation of the applications, the announcement and notification of the results on the internet, the notification of the technical evaluation report to the EIGM and the technical evaluation of the EIGM and the notification of the call letter to the applicant for the connection agreement as a result of the report being positive.
C. Technical Evaluation of Applications
Article 10 of the Regulation regulates the process of receiving the applications.15 In this article, the relevant network operator is partially restricted to reject applications.15. The applications shall not be rejected due to the lack of documents other than the documents determined by EMRA.
The evaluation of the applications is also envisaged to be made by the committee consisting of TEIAS16, TEDAS17 and a representative of the relevant network operator, as stated in Article 12/2. This board has fifteen days to evaluate the application in terms of documents. If the documents are missing in the applications, the application will not be evaluated and the applicant shall provide necessary documents by the end of the month within three business days after the result is notified. Applications that can reach the technical stage will be evaluated by the procedure specified in article.
D. Call Letter to Connection Agreement
The process of the application after is regulated in Article 15 and 16. If the application is rejected, the document containing the reason for rejection is returned to the applicant along with other documents. The application considered as suitable for the connection application is sent to the Ministry of Energy Affairs General Directorate (“EAGD”) EAGD shall check its technical evaluation within thirty working days through this application and send the related report to the network operator. If the documents are found to be inaccurate or incomplete, the applicant is notified and the non-compliance is requested. The regulation proposes two types of connection opinions: (a) the opinion of the commission regarding the generation of unlicensed electricity from renewable energy sources other than wind and solar energy, if positive, and (b) the opinion of EAGD regarding the applications based on wind and solar energy after the technical evaluation phase described above by EAGD. In applications with positive results, a call letter shall be issued to the connection agreement and the applicant shall be invited to make a connection agreement. The process up to this stage takes about four months 18 Pursuant to Article 17 of the Regulation, the persons whose call letters are notified shall submit the project to the ministry or to the institution authorized by the ministry within one hundred and eighty days from the date of notification. The relevant network operator should sign a contract with the applicant within thirty days after this approval is obtained within the given time.
IV. CONCLUSION
In the Electricity Generation Sector in Turkey, investors are expected new regulations for long-time which pave the way for unlicensed electricity production with self-consumption purposes. By this regulation, rapid growth shall be introduced in the roof-top electricity generation19. Looking at the examples from the world, there are rapid developments in solar energy and electricity production across the globe. India is expected to increase its energy capacity in solar panels to 40 GW by 2020. Germany, as one of the most developed countries in renewable energy, aims to use entirely renewable energy by 2030 and envisages to build 42 GW solar roof capacity for 10 years. Turkey has 1.5 times more sunshine duration than Germany, but has less roof occupancy rate. It is expected that Turkey shall be exceed the country's 5 GW target for 2023 and is expected to show its potential in the coming years20. This regulation is expected to provide many different innovations such as the possibility of producing unlicensed electricity and the netting mechanism. Notably, small-scale enterprises are provided with convenience since the process of obtaining a license is a multi-stage process. All facilities are subject to monthly netting, but the weekend losses experienced in daily netting will be largely eliminated. The evaluation of the applications shall be made by the board including the members of TEIAS, TEDAS and a representative of the relevant network operator.
In the energy market, it is considered that the Regulation shall increase renewable energy and roof type electricity production rapidly and small facilities shall serve to the country’s economic boost.
BIBLIOGRAPHY
HAKAN ERKAN, “Gensed Yeni Yönetmelik Bilgilendirme Notu”, https://www.solarbabatr.com/gensed-yeni-yonetmelikbilgilendirme-notu/ (Access Date 01.03.2020)
HAKAN ERKAN, “Güneş Yatırımları İçin Uygun Finansman Koşulları Oluşturulmalı”, Enerji ve Çevre Dünyası Dergisi, July – August 2019, pp. 24-26. HALIL DEMIRDAĞ, “Güneş Enerjisinde Elde Ettiğimiz Başarıyı Destekleyen Her Adım Çok Önemli”, Enerji ve Çevre Dünyası Dergisi”, July– August 2019, p. 20.
KUTAY KALELI, “Çatı Alanlarının Üçte Biri Güneş Enerjisi Kurulumuna Uygun, Enerji ve Çevre Dünyası Dergisi”, July– August 2019, Issue. 151, p. 22.
LEVENT BAŞAK, “Almanya Anlaşmasının 5. Maddesinin (3) Numaralı Fıkrasının (B) Bendi Kapsamında Elde Edilen Gelirlerde Vergilendirme Yöntemi”, Yaklaşım Dergisi, October 2019, Issue. 322, p. 68.
ÖZLEM EGE POLAT, “Yeni Lisanssız Elektrik Üretimi Yönetmeliği ve İlgili Düzenlemelerin Yenilenebilir Enerji Sektörüne Getirdikleri, Enerji ve Çevre Dünyası Dergisi”, JulyAugust 2019, Issue. 151, pp. 30-32.
FOOTNOTE
1 Elektrik Piyasasında Lisanssız Elektrik Üretim Yönetmeliği, Official Gazette dated 12.05.2019, numbered 30772.
2 Official Gazette dated 02.10.2013, numbered 28783.
3 Elektrik Piyasasında Lisanssız Elektrik Üretimine İlişkin Yönetmelikte ve Elektrik Piyasasında Lisanssız Elektrik Üretimine İlişkin Yönetmeliğin Uygulanmasına İlişkin Tebliğ (Official Gazette dated 23.03.2016 and numbered 29662).
4 Hakan Erkan, “Gensed Yeni Yönetmelik Bilgilendirme Notu”, https://www.solarbabatr.com/ gensed-yen_-yonetmel_k-b_lg_lend_ rme-notu/ (Access Date: 01.03.2020).
5 Erkan.
6 Official Gazette dated 02.11.2013, numbered 28809.
7 Halil Demirdağ, “Güneş Enerjisinde Elde Ettiğimiz Başarıyı Destekleyen Her Adım Çok Önemli”, Enerji ve Çevre Dünyası Dergisi, July – August 2019, p. 20.
8 Demirdağ, p. 20.
9 Özlem Ege Polat, “Yeni Lisanssız Elektrik Üretimi Yönetmeliği ve İlgili Düzenlemelerin Yenilenebilir Enerji Sektörüne Getirdikleri”, Enerji ve Çevre Dünyası Dergisi, July – August 2019, p. 31.
10 Erkan, p. 30-32.
11 Levent Başak, “Almanya Anlaşmasının 5. Maddesinin (3) Numaralı Fıkrasının (B) Bendi Kapsamında Elde Edilen Gelirlerde Vergilendirme Yöntemi”, Yaklaşım Dergisi October 2019, Issue 322, p. 68.
12 Official Gazette. 02.02.2018, Issue: 30320.
13 Elektrik Piyasası Kanunu, Official Gazette. 30.03.2013, Issue: 28603.
14 The facilities that can be carried out without license are listed in the article 14 under the sub-heading: (a) Production facility that does not establish connection with emergency groups and transmission or distribution system, (b) Its generation facility based on renewable energy sources with a maximum installed power, (c) Electricity generation facility established for the disposal of mud of municipal solid waste facilities and treatment facility(d) Micro-cogeneration facilities and cogeneration facilities that provide the efficiency value to be determined by the Ministry and those that are in the category to be determined by the Board (e) generation facilities based on renewable energy sources that use all the energy they produce without delivering it to the transmission or distribution system, whose production and consumption are at the same measurement point
15 Paragraph 1 of Article refers to 5/1, which regulates the exemption of obtaining a license and establishing a company
16 TEIAS refers to the Turkish Electricity Transmission Corporation in this study.
17 TEDAS refers to the Turkish Electricity Distribution Corporation in this study.
18 Polat, s. 31.
19 Demirdağ, p. 20.
20 Kutay Kaleli, “Çatı Alanlarının Üçte Biri Güneş Enerjisi Kurulumuna Uygun, Enerji ve Çevre Dünyası Dergisi”, Enerji ve Çevre Dünyası Dergisi, July – August 2019, p. 22.
