Key Components of Legal Framework

• 1. Ownership and access to geothermal resources

• 1.1 What are the rules on ownership of geothermal resources? Can private parties hold ownership of geothermal resources?

  Article 4 of the Law on Geothermal Resources and Natural Mineral Waters numbered 5686, published in the Official Gazette dated 3 June 2007 and numbered 26551 (the “Geothermal Resources Law”) and Article 5 of the Geothermal and Mineral Resources Implementation Regulation published in the Official Gazetted dated 11 December 2017 and numbered 26727 (the “Regulation”) state that all geothermal resources in Turkey belong to the State, independent from the ownership of the land on which they are located. Even if private persons own the land, the geothermal resources under such land are owned solely by the State. Although exploration and exploitation licenses may be issued by the State for the operation of geothermal resources, the ownership of such resources may not be transferred under any circumstances. 

• 1.2 Who can grant access to geothermal resources, only state or also landowner?

  Since the landowner has no right of disposal over the resources themselves, only the State may grant access to geothermal resources. However, the access rights to the land itself still belong to the landowners. The State will grant a license over the resource itself only. Access to the land itself will need to be obtained by the licensee either by reaching an agreement with the landowner (i.e. an outright purchase of ownership or a limited proprietary right agreement) or by requesting the State to expropriate the land for the benefit of the licensee.

• 1.3 Is exploration/exploitation open to foreign investment?

  The Geothermal Resources Law states explicitly that exploration and exploitation may be carried out by either Turkish citizens or companies incorporated under Turkish law. However, there are no limitations as to the foreign shareholding structure of such companies and foreign investment can take place in the geothermal energy market through a project company incorporated under Turkish law with foreign shareholders.

• 2. Involvement of administrative bodies

• 2.1 Which administrative bodies (ministry and/or governmental agencies) are involved in the licensing of geothermal resources, including licensing and developing?

  The Ministry of Energy and Natural Resources (the “Ministry”) sets forth the terms and conditions for obtaining exploration and exploitation licenses. According to such terms and conditions, the Special Provincial Administration or (if there is a metropolitan municipality in the relevant province) the Provincial Directorate of Planning and Coordination of Investment of the metropolitan municipality in the relevant province in which the geothermal resource is located (the “Administration”) is responsible for the issuance of licenses. The Administration notifies the General Directorate of Mining Affairs regarding license applications and its approval thereof. Where necessary, the Administration may request the General Directorate of Mineral Research and Exploration’s (“MTA”) to conduct an evaluation of the planned project prior to the issuance of a license.

  The Energy Market Regulatory Authority (“EMRA”) is responsible for the issuance of electricity generation licenses for power plants based on geothermal energy.

  There are also various other state entities involved in the development, such as for environmental and land acquisition purposes.

• 2.2 Do administrative bodies assign any of their respective roles to a third party, including but not limited to a peer review, during the period of exploration, exploitation and/or production of geothermal resources?

  There is inter-agency cooperation between the Administration and the General Directorate of Mining Affairs in the licensing process and MTA may become involved as necessary. However, it is not possible for a State entity to assign its duties to another State entity or a private third party unless this is expressly provided for by law. In this respect, there is no provision providing for such transfer of duties in the Geothermal Resources Law or the Regulation.

• 2.3 Is there a government policy in place concerning geothermal resources? If so, what is the object and to what end?

  Turkey has reached its 2023 targets concerning renewable energy (raising contribution of renewables in overall electricity generation to 30% and reaching an aggregate 600 MW of installed capacity based on geothermal electricity) in 2017 and the Ministry is working on setting new policy targets (for example, by way of incentives and other support mechanisms) to promote the generation of electricity from renewable resources. Currently, Turkey’s new target set for 2030 is to reach an annual 2000MWe of electricity generation based on geothermal resources.

• 3. Allowed Exploitation

• 3.1 Is exploitation of resources subject to licensing? Do landowners have the right to exploit recourses without a license? If yes, to what extent?

  All explorations and exploitation of geothermal resources is subject to licensing and an exception is not granted for landowners. 

  The exploitation of geothermal resources is subject to two separate licenses both granted by the State. The first is the exploration license. Under the exploration license, the licensee is granted the right with the right to explore the land for the existence of geothermal resources and analyse the feasibility of its findings. The second is an exploitation license which may only be granted to licensees already holding an exploration license. Issuance of an exploitation license, without first obtaining an exploration license is not possible under Turkish law. The exploitation license grants its owner the right to fully exploit the geothermal resources on the project site within the boundaries of the project that it has submitted to the relevant State authority for obtaining the operation license. 

  The licenses described above do not cover any other licenses or permits that may be required to put the geothermal project site into operation. For instance, for the construction and operation of a power plant based on geothermal energy, an electricity generation license must also be obtained in addition to the exploration and exploitation licenses that are required to source and exploit geothermal resources.

• 4. Role and voice of landowner or “project affected people” in the licensing procedure and land lease agreements

• 4.1 Does the landowner or any “project affected people” have a role in the process of granting a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  None of the processes above may be influenced in any way by the landowner who has no part in license granting processes concerning geothermal resources or the generation of electricity from these resources. However, in the event that the party requesting a license for the exploitation of geothermal resources is not the landowner, the landowner might have a role in such process by allowing its property to be used by the license owner. The landowner has an option to allow the land to be used in exchange for a price, or if the license owner and landowner cannot reach an agreement for the purchase or usage of the land, the land may be expropriated by the State. 

  People affected by a specific project might have an impact on the licensing process as part of environmental impact assessment proceedings (“EIA”) (please see our responses in paragraph 4.2 below).

• 4.2 Will an opposition of a landowner or any “project affected people” have a bearing on the process of granting a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  If the landowner considers that the issuance of a geothermal license or the expropriation of the land is unlawful, then it can file a lawsuit for the cancellation of such transactions. If the court decides in favour of the landowner, such licenses might be cancelled or the expropriation procedure might be reversed. However, in such lawsuits, elements of violation should be proven by the claimant.

  As explained in further detail in our responses in paragraph 14, applicable EIA proceedings must be completed prior to the issuance of generation licenses. People affected by a specific project are allowed to participate in and express their opinions and comments during public meetings required to be held as part of EIA proceedings. These opinions and comments are required to be taken into consideration in the preparation of the relevant EIA Report.

• 4.3 Are the terms of land lease agreements regulated and if so, (i) what is a general timeframe of land lease agreements and (ii) what are the obligations for decommissioning at the end of the term?

  The terms of land agreements are not regulated under the Geothermal Resources Law or the Regulation. The landowner and the licensee can negotiate the terms of land agreements subject to any mandatory provisions of Turkish law.

  However, the term of the land agreement may not be shorter than the term of the generation license issued or to be issued by EMRA.

• 5. Criteria for granting of a license

• 5.1 Which documents need to be submitted and what is the criteria for obtaining a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  For the three main types of licenses, the licensing procedures are briefly as follows:

  (i) exploration: The primary documentation in order to obtain an exploration license is a mapped and detailed design of the exploration project including a detailed description which must be prepared in line with the technical format determined by the State. The State will evaluate the application for the exploration license based on the project design. Additional documentation accompanying the project design varies depending on whether the applicant is a person or a company. A real person’s full ID information, place of residence and notification address must be provided, whereas the applicant company’s articles of association, current management structure and signature circular (a Turkish law document showing the signatories of a legal entity) must be provided. The criteria for granting an exploration license is the feasibility of the project design that is submitted to the State which is evaluated based on technical examinations. The State mainly examines the financial capacity of the applicant and environmental impact of the exploration process. If the project is found to be feasible on all counts, then an exploration license will be issued for such project.  

  (ii) exploitation: Similar to an exploration license, a request for an exploitation license must be accompanied by a mapped and detailed description of the project that is being planned for that particular site, with the same technical specifications as required for an exploration license. Additionally, any licenses or permits that may be required for operating the specific project relating to the geothermal resource must also be obtained after the exploitation license is granted but before the project for the exploitation of geothermal energy may commence. For example, if electricity generation is being planned from the geothermal resource, an electricity generation license must be obtained prior to the commencement of the construction that will exploit the geothermal resource. The application for an exploitation license must be submitted on the expiration date of the exploration license at the latest. The main criteria are once again the financial capacity of the applicant and environmental impact of the exploitation project. 

  (iii) power plant (generation license): A power plant using geothermal energy will be subject to an electricity generation license issued by EMRA, which is obtained through a two tier process: First a 24-month pre-license is obtained wherein the necessary requirements for a project and a subsequent license are fulfilled. Many of these requirements involve undertakings with respect to the corporate structure of the applicant company (such as the requirement for having certain minimum share capital) and technical readings that sufficiently demonstrate the feasibility of constructing a power plant in that specific location. Once the requirements of the pre-license are fulfilled, an electricity generation license is issued. As a secondary requirement, the licensee must execute a grid connection and usage agreement with the relevant electricity distribution company in order to be connected to the grid and sell electricity to this grid. Permits that are not specific to electricity generation licenses will also be required to operate the power plant. As stated above, the land rights must be obtained for the project site. Further, relevant zoning plans, construction permits and workplace opening permits must also be obtained in order to initiate the operation of the power plant.

  For each of the licenses stated above, the relevant State authority will also demand the relevant documentation showing the shareholding structure of the company applying for such licenses.

• 6. Duration of Licenses and Renewal

• 6.1 What is the maximum duration of a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  (i) exploration, –  3 years

  (ii) exploitation– 30 years, may be extended for an additional 10 years if necessary

  (iii) power plant (generation license)  – 49 Years

• 7. Terms of License

• 7.1 What are the general terms of the license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) exploration drilling and other drilling,
     (iv) power plant (generation license)?

   (i) exploration: An exploration license gives the licensee the right to conduct exploration activities in the relevant area in accordance with the project submitted to the Administration by the licensee during the license application. The licensee has to carry out its activities under the supervision of a geology engineer and submit an annual “exploration activity report” to the Administration.

  (ii) exploitation: Exploitation activities include works and studies concerning the production of geothermal fluid (i.e. water, gas or vapour obtained from the relevant geothermal resource), injection, re-injection, discharge and related drilling activities. The licensee has to exploit such geothermal fluid in accordance with the time schedule specified in the project submitted to the Administration by the licensee during the license application. Before commencing exploitation activities, the licensee has to conduct a “resource protection area study” for the purposes of protecting the sustainability of the relevant resource and the relevant geothermal system from external factors. Similar to exploration activities, the licensee has to conduct its activities under the supervision of a geology engineer and submit an annual “exploitation activity report” to the Administration.

  (iii) exploration drilling and other drilling: Exploration drilling is within the scope of exploration licenses while other drilling activities are within the scope of exploitation licenses. It is important to note that the licensee cannot conduct any drilling activity other than those specified in the project submitted to the Administration by the licensee during the license application.

  (iv) power plant (generation license): As explained above in detail,  a generation license is obtained through a two tier process. During the pre-license period, the pre-license holder must fulfil its obligations that are necessary to obtain an electricity generation license. Following the issuance of the electricity generation license, the licensee is allowed to construct the power plant and to generate and sell electricity during the term of its license. During the construction of the power plant, the licensee is obliged to submit bi-annual progress reports to EMRA.

• 7.2 Are exploration license holders granted pre-emptive rights with regards to exploitation or do exploration licenses automatically convert into exploitation licenses if the resource has been substantiated? If so, are there any conditions?

  The request for an exploitation license could only be made by persons or companies already in possession of an exploration license. Therefore, the exploration license is a prerequisite for an exploitation license. However, it does not convert to an exploitation license even if a resource is substantiated, still the necessary conditions for obtaining an exploitation license must be met.

  There is no conversion from one license to another. Therefore, no conditions exist.

• 7.3 Is an exploitation license included in a power plant license or are these licenses separate?

  These licenses are separate as detailed above.

• 7.4 Are there any encumbrances in place for the licence holder to keep a license, once granted?

  There are no requirements for an exploration or exploitation licensee to maintain a license, once granted. Exploration and exploitation licensees have the right to request full or partial abandonment of licensed areas. In such case, wells and any facilities constructed to protect such wells must be surrendered to the Administration without any consideration. The Administration subsequently re-allocates abandoned license areas by way of tender and grants licenses to successful bidders who fulfil the requirements for obtaining the relevant exploration or, as applicable, exploitation license. Furthermore, both exploration and exploitation licenses can be transferred to other parties. All information concerning licenses, such as their assignment and any lien, pledge, rental and similar arrangements concerning usage of the resource area are required to be registered with a registrar maintained by the Administration.

  Please note that, unlike exploration and exploitation licenses, it is not possible to transfer an electricity generation license issued by EMRA to another legal entity.

• 8. Termination and revision of licenses

• 8.1 What actions by the license holder would warrant revision of exploration-, exploitation- and power plant (generation) licenses?

  None of the abovementioned licenses are subject to unilateral revision by the State according to Turkish law, with two exceptions provided for electricity generation licenses in the event of force majeure situations or changes in legislation that require a revision of licenses. Revision of licenses must be requested by the licensee under certain conditions. If there is a change in the scope or timeline of the project, the licensee must apply for a revision and/or extension in order to adapt the license for the changing conditions of the project. The State will grant the revision if the requested change is in accordance with the applicable law. 

• 8.2 Does the license granting authority license have the power to revoke or terminate licenses? If yes, what actions of the license holder would warrant the termination of the license?
     (i) exploration license,
     (ii) exploitation license,
     (iii) power plant (generation license)?

  There are situations in which a license may be terminated by the State. Briefly, a license may be terminated if the licensee no longer meets the requirements necessary for obtaining such license. If a new requirement is introduced for persons already holding a license, a time period is given for these new requirements to be fulfilled, a failure to do so will likely result in the termination of the license. The license will also end if the licensee initiates insolvency proceedings or loses its legal capacity to enter into transactions. 

• 8.3 Can the license granting authority set forth conditions into licenses which provide for (i) stricter terms and conditions of licensees or (ii) more lenient terms and conditions for licensees, when such terms and conditions (whether stricter or more lenient) are not otherwise provided for by law?

  The law provides explicitly for the terms and conditions of the abovementioned licenses, including their provisions, possibility of revisions, termination and incentives attached depending on the energy source. Therefore, the terms and conditions of licenses are set and the relevant regulatory authorities issuing such licenses do not ordinarily have discretionary powers in amending the conditions to reflect stricter or more lenient provisions. However, the Law provides in exceptional cases, discretionary powers to government authorities to provide for more lenient conditions for certain aspects of the licensing process involving monetary values (such as the amount of security or penalty) whereby the law sets out the upper limit and the government authority has the right to set a lower value. Under no condition can the conditions of licenses become stricter without being expressly provided for by law.

• 8.4 What remedies does the License granting authority have in order to enforce compliance to the terms and conditions of a license, other than by revoking the license?

  A variety of remedies are available to the authorities in the event of non-compliance, before the license is unilaterally revoked. For instance, for geothermal exploration and exploitation licenses, guarantees that license applicants provide to the authorities are considered forfeited and are cashed in for several situations of non-compliance. Further, in the event that the project is not operated in accordance with the relevant legal provisions and the project submitted as part of the license application, the authorities may order an injunction to be put in place in respect of the project until such time as the non-compliance is remedied.

  For electricity generation licenses, remedies other than license revocation come in the form of monetary fines levied by the regulator in specific events of non-compliance. The amount of the fine is dependent on the nature of the non-compliance and is specifically set out in the law. 

  The law provides, in all the cases specified above, a period before measures are applied to the licensee to remedy the non-compliance. 

• 9. Regulatory and information obligation

• 9.1 Briefly outline the surveillance carried out by the regulatory authorities during the license period, e.g. with regards to reporting duties and/or on-site visits.

  The State carries out inspections of the project sites once a year and the licensee is responsible for bearing the expenses of these inspections. With respect to geothermal resources, the licensee does not have any specific reporting duties, but must make certain payments to the State in any way necessary for the inspection to properly take place. 

• 9.2 Which information is required to be submitted to regulatory authorities during the license period for the holder of a license for:
     (i) exploration,
     (ii) exploitation,
     (iii) power plant (generation license)?

  For the geothermal exploration and exploitation licenses, licensees are not obliged to provide specific information during the inspection period. However, the licensee is under an obligation to not only bear the expenses of the inspection and expedite the inspection process, but also to provide whatever information that the State may need during the inspection, including but not limited to corporate books and technical data.

  For electricity generation licenses, the licensees are required not only to bear the expenses of the inspections in the same manner as described above, but also to submit the following regular reports to EMRA:

  • During the construction of the power plant, the licensee is obliged to submit detailed yearly progress reports on the construction of the power plant and provide information concerning the fulfilment of the deadlines stated in the project design;
  • Detailed information on the status of all licenses, permits and applications that are relevant to the project; and
  • Yearly reports, measurements and data on all activities conducted in relation to the electricity generation license. 

• 10. Power purchase agreements

• 10.1 Are general terms and conditions, such as duration of Power Purchase Agreements regulated? If no, are there any soft law or general recommendations in place in your jurisdiction?

  Power purchase agreements (“PPAs”) are not regulated under Turkish law. The parties are free to determine the terms and conditions of PPAs within the general rules of contract. However, if the license holder is registered to the Renewable Energy Support System (see explanations on incentives), the electricity will be sold to a pool, the terms of which will be subject to certain requirements under the support system. 

• 10.2 What is the permitted or general duration of PPA's?

  No such limit exists. 

• 10.3 Are public and/or national regulatory authorities involved in any way in forming the terms of PPA's, either directly or indirectly?

  The authorities are not involved in any way with the formation of PPAs. However, PPAs must be notified by the parties to the electricity balancing and settlement system operator in order to determine the balancing and settlement rights and obligations of the parties.

  One State owned enterprise, the Turkish Electricity Trading and Contracting Corporation (“TETAŞ”) has an active role in entering into PPAs with electricity generation facilities on behalf of the State, with the aim of purchasing electricity from these facilities for the wholesale of electricity at a reasonable cost. There are rules regarding its own PPAs. However, this State enterprise has no regulatory or binding role in determining the terms and conditions of PPAs for the private market.

• 11. Incentives

• 11.1 Is there any governmental support or funding available for exploration activities?

  In 2016, the World Bank, through the International Bank for Reconstruction and Development (IBRD), provided a financing grant of US$250 million and a Clean Technology Fund Grant of US$39.8 million to support geothermal development projects in Turkey. These grants were implemented by Türkiye Kalkınma Bankası A.Ş. and Türkiye Sınai Kalkınma Bankası A.Ş. as financial intermediaries that provided access to long term financing for exploration and test drilling operations.

• 11.2 Are there any incentives offered by the government or local authorities for utilization of geothermal energy? If yes, in what form (e.g. tax and/or feed-in tariffs) and what are the maximum amounts permitted?

  The incentives are not subject to recovery by the State.

• 11.3 What requirements must the project fulfil in order to be eligible to receive such incentives?

  In order to benefit from renewable energy incentives, the power plant in question must become operational until 31.12.2020 and must be registered with the “Renewable Energy Support System”. The registration to this system requires an application by the licensee. Further, the incentive package is available for a duration of 10 years. 

• 11.5 In the case of production of electricity from geothermal, are there any incentives/rewards for utilizing the geothermal energy for other than producing electricity, such as waste heat?

  Pursuant to the Regulation, if a company utilises geothermal resources for purposes other than generation of electricity, it is regarded as an industrial enterprise or a waste treatment enterprise and can apply for a geothermal resource distribution or production certificate. Companies with such certificates are able to apply for any incentives from which the industrial or waste treatment enterprises can benefit.

• 12. Participation and authority of indigenous people

• 12.1 Are the rights of indigenous peoples in connection to geothermal resources regulated?

  Specific regulations with regards to indigenous people are not provided for in the exploration and exploitation of geothermal resources. However, project sites involving geothermal resources are required to pay a yearly fee corresponding to a certain percentage of their income to the State, 20% of which is given to the local municipality in which the project site is located. Such payments are used for the reparation of any possible adverse effects that may have been caused to indigenous peoples in that area. As mentioned above, the public is allowed to express their opinion during the public meetings organised for obtaining the relevant EIA decision.

• 12.2 To what extent are indigenous municipalities involved in the process of granting licenses?

  Local municipalities are not involved in granting any of the licenses detailed above. Municipalities do however grant zoning plans and construction permits that are required to make any project operational. These are not specific to licenses required to explore and exploit geothermal resources.

• 13. Alteration of law and regulation

• 13.1 What are the principles regarding retroactivity of laws and regulations, can changes in such rules affect license holders?

  Although Turkish law as a rule provides that laws and regulations do not apply retroactively, licenses in the energy market may be subject to retroactive effects. For example, a new requirement for a given license may be introduced that is also expected to be fulfilled by existing licensees. However, in such situations, a period of several months is given to licensees to fulfil such additional requirements, in order to protect the investment in the sector and to ensure the validity of the new legislation. 

• 14. Taxation and capital controls

• 14.1 How does taxation in the sector affect license holders?

  Licensees are subject to a number of taxes, must notably VAT for the energy that is generated and sold in the market. However, many of the incentives for licensees in the renewable energy sector concern taxation, thereby eliminating many of the concerns that investors have with respect to taxation. For example, projects that are within the scope of the incentive scheme detailed above are exempt from stamp tax and certain fees entirely.

• 14.2 Please describe and provide information on the applicable tax rate and resource tax.

  The applicable tax rates depend on the incentive scheme from which the project benefits. According to the Council of Ministers Decree on State Aid in Investments numbered 2012/3305 (the “State Aid Decree”), there are five different incentive schemes, being: (i) the general incentive scheme; (ii) the regional investment incentive scheme; (iii) the priority investment incentive scheme; (iv) the large scale investment incentive scheme; and (v) the strategic investment incentive scheme. All of these incentive schemes include VAT exemptions for imported and/or domestic machinery and equipment purchases and exemptions from customs duties. Additional exemptions apply depending on the type of the incentive scheme.

  Tax rate reductions, which refers to a reduction of applicable rates of income tax or corporate tax, of up to 80% may apply depending on the location of the investment.

  Furthermore, an income tax withholding exemption (at the rate of 15% of total income) is available for investments located in Region 6 (which includes the least developed regions of Turkey).

  Other taxes may apply, such as documentary taxes (i.e.  stamp duty at the current rate of 0.948% of the highest monetary value stipulated in the executed agreement).

• 14.3 Is the sale of energy subject to VAT?

  The sale of energy is considered a transfer of goods under Turkish law and is subject to VAT (currently 18%).

• 14.4 Is VAT refundable and what is the procedure for VAT refunding?

  Ordinarily, VAT refunds are not available to investors in the sector because of an already existing tax incentive scheme. The exception to this rule is the VAT collected for the construction of projects that involve an investment of more than TL 500 million. In such projects, any VAT not deducted as part of the incentive scheme is refundable within the following year. 

  There are specific conditions for this incentive to apply – the project must be classified as a strategic investment, whereby the amount of local investment in that specific service must be lower than the amount of foreign import for the same service. This is a temporary incentive scheme available until 21.12.2023 in accordance with the State Aid Decree.

• 14.5 Is the flow of foreign capital restricted with capital controls? If so, briefly describe the nature of such controls.

  Pursuant to the Foreign Direct Investment Law published in the Official Gazette dated 17 June 2003 and numbered 25141, foreign investors are free to make foreign direct investments in Turkey and are subject to equal treatment with domestic investors. Therefore, the flow of foreign capital is not restricted under Turkish law.

• 15. Environmental Impact Assessment

• 15.1 What demands are there regarding environmental impact assessment prior to exploration, exploitation and or production of geothermal energy?

  EIAs are required for project sites before licenses are issued. If it is determined by the State authority granting the license that the environmental impact is too adverse for the project to proceed, a license will not be granted.

  An EIA is not always required for all licenses. For all geothermal electricity generation licenses over 20 MW, a positive EIA decision is necessary. For the exploration and exploitation of geothermal resources, an EIA Report is required depending on the decision of the Ministry of Energy and Natural Resources. 

• 16. Other regulatory requirements or permits needed

• 16.1 What other licenses are needed in order to commence exploration, exploitation and/or production with geothermal energy?

  Yes, as explained above, secondary permits required for the operation of the facility in question are required. Other than the ones listed above, no other licenses are required for exploration, exploitation and/or production with geothermal energy.

  However, there are land specific permits that are required to start operations with respect to any facility. These are mostly local permits concerning the land and the workplace opening permits issued by the local municipalities.

• 16.2 Which other regulatory requirements are in place, including but not limited to the need to provide insurances or guarantees, in connection with the commencing or continuing of exploration, exploitation and/or production of geothermal energy?

  All licensees are obliged to pay a license fee for exploration and exploitation licenses. In addition, a bank guarantee in the amount of 1% of the licensing fee per hectare of the license area is required to be provided. Licensees are also required to pay a yearly fee corresponding to 1% of their income to the Administration, 20% of which is allocated by the Administration to the budget of the local municipality in which the project site is located.

• 17. Legislation

• 17.1 Have there been any recent amendments to the legislation for licensing, exploration and/or exploitation of geothermal energy in the last 15 years? If so, have these amendments made a noticeable impact on the increase or decrease of production of electricity from geothermal resources?

  The first legislation that regulated the exploration and exploitation of geothermal resources was the Law on the Exploitation of the Warm and Cold Mineral Waters numbered 927 published in the Official Gazette dated 10 June 1926 (the “Law Numbered 927”) which was abolished by the Geothermal Resources Law in 2007. The Law Numbered 927 was an early law consisting of only seven provisions which did not provide a robust legal framework for geothermal energy.

  The Geothermal Resources Law and the Regulation provide detailed provisions on the development, production and protection of geothermal resources and the licensing procedure. Therefore, the enactment of such modern legislation has made a noticeable impact on the increase of electricity generation from geothermal resources.

• 17.2 Have any other factors made a strong impact on the production of electricity from geothermal in the last 15 years? If so, for what reasons.

  The amendments made to the electricity market legislation in 2001 provided the legal framework to transition the energy market from a State monopoly into a competitive and transparent market by enabling private investments.

  In the course of the last 15 years, the Turkish government has been carrying out a policy to prioritise investments in renewable energy and domestic generation. This policy has materialised by  the introduction of feed-in-tariffs for renewable energy generation in 2005.

  Turkey has also been following foreign-investor friendly policies which has resulted in approximately 45% of renewable energy projects being undertaken by companies which are either fully or partly owned by foreign investors.

  Overall, the existence of robust legislative framework and policy incentives that support foreign investment have had a strong impact on the generation of electricity from renewable energy resources, including geothermal resources.

  As the Turkish government aims to be less dependent on other countries, it continues its efforts to increase the share of renewable energy sources in the overall electricity generation.

• 17.3 Is there a specific legislation in place regarding geothermal extraction?

  There is no specific legislation in place regarding geothermal extraction. The Geothermal Resources Law is the main law for the exploration, extraction and exploitation of geothermal resources.

• 18. Alternative or cascade use of resources

• 18.1 When applying for a licence, is it possible to apply for one license or authorization, which provides for multiple or cascade use of the resource, e.g. direct and indirect utilization (generation of electricity, district heating and cooling)?

  During the exploration phase, geothermal resources are examined to determine whether they are suitable for use in the energy production, heating or cooling. 

  If a resource is determined to be suitable for multiple uses, an exploitation license for integrated usage may be issued. In this case, the licensee must use any excess geothermal energy primarily for heating in greenhouses and organic agriculture.

• 18.2 Could mineral extraction from geothermal fluid be included under such cascade usage clauses?

  Yes, there is no restriction in the legislation concerning extraction of minerals by licensees. If the geothermal fluid is rich in minerals, the licensee is allowed to extract these minerals to get maximum efficiency from such resource.

• 18.3 What possibilities does a license holder have to expand operation in order to seek further revenue based on secondary resources?

  Licensees are obliged to carry out their operations in accordance with the projects submitted to the Administration during the license application and cannot amend or vary such projects without the approval of the Administration. Pursuant to the Geothermal Resources Law, any project amendments, including increasing the quantity or capacity or the renewal of the existing wells, the revision of injection, reinjection or drilling operations cannot be made without the approval of the Administration. Therefore, if a licensee wishes to expand its operations in order to pursue further activities by utilising any secondary resources, it is required to seek the prior approval of the Administration. Once such approval is granted, secondary resources can be freely utilised within the scope of the amended project.

• 19. Water rights

• 19.1 Once an exploitation license has been granted for the operation of a power plant, along with access to fresh water for power plant operation, can the licence allow for sales and distribution of fresh water to local communities?

  There is no restriction in the legislation concerning the distribution or sale of fresh water by licensees.

  However, geothermal fluid utilised in power plants for the purposes of generating electricity is typically not rich in minerals and generally not fit for human consumption.