Turkey: Law No. 7501 on the Amendment of the Mining Law and Certain Laws (Official Gazette 11th May 2024)

With the Law No. 7501 on the Amendment of the Mining Law and Certain Laws, which entered into force after being published in the Official Gazette on 11 May 2024, important amendments were made especially in the field of renewable energy investments.

In this context, for example; new provisions were determined for floating power plants; the establishment of licensed and unlicensed floating SPPs was allowed; new regulations were made regarding energy efficiency supports; the possibility of liquefying natural gas within the borders of the country and marketing it directly as LNG was introduced; the Turkish Lira requirement in YEKA (renewable energy resource areas) competitions was abolished; the provisions regarding the market activities of unlicensed power plants that have completed their ten-years term were redefined; and projects that did not come to life were given the right to terminate and amend.

More detailed information on all these amendments, whose main objective is to increase Turkey's energy security and support economic growth by paving the way for investments in the energy sector and mining, is provided below.

1. Mining Law and UMREK Code Regulations

Article 24 of the Mining Law No. 3213 has been amended. With this amendment, reporting according to the UMREK (National Resources and Reserves Reporting Committee) Code for Group I, Group II, Group III and Group V mines will be voluntary and will only be mandatory for Group IV mines. The regulation aims to reduce reporting costs and facilitate the activities of small and medium-sized companies.

2. Activities of the General Directorate of Mineral Research and Exploration (MTA)

According to the amendment made by Law No. 7501, the General Directorate of Mineral Research and Exploration (MTA) will acquire the right of discovery for the mines it finds within the scope of its exploration licence with the reports it prepares,  and the UMREK report will not be required to be prepared. Thus, it is aimed to accelerate the fulfilment of the demand for raw materials through the acquisition of the right of discovery by the General Directorate of MTA. In addition, when the licences transferred to MTA until the end of the exploration licence period are tendered, 50% of the revenue generated will be transferred to MTA as resource income.

3. Renewable Energy Resource Areas (YEKA)

With the regulation made by Law No. 7501, the zoning plan requirement for the establishment of renewable energy power plants in seas and lakes has been abolished. The amendment amends the relevant article of the Coastal Law No. 3621, allowing the establishment of power plants without a zoning plan in areas declared as YEKA by the Ministry of Energy and Natural Resources. However, this provision does not cover drinking and potable water reservoirs, wetlands and coastlines. In addition, in dams, artificial and natural lakes, people who have a preliminary license or production license based on hydraulic resources are given the opportunity to establish a power plant without the requirement of a zoning plan. In this context, DSİ (State Hydraulic Works) or irrigation associations will be able to establish unlicensed electricity generation facilities to meet the electricity needs of facilities for agricultural irrigation purposes. In areas within municipal boundaries, municipalities and affiliated organisations will be able to establish renewable energy facilities with the permission of DSİ.

4. Natural Gas and LNG Regulations

Exemptions regarding the operation and relocation of floating LNG (liquefied natural gas) facilities will be regulated according to the procedures and principles determined by the Energy Market Regulatory Authority (EMRA) in consultation with the Ministry of Energy and Natural Resources. Existing storage facilities may be exempted from the provisions regarding capacity increases or system access of new facilities for a certain period of time; in this process, the opinions of the Ministry and EMRA will be taken into consideration. Storage companies are obliged to publish their unit prices and facility capacities for the services they provide. Companies that will operate facilities established to liquefy natural gas for export abroad or for domestic sale are required to obtain a licence from EMRA. These licence applications require legal entities to demonstrate their technical and economic capacities and to fulfil other conditions specified in the regulations. Liquefaction plant operators are responsible for the construction and operation of the facilities they operate in accordance with the relevant standards and technical criteria.

In addition, the practice of issuing separate export licences for each country will be abandoned and "single export licences" will be issued for more than one country in order to make timely use of export opportunities and facilitate market entry. With these amendments, both domestic and imported natural gas will be able to be liquefied locally, thus paving the way for direct and easy marketing of natural gas as LNG.

5. Electricity Generation Plants

The rule regarding the determination of the ceiling price in YEKA (renewable energy resource areas) competitions in Turkish Lira and updating this price during the competition process has been abolished. The rules regarding the competition and the price or compensation determined as a result will be evaluated within the scope of the YEK (renewable energy sources) Support Mechanism for the period specified in the competition specifications. Thus, a more dynamic structure is aimed by eliminating the factors that delay investments depending on the changing conditions of the day.

For unlicensed generation facilities that have completed their ten-year term, the conditions for transition to licensed generation activities have been changed. Facility owners may opt to engage in licensed generation activities by paying a contribution fee to the YEK Support Mechanism. This fee is calculated based on the difference between the hourly market clearing price in the electricity market and the current YEK Support Mechanism price, in addition to the licence fee. With this amendment, the contribution amount to be paid to the YEK Support Mechanism has been set as a ceiling price. Obtaining a licence, licence duration and other issues will be determined by EMRA. For the ongoing activities of unlicensed generation facilities, the price and procedures and principles to be applied for the excess electricity generated will be determined by the President of the Turkish Republic, with a ceiling on the market clearing price.

In this way, it will be ensured that the generation facilities, which will complete their ten-year term and switch to licensed generation activities, will be able to generate income in line with other facilities carry out licensed production activities by being included in the YEK Support Mechanism or by obtaining generation licences as a result of YEKA competitions. In addition, additional revenue will be provided to the state budget by adding a licence fee condition for the transition of unlicensed electricity generation facilities to licensed electricity generation activities.

6. Energy Efficiency

Within the framework of the Law, with the amendments made to Articles 3 and 8 of the Energy Efficiency Law No. 5627, sectoral restrictions on energy efficiency supports were removed, support fees were increased 10 times, and carbon intensity and specific energy consumption reduction criteria were introduced in addition to energy intensity reduction criteria. With this Article, it is aimed to remove sectoral restrictions for those who want to benefit from energy efficiency supports and to define the criteria for reducing emission and specific energy consumption and to provide the opportunity to apply for both energy efficiency project supports and the support given to legal or real persons who reduce energy and/or carbon intensity or specific energy consumption.

The upper limits on the amount of support payments to be made have been increased to 15 million TL for projects within the scope of Efficiency Enhancing Projects (VAP) and to 10 million TL for voluntary agreements. The amount of investment to be supported in both areas will not exceed 30 percent of the total investment amount, limited to these upper limits.

In accordance with the statement made by the Ministry, due to the change of conditions, and due to secondary legislation studies to be carried out on the Regulation on Increasing Efficiency in the Use of Energy Resources and Energy, as well as on the implementation procedures and principles, applications will not be received until these studies are completed.

7. Electricity Market

According to the article added to the Electricity Market Law with the amendments, in places where a state of emergency has been declared or in an area declared as a “disaster zone affecting everyday life”, temporary electric power demands may be met by a Board decision, and EMRA will be authorised in order to provide uninterrupted electricity services.

With a paragraph added to Law No. 6446, it is stated that the easement area related to electricity distribution facilities or transmission lines will be determined based on technical criteria and, thus providing clarity in determining the expropriation costs related to energy transmission lines.

In addition, according to the provisional article added by the amendment to the Electricity Market Law, license applicants who could not make investments due to pandemic or war-related financial increases or technical difficulties are granted the right to cancel their licenses by applying to EMRA. In this context, it is stipulated that legal entities wishing to cancel the contracts signed as a result of YEKA competitions can also terminate their rights and obligations by applying to the Ministry within a certain period of time. Thus, the connection capacity granted to facilities that cannot be installed will be released. In this way, the resulting capacity can be allocated to new investments that can be established in a shorter time and will be transformed into production in a more efficient and faster manner.

8. Nuclear Energy

With the amendment made, a paragraph added to Article 14 of the Nuclear Regulation Law No. 7381 titled "Obligation of the operator to take out insurance or provide collateral" enables the carrier to assume the responsibility of the carrier upon the request of the person transporting nuclear material, the permission of the operator of the nuclear facility and the approval of the Nuclear Regulation Authority. Within the scope of this provision, , the operator will be able to transfer the obligation to take out insurance or provide collateral to the carrier, with the approval of the Nuclear Regulatory Authority, and the carrier that takes over this obligation will be liable as the operator.

Autor: Müge Şengönül