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Critical Amendments In Unlicensed Generation: New Regulations On Hourly Netting, Storage And The Consumption Relationship

Aydın Law — Fri, 10 Apr 2026 11:02:43 +0000

I. INTRODUCTION

The Regulation on Unlicensed Electricity Generation in the Electricity Market (the “Regulation”), published in the Official Gazette dated 12 May 2019 and numbered 30772, constitutes the primary legislation governing the procedures and principles applicable to unlicensed electricity generation activities. Significant and systematic amendments have been introduced to the said Regulation through the Regulation Amending the Regulation on Unlicensed Electricity Generation in the Electricity Market (the “Amendment Regulation”), published in the Official Gazette dated 2 April 2026 and numbered 33212.

The regulations introduced by the Amendment Regulation are of a nature to reshapes the fundamental parameters of the unlicensed generation model. In this context, the reconfiguration of the netting mechanism from a monthly basis to an hourly basis, the subjection of the relationship between production and consumption to stricter technical and legal criteria, and the clarification of the framework regarding storage activities are noteworthy.

II. FUNDAMENTAL PRINCIPLES

1. How Has the Transition to the Hourly Netting System Been Regulated by the Amendment Regulation?

Prior to the Amendment Regulation, netting transactions were conducted (setting aside thehierarchy of norms and taking into consideration the nature of special-general regulations)pursuant to (i) the Regulation, (ii) the Board Decision numbered 11917 (the “Board Decision”), published in the Official Gazette dated 24 June 2023 and numbered 32231, and (iii) the Law No. 5346 on the Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy (the “YEK Law”).

During the period in which the monthly netting structure was applicable, the arrangement established by the Board Decision led to the result of an SPP established for self-consumption purposes acquiring a form of “IPP – independent power producer” character, if the production and consumption points were located in two separate distribution / supply regions. Accordingly, the portion of electricity matching the consumption was evaluated based on the last resort supply tariff, where the relevant consumer was within the scope of such tariff; whereas, provided that it remained within the annually monitored sales limit, the excess production was evaluated on the basis of the unit prices set forth in the tariff tables.

Accordingly, even if a differentiation in terms of unit price was present, an invoice was issued for the entirety of the produced electricity, and the corresponding amount was collected from the incumbent supply company within the determined term. On the other hand, the consumer was obliged to pay the equivalent of the electricity at the consumption point to its supplier within the framework of bilateral agreement provisions.

With the Amendment Regulation, it is observed that the netting mechanism, which was previously carried out in practice on a “monthly” basis, has been reorganized to be based on an “hourly” time period. From a purposive interpretation, we are of the opinion that this fundamental change has essentially been issued with the expectation of synthetically constructing a “behind-the-meter netting” paradigm similar to rooftop SPPs. Indeed, with the Amendment Regulation, the concept of netting has been redefined and expressed as “the process of finding the net production or net consumption value in kWh as a result of offsetting production and consumption occurring within an hourly time period.”

In this case, during the first 10-year operation period of unlicensed SPPs, within the framework of the operation of the hourly netting mechanism, we are of the opinion that, considering the data set collected, managed, and coordinated by Energy Exchange Istanbul (“EXIST“), and taking into account the letter of the Amendment Regulation, three different situations may theoretically arise; however, whether this configuration will be implemented in practice in the same manner will gain clarity within the framework of the procedures and principles to be updated and published by the EMRA and explanatory additional regulations regarding settlement processes.

• In the event that consumption exceeds production in the relevant time period, the difference shall be characterized as net consumption; while no separate invoice is issued for production, an invoice shall be issued to the consumer by the supplier based on the net consumption amount, taking the current electricity consumption cost as the basis.

• In the event that production and consumption are equal, no invoicing shall be in question.

• In the event that production exceeds consumption, the difference shall be evaluated as “surplus energy”; the price regarding this energy shall be determined within the scope of Schedule No. I annexed to the YEK Law (based on the unit prices set forth in the tariff tables), and shall be invoiced by the consumer depending on its purchase by the incumbent supply company within the framework of the relevant legislation

In all cases, the unit benefit provided by the electricity subject to netting must be deemed equal to the unit supply cost of the relevant commodity.

It is observed that the “miracle” of hourly netting does not lie in the unit price at which the produced electricity will be evaluated. On the contrary, provided that the consumption profile of the relevant consumer is taken as the basis, this practice may result in reaching the annual limit on the sale of excess electricity (permission to sell up to one times the consumption) more rapidly. This is because, within the monthly netting structure, a neutralization is carried out based on approximately 720 hours. Undoubtedly, in the monthly netting regime, the breadth of the sample group serves a function of reducing uncertainty and imbalance. This flexibility does not exist in the new system.

As briefly mentioned above, it is understood that, under the hourly netting system introduced by the Amendment Regulation, the calculation and settlement processes will be carried out by EXIST, the market operator, and that, within this scope, production and consumption data provided by the relevant grid operators will be consolidated into a single source and rendered suitable for settlement.

Within this framework, netting transactions will be carried out by EXIST, and accordingly the payment amounts will be calculated, and payment and invoicing processes will continue to be carried out through incumbent supply companies based on the calculated amounts. Within this scope, it is clear that the settlement process carried out by EXIST performs a technical balancing and netting function by comparing production and consumption data for each hour.

Within the framework of the current regulations, it is understood that there is a tendency towards a change in the existing structure established by the Board Decision. In other words, it is expected that the implementation principles regarding the netting system will be determined and clarified by a new Board Decision to be adopted in this direction. In this respect, in order to make a final and sound assessment on the matter, it is necessary to follow the procedures and principles to be published by the Energy Market Regulatory Authority.

At this juncture, we would like to state that, when the evolution of the market and the historical tendencies of the rule-maker are observed; in the current situation, the reference made to the tariff table with respect to the sale of excess energy may, over time, be updated towards the market clearing price (MCP) through an amendment to the law or by a Presidential decision. This is because the tariff, by its nature, is an umbrella covering subsidized groups. A pricing mechanism aligned with market formation (and therefore to – MCP) will also be in line with the fundamental mantra of self-consumption investments.

2. What Are the Regulations Introduced with Respect to Storage Activities in Unlicensed Generation Facilities?

When the regulations concerning storage activities within the scope of unlicensed generation facilities are examined, it is regarding storage activities within the scope of unlicensed generation facilities are examined as a whole, it is observed that permitting the establishment of storage units does not constitute a new approach, and that such possibility had already existed previously. Indeed, pursuant to the Regulation on Storage Activities in the Electricity Market, published in the Official Gazette dated 9 May 2021 and numbered 31479, it was possible to establish electricity storage facilities in unlicensed generation facilities that had received a call letter within the scope of the Regulation and where netting was applied for surplus energy. However, it was made mandatory that such storage facilities meet certain technical and legal conditions; in particular, it was explicitly regulated that no payment would be made for the energy remaining as surplus after netting with respect to the energy supplied to the grid from storage facilities. Even, in cases where the amount of energy supplied from the storage unit could not be separately determined, it was envisaged that the entirety of the surplus energy would be evaluated without consideration, and such energy was deemed to have been generated by the incumbent supply company within the scope of YEKDEM and reflected to the system as a gratuitous contribution.

Within this framework, it is understood that the regulations introduced by the Amendment Regulation, rather than establishing an entirely new system, render the existing structure more explicit and systematic. Indeed, with the new regulation, the establishment of integrated storage units in unlicensed generation facilities has been expressly permitted, and it has been stipulated that the capacity of such units may not exceed the electrical capacity of the generation facility.

On the other hand, the approach that the energy supplied to the grid from storage units is not evaluated within the scope of the support mechanism has been maintained; within this scope, it has been explicitly regulated that no payment shall be made for the energy supplied to the system from the storage unit that remains as surplus after netting. In addition, in cases where the energy supplied from the storage unit cannot be separately determined, it has been envisaged that no payment shall be made for the entirety of the surplus energy, thereby confirming the previous approach and establishing a clearer framework for implementation.

When these regulations are evaluated together, it is understood that, although it is possible to establish integrated storage units in unlicensed generation facilities, due to the fact that the energy supplied to the grid from the storage unit is not evaluated within the scope of any payment mechanism, it is not possible to generate income by storing energy during low-price hours and supplying it to the grid during high-price hours. In other words, storage units that would provide a flexibility mechanism within the scope of unlicensed electricity generation will essentially be used for “peak shaving” purposes; at present, it does not appear possible for them to be allocated to arbitrage.

3. What Are the Regulation Introduced with Respect to the Association of Consumption Facilities with the Generation Facility?

With the Amendment Regulation, within the scope of transfer transactions, the new consumption facility or facilities intended to be associated with the generation facility must have the following characteristics:

• Based on the date on which the generation facility obtained the connection agreement call letter, the total of the contracted capacities in the connection agreements of the relevant consumption facilities;

• In the event that the call letter has been obtained after 12 May 2019, (i) provided that the exceptions set forth in the Regulation are reserved, it must not be less than the installed capacity of the generation facility, (ii) where the generation facility falls within the scope of subparagraph (h) of paragraph one of Article 5 of the Regulation and the associated consumption facility or facilities belong to municipalities, their affiliated entities, industrial facilities, or agricultural irrigation subscribers, the said total must not be less than the contractual capacity forming the basis of the application in cases where the installed capacity of the generation facility is greater than this total, and must not be less than the installed capacity of the generation facility in cases where the total of the contracted capacities is greater than the installed capacity of the generation facility

• In the event that the call letter has been obtained before 12 May 2019, the total of the contracted capacities in the connection agreements of the relevant consumption facility or facilities must not be less than the contractual capacity forming the basis of the application in cases where the installed capacity of the generation facility is greater than the contractual capacity forming the basis of the application, and must not be less than the installed capacity of the generation facility in cases where the contractual capacity forming the basis of the application is greater than the installed capacity of the generation facility

• For generation facilities that have been entitled to receive a connection agreement call letter as a result of the priority evaluation and for which a connection agreement has been executed, the total annual electrical energy consumption of the new consumption facility or facilities to be associated with the generation facility must not be less than the consumption amount forming the basis of the application.

III. CONCLUSION

While the fundamental structure of the unlicensed generation system has been preserved with the Amendment Regulation, the rules regarding the functioning of the system have been made more explicit through the transition of the netting mechanism to hourly principles, the establishment of a clearer framework for the regulations on storage activities, and the re-determination of the conditions regarding the consumption facilities to be associated with generation facilities on the basis of the technical and consumption data forming the basis of the application. Within this scope, it is understood that, in particular, the reflection of the hourly netting system on invoicing and settlement processes will be clarified together with the regulations for implementation.

You may access the Amendment Regulation via this link.

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Serhat Aydın

Managing Partner

+90 532 242 10 28
serhat.aydin@aydin.law

Doğa Kale

Associate

+90 552 452 13 71
doga.kale@aydin.law

Critical Amendments In Unlicensed Generation: New Regulations On Hourly Netting, Storage And The Consumption Relationship yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

Amendments To The Charging Service Regulation: Pricing, Payment Processes, and User Rights in Electric Vehicle Charging Are Being Redefined

Aydın Law — Thu, 02 Apr 2026 08:58:47 +0000

I. INTRODUCTION

The amendments introduced by the Regulation on the Amendment of the Charging Service Regulation (the “Regulation”), published in the Official Gazette dated 23 March 2026 and numbered 33202, demonstrate that the electric vehicle ecosystem in Türkiye has evolved from merely a growing market into a more sophisticated regulatory domain. While the Regulation deepens the existing framework across various areas ranging from mobile charging solutions to data security standards, from price transparency to interoperability within the market, it also renders the obligations of market players clearer and more measurable. In this respect, the amendments do not merely constitute a technical update; they also signal a transition to a new phase in the charging services market shaped by competition, transparency, and user-centricity.

II. FUNDAMENTAL PRINCIPLES

An examination of the Regulation indicates that, particularly from the users’ perspective, the pricing structure has been significantly simplified, as charging service fees are now to be applied solely in TL/kWh and no additional fees may be charged under any other name. Furthermore, mandating card and contactless payment options at certain charging units and explicitly prohibiting additional charges for such methods enhance accessibility and make the process more practical for users. In addition, it is understood that the concept of a charging network has been expanded to include mobile charging stations and interoperability mechanisms, that data security obligations are being aligned with international standards, and that service quality is aimed to be improved through regulations enabling users to access real-time information regarding price, availability, and service conditions. The key amendments are summarized below under separate headings:

Simplified Pricing: Single Fee, Clear Rules

With the amendments, the pricing structure of charging services has been significantly simplified. Pricing will now be based solely on TL/kWh, and no additional fees—such as connection fees, transaction initiation fees, or equipment usage fees—may be charged under any name beyond the amount calculated based on the charging service price. This constitutes an important step towards ensuring that users can clearly understand what they are paying for. In addition, transparency has been strengthened by requiring prices to be shared in real time through digital channels and at charging stations.

Operators are also allowed to apply discounted pricing based on the time of day and the location of the station. However, an important rule protects users: even if prices change after charging has started, the user will pay according to the price applicable at the time the transaction began. Since such discounted prices must be clearly communicated to users and notified to the Energy Market Regulatory Authority (“Authority”), the system is intended to operate in a transparent and controllable manner.

Introduction of Congestion Management at Charging Stations

An important step has been taken towards more efficient management of congestion at charging stations. In DC charging units, once a vehicle’s battery level reaches 85% or above, the charging service may be terminated, provided that the user has been informed in advance. This mechanism aims to improve the efficiency of station usage and enable more users to access the service during peak hours. However, it remains unclear how such notifications will be made and to what extent users will be able to anticipate this process. This issue will be particularly significant for users planning long-distance travel.

Card and Contactless Payment Options Clearly Regulated

At newly added charging stations on highways under the responsibility of the General Directorate of Highways, at least one of the DC charging units with a capacity of 50 kW or above must provide card or contactless payment options. This requirement will come into force as of 1 July 2026. Moreover, no additional fees, commissions, or price differences may be charged to users for these payment methods. This regulation is expected to facilitate access to charging services and make the process more practical for users.

Expansion of the Charging Network Definition: A Growing System

The Regulation no longer considers charging services as limited to physical stations. Structures such as mobile charging stations, smart charging systems, and interoperability between different networks (roaming) have been explicitly included within the system. Accordingly, the charging network is now approached as a more holistic structure encompassing both software and hardware. This indicates that the sector has expanded both technically and commercially.

In this context, particular attention should be drawn to the contractual structure of roaming arrangements introduced by the Regulation. Indeed, this aspect entails legal and operational considerations that must be evaluated both from the perspective of prospective roaming “contracting parties” holding a charging network operator license and from the perspective of users.

Within the Regulation, roaming agreements are defined as agreements enabling charging network operators to directly provide services to each other’s users and covering data and payment flows. Furthermore, it is stipulated that contracting parties holding a charging network operator license must notify the Authority within 30 days following the execution of such roaming agreements. In addition, the Authority is authorized to determine the procedures and principles, as well as the necessary protocols, regarding activities carried out under roaming agreements.

This approach demonstrates that, on the one hand, the regulatory authority may guide the general framework in the forthcoming period; however, in the absence of any protocol or secondary legislation issued by the Authority at this stage, the current practice is expected to be shaped largely within the framework of contractual freedom between the parties in other words, a structure in which the framework is effectively filled in by the parties themselves. Nevertheless, it should also be taken into consideration that, should mandatory provisions arise through future regulations and protocols to be issued by the Authority, existing agreements will need to be reviewed and adapted accordingly.

In this context, in roaming relationships, it is essential that matters such as data sharing, management of payment and collection processes, revenue sharing, service continuity and quality standards, and allocation of responsibilities between the parties are clearly and comprehensively regulated within the agreements. In particular, the structuring of the collection mechanism (including which party will collect payment from the user and how reconciliation and transfer processes between the parties will operate) stands out as a critical area in terms of both managing commercial risks and ensuring operational continuity.

From the user (consumer) perspective, it is also necessary for the roaming structure to be transparent and predictable. Regardless of which network the user receives the service from, clear information should be provided regarding pricing, payment, and service conditions; it should be clarified who the counterparty is in case of disruptions arising from services provided across different operators; and liability in potential disputes should be clearly determined. Therefore, roaming agreements should be considered not only as instruments governing commercial relations between parties but also as structures that directly affect user experience and trust.

Clarification of Operator’s Authorities and Notification and Application Processes for Charging Activities

It is observed that the framework regarding the authorities and obligations of charging network operators has also been further clarified. Activities such as the establishment and operation of a charging network, the operation of mobile charging stations, the contractual relationships established with users, and the execution of practices related to invoicing and the collection of fees within the scope of charging services are regulated under the license regime. In addition, it appears that notification and application processes concerning the integration of new stations into the network, the transfer of existing stations, and mobile charging activities have been simplified and rendered more traceable. Accordingly, in the event of the transfer of charging stations from one charging network operator to another, both the transferring and the transferee operators are required to notify the Authority electronically, and following the approval of such notifications by the Authority, a further notification must be made to the relevant charging network operator. Within this process, it is stipulated that the certificate of favorable opinion issued in the name of the transferring operator shall be revoked and reissued in the name of the transferee operator.

Strengthening of User-Oriented Service Approach; Introduction of Certification Requirement for Software Systems in Information Security

With the amendments, significant obligations have also been introduced in the areas of user experience and data security. Accordingly, charging network operators are required to establish communication channels through which user complaints can be submitted and tracked, and to set up or procure a call center certified under ISO 18295 that will operate on a 24/7 uninterrupted basis. In addition, it has been made mandatory to provide real-time information regarding the status and availability of stations and sockets, as well as pricing information, and to ensure that user requests are resolved within specified time periods. A transition period of six months has been granted to existing license holders for the implementation of these requirements.

On the other hand, the bar has been significantly raised in terms of data security. While it has become mandatory to ensure the protection of data obtained within the scope of charging services, to prevent unauthorized access, and to operate IT infrastructure in compliance with international standards, it is explicitly regulated that systems must comply with the TS ISO/IEC 27001 standard. Within this scope, ensuring elements such as authentication, access control, and secure communication becomes a fundamental obligation for operators. A transition period of one year has been granted to existing license holders for the fulfillment of these obligations.

III. CONCLUSION

Overall, the amendments aim to establish a more transparent, predictable, and user-oriented structure in the charging services market. The regulations introduced across various areas from pricing and payment processes to data security and operational obligations not only require technical compliance from market players but also bring about a more systematic and standardized approach to business practices.

In particular, the simplification of the pricing structure, the expansion of direct payment options, and the enhancement of the level of information provided to users stand out as significant developments directly affecting user experience. However, certain areas such as congestion management will need to be closely monitored in the coming period in terms of how they will be implemented and whether uniformity can be achieved across the market.

Furthermore, with the expansion of the definition of the charging network, it is understood that the contractual relationships to be established within the scope of interoperability (roaming) will play a critical role in shaping the practice, particularly in terms of data sharing, collection mechanisms, allocation of responsibilities, and service conditions reflected to users. In this respect, the proper and sustainable structuring of roaming arrangements will directly affect not only the balance between market players but also user trust and service quality.

In this framework, it would be appropriate to consider these amendments not merely as technical updates to the existing structure, but as an important component of the transition towards a more mature, competitive, and user-centered charging services market.

Makalenin Türkçe versiyonuna ulaşmak için bu bağlantıya tıklayınız.

Serhat Aydın

Managing Partner

+90 532 242 10 28
serhat.aydin@aydin.law

Aslı Başçoban

Associate

+90 534 369 24 22
asli.bascoban@aydin.law

Amendments To The Charging Service Regulation: Pricing, Payment Processes, and User Rights in Electric Vehicle Charging Are Being Redefined yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

Comprehensive Innovations In Investment Incentives: The Century Of Türkiye Development Initiative And The Sectoral Incentive

Aydın Law — Fri, 30 May 2025 18:12:30 +0000

I. INTRODUCTION

Decision on State Aids in Investments, published in the Official Gazette No. 32915 dated 30 May 2025 (the “Decision”), establishes the practical implementation of the strategic priorities set out in the development plans. Accordingly, high value-added projects aimed at increasing production and employment have been incorporated into an integrated incentive regime providing tax exemptions, customs-duty waivers, low-interest credit facilities, machinery support, allocation of investment land and support for the employer’s share of social security premiums. Ensuring that projects comply with green and digital transformation requirements, and structuring the application, evaluation and monitoring processes in a transparent and traceable manner to clarify investment roadmaps, are also among the Decision’s core provisions.

Within its general framework, the Decision seeks to transcend pure economic-growth dynamics by reinforcing Türkiye’s position in global production networks, reducing external dependency and enhancing the inflow of foreign direct investment. A transformation process, aligned with sustainable development plans, has been designed through measures to support local capacity in eliminating regional development disparities, increase domestic resource utilization in supply chains and promote innovation-driven production models.

II. FUNDAMENTAL PRINCIPLES

1. Which Investments Are Eligible for Incentives under the Decision?

Eligible investments and the conditions they must satisfy are set out in Annex-3 to the Decision, and as a rule, any investment not listed therein is ineligible for the incentives provided by the Decision. The only exceptions to this requirement are investments carried out under the Century of Türkiye Development Initiative, the Digital Transformation Program, the Green Transformation Program and investments in existing facilities holding an industrial registration certificate that are made to mitigate earthquake or fire risks.

For investments for which no minimum fixed-investment threshold is otherwise specified, the Decision stipulates a minimum fixed-investment amount of 12 million Turkish liras in regions 1 and 2 and 6 million Turkish liras in all other regions, as set out in Annex-2 to the Decision. Moreover, the total cost of machinery and equipment procured under financial leasing must amount to at least 3 million Turkish liras per leasing company. Any investment expenditures incurred before the date of application for the issuance of an incentive certificate are not covered by that certificate.

Additionally, under the Decision, only applications for incentive certificates submitted by 31 December 2030 will be subject to evaluation.

2. What Regulations Are Envisaged under the New Incentive Policy?

The Decision adopts three distinct incentive systems: the Century of Türkiye Development Initiative, the Sectoral Incentive System and Regional Incentives. Investments falling under the Century of Türkiye Development Initiative and Sectoral Incentive System qualify for customs-duty exemption, value-added tax exemption, tax reduction, interest and profit-share support, and allocation of investment land, while those under the Century of Türkiye Development Initiative additionally benefit from machinery support. Regional Incentives allow investments supported under the Century of Türkiye Development Initiative and Sectoral Incentive System to receive employer-share social security premium support and social security premium assistance on a regional basis.

The Green Transformation Program, one of the initiatives comprising the Century of Türkiye Development Initiative, encompasses investments that are aligned with a circular-economy approach, conserve natural resources, contribute to climate and sustainability objectives, and pursue resource-efficient, low-carbon production. Green Transformation Program projects with a minimum fixed investment of 50 million Turkish liras may benefit from incentives without undergoing the detailed evaluation procedures prescribed by the Decision.

Furthermore, the conditions prescribed for investments eligible for the above-mentioned incentives are explicitly set out in the Decision, and key considerations in this regard are as follows:

• Amounts denominated in Turkish liras under the Decision shall be updated annually, effective as of the first day of each calendar year, by applying the revaluation rate for the preceding year.

• Incentive certificate must be issued electronically via the E-TUYS system; all transactions under the certificate and supporting documents, such as customs declarations, electronic invoices or electronic archive invoices, must be submitted electronically to the Republic of Türkiye Ministry of Industry and Technology (the “Ministry”).

• To ensure incentives are used proportionately to investment size, the total value of the value-added tax exemption, customs-duty exemption, tax reduction, interest or profit-share support and machinery support provided under the certificate, calculated using the revaluation rate applicable in the benefit year, must not exceed the actual fixed-investment amount.

• Transfers of incentive certificates that have not received completion visa, whether by transferring the entire investment due to a change of title or by partially dividing the certificate on account of legislative or partnership-structure changes, require approval of the General Directorate of Incentive Implementation and Foreign Investment of the Republic of Türkiye Ministry of Industry and Technology. Certificates that have received completion visa may not be transferred in whole to another investor.

• Investment must be executed in the region specified in the incentive certificate; however, if the investment is relocated to a region with lower or no support, relocation requests may be approved provided that the support amount exceeding that available in the new region and any support elements not available there are reclaimed under applicable legislation. For certificates without completion visa, if relocation is to a region that offered higher support under the legislation in force at the date of application, the supports applicable to the relocated region will apply; for certificates with completion visa, if relocation is to a region that offered higher support under the legislation in force at the date of application, approved relocation will not result in any revision of support elements. This provision applies equally to all certificates issued before its entry into force.

• The Decision details the procedure for completion periods: the investor must submit the proposed completion period to the Ministry, the authority of the Ministry to shorten this period up to a maximum of three years in case this period exceeds three years; upon expiry of the proposed period, an additional term equal to half of the original period is granted; and further extensions may be granted where justified by force majeure or delays attributable to public institutions. Failure to apply for completion visa within the prescribed period will result in cancellation of the certificate and any penalties arising from the delay will be borne by the investor, and if, at the completion visa stage, the support conditions cannot be met, incentives will be revised in accordance with the legislation in force at the date of application and any excessive support granted will be recovered pursuant to Law No. 6183 on Procedures for the Collection of Public Receivables (the “Law”).

3. What Sanctions Apply for Violation of the Provisions Regulated by the Decision?

Violation of the Decision or related legislation, failure to fulfil the records and conditions set out in the incentive certificate, tampering with the certificate or its annexes, preparation or use of forged or misleading documents, submission of false information, sale of machinery and equipment before the prescribed period or causing such sale, or failure to complete the investment and ecosystem development plan within the prescribed timeframe and minimum amounts will result in immediate cancellation of the incentive certificate. Where cancellation is not applicable, but obligations are only partially met, the relevant incentives will be recovered proportionally to the breach under the Law. All amounts to be collected pursuant to these procedures and cancellation decisions will be determined in accordance with the Law. In addition, incentives granted for machinery and equipment acquired through financial leasing may be recovered, in whole or in part, from the financial leasing companies.

4. What Procedure Will Be Followed for Pending Incentive Applications and Existing Incentive Certificate?

The Decision repeals the Decision on State Aids in Investments No. 2012/3305 dated 15/06/2012 and the Decision on Support for Investments within the Scope of the Incentive Program for Attractive Investment Areas No. 2018/11201 dated 02/01/2018. However, incentive applications pending as of the date of publication of the Decision will continue to be finalised in accordance with the legislation in force at the date of application; at the investor’s request, such applications may instead be evaluated under the provisions of the Decision.

With respect to incentive certificates issued prior to the entry into force of the Decision, the former decisions and related legislation forming the basis of those certificates shall continue to apply in full. Accordingly, machinery and equipment acquired under the previous schemes may not be transferred under the Decision, except in cases of legislative amendments or division into independent production units due to changes in shareholding structure, where transfer may be permitted on condition that any excess incentives provided are repaid. Furthermore, no additions of machinery or equipment that would increase capacity may be made to certificates issued under earlier decisions, which fall outside the scope of the Decision and for which a completion visa has not yet been granted.

5. Under Which Circumstances May Investors Benefiting from the Incentives in the Decision Also Access Additional Support Measures for the Same Investment?

Investments that have benefited from support by other public institutions shall not be permitted to apply to the Ministry for incentives under the Decision; any breach of this provision will result in the recovery of the Decision’s incentives. Investments that benefit only from subsidized credit support or other support related to the credit used within the scope of the investment from other public institutions and organizations will be able to benefit from other support elements within the scope of the Decision, provided that the credit in question is not provided with interest or profit share support and machinery support regulated in the Decision; this exception also applies to documents issued pursuant to previous decisions that have not been subject to completion visa. Moreover, investments approved for support under the Technology Initiative Program may receive direct support from KOSGEB and/or TÜBİTAK in accordance with their enabling legislation, and such support from these bodies and other public institutions may be regarded as contributing to the integrity of the investment covered by the incentive certificate.

III. CONCLUSION

The restructured incentive regime integrates tax, customs and financing facilitation with digitization, thereby enabling production- and employment-oriented growth strategies to be implemented on a foundation of transparency and traceability. This holistic approach, which safeguards regional and sectoral balances within the framework of innovation and sustainability principles, serves as a catalyst—enhancing Türkiye’s international investment appeal and competitiveness while nurturing local development dynamics.

The full text of the Decision can be accessed here.

Makalenin Türkçe versiyonuna ulaşmak için bu bağlantıya tıklayınız.

Serhat Aydın, LL.M.

Managing Partner

+90 532 242 10 28
serhat.aydin@aydin.law

Doğa Kale

Associate

+90 552 452 13 71
doga.kale@aydin.law

Comprehensive Innovations In Investment Incentives: The Century Of Türkiye Development Initiative And The Sectoral Incentive yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

Call For Developing Fast-Charging Infrastructure For Electric Vehicles In Türkiye

Aydın Law — Mon, 21 Apr 2025 13:59:14 +0000

I. INTRODUCTION

Electric vehicles have emerged as one of the cornerstones of sustainable transportation due to their environmentally friendly features and energy efficiency. The widespread adoption of electric vehicles holds strategic importance in reducing urban air pollution, decreasing dependence on fossil fuels, enhancing energy security, and achieving sustainability goals. In line with its objectives of transitioning to sustainable transportation systems and promoting environmentally friendly technologies, Türkiye has been taking strategic steps to encourage the use of electric vehicles (“EVs”).

In this context, based on the Regulation on the Technological Product Investment Support Program (“Regulation”) published in the Official Gazette dated 29 April 2014 and numbered 28986, the Ministry of Industry and Technology (“Ministry”) has announced the Call for Fast- Charging Infrastructure for Electric Vehicles 2025.01 (“Call”). This Call has been designed to accelerate the adoption of electric vehicles, establish an accessible, reliable, and fast-charging infrastructure nationwide, support domestic technology production, and contribute to energy security.

The potential of electric vehicles to reduce carbon emissions, improve energy efficiency, and decrease dependence on fossil fuels positions the Call as a key component of national sustainability policies. A fast, accessible, and reliable charging infrastructure plays a critical role in this transformation. Fast-charging units facilitate long-distance travel, enhance user experience, and encourage the preference for electric vehicles.

This article discusses the purpose, scope, application procedures, incentive mechanisms, and outcomes of the Call.

II. THE STATE OF TÜRKİYE’S CHARGING UNIT INFRASTRUCTURE, AND THE PURPOSE AND IMPORTANCE OF THE CALL

Türkiye has made significant progress in developing its electric vehicle charging infrastructure. Under the initial support program, which was completed as of 31 January 2024, more than 1,000 fast-charging units were installed across 81 provinces and 400 districts.

Together with private sector investments, the total number of fast-charging units has reached approximately 6,000, positioning Türkiye as the European leader in the number of fast-charging sockets per vehicle.

However, the increasing number of electric vehicles necessitates the further development of the existing infrastructure and its equitable distribution throughout the country. This Call aims to ensure access to fast-charging units across all regions, meet infrastructure needs at the provincial and district levels, provide high-quality, fast, and affordable charging services, and support the growth of domestic charging equipment manufacturers.

Accordingly, the Call has been structured to address needs identified at the province/district level based on socio-economic development rankings, gross domestic product (GDP), population, number of vehicles, traffic density, existing charging infrastructure, population projections, and the Energy Market Regulatory Authority’s (“EMRA”) projections for electric vehicles and charging infrastructure.

II. SCOPE AND SUBJECT OF THE CALL

The Call aims to support investment projects for the establishment of fast-charging stations for electric vehicles by legal entities. Eligible projects will focus on investment topics that meet the location and minimum investment amount requirements as outlined in Annex-1 of the Call announcement. Investment projects must meet the following conditions:

• Investment Topic: Each project must focus on only one of the investment topics specified in Annex-1 of the Call announcement.

• Minimum Unit Requirements: Projects must meet the minimum unit number and distribution requirements determined for each province/district.

• Domestic Goods Certificate: All charging units must have a valid Domestic Goods Certificate as of the invoice date.

• Location Flexibility: Units can be installed at any location within the geographic boundaries of the province/district.

• Free Units: At least 3 different provinces must be involved, with each unit installed in a different district; a maximum of 4 free units can be installed in one province.

• Distance Requirements: A minimum distance of 1 km must be maintained between units in residential areas, and 10 km along the same direction on highways.

• Technical Specifications: Units must have a minimum charging capacity of 120 kW, a peak current capacity of 300 Amps, and a continuous current capacity of 250 Amps; they must also be certified by TSE as compliant with CE marking, IP54 protection class, and TS 13912 Safety Standard.

• Access: Units must be installed in public spaces accessible to all electric vehicle users.

The terms used in the Call are based on the definitions in the Regulation on the Technological Product Investment Support Program, its Implementation Procedures and Principles, and the TS 13909 standard. Projects must be completed no later than 30 September 2026, and investments made after the announcement of the Call will be considered.

III. APPLICATION PROCESS AND EVALUATION

Applications will be accepted through the website sarjdestek.sanayi.gov.tr or other methods specified by the Ministry until the end of business hours on 20 June 2025. For the application, an EPRA Charging Network Operator License or a certificate obtained from a charging network operator is required. The application documents are specified in the relevant Call announcement issued by the Ministry.

The Ministry may charge an application fee, and it has been stated that fees will not be refunded. It is also noted that only one investor will be supported for each Investment Topic. Regarding the evaluation process for project applications submitted for investment topics, it has been stated that applications will be ranked based on the “total requested support amount” for the relevant Investment Topic. According to this ranking, the business that commits to implementing the investment with the unique lowest “total requested support amount” will be granted support for the relevant Investment Topic.

If multiple applicants submit the same lowest requested support amount for the same Investment Topic, these applicants will be given the opportunity to renew their support requests. After revisions, if the lowest requested support amounts remain the same, this process will be repeated twice more. In the case of continued equality, a revision opportunity will be granted, and the process may be repeated twice more. If equality persists, the Investment Topic will be removed from the Call.

Support Calculations:

• Requested Support Ratio: The ratio of the requested support amount to the total investment amount cannot exceed 60%, as specified in the announcement.

• Maximum Support per Unit: The maximum support amount per unit is capped at 500,000 TL.

Guarantees:

• Temporary Guarantee Letter: A temporary guarantee letter of 500,000 TL, valid until 30 September 2025, must be submitted by the investor to the Ministry of Industry and Technology by the final application date of the Call for each Investment Topic.

• Final Guarantee Letter: After the investor is notified of the support decision, a final guarantee letter must be submitted within 30 business days, for the amount specified in Annex-2 of the Call announcement, valid until 31 March 2027. Failure to submit this guarantee will result in the loss of the right to support.

The investment support agreement for the investor will be signed after the submission of the final guarantee letter. The investor commits to completing the unit installation by 30 September 2026. In cases of force majeure, the Ministry may make changes in accordance with Article 18/4 of the Regulation, and in other cases, in accordance with Article 23/2 of the Regulation.

IV. INVESTMENT SUPPORTS AND CONDITIONS UNDER THE CALL

Under the Call, for projects that receive a support decision, support will be provided for machinery and equipment for charging units, as well as auxiliary equipment support for distribution transformers, panels, and cabling.

1. Machinery and Equipment Support:
o Up to 60% grant for charging units; the support amount is calculated by multiplying the requested support rate by the invoice amount excluding VAT, but cannot exceed 500,000 TL per unit.

2. Auxiliary Equipment Support:

• Distribution Transformer: A grant of up to 180,000 TL for transformers up to 400 kVA with a valid Domestic Goods Certificate, at a rate of 50%.

• Cabling: A grant of up to 75,000 TL for cables up to 100 meters with a valid Domestic Goods Certificate, at a rate of 50%.

• Charging Unit Panel: A grant of up to 50,000 TL for panels with a valid Domestic Goods Certificate, at a rate of 50%.

3. Power Increase Support:

• For units of 180 kW and above, a 20% increase will be added to the entitled support. (This requires cables with 500 Amp peak and 400 Amp continuous current capacity.)

• The total support cannot exceed 75% of the investment cost.

Restrictions:

• Investments exceeding the number of units specified in EK-1 of the Call announcement will not be supported.

• Except for free units, if the number of units installed is less than 70% of the total, the project will be considered unsuccessful, support will not be provided, and the final guarantee will be recorded as revenue by the Treasury.

• In projects completed at 70% or more, 200,000 TL will be deducted from the support for each unit that was not installed.

Support Conditions:

• The units must operate under a license/certificate in compliance with the Electricity Market Law, must be registered with the Energy Market Regulatory Authority (EPDK), and must be documented by TSE for compliance with the Workplace Opening and Operating License and TS 13912.

• An investor can receive support for a maximum of 5 Investment Topics.

• Units cannot be sold, leased, or transferred for 1 year; operations between 1-3 years are subject to Ministry approval.

The location of the units can be changed within the same province/district with Ministry approval.

VI. CONCLUSION

The Electric Vehicle Fast Charging Infrastructure Development Program Call 2025.01 is a strategic initiative that strengthens Türkiye’s sustainable transportation vision and supports the widespread adoption of environmentally friendly technologies. Designed to accelerate the growth of the electric vehicle ecosystem, expand fast and reliable charging services nationwide, and contribute to the development of the domestic industry, this Call offers a significant opportunity for the private sector. Through this Call, operators will also increase their investments in regions with low population density.
This program plays a critical role in reinforcing Türkiye’s position as a leader in Europe, promoting domestic technology production, and enhancing energy security. It encourages investors to contribute to national sustainability goals. Legal entities applying with projects that align with the Call can gain a competitive advantage in the growing electric vehicle market, play a pioneering role in the green transformation process, and support the goal of leaving a cleaner environment for future generations.

Makalenin Türkçe versiyonuna ulaşmak için bu bağlantıya tıklayınız.

Serhat Aydın, LL.M.

Managing Partner

+90 532 242 10 28
serhat.aydin@aydin.law

Necip Çiftçi

Associate

+90 538 775 67 94
necip.ciftci@aydin.law

Call For Developing Fast-Charging Infrastructure For Electric Vehicles In Türkiye yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

A New Benchmark In Green Finance: Calculation Of Banks’ Green Asset Ratio

Aydın Law — Wed, 16 Apr 2025 12:49:19 +0000

I. INTRODUCTION

Today, climate change mitigation and sustainable development goals play a decisive role in the restructuring of financial systems both globally and locally. It is important for financial institutions to steer their activities by taking environmental risks into account, in order to enhance the effectiveness of sustainable financing policies. In Türkiye, it is observed that regulatory authorities have accelerated the adoption of regulations incorporating environmental and social responsibilities in recent years to contribute to this transformation process.

Within this framework, the Communiqué on the Calculation of Banks’ Green Asset Ratio (“Communiqué”), published in the Official Gazette dated 11/04/2025 and numbered 32867, aims to promote the alignment of banks with environmental sustainability criteria. The Communiqué sets out the procedures and principles regarding the calculation and reporting of banks’ green asset ratios and other key performance indicators. This regulation seeks to ensure greater transparency in the environmental impact of financial institutions and to support the development of their sustainable finance strategies.

II. FUNDAMENTAL PRINCIPLES

1. How Is the Green Asset Ratio Calculated?

The green asset ratio is the primary key performance indicator in terms of banks’ activities, reflecting how and to what extent these activities take into account sustainability and environmental objectives, as well as the degree to which they contribute to such objectives. The green asset ratio is calculated by dividing the eligible assets included in banks’ unconsolidated balance sheets by the total assets encompassed within the scope of the green asset ratio.

𝐸𝑙𝑖𝑔𝑖𝑏𝑙𝑒 𝐴𝑠𝑠𝑒𝑡𝑠 𝐼𝑛𝑐𝑙𝑢𝑑𝑒𝑑 𝑖𝑛 𝐵𝑎𝑛𝑘𝑠′𝑈𝑛𝑐𝑜𝑛𝑠𝑜𝑙𝑖𝑑𝑎𝑡𝑒𝑑 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 𝑆ℎ𝑒𝑒𝑡𝑠

𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑤𝑖𝑡ℎ𝑖𝑛 𝑡ℎ𝑒 𝑆𝑐𝑜𝑝𝑒 𝑜𝑓 𝑡ℎ𝑒 𝐺𝑟𝑒𝑒𝑛 𝐴𝑠𝑠𝑒𝑡 𝑅𝑎𝑡𝑖𝑜

In calculating eligible assets, within the total assets encompassed by the green asset ratio, the gross amounts of on-balance sheet financial assets—measured at amortized cost—pertaining to all economic activities included in the technical screening criteria defined by the Banking Regulation and Supervision Board (the “Board”) are summed.

In calculating compliant assets, among eligible assets, the gross amounts—measured at amortized cost—of on-balance sheet financial assets related to economic activities that simultaneously (i) significantly contribute to one or more environmental objectives, (ii) do not cause significant harm to other environmental objectives, and (iii) fulfill the conditions for ensuring minimum social security standards are summed. It is important to note that working capital loans and other similar types of credit, allocated to enterprises that derive at least 90% (ninety percent) of their most recent fiscal year’s turnover from compliant assets and that have not generated any revenue from non-renewable energy sources during the past year—but for which the designated place of use cannot be determined in a concrete manner—may nonetheless be accepted as compliant assets in the calculation of the green asset ratio.

In calculating total assets under the green asset ratio, (i) receivables from public administrations within the scope of the central government, from central banks, and from supranational organizations—as well as assets recorded in trading accounts—are first deducted from the total on-balance sheet financial assets; thereafter, (ii) the gross amounts of the remaining on-balance sheet assets, measured at amortized cost, are added to the result.

2. What Are the Criteria to Be Determined by the Board for Identifying Compliant Assets?

In calculating the green asset ratio, the accurate identification of the compliant assets serving as its basis is of critical importance for the proper evaluation of banks’ environmental sustainability performance. In this context, under the Communiqué, the principles for identifying compliant assets shall be determined either directly by the Board or by authorized public institutions in accordance with the Board’s decision, and three fundamental headings have been established as a framework within the Communiqué:

Technical Screening Criteria: The inclusion of a compliant asset in the green asset ratio is contingent upon the asset making a significant contribution to at least one environmental objective and meeting the technical screening criteria established by the Board. Banks are required to verify—and ensure availability for audit—that the technical screening criteria have been or will be met, using emission reports, feasibility studies, energy efficiency assessment reports, and similar documents prepared by independent verifiers, in addition to national or internationally recognized certifications, green technology selection tools, or investment-related expenditure documentation. For compliant assets with maturities, it is imperative to continuously monitor whether the technical screening criteria are maintained throughout the term.

Avoidance of Significant Environmental Harm: When evaluating whether economic activities cause significant harm to the environment, the assessment should not be based solely on their positive impacts, but also on whether they inflict damage on other environmental areas. Accordingly, both the activity itself and the environmental impacts of the products and services it produces over their entire life cycles are evaluated. Environmental consequences that may arise after the usage phase has ended are also analyzed within this framework. Banks are obligated to prepare and maintain, for audit purposes, the technical and administrative documentation that confirms compliance with this requirement. For compliant assets with maturities, it is essential to monitor whether the criteria for avoiding significant environmental harm continue to be met throughout their maturity period.

Minimum Social Security Standards: The activities to be included in the green asset ratio are expected to meet certain minimum standards not only environmentally but also socially. Accordingly, it is mandatory for the activities and the involved parties to act in accordance with the fundamental principles of social security. Banks are required to prepare the documentation confirming that these standards are met and, if necessary, present such documentation for an audit. For compliant assets with maturities, it is essential to monitor whether the criteria for compliance with minimum social security standards continue to be satisfied throughout their term.

The aforementioned set of three criteria enables banks to calculate their green asset ratios not only through a quantitative lens but also with a qualitative perspective. This approach provides a significant regulatory framework that supports the integration of environmental and social responsibility into the financial system.

It is important to note that, in determining compliant assets, the objective of mitigating climate change shall be taken into account. For the calculation of the green asset ratio, the objectives of climate change adaptation, transition to a circular economy, sustainable use and conservation of water and marine resources, pollution prevention and control, as well as the protection and restoration of biodiversity and ecosystems may be incorporated within the scope by the Board.

3. What Are the Other Obligations Imposed on Banks Under the Communiqué?

Global regulations on environmental sustainability and climate change mitigation focus not only on the investment preferences of financial institutions, but also on the transparent monitoring and public disclosure of such preferences. In this respect, as in European Union regulations, reporting activities constitute the core of the obligations imposed on banks in Türkiye. Pursuant to the Communiqué, banks are required to manage the data and processes related to the green asset ratio calculated within the framework of environmental sustainability. Accordingly;

(i) Banks must establish documentation, classification, monitoring, and control processes, along with the relevant internal policies, for the assets comprising the numerator and denominator of the green asset ratio. They must also make the necessary arrangements in their databases and develop an appropriate reporting system.

(ii) Banks are required to submit their green asset ratio reports to the Banking Regulation and Supervision Agency within the timeframes to be determined by the Board. This reporting requirement will take effect as of 30 June 2025

The Board shall determine and differentiate the green asset ratio reporting obligation based on the type and size of the bank and is empowered to differentiate it.

4. What Are the Secondary Key Performance Indicators Established Under the Communiqué?

Pursuant to the Communiqué, in addition to the green asset ratio, banks are required to calculate two secondary key performance indicators to assess their contribution to environmental sustainability: the ratio of compliant assets to eligible assets, and the ratio of eligible assets to total assets within the scope of the green asset ratio. The Board is authorized to define new performance indicators and impose related reporting obligations in line with the national taxonomy framework.

III. CONCLUSION

In conclusion, the regulations introduced by the Communiqué enable the assessment of environmental sustainability principles in the banking sector through concrete indicators and contribute to the establishment of an institutional framework in the field of sustainable finance. In the upcoming period, it is expected that the development of financial legislation and its alignment with international practices will continue in line with climate change mitigation, green transition, and sustainable development goals. Accordingly, the Board’s further development of the criteria for calculating the green asset ratio and the clarification of the implementation details, within the framework of the powers conferred upon it by the Communiqué, will strengthen the scope of the regulation.

The full text of the Communiqué can be accessed here.

Makalenin Türkçe versiyonuna ulaşmak için bu bağlantıya tıklayınız.

Doğa Kale

Associate

+90 552 452 13 71
doga.kale@aydin.law

Sinem Sedef

Intern

+90 538 343 30 11
sinem.sedef@aydin.law

A New Benchmark In Green Finance: Calculation Of Banks’ Green Asset Ratio yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

Bilateral Revenue Model In Energy Storage Systems: Grid Support Services And Electricity Trading In Türkiye

Aydın Law — Thu, 27 Mar 2025 12:15:45 +0000

I. INTRODUCTION

Ongoing transformation in energy markets and the rapid increase in the share of renewable sources have elevated energy storage systems (the “ESS“) from merely a supplementary technology for storing surplus electricity to a critical element in grid flexibility and supply security. In an environment where more than half of the installed capacity in Türkiye is based on renewable sources, ESS plays a significant role in maintaining grid stability, mitigating price fluctuations, and ensuring supply-demand balance. However, factors such as the high capital costs of ESS installations and the regulatory framework necessitate an examination of both the financial and legal dimensions of ESS.

Originally implemented solely to store surplus energy, ESS has now become an attractive option for investors through revenue models derived from arbitrage, capacity mechanism support, and grid services. In addition to contributing to market stability by providing ancillary services, ESS, when integrated in a integrated configuration with renewable power plants, possesses the potential to offset the intermittent nature of generation. At this stage, ESS has positioned itself at the intersection of rapidly evolving technological and investment perspectives, emerging as a field that offers significant opportunities for the future of Türkiye’s energy sector.

II. FUNDAMENTAL PRINCIPLES

1. What Are Energy Storage Systems and What Purpose Are
They Used?

ESSs are widely employed to address the imbalances in supply and demand that arise in the electricity market and to enhance generation flexibility. In particular, with the rising share of renewable sources, the primary function of ESS has evolved into stabilizing the grid by compensating for the intermittent nature of renewable generation. Their applications include providing the additional energy required by the system during periods of high electricity demand, responding swiftly to sudden frequency or voltage fluctuations, and ensuring more efficient operation of the existing infrastructure.

Various technological approaches exist in the field of storage. Common types include mechanical storage (such as pumped hydroelectric and compressed air), chemical storage (including synthetic natural gas and hydrogen), electrical storage (such as supercapacitors and superconducting magnetic systems), and thermal storage (including molten salt and hot water). While the technical characteristics and field adaptability of each method vary, the fundamental objective is to optimize the utilization of generated energy, thereby contributing to both the economic and operational sustainability of the system.

Furthermore, storage units support the grid during periods of high demand by smoothing sudden fluctuations and mitigating imbalances caused by intermittent generation, thereby maintaining both frequency and voltage stability. In addition, by storing surplus energy produced from renewable sources and later reintegrating it into the system, cost optimization is achieved for investors and operators, and arbitrage opportunities may also emerge. Such flexibility not only enhances profitability in markets with variable electricity prices but also greatly facilitates the integration of renewable power plants into the grid.

2. What Are the Leading Business Models in Türkiye in terms of the Use of ESSs?

In Türkiye’s electricity storage sector, two primary models attract particular attention: independent Battery Energy Storage Systems (the “BESS“) and integrated projects with renewable power plants (the “Integrated Storage Projects“). Independent BESS projects, which can connect directly to the grid without being tied to any generation source, possess the flexibility to deliver stored energy to the market when favorable market conditions arise.

In Integrated Storage Projects, battery technology not only supports grid stability by storing electricity generated by power plants but also creates additional revenue opportunities for investors. In particular, the fluctuations in electricity generation stemming from the intermittent nature of renewable sources are balanced through the integrated configuration, ensuring a more stable supply. This dynamic contributes both to enhanced renewable energy efficiency and to a more predictable revenue stream in electricity trading.

From a technical perspective, the batteries employed in both independent BESS and Integrated Storage Projects are equipped with advanced monitoring and control systems capable of tracking current and voltage values in real time. These systems dynamically manage critical parameters such as the state of charge and the depth of discharge, to extend battery life and maximize performance. In integrated applications, the generation profile of the renewable source is integrated into the battery’s charge/discharge strategy, thereby determining the optimal operating points and improving the quality of the power delivered to the grid.

3. What Are the Ancillary Services Utilized to Achieve Balance in the Energy Market?

Balancing in the energy market involves continuously maintaining the instantaneous equilibrium between electricity generation and consumption. This process ensures that technical parameters of the electricity grid, such as frequency and voltage, remain within predetermined limits, thereby safeguarding the stability and reliability of the electrical system.

Balancing is achieved through various mechanisms, referred to as “ancillary services,” which are provided by the relevant legal entities associated with the transmission or distribution system. These services ensure that the system operates reliably, and that electricity is delivered to consumers under the required quality conditions.

• Primary Frequency Control: In response to a decrease or increase in system frequency, the ancillary service unit automatically increases or decreases its active power output to bring the system frequency to a new equilibrium.

• Secondary Frequency Control: The active power output of ancillary service units is automatically increased or decreased in response to signals transmitted from the national load dispatch center, thereby restoring the system frequency to its nominal value and aligning the total electricity exchange with neighboring grids to the programmed level.

• Demand-Side Participation Service: This service is provided by reducing the consumption of facilities through aggregators in accordance with instructions from the system operator.

• Instantaneous Demand Control Service: Provided by consumption facilities, this service relies on the load, which can be automatically disconnected via instantaneous demand control relays, to prevent the system frequency from falling to critical levels.

• Reactive Power Control: This service ensures the control of voltage levels by enabling units, operating as generators or synchronous condensers, to supply reactive power to the system or draw reactive power from it.

• Restoration of a Settled System: If the transmission system becomes partially or completely settled, generation facilities that can be activated without relying on an external energy source are employed to energize the transmission system, supply electricity to customers, and facilitate the reactivation of other generation facilities.

• Regional Capacity Rental: To preserve system reliability and address potential regional need arising from insufficient capacity, the capacities of new or existing generation facilities are rented through tenders organized by the Turkish Electricity Transmission Company.

• Limited Frequency Sensitivity Mode: This mode enables units of generation facilities operating in limited frequency sensitivity mode to contribute to system frequency balance by automatically increasing or decreasing their active power output when certain frequency thresholds are exceeded.

All these ancillary services are implemented by the technical requirements and regulatory principles stipulated in the legislation, with the objective of improving the quality of electricity supply, enhancing grid stability, minimizing the risk of outages, and ensuring the rapid recovery of the system in the event of any technical failure or unforeseen circumstance. In this manner, the electricity system can be operated sustainably and securely in both the short term and the long term.

4. What Revenue Models Do ESS Offer as Financial Mechanisms for Investors?

ESS’s primary revenue model in the electricity market is the arbitrage model. The arbitrage model is based on the strategy of storing energy during periods of low prices and selling it when prices rise, thereby generating profit. The rapid charge/discharge performance of battery systems and their capability to track market prices in real-time further enhance profitability. In this context, battery storage systems enable dual revenue streams by participating in both electricity trading and grid support services.

However, with the increasing integration of renewable energy resources, imbalances between electricity supply and demand within power grids are becoming more frequent. This development necessitates the deployment of ancillary services by system operators to ensure instantaneous frequency and voltage stability. Energy storage systems contribute significantly to grid reliability by providing ancillary services, including frequency regulation, reactive power support, and uninterrupted power supply, thereby enabling additional revenue streams. Consequently, energy storage systems establish a dual revenue model by combining revenues derived from electricity trading and ancillary service provision, thus enhancing their investment attractiveness.

Similarly, capacity mechanisms—implemented to provide the grid with fixed and reliable capacity—serve as an important financial support tool that grants ESS a predictable long-term revenue stream. However, these mechanisms may occasionally introduce uncertainty and risk due to potential changes in regulatory frameworks. Long-term renewable energy supply agreements (the “PPAs”) and capacity mechanisms play a critical role in providing predictable cash flows for banks and financial institutions; while PPAs offer an effective hedge against market price fluctuations, capacity mechanisms ensure the continuity of energy supply under state-supported incentive schemes. Additionally, green financing and ESG credits add further value to projects by leveraging the potential of storage systems to reduce carbon emissions. Green financing and ESG credits enable ESS to receive support through green bonds, carbon credits, and sustainable finance programs; ESG-compliant projects are backed by financial instruments aligned with sustainability criteria, while carbon offset programs can serve as supplementary incentive mechanisms.

On the other hand, Integrated Storage Projects create a more stable supply profile by mitigating the generation fluctuations inherent in intermittent renewable sources, thereby contributing to secure cash flow under long-term PPAs. From a technical standpoint, high-performance battery technologies and advanced control software enable ESS to integrate different revenue models through a “revenue stacking” approach. Real-time monitoring and management systems continuously oversee critical parameters such as state of charge and depth of discharge, facilitating optimal decision-making regarding the timing and quantity of energy to be purchased or sold. As a result, revenues from both arbitrage and ancillary services can be maximized. In integrated applications, battery units synchronized with renewable sources strengthen the alignment between generation profiles and market price signals, thereby enhancing efficiency and profitability.

5. What Inherent Risks Are Associated with the Deployment of Energy Storage Systems?

Financing energy storage system projects entail certain risk factors that investors must be prepared to address. Uncertainty in electricity prices emerges as a significant risk factor, particularly in revenue models based on arbitrage and balancing markets. In this context, risk management strategies—such as forward contracts and derivative instruments that allow for fixing electricity prices at a predetermined rate for a future date amid market fluctuations—must be implemented, while optimizing investment return projections by modeling various price scenarios over the battery’s economic lifespan is of strategic importance. On the other hand, the regulatory framework concerning storage projects has not yet fully matured, leading to uncertainties arising from insufficient regulation. This situation may adversely affect investors’ long-term decision-making processes and result in increased financing costs. Therefore, establishing incentive mechanisms during the integration process into the energy market and enhancing regulatory provisions are critical to minimizing the project’s risks.

III. CONCLUSION

Energy storage systems emerge as a strategic element in Türkiye’s renewable energy-dominated electricity market, enhancing grid flexibility and addressing supply-demand imbalances. Both independent BESS and Integrated Storage Projects present attractive opportunities for investors through dual revenue models derived from arbitrage, capacity mechanisms, and ancillary services, bolstered by advances in technology and control systems. However, effective management of risks—such as regulatory uncertainties and fluctuations in electricity prices—is critically important for ensuring the economic sustainability of these projects. In this context, the implementation of innovative technological approaches and risk management strategies will strengthen the pivotal role of energy storage systems in Türkiye’s energy transformation and contribute to market stability.

The full text of the Draft Regulation can be accessed here.

Serhat Aydın, LL.M.

Attorney-at-Law

+90 532 242 10 28
serhat.aydin@aydin.law

Doğa Kale

Attorney-at-Law

+90 552 452 13 71
doga.kale@aydin.law

Bilateral Revenue Model In Energy Storage Systems: Grid Support Services And Electricity Trading In Türkiye yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

Comprehensive Reform Of Sustainability Legislation: The Omnibus Proposal

Aydın Law — Mon, 17 Mar 2025 10:10:28 +0000

I. INTRODUCTION

The European Commission (“European Commission”) published the Omnibus Package on February 26th to simplify the EU sustainability reporting standards and reduce bureaucratic burdens. Designed to create a more prosperous and competitive EU economy, the proposal was developed based on the Draghi Report, which explores the future of Europe’s competitiveness. Former European Central Bank President Mario Draghi authored this report, providing key insights for shaping the proposal.

The Omnibus Package introduces significant amendments to several key regulations that fall under sustainability legislation, including the Corporate Sustainability Due Diligence Directive (“CSDDD”), the Corporate Sustainability Reporting Directive (“CSRD”), the Carbon Border Adjustment Mechanism (“CBAM”), and the EU Taxonomy Regulation. Given that many companies are currently preparing to comply with reporting obligations, understanding the impact of this proposal is crucial for shaping their strategic roadmaps.

II. FUNDAMENTAL PRINCIPLES

1. Basis of The Omnibus Package: What Does the Draghi Report Say About Europe’s Competitiveness?

Upon the request of European Commission President Ursula von der Leyen, renowned economist Mario Draghi presented his report to the European Commission, The Future of Europe’s Competitiveness, on September 9, 2024. The report focuses on three key areas: (i) closing the innovation gap between the United States and the European Union, (ii) aligning decarbonization with competitiveness, and (iii) ensuring economic security by reducing dependencies.

Therefore, the report highlights findings that indicate the need to reassess Europe’s growth model. One of the key points in this context is aligning decarbonization with competitiveness, which plays a crucial role in Europe’s ability to compete with countries like the U.S. and China. According to the report, if clean energy does not lead to lower prices, inequality will continue to grow.

Draghi also stresses the need for more flexible and business-friendly regulations. He critiques the high regulatory costs imposed on small and medium-sized enterprises (SMEs) and advocates for a regulatory pause in the next EU institutional cycle. He calls for thorough consultations and well-justified regulations, ensuring that future policies are practical, cost-effective, and do not hinder growth.

2. What Is the Main Objective of the Omnibus Package?

The Omnibus Package, published by the European Commission, primarily aims to simplify the reporting obligations imposed by the EU’s sustainability framework. As highlighted in the Draghi Report, this initiative is driven by the need to strengthen Europe’s competitive position and foster economic growth. The European Commission believes that these changes will help create high-quality job opportunities, attract investments, and mobilize the necessary funding for a transition to a more sustainable economy. In line with this vision, the Commission has also embraced the Clean Industrial Agreement, which integrates climate and competitiveness policies.

The Omnibus Package identifies redundant, repetitive, and disproportionate rules that place unnecessary burdens on EU companies, particularly regarding sustainability reporting, corporate practices, and compliance requirements. The proposal suggests revisions to key regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), the EU Taxonomy Regulation (Taxonomy), and the InvestEU Regulation.

a. What are the Key Changes Introduced by the Omnibus Package to the CSRD?

The proposed changes brought by the Omnibus Package to the CSRD can be summarized as follows:

• First of all, the scope of companies subject to reporting obligations has been narrowed. Currently, companies meeting at least two of the following criteria: (i) net revenue over 50 million euros, (ii) total balance sheet over 25 million euros, and (iii) more than 250 employees, are considered large companies and are required to report. Additionally, SMEs listed on a regulated market within the EU are also included in this scope. According to the Omnibus Package, only companies with more than 1,000 employees will be subject to reporting obligations. Once the threshold of 1,000 employees is exceeded, the obligation will be determined based on other financial criteria.

• For SMEs, which will not be included within the scope of obligations, voluntary reporting standards will be established. Additionally, the information that large companies and banks can request from these companies will be limited.

• Moreover, companies located in third countries outside the EU that previously were subject to the regulation if they generated more than 150 million euros in the past two years or had a subsidiary in the EU generating more than 40 million euros annually, will now be subject to the scope if they generate more than 450 million euros or 50 million euros annually.

• Expected Outcomes:These proposed changes will likely lead to around 80% of the companies currently within the scope of CSRD being removed from its obligations.

• No delay in reporting obligations for companies reporting in 2025, but for large companies that have not yet applied the CSRD and listed SMEs, the obligation will be postponed for 2 years.

• The European Commission will review the European Sustainability Reporting Standards and reduce the types and amounts of data companies need to report, clarify ambiguous provisions, and align the rules with other regulations.

b. What are the Key Changes Introduced by the Omnibus Package to the Corporate Sustainability Due Diligence Directive (CSDDD)?

The changes brought by the Omnibus Package to the CSDDD can be summarized as follows:

• Indirect supply chain due diligence: A change has been proposed regarding the “indirect supply chain due diligence” obligation, which we evaluate could directly impact Turkish companies’ commercial relationships. The proposal suggests limiting the due diligence obligation to direct suppliers only. Companies will be required to conduct an investigation into indirect suppliers only when they suspect adverse impacts and have reasonable justification for such suspicion. For example, if reliable sources such as civil society organizations or media provide information regarding adverse impacts from indirect suppliers, companies would then be required to conduct additional investigations.

•Transition plans: Under the proposal, the obligation to adopt and implement a transition plan to mitigate climate change will only be mandatory for adopting the plan, thereby removing the obligation for the plan’s implementation.

• Extension of deadlines: Companies will be given time to implement the new framework concerning their sustainability obligations under the Omnibus Package. Consequently, the deadline for applying CSDDD requirements for large companies will be extended from July 26, 2027, to July 26, 2028. During this time, the release of the necessary guidelines prepared by the European Commission will also be postponed until July 2026.

• Sustainability due diligence requirements: The frequency of periodic evaluations will be extended to 5 years, and the obligation to update due diligence measures when reasonable grounds show that the measures are insufficient or ineffective will be clarified. Additionally, the obligation to terminate business relationships will be removed.

• Limitation on information requests: Similar to the changes introduced to the CSRD, the information that large companies and companies within the scope of obligations can request from small and medium-sized business partners has been limited.

• Transition plan requirements: The requirements related to transition plans will be aligned with the CSRD, and provisions for aligning due diligence requirements will be expanded to ensure a level playing field for competition within the EU.

c. What are the Key Changes Introduced by the Omnibus Package to the EU Taxonomy?

The changes brought by the Omnibus Package to the Taxonomy can be summarized as follows:

• Voluntary Taxonomy Reporting for Large Companies: In the future, large companies with more than 1,000 employees and net revenues up to 450 million Euros, which fall under the scope of CSRD, will have voluntary Taxonomy reporting.

• Simplification of Reporting Requirements: The European Commission has proposed simplifying reporting formats to reduce the reporting burden on companies under the Taxonomy regulations. Additionally, exemptions will be provided for activities that account for less than 10% of a company’s total revenue, capital expenditures, or total assets, removing the Taxonomy reporting obligation for these activities.

d. What are the Key Changes to the Carbon Border Adjustment Mechanism (CBAM) Under the Omnibus Package?

The changes brought by the Omnibus Package to the CBAM can be summarized as follows:

• Exemption for Small Importers: The European Commission has proposed that importers who bring goods under the CBAM framework with emissions equivalent to less than 50 tons per year (approximately 80 tons of CO2 per importer) will no longer be subject to CBAM obligations. This means that only importers bringing more than 50 tons of CBAM-covered goods to the EU annually will remain within the scope.

• Simplification for Remaining Importers: For importers who continue to be subject to CBAM obligations, the proposal includes simplifying the authorization process for declarations, as well as making emissions calculations and reporting requirements clearer and easier to follow.

III. CONCLUSION

Based on the findings that the European Union’s casuistic regulations regarding sustainability and decarbonization policies are limiting its competitiveness, particularly against rivals such as the United States and China, the new policy aims to ease the sustainability reporting requirements for both small and medium-sized companies, as well as large enterprises. The regulations are designed to reduce administrative burdens on companies while also addressing the disadvantage of small and medium-sized companies compared to large enterprises within the European Union. This approach intends to free up administrative costs, which can then be redirected toward innovation and economic growth. In any case, it is essential for the companies in question to monitor the proposed recommendations and changes, including the Omnibus Package, and update their implementation plans in accordance with sustainability and corporate responsibility frameworks.

The full text of the Proposal can be accessed here.

Aslı Başçoban

Associate

+90 534 369 24 22
asli.bascoban@aydin.law

Sinem Sedef

Legal Intern

+90 538 343 30 11
sinem.sedef@aydin.law

Comprehensive Reform Of Sustainability Legislation: The Omnibus Proposal yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

A New Era In The Fight Against Climate Change: Türkiye’s Climate Law

Aydın Law — Mon, 10 Mar 2025 12:35:49 +0000

I. INTRODUCTION

Climate change remains a significant global threat, exacerbated by intensive use of fossil fuels and rapid industrialization processes. Extreme weather events, depletion of water resources, and the destruction of natural habitats—driven by increasing greenhouse gas emissions—profoundly impact both economies and societal structures. In this regard, international regulatory frameworks, ranging from the European Union’s Green Deal to the Paris Convention, are compelling countries and corporations transitioning toward lower-carbon production models.

Türkiye, due to its geographical position, is among the countries directly exposed to adverse effects of climate change. In addition to ongoing efforts aligned with the net-zero emissions target set for 2053, the Climate Law Proposal (the “Proposal”), submitted to the Presidency of the Grand National Assembly of Türkiye on 20/02/2025, aims to facilitate a comprehensive transformation in harmony with international obligations. The Proposal seeks to establish a legal framework encompassing a broad spectrum of issues, including introduction of an emissions trading system, development of green finance models, integration of climate plans into local governance, and promotion of clean technology investments.

Within this framework, roles and responsibilities of all stakeholders, from public authorities to the private sector, from local administrations to individuals, will be defined, ensuring implementation of carbon markets, support of sustainable production methods, and expansion of clean technologies. Through this approach, the necessary legal infrastructure will be established with due consideration for principles of climate justice and just transition, thereby enabling Türkiye to take a crucial step toward a more resilient and sustainable future in the face of climate change risks.

II. FUNDAMENTAL PRINCIPLES

1. How will the Directorate of Climate Change (the “Directorate”) obtain necessary information, documents, and data for implementation of the Proposal?

Without prejudice to provisions of Law No. 6609 on the Protection of Personal Data, the Directorate shall have the authority to directly request necessary information, documents, and data from public institutions, organizations, and legal entities. Upon receipt of such requests from the Directorate, relevant parties are required to provide the requested information, documents, and data promptly, free of charge, and within the prescribed timeframe.

For obtaining information, documents, and data, the Directorate shall primarily utilize the National Geospatial Information Platform. Any information, documents, or data not accessible via this platform shall be acquired through protocols established with relevant public institutions and organizations.

2. What activities are foreseen by the Proposal for the reducing greenhouse gas emissions?

The Proposal aims to implement greenhouse gas emission reduction measures in an integrated manner, in line with the net-zero emissions target, under the coordination of the Directorate. This implementation is to be carried out in collaboration with relevant public institutions and organizations, taking into account international agreements and standards. The process is structured around the “Nationally Determined Contribution” (the “Nationally Determined Contribution“), which is periodically prepared and submitted to the Secretariat of the United Nations Framework Convention on Climate Change and includes both greenhouse gas reduction and climate adaptation targets. In this regard, relevant public institutions and organizations are obliged to prepare, update, and implement their respective action plans based on the designated policies and strategies.

To achieve emission reduction, a range of measures is proposed, including increasing energy, water, and raw material efficiency; preventing pollution at its source; expanding renewable energy usage; reducing carbon footprints; promoting alternative fuels and clean technologies; and adopting the zero-waste approach. Additionally, the protection and enhancement of carbon sinks—such as forests, agricultural lands, pastures, and wetlands—are emphasized, integrating carbon offset mechanisms with an ecosystem-based approach beyond technical solutions. Thus, within the framework of the just transition principle, economic and social impacts will be managed in a balanced manner, while ensuring the preservation of ecosystem integrity to support long-term climate objectives.

Obligations related to the preparation and adaptation of greenhouse gas reduction measures must be fulfilled by relevant institutions and organizations no later than 31/12/2027. The President is authorized to extend this deadline by up to 1 (one) year.

3. How does the Proposal regulate “climate change adaptation”?

Climate change adaptation activities are carried out in alignment with the Global Adaptation Goal set under the Paris Convention, to which Türkiye is a party, as well as in accordance with the Nationally Determined Contribution, the 2053 Net-Zero Emissions Target, and the strategy and action plans prepared under coordination of the Directorate. Within this framework, relevant public institutions and organizations shall undertake activities within their respective areas of responsibility to mitigate risks posed by climate change, prevent existing or anticipated damage, and capitalize on potential opportunities. They shall also regularly update their sectoral policies in response to evolving climate conditions.

Effective water resource management emerges as a key component of adaptation measures. Management plans developed by institutions shall be implemented to lessen impacts of floods, droughts, and water scarcity, alongside necessary infrastructure and governance measures. Furthermore, to ensure sustainable management of ecosystems, the proportion of terrestrial and marine protected areas shall be increased, and measures shall be adopted to safeguard biodiversity. Reforestation efforts and nature-based solutions shall be employed to combat desertification and erosion, thereby creating climate-resilient natural buffer zones.

In the agricultural sector, an ecosystem-based adaptation approach shall be adopted to support sustainable production and food security. This approach maintains a balance between conservation and utilization of natural resources, involves water budget planning, and promotes nature-based practices. Additionally, under integrated disaster management, early warning and monitoring systems shall be developed to minimize damage caused by climate-related disasters, thereby enhancing the adaptation capacity of both society and institutions.

Obligations related to preparation and adaptation of climate change adaptation measures shall be fulfilled by relevant institutions and organizations no later than 31/12/2027, with the President authorized to extend this deadline by up to 1 (one) year.

4. What Planning Tools Will Be Used for Greenhouse Gas Emission Reduction and Climate Change Adaptation Activities?

Within the scope of the proposal, planning tools have been identified at the national and local levels for the implementation of greenhouse gas emission reduction and climate change adaptation activities. In this context, climate change strategies and action plans prepared at the national level under the coordination of the Directorate, with the participation of relevant institutions and organizations, will be regularly updated and implemented in alignment with net zero emission targets. Throughout this process, sectoral vulnerability and risk analyses, along with climate models, will be utilized to reduce future uncertainties and establish a robust data infrastructure for investments.

At the local level, Provincial Climate Change Coordination Boards play a prominent role. These boards, established under the coordination of governors and with the participation of relevant public institutions and local government representatives, coordinate the preparation, implementation, and monitoring of local climate change action plans tailored to the characteristics of each province. In metropolitan municipalities, these plans are prepared by the metropolitan municipality, while in other provinces, they are jointly prepared by the provincial municipality and the special provincial administration. The plans are then submitted to the boards for decision-making, ensuring that concrete steps addressing local needs and risks are effectively and holistically implemented.

Local climate change action plans will be prepared no later than 31/12/2027, and the Ministry of Environment, Urbanization, and Climate Change (the “Ministry”) is authorized to extend this deadline by up to 1 (one) year.

5. What Are the Principles Regarding Finance, Technology, and Capacity-Building Tools Related to the Implementation within the Scope of the Proposal?

The Proposal sets forth three fundamental implementation tools for climate change mitigation activities: finance, technology, and capacity-building. In terms of financial instruments, the primary objectives include developing climate finance, expanding green and sustainable capital market instruments, and promoting bank financing.

In this context, the Directorate is responsible for establishing and managing Türkiye’s Green Taxonomy to bolster green investments. Additionally, in line with circular economy and zero-waste targets, support mechanisms will be developed for recovery and reuse initiatives. To address embedded carbon emissions of goods imported into Türkiye’s Customs Territory, a Carbon Border Adjustment Mechanism may be established, overseen by the Ministry of Trade in collaboration with the Directorate.

Regarding technological implementation tools, the main goal is developing and disseminating clean technologies. The Directorate will coordinate the creation of new climate-related technologies, such as carbon capture and storage and hydrogen technology, through cooperation with relevant institutions. Moreover, research and application centers, along with institutes under the Directorate’s auspices, are anticipated to support technological progress.

Within the capacity-building framework, educational and awareness-raising activities will be undertaken to enhance public awareness of climate change. In this regard, the Ministry of National Education and the Council of Higher Education will update pertinent curricula and educational programs to advance a green workforce. The procedures and principles governing these measures will be determined by relevant public institutions and organizations in consultation with the Ministry.

6. How Is the Emissions Trading System (the “ETS”) Regulated, and What Obligations Does It Impose on Businesses?

The ETS is a market-based mechanism designed to ensure cost-effective reduction of greenhouse gas emissions, in line with Türkiye’s 2053 Net-Zero Emissions Target. Under this mechanism, businesses engaging in activities that generate greenhouse gas emissions must obtain a greenhouse gas emission permit from the Directorate to continue operations. Emission allowances allocated to businesses on the basis of emission caps may be traded in the market, providing economic flexibility. Free allocation of allowances is also implemented to prevent carbon leakage, which occurs when industries shift investments to jurisdictions without carbon pricing mechanisms due to heightened carbon costs.

Accurate and reliable measurement of greenhouse gas emissions is critical to effective functioning of the ETS. Accordingly, businesses must submit verified annual greenhouse gas emission reports to the Directorate and surrender corresponding allowances at the end of each compliance period. Failure to comply shall result in sanctions. Moreover, the free allocation mechanism aims to ease the financial burden on businesses by reducing carbon pricing costs under specified conditions. Allocated allowances are tradable, and transactions within the ETS shall not be subject to the Public Procurement Law No. 2886, ensuring stability and preventing undue costs. If you would like more detailed information about the ETS, you can access our in-depth article on the subject through this link.

7. What Incentives Will Be Implemented for Green Transformation and Climate Change Mitigation?

Türkiye’s green transformation will be further advanced through incentives directed toward investments with high potential for reducing greenhouse gas emissions and adapting to climate change. In this context, financial incentive mechanisms and support schemes shall be developed, particularly for public institutions and legal entities operating in priority sectors within the ETS framework. Furthermore, green capital market instruments, grants, guarantee provisions, and financial cost support will be provided to facilitate investment financing and reduce borrowing costs. The procedures and principles governing implementation of these incentives shall be determined by the Ministry, in consultation with the Ministry of Treasury and Finance, the Strategy and Budget Presidency, and other relevant public institutions.

8. What Sanctions Apply for Non-Compliance with the Provisions of the Proposal?

Administrative sanctions under the Proposal serve as a deterrent measure to ensure effective enforcement of obligations and achievement of greenhouse gas emission reduction targets. Accordingly, administrative fines shall be imposed for failure to comply with monitoring, reporting, and verification requirements related to greenhouse gas emissions, for violations of regulations governing ozone-depleting substances, and for breaches of obligations concerning fluorinated greenhouse gases.

With regard to the ETS, sanctions shall apply in circumstances such as operating without a greenhouse gas emission permit, exceeding emissions permitted under allocated allowances, and failing to meet allowance surrender obligations. Moreover, specific penalties shall be enforced for irregularities in carbon credit generation and offsetting transactions. The Directorate and the Ministry shall be responsible for identifying violations and imposing sanctions. While administrative judicial remedies are available against sanction decisions, filing a lawsuit shall not suspend the collection of imposed penalties.

9. What Regulations Does the Proposal Introduce to Address Market-Disruptive Behaviors in Markets and Bilateral Agreements?

Amendments to Electricity Market Law No. 6446 introduce sanctions against manipulative and market-disruptive activities in markets, including the ETS market. Where such activities or attempts are detected, administrative fines shall be imposed on natural and legal persons according to the severity of the violation. Additionally, penalties must be set at a level not less than twice the benefit gained, or the damage caused. To ensure efficient and fair market operation, regulatory authorities may adopt any necessary measures, including partial or complete suspension of market participation rights, either temporarily or permanently. The procedures for determining administrative fines and defining market-disruptive behaviors shall be established by the Energy Market Regulatory Authority, in consultation with the Capital Markets Board.

10. What Are the Transitional Provisions Implemented by the Proposal?

As a result of transitional provisions stipulated in the Proposal:

• A pilot implementation period is envisioned prior to full-scale rollout of the ETS. The Carbon Market Board, considering inputs from relevant institutions and civil society organizations, shall determine the scope, duration, and procedural principles of this pilot period. During this phase, administrative fines imposed for non-compliance with obligations shall be subject to an 80% reduction.

• A three-year transition period is introduced from the date of the Proposal’s enactment, during which businesses under ETS scope must obtain a greenhouse gas emissions permit. Throughout this three-year timeframe, these businesses shall be deemed to hold existing greenhouse gas emission permits on a one-time basis. By decision of the Carbon Market Board, the Directorate is authorized to extend this period by up to two years.

• Following the establishment of the carbon credit registry system by the Directorate and publication of the relevant notification on its official website, penal provisions will come into force for those who fail to fulfill carbon credit registration obligations.

III. CONCLUSION

The Proposal establishes a comprehensive legal framework aimed at reducing greenhouse gas emissions and enhancing climate change adaptation efforts. It introduces ETS as an effective market-based mechanism to mitigate emissions, while incorporating flexibility mechanisms, such as free allowance allocations, to help businesses manage carbon costs and economic burdens. Additionally, financial sustainability in the green transformation process and competitiveness in international trade shall be ensured through instruments such as carbon credits and the Carbon Border Adjustment Mechanism.

Beyond its role as a legislative measure, the Proposal seeks to accelerate the green transformation process by encouraging broad societal participation. By clarifying obligations of local governments, the private sector, and public institutions, the Proposal strengthens coordination in fighting climate change, fostering a framework that supports both environmental sustainability and economic growth. In this context, it is expected to make a significant contribution to Türkiye’s national and international commitments in combating climate change.

The full text of the Proposal can be accessed here.

Doğa Kale

Associate

+90 552 452 13 71
doga.kale@aydin.law

Aleyna Altın

Legal Intern

+90 533 918 83 83
aleyna.altin@aydin.law

A New Era In The Fight Against Climate Change: Türkiye’s Climate Law yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

Digital Transformation In Commercial Books: New Regulatory Developments For Business

Aydın Law — Tue, 18 Feb 2025 15:09:24 +0000

I. INTRODUCTION

Proper keeping of commercial books is one of the vital issues for companies. In this respect, the Communiqué on Keeping Commercial Books Not Related to the Accounting of the Business in Electronic Form (the “Communiqué”), which introduces a fundamental change regarding commercial books, has been published in the Official Gazette. The Communiqué published by the Republic of Türkiye Ministry of Trade (the “Ministry”) and the Republic of Türkiye Ministry of Treasury and Finance in the Official Gazette dated February 14, 2025 and numbered 32814, imposes an oblligation certain commercial companies, as specified in Article 5 of the Communiqué to keep their commercial books in electronic form.

As part of the digital transformation process, in addition to the general ledger and journal books that are already transferred to the electronic form, it has also become mandatory to transfer the books that are not related to the accounting of the business to the electronic ledger system (the “System”) established by the Ministry.

II. FUNDAMENTAL PRINCIPLES

1. Which Commercial Books Are Not Related to the Accounting of the Business?

Article 64 et seq. of the Turkish Commercial Code No. 6102 (the “TCC”) set forth the commercial books that merchants are obliged to keep and the bookkeeping principles. In these provisions, the legislator has established a dual distinction regarding the books to be kept by merchants, based on whether they are related to the accounting of the business. However, in the fourth paragraph of Article 64, it is clearly stated that books such as share ledgers, board of directors’ decision books and general assembly meeting and negotiation books are not related to the accounting of the business, while also recognizing them as commercial books.

These books are kept by the board of directors and keeping these books is regulated as one of the non-transferable duties and powers of the board of directors.

2. What Was The Practice Regarding the Keeping of Commercial Books in Electronic Form Before the Publication of the Communiqué?

Prior to the regulation introduced by the Communiqué, the Electronic Ledger General Communiqué (Serial No. 1), published in the Official Gazette No. 28141 on December 13, 2011, stipulated that taxpayers obligated to use e-invoices, companies subject to independent auditing under the TCC, and taxpayers required to keep books according to the balance sheet method, as well as those who voluntarily opted to keep books based on the balance sheet method, are oblgated to keep their journal and ledger books as e-ledger as of 2025.

Before the publication of the Communiqué, there were no regulations mandating the electronic keeping of commercial books not related to the accounting of the business. However, businesses were allowed to keep their commercial books in electronic form on a voluntary basis without any restriction. With the publication of the Communiqué as an extension of digitalization efforts, it is possible to say that for commercial companies, keeping their books in electronic form has become a “mandatory” requirement.

3. Which Companies Are Obligated To Keep Their Commercial Books in Electronic Form?

According to the Communiqué, the companies obligated to keep their commercial books in electronic form are as follows:

• Companies registered with the trade registry as of January 1, 2026, anf thereafter;

• Banks, financial leasing companies, factoring companies, consumer finance and card services companies, asset management companies, insurance companies, holding companies established as joint-stock companies, currency exchange companies, general retail companies, licensed agricultural product warehouse companies, product specialization exchange companies, independent auditing companies, surveillance companies, technology development zone management companies, companies subject to the Capital Markets Law No. 2499 dated July 28, 1981, and free zone founders and operators.

Companies not mentioned above may keep their books in electronic form on a voluntary basis, provided that all of their books are kept in electronic form.

4. Which Commercial Books Are Covered By The Communiqué?

The commercial books that must be kept in electronic form are regulated in Article 2 of the Communiqué. According to this provision, these books are

• share ledger,

• board of directors’ resolution book,

• board of managers’ resolution book, and

• general assembly meeting and negotiation book (the “Books”).

5. What are the Obligations or Exemptions Arising from Keeping the Books in Electronic Form?

Pursuant to the provisions of the Communiqué, companies that transition to keeping their books in electronic form are not permitted to revert to maintaining their books in physical form.
On the other hand, opening and closing approvals will not be required for the Books kept in electronic form.

6. What Is the Electronic Ledger System Introduced by the Communiqué?

The System is the platform where the electronic records of the Books will be kept, to be established by the Ministry. While the Communiqué does not specify through which portal access to the System will be granted, it is expected that further details regarding the System will be announced on the Ministry’s website, etds.ticaret.gov.tr, by the effective date of the Communiqué, July 1, 2025.

The authority to perform transactions in the System will belong to the individual(s) designated by the company’s governing body or managing partners. The System user (the “User”) approved by all members of the governing body or managing partners will be registered in the MERSIS system. If the User’s notification form is prepared in physical form, it will be submitted to the Trade Registry Directorate along with the incorporation documents. If the Books are transitioned to electronic form after the company’s establishment, the User will be registered in the System during the process of entering the closing information of physical books into the System by a notary.
Transactions performed by the User in the System shall be recorded in such a way that no changes can be made; however, material errors such as typographical mistakes made during the recording can be corrected by the User by explicitly indicating the existence of the material error in writing in the System.

7. How Will Companies Transition to the System?

For companies that will keep their Books of Accounts electronic form from the date of their establishment, the Books will become active in the System simultaneously upon registration.
For companies currently keeping their Books in physical form, they will be required to transition to keeping their Books in electronic form within 2 (two) months from the date the obligation to do so arises. This transition will be initiated by a decision presented by the company’s authorized representative to a notary, who will obtain the closing approval for the physical books.

Subsequently, the notary will register the User information and the closing details of the physical books in the System, and the Books will become active in the System.

8. Will the Transfer of Ledgers to ELS Eliminate the Legal Liability of Managers?

Under the Communiqué, no changes have been made to the responsibility of the company’s governing body and managers regarding the accuracy of the records in the Books and the potential damages arising from discrepancies between the records. These individuals remain responsible for ensuring that the Books are kept in accordance with the law and accurately reflect the company’s activities.

III.CONCLUSION

The Communiqué represents a significant milestone in the digitalization process of businesses. With this regulation, the mandatory electronic keeping of commercial books aims to enhance data security in record-keeping processes, strengthen audit mechanisms, and facilitate compliance with regulations for businesses. The transition to the System will not only provide time and cost savings but will also enable businesses to adopt a more effective management approach, improve operational efficiency, and allow decision-making processes to be carried out more effectively. In this context, it is crucial for companies to establish the necessary infrastructure to comply with the regulation and review their processes related to digital recording systems.
The full text of the Communiqué can be accessed here.

Doğa Kale

Associate

+90 552 452 13 71
doga.kale@aydin.law

Sinem Sedef

Intern

+90 538 343 30 11
sinem.sedef@aydin.law

Digital Transformation In Commercial Books: New Regulatory Developments For Business yazısı ilk önce Aydın Law üzerinde ortaya çıktı.

The Snowball Effect In Green Transformation: Türkiye’s Green Taxomony Draft Published!

Aydın Law — Wed, 12 Feb 2025 10:00:32 +0000

I. INTRODUCTION

The Draft Regulation on Türkiye’s Green Taxonomy (“Draft Regulation“) was published in the last quarter of 2024 by the Climate Change Directorate of the Ministry of Environment, Urbanization, and Climate Change of the Republic of Türkiye (“Ministry”) and submitted for stakeholder consultation. The Draft Regulation establishes the classification methodology for economic activities in line with sustainable development goals and defines the procedures and principles that the relevant institutions and organizations within its scope must adhere to.

Emergence;

Green taxonomy is a classification system designed to determine whether economic activities are environmentally sustainable. This system facilitates the assessment of economic activities’ compliance with international policies, such as the Paris Agreement and the European Green Deal, both of which aim to achieve a carbon-neutral economy by 2050. As explicitly stated by the European Commission, the primary objective of the taxonomy is to prevent greenwashing and to support investors in making informed and sustainable investment decisions.

A step backward;

In February 2022, the Ministry convened the Climate Council, during which the Commission’s Recommendations emphasized the necessity of finalizing the green taxonomy legislation by the end of 2023.

As part of the Project on the Preparation of Reporting Guidelines in Türkiye and the Identification of Potential Users and Beneficiaries of the Green Taxonomy, conducted by the Ministry in collaboration with the French Development Agency, a comprehensive report was published in March 2023. This report provided a detailed analysis of national and international developments regarding taxonomy, outlined national taxonomy efforts in compliance with EU regulations, and introduced a taxonomy framework document. Notably, this project also included a cost-benefit analysis of establishing a national taxonomy system. The full details of this study can be accessed here.

On the other hand, Article 380.2 of the Twelfth Development Plan (2024-2028), published by the Presidency of the Republic of Türkiye Strategy and Budget Department, states that a national taxonomy and related legislation will be developed to define sustainable economic activities. Additionally, the Medium-Term Program (2025-2027), under the section titled “Acceleration of Green Transformation”, emphasizes that the legislative efforts for establishing a national green taxonomy—which aligns with the EU Taxonomy and other international taxonomy frameworks while also addressing Türkiye’s specific needs—will be finalized.

Background from the Europan Perspective;

In line with the objectives of the European Green Deal, the EU Taxonomy Regulation entered into force on July 12, 2020, establishing six environmental objectives to assess whether an economic activity is sustainable. These objectives have also been incorporated into the Draft Regulation submitted for consultation by the Ministry.

On April 21, 2021, the European Commission published the Sustainable Finance Package, which included key regulatory measures such as the EU Taxonomy Climate Delegated Act and the Corporate Sustainability Reporting Directive (CSRD). Consequently, the EU Taxonomy Climate Delegated Act officially entered into force on January 1, 2022.

Regarding this matter, the European Commission subsequently adopted the Complementary Climate Delegated Act on July 15, 2022, followed by the Environmental Delegated Act on June 27, 2023. These legislative texts became applicable as of January 1, 2024.

II. FUNDAMENTAL PRINCIPLES

What is Türkiye’s Green Taxonomy and Its Scope of Application?

Türkiye’s Green Taxonomy is a classification system that establishes principles and criteria for economic activities that contribute to mobilizing climate finance and support efforts to combat climate change in line with designated environmental objectives.

Article 2(a) of the Draft Regulation specifies that institutions and organizations required to conduct sustainability reporting under Türkiye’s Sustainability Reporting Standards (TSRS) fall within the scope of Türkiye’s Green Taxonomy. Under TSRS regulations, these institutions and organizations include publicly traded companies with capital market instruments listed on the stock exchange, investment firms, portfolio management companies, financing companies, central clearing and custody institutions, and data storage entities. However, the Public Oversight, Accounting, and Auditing Standards Authority periodically issues decisions that may alter this scope. Therefore, it is essential to monitor the decisions of the Public Oversight, Accounting, and Auditing Standards Authority to stay informed about any changes in this regard.
Consequently, institutions and organizations subject to reporting obligations under TSRS are also included within the scope of application of the Draft Regulation. As a result, new disclosure and reporting obligations have been introduced for companies covered by TSRS.

What Are the Eligible and Aligned Economic Activities Under Türkiye’s Green Taxonomy?

Under the Draft Regulation, economic activities are classified as either “eligible economic activities” or “aligned economic activities”. This classification aims to establish a structured evaluation process for determining the sustainability of an activity.

An eligible economic activity refers to an economic activity listed in the Draft Regulation that has the potential to contribute to environmental objectives. These activities have been specifically outlined in Annex-2 of the Draft Regulation, titled “Economic Activities Under Türkiye’s Green Taxonomy”, and have been submitted for public consultation.

An aligned economic activity refers to an eligible economic activity that meets the specific conditions set forth in the Draft Regulation. To be classified as an aligned economic activity, an eligible economic activity must cumulatively satisfy the following four fundamental criteria:

• Make a significant contribution to at least one of the designated environmental objectives.
• Not cause significant harm to any other environmental objective.
• Comply with minimum social safeguards.
• Meet the technical screening criteria established for the first two conditions (a and b)

In summary, an aligned economic activity is an eligible economic activity that has been verified to comply with all the above criteria. Consequently, not all eligible economic activities qualify as aligned economic activities, as each must undergo a compliance assessment.

The second section of the Draft Regulation, titled “Determining Taxonomy Alignment,” provides detailed explanations regarding the requirements for meeting these conditions.

What Are the Obligations of Institutions and Organizations Within the Scope?

Institutions and organizations within the scope of the regulation are required to:

• Utilize the Online Taxonomy Management System (e-Taxonomy) for all processes related to taxonomy compliance. Accordingly, the following financial indicators must be calculated and reported annually in the system:

a) The ratio of revenue derived from aligned economic activities to total revenue.
b) The ratio of capital expenditures (CapEx) allocated to aligned economic activities to total capital expenditures.
c) The ratio of operational expenditures (OpEx) related to aligned economic activities to total operational expenditures.

The data entered into the system will then be used to automatically calculate the compliance ratio. The information related to the calculated compliance ratio will be reported as part of the sustainability report, in accordance with the Taxonomy Disclosure Tables, which have been submitted for consultation as Annex-2 of the Draft Regulation.

• It is important to emphasize that the above calculations must be based on general-purpose financial statements prepared and presented in accordance with Turkish Financial Reporting Standards (TFRS).
• In addition to the sustainability report prepared under TSRS, verified data on eligible economic activities conducted in the previous year must be recorded in the e-taxonomy system.
• Finally, all reports must be verified and validated by organizations accredited by TÜRKAK (Turkish Accreditation Agency).

What Transition Period Has Been Envisioned?

Institutions and organizations within the scope will be required to submit reports under the Draft Regulation in addition to their sustainability reports prepared under TSRS. These reporting obligations will be voluntary until December 31, 2026, but will become mandatory as of January 1, 2027.

Are There Any Sanctions Prescribed?

Pursuant to Article 18 of the Draft Regulation, institutions and organizations subject to reporting obligations will face administrative fines in accordance with the relevant provisions of Law No. 2872, should they fail to fulfill their notification, information, and documentation obligations required for reporting.

III. CONCLUSION

First and foremost, the adoption of a national taxonomy framework represents a significant step toward fostering the development of capital markets for sustainable finance and enhancing long-term financing opportunities. Additionally, the taxonomy mechanism will undoubtedly increase transparency regarding sustainable activities and serve as an objective and effective tool for evaluating the environmental impact and sustainability of economic activities.

In this regard, the Draft Regulation has the potential to support companies’ investment planning and financing efforts, while also facilitating access to financing for projects that are already sustainable in nature or are in a transition phase. Furthermore, the monitoring mechanism introduced by the Draft Regulation is expected to mitigate and control greenwashing risks.

Lastly, while the inclusion of institutions and organizations covered under TSRS within the scope of the Draft Regulation introduces additional reporting and disclosure obligations, the alignment of reporting timelines and methodologies between the Draft Regulation and TSRS will allow relevant entities to effectively and strategically manage the transition process.

You can access the Draft Regulation and its annexes via this link.

Serhat Aydın, LL.M.

Managing Partner

+90 532 242 10 28
serhat.aydin@aydin.law

Aslı Başçoban

Associate

+90 534 369 24 22
asli.bascoban@aydin.law

The Snowball Effect In Green Transformation: Türkiye’s Green Taxomony Draft Published! yazısı ilk önce Aydın Law üzerinde ortaya çıktı.