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New wind power plant tenders announced in Turkey

June 2021 – Turkey’s Energy and Natural Resources Ministry (“MENR”) has recently announced that it will collect bids for 42 mini Renewable Energy Resource Area (“RERA”) tenders for wind power in October 2021 (“Wind RERA Tenders”). Below is a summary of the RERA tender process and details of the Wind RERA Tenders.

Background Information

RERAs were introduced in Turkey in 2016 as a new investment model to support renewable energy investments, to ensure efficient and effective use of renewable energy, and to facilitate R&D activities and domestic manufacturing of technological equipment used in renewable energy-based power plants. As per the Regulation on Renewable Energy Resource Areas enacted on 9 October 2016, there are two methods for the designation of RERAs: (i) designation of RERA by MENR prior to the RERA tender, and (ii) capacity allocation by MENR through an RERA tender and designation of the RERA by the winner of the RERA tender together with MENR.

RERA Usage Right Tenders are announced occasionally in the Official Gazette. The bidding process for RERA projects is on the Dutch-auction basis starting from the price ceiling that is determined in the contest specifications and taking into consideration the feed-in tariff and local component bonus set forth in Turkish renewable energy legislation. The lowest bidder wins the tender, is granted the right to sign an RERA Usage Right Agreement with MENR, and also benefits from a purchase guarantee, while being obliged to either establish an equipment manufacturing company as well as an R&D Centre, or to use domestically manufactured or supplied equipment, up to a certain ratio.

Details of the Wind RERA Tenders

In March 2021, a capacity of 2,000 MWe that had been previously allocated for licensing was allocated for wind power plant RERA tenders (more information on this announcement may be found here). This capacity will now be allocated under the Wind RERA Tenders.

According to the announcement, Wind RERA Tenders will be composed of 42 different mini projects/tenders, with allocated capacity ranging from 30 MWe to 80 MWe. The ceiling price applicable for each mini tender is determined as 45 TL/kWh (approx. USD 5.2/kWh).

A purchase guarantee is foreseen in the announcement as well. Accordingly, for each MW of allocated connection capacity, the first 35 GWh of electricity generated from the wind power plant since the date of the relevant wind power plant’s formal acceptance will be purchased through the renewable energy support mechanism. 

In order to participate in Wind RERA Tenders, potential bidders must obtain tender specifications for each mini tender they wish to participate in by paying (for each tender) a fee of TL 2,000 (approx. USD 233) and submit a tender guarantee of TL 500,000 (approx. USD 58,000) with a maturity period of one year (for each tender).

Bids will be collected on 12 October 2021 between 10:00 a.m. and 2:00 p.m.

Conclusion

Turkey is eager to utilise its green energy resources and has been dramatically expanding its solar and wind installed capacity for the past few years, and MENR prefers allocating such capacities through RERA tenders rather than conventional licensing.

In May 2021, tenders for a 1-GW connection capacity covering in total 74 minor solar power RERA projects were completed, and shortly afterwards the Wind RERA Tenders, with which a capacity of 2,000 MWe will be allocated, has been announced. It is very likely that more solar and wind RERA tender announcements are on the horizon.

The Wind RERA Tenders are expected be concluded by end-2021, although the exact timeframe has not yet been announced.

For more information, please contact Şeyma Olğun, Senior Associate, at solgun@gentemizerozer.com.