An Overview of Hydroelectricity in Turkish Energy Market
As is known, the renewable energy resources have gained great importance in energy production in Turkey as well as in the world. By reason of the exhaustibility of primary energy resources such as coal, oil and natural gas and import dependence on natural gas and oil, Turkey has been working on use of the renewable resources in electricity manufacturing and it is intended to increase the rate of renewable resources in electricity manufacturing up to 30 % until 2023. Hydroelectric power as a renewable energy resource plays also an essential role forTurkish energy market, its market share has been increasing year for year.
Turkish Legislation on Hydroelectric Energy
Legal ground of hydroelectric power plants consists of the laws and regulations concerning the electricity market and renewable energy. First of all, an investor intending to operate a hydroelectric power plant shall consider two significant points: licensing procedures and incentives.
License procedures of a hydroelectric power plant are performed under the conditions of the related laws and regulations on renewable energy and electricity market. It shall be considered that each electricity market activity may be operated with a related license excluding unlicensed electricity manufacturing from renewable energy resources under the conditions which have been stated by the Electricity Market Law.
If the establishment and operation of hydroelectric power plants are subject to the incentives provided by the state is another significant question. As is known, the investment incentives have been regulated by the related Decision of Council of Ministry and Communiqué which include state's support such as tax reductions, tax exemptions and social security premiums support on incentives depending on their regions and types.
What About the Status of the Inactive Hydroelectric Power Plants?
There are several hydroelectric power plants in Turkey which have been sequestrated and are inactive because of environmental and other different reasons. The status of such inactive hydroelectric power plants has been regulated by the New Electricity Market Law which has entered into force in 2013. Accordignly, the rightholders of such hydroelectric power plants have had a term of six months as from the date of entering of this Law into force under the condition that they should not coincidence with other existing projects.
If the definition of renewable energy resources is considered, the hydroelectric power is regarded as a renewable energy resource. However, only certain category of energy resources is regarded as renewable resources before the Law on Renewable Energy Resources. Accordingly, hydroelectric power resources reservoir area of which does not exceed 15 km are not in the scope of renewable energy resources and therefore these may not benefit from the incentives for renewable energy resources stated by the laws and regulations.
Incentives for Investments in Hydroelectric Energy
As mentioned above, investments in certain type of hydroelectric power plants are subject to incentives which are provided to investors in electricity manufacturing from renewable energy resources. In the event that a hydroelectric power plant fulfills these conditions, this investment will be able to benefit from the following incentives and support mechanisms for renewable energy:
- Feed-in tariffs for renewable energy resources
- Financial support for local equipment used in the power plant
- Diverse financial supports of the state such as tax exemption or tax reduction depending on the scope and location of each project
- Licensing incentives especially with regard to the license fee
- Incentives in land allocation such as reductions under certain conditions
- Priority for electricity manufacturing plants from renewable energy and local natural resources in connection processes
The Pros and Cons of Hydroelectric Energy
Compared to other energy resources, the most essential advantage of hydroelectric power is its harmlessness for the environment. Moreover, the power manufacturing costs are not high due to the inexpensiveness of water, its main resource. Such projects have longer life spans compared to primary energy resources. However, the investment costs of a hydroelectric power plant are high.
According to the statistics, the theoretical hydroelectric potential of Turkey is 433 bn kWh, and 216 bn kWh is the technical evaluable potential. Currently, there are ore than 200 hydroelectric power plants in operation and it is expected to increase the number of hydroelectric power plants in Turkey in coming years.