HOW WILL THE 1000 MW YEKA GES-3 COMPETITION PROCESS PROCEED UNDER YEKA REGULATION?
The competition announcement regarding Renewable Energy Sources Areas (“YEKA”) based solar energy and allocation of connection capacities (Competition announcement) has been published in the Official Gazette dated 3 July 2020 and numbered 31174 by the Ministry of Energy and Natural Resources (“Ministry”). In this context, it has been aimed to ensure that YEKAs are used for the establishment of solar power plants (“GES”) in the Connection Zones specified in the Competition announcement and to allocate the related Connection Capacities.
The Competition announcement and subsequent process will be carried out by the Ministry of Energy and Natural Resources General Directorate of Energy Affairs (“Administration”) within the framework of the principles of Renewable Energy Resource Areas Regulation (“Regulation”) published in the Official Gazette dated 9 October 2016 and numbered 29852. In this article, the content of the Competition announcement in question and the procedures and principles foreseen in the Regulation are discussed.
- The Content of Competition Announcement
Pursuant to the Competition announcement, 74 (seventy-four) tenders (YEKA GES-3 competitions) based on solar energy will be held in capacities varying between 10 (ten) MWe, 15 (fifteen) MWe and 20 (twenty) MWe in 36 provinces for the purpose of allocating the connection capacity in total 1000 MWe according to the “YEKA Purpose Connection Capacity Allocation Method” and “Domestic Product Use Allocation (” YMKT “) Method” foreseen in the Regulation.
The names of YEKA GES-3 competitions, connection capacity amounts and application dates are included in the Competition announcement, and applications can be made between 19-23 October 2020.
It is envisaged that only legal entities established as joint-stock or limited companies according to the provisions of the Turkish Commercial Code can apply to the said competitions, and no financial competence or work experience is required. Per the provisions of the Regulation, the works and procedures, scope, procedures and principles, technical and administrative conditions regarding the competition, qualifications sought in the applicant legal entities, and other information and required documents are determined by the Specification. Information is given in the Competition announcement in question regarding the price of the relevant specification, the form of payment and where it will be obtained. In this context, the specification must be provided in order to participate in each tender.
The amount and type of guarantee required to participate in the competitions are also set out in the Competition announcement. Accordingly, the following types and amounts of letters of guarantee will be submitted to the Administration;
|GUARANTEE TYPE AND AMOUNT
|At the application stage (definite, 1 year period, completely and partially convertible into cash, out of limit)
|If the competition is won (definite, 10 year period, completely and partially convertible into cash, out of limit)
If a guarantee letter is submitted to the Administration in case of winning the competition, the guarantee letter submitted at the application stage is returned.
In the Competition announcement, the starting ceiling price of each tender is determined as 30 (thirty) kurus per kilowatt-hour, and the duration of the electricity purchase is foreseen to be 15 years from the date of signing the Contract.
- Provisions Regarding the Subject under YEKA Regulation
Per the provisions of the Regulation, YEKAs can be developed in two different ways as a result of the works to be carried out by the General Directorate of Energy Affairs or the YEKA Purpose Connection Capacity Allocation Competition and subsequent works (art. 5).
Under the Regulation, within the scope of the YEKA Purpose Connection Capacity Allocation Competition, procedures and principles regarding the conditions to be sought in those who will participate in the competition, competition procedure, obtaining the guarantee, registering the guarantee as revenue in case the obligations are not fulfilled, pre-license/ license applications of electrical power generation facilities to be established in YEKA and the sale of electrical energy are included.
- Receipt of Applications for YEKA Usage Right
According to Article 7 of the Regulation, those who meet the conditions in the Regulation and Specification can apply to the competition. In case the application is made by more than one legal entity, the matters regarding the application as a joint venture are defined in the Specification.
Legal entities entitled to apply for pre-license under the Regulation must also fulfill the conditions determined for pre-license application under the Electricity Market Licensing Regulation.
Application files containing the documents specified in the Specification must be submitted to the address specified in the Competition announcement, up to the date specified in the advertisement and applications that are not submitted on time are not evaluated.
- Examination of applications
For the examination of the applications, a Committee consisting of a chairman and at least four permanent members from the institutions/organizations to be determined by the Ministry with the approval of the Minister will be established (Reg. art. 8). Under Article 9 of the Regulation, at the first stage, the Committee conducts a documentation examination in terms of the availability of the documents that must be submitted and the next stage is not taken in terms of the applications found to be incomplete. In the next stage, detailed documentation is examined over all the information and documents submitted for the applications that are deemed appropriate, and the venue, date of the competition are subsequently published on the internet site of the Administration at least 3 (three) calendar days before the date of the competition or notified one of the methods of correspondence to the applicants at least 3 (three) calendar days before.
- YEKA Usage Right Competition Procedure
Under Article 10 of the Regulation, the Financial Offer envelopes of applicants who have the right to participate in the competition are opened by the Committee in the presence of the applicant officials at the venue and date specified in the Competition announcement. The competition is held in accordance with the reverse auctions starting from the maximum electricity purchase price set by the Ministry for kilowatt-hours.
After the Financial Offer envelopes are opened, the Committee informs the applicants and passes to the competition based on the open reverse auction. The bids in the Financial Proposal envelopes are ranked and an open reverse auction competition is held among the minimum five maximum bidders. Reverse auction procedure continues till the offering of the lowest price and tender shall be awarded when the lowest and last offer is reached. After the competition, the committee minute is prepared and this minute is submitted to the approval of the Minister in accordance with the Regulation. The competition is concluded with the approval of the Minister.
Guarantee letters, except for the most advantageous first three price offers, are returned within 3 business days following the tender date. The winner of the tender shall then be invited to sign the Usage Right Agreement (“Agreement”).
The Ministry is entitled to terminate the competition at any point at its own discretion.
- Signing of the Usage Right Agreement
It is essential that the legal entity, which is invited to sign the Agreement, shall sign the Agreement within 30 calendar days upon the receipt of notification of the invitation. If the Agreement is signed with the lowest first bidder or the second and third bidder is not invited to the Contract, the guarantee letter of the lowest second and third bidder shall be returned within 3 (three) business days as of the date of signature of the Agreement.
If the first lowest price bidder fails to sign the Agreement within this 30 days’ period, the second lowest bidder and the third lowest bidder are invited to sign the Agreement, respectively. Before the Agreement is signed, the legal person; completing the necessary commercial establishment, it submits the Trade Registry Gazette, partnership structure, guarantee letter issued in the name of the legal entity and the work programs of electrical power generation facilities (Reg. m. 11).
- Submission of YEKA offers
The legal person who won the competition and signed the Agreement proposes the Candidate YEKA’s to the Administration within the period specified in the Specification, together with the requested information and documents. For each candidate YEKA who is not eligible, the winner of the competition may be asked to propose a new Candidate YEKA under conditions determined in the Specification in order not to change the connection region where the competition was won and the connection capacity allocated for the connection area is not exceeded. With the approval of the candidate YEKA for the allocated connection area and connection capacity, this candidate YEKA is announced as YEKA in the Official Gazette. The evaluation process of the proposed Candidate YEKAs is completed under the conditions and time specified in the Specification (Reg. art. 5/3-c).
- Pre-license Period
According to Article 12 of the Regulation, obtaining a pre-license and generation license is obligatory in order to conduct electricity generation activities in YEKA within the scope of the Agreement.
The legal entities winning the competition held by the YEKA connection capacity allocation method must submit the pre-license application within 45 calendar days as of approving by the Administration and publishing as YEKA in the Official Gazzette of YEKA offers submitted to the Administration and notification to the Energy Market Regulatory Authority (“EMRA”).
In the Regulation, certain obligations are stipulated for legal persons holding pre-license within the scope of YMKT. The maximum installation time of the electricity generation facilities (“Factory”) to be established within the scope of the YMKT is shown in the Specification. Under the Regulation, upon the occurrence of any delays in the Factory’s detailed construction program, the sanctions are stipulated to the termination of the Agreement and the cancellation of the pre-license. In addition, if it is determined that the commitments within the scope of the Agreement have not been fulfilled, other legal persons with the relevant legal person and the shareholders in the partnership structure cannot participate in other YEKA competitions to be organized by the Ministry for 2 (two) years.
- License Period
Pre-license holder legal entities that have fulfilled their obligations under the Electricity Market License Regulation, and which have completed the construction of Factory, will apply to the EMRA in order to obtain a license. Within the scope of YMKT; the duration of the licenses to be obtained for YEKAs is determined in the Specifications and at the end of this term, general procedures will be applied in accordance with the legislation of the relevant institutions, where the usage right is obtained (Reg. art. 13).
- Sale of Electric Energy
Article 14 of the Regulation contains regulations as to the sale of electrical energy generated in YEKAs. The generated electricity in YEKAs will be subject to and sold under the Regulation on Certification and Support of Renewable Energy Resources (“YEKDEM Regulation”) for the period determined in the Specifications and at the prices determined in the Agreements. The purchase period defined in the Specification starts from the execution of the Agreement. No term extension may be applied except for force majeure events.
As a result; the process following the announcement of the competition regarding the allocation of solar energy based YEKA and connection capacities will be carried out in accordance with the provisions of the Regulation and related Specification summarized above. Those who want to participate in tenders within the scope of the Competition announcement must obtain the relevant Specification for details such as the documents requested for competition application, competition procedure, inviting the bidder to the agreement, YEKA’s offers and examination, announcement of YEKA and the activities to be carried out later, domestic contribution rate, the period and method of updating the electric energy unit price and the obligations of the parties.