Turkey is an energy importing nation with more than half of its energy requirements met by imported fuels.
Air pollution is also becoming a significant environmental concern.
In addition to pushing an energy saving programme, the Government sees, geothermal energy and other renewable energy sources as an attractive solution for a clean and sustainable energy future for Turkey.
Turkey is the seventh richest country in the world in geothermal energy potential.
The main uses of geothermal energy are space heating and domestic hot water supply, greenhouse heating, industrial processes, heat pumps and electricity generation.
District heating system applications started with large-scale, city-based geothermal district heating systems. Geothermal district heating centres and distribution networks have been designed according to the geothermal district heating system (‘GDHS’) parameters. This constitutes an important technical and economic advantage in relation to GDHS investments in the country.
There are approximately 61,000 residences currently heated by geothermal fluids in Turkey. A total of 665 MWt is utilised for space heating of residential, public and private property, and 565,000m2 for greenhouses. The proven geothermal heating capacity, according to data from existing geothermal wells and natural discharges is 3132 MWt. Present applications have shown that geothermal energy is clean and much cheaper when compared with other fossil and renewable energy sources in Turkey.
Geothermal energy is regulated by the Law numbered 5686 (3rd Jun, 2007) Law on Geothermal and Mineral Resources (‘Geothermal Energy Law’) along with the Geothermal and Mineral Resources Law Implementation Regulation numbered 26727 (‘Regulation’). The Geothermal Energy Law in Turkey regulates geothermal resources along with natural mineral water resources and geothermal-related gases. It covers the procedures of usage rights, licences and their assignment or transfer. The relevant authority is the Ministry of Energy and Natural Resources (“MENR” or “Ministry”) and the relevant head state entity is the Provincial Special Administration (‘Administration’).
Pursuant to Article 4 of the Geothermal Energy Law, ownership of above-mentioned resources is deemed to belong to the State rather than to private property-owners where the resources are located. Any activity relating to the resources will be subject to parties first obtaining the necessary licenses set out into the same law. Turkish citizens or legal entities duly incorporated under Turkish Law are entitled to apply for the related licences.
There are two types of licences; namely prospecting licence and operating licence. The former enables its holder to carry out prospecting activities in a specific area based on the project notified to the Administration; the latter enables its holder to produce geothermal related-water, gas and steam and use them for energy production, heating or for industrial purposes.
Pursuant to Article 5 of the Geothermal Energy Law and Article 6 and 7 of the Regulation, the applicant may apply to the local Administration for the licence with the prospecting project, stating the plate name and its coordinates drawn to a scale of 1/25000, provided however that it does not exceed 5,000 acres. In case of more than one application for the same location, the first one will normally have priority over others. However, in the event that there is more than one application at the same time, the Administration may give priority to another project with a more suitable project proposal. The duration of a prospecting licence is three (3) years, commencing as of the date of the registration of the licence and may be extended up to one (1) year with the consent of the Administration, on the condition that the revised project is satisfactory to the Administration. As long as the activities are not hazardous to the environment, production may be operated with a trial purpose during the licence term.Operating Licence
Under Article 6 of the Geothermal Energy Law and Article 9 of the Regulation, the prospecting licence holder may apply with a project to the Administration for an operating licence before the expiration date of the prospecting licence. The holder must specify a deadline to initiate the operation. The failure to start the operation before the specified term will give rise to the cancellation of the licences and the guarantee deposited will be recorded as revenue by the State. The licence holder cannot make any amendment with regard to the project without the consent of the Administration. The duration of the licence is thirty (30) years, commencing as of the date of the registration of the licence and may be extended up to further ten (10) years. After receiving the operating licence, the holder should obtain other required permits, including the Environment Assessment Report within three (3) months, otherwise the licence may be cancelled.
As per Article 10 of the Regulation, the operation must be conducted under the supervision of an engineer from a related field as a technical responsible person. In the absence of such engineer during the operation, the amount deposited as a guarantee will be deemed to be recorded as revenue by the State and the operation will be suspended.
Moreover, the technical responsible person must prepare operating and prospecting report to be submitted annually to the Administration until the end of March and every other consecutive year. In the event that the report is not submitted in time, the amount deposited as a guarantee will be again deemed to be recorded as revenue by the State and an extension for the submission will be granted, provided that a deposit equal to twice the amount is deposited as guarantee. Otherwise, the operating licence may be cancelled. Furthermore, all activities regarding to licences are also annually monitored by the Administration. If the licence holder does not meet the criteria under the related law, the licence may be suspended or even cancelled.Assignment, Transfer and Easements
Pursuant to Article 14 of the Regulation both the operating and prospecting licences can be assigned. In order to track the record relating to the assignment, mortgage, lien and any encumbrance, the Administration is required to have a registry in place under Article 10-b of Geothermal Energy Law. According to Article 15 of the Regulation, obligations and rights as a whole are transferred to inheritors and cannot be divided into parts without their consents. In the event that there is dispute among inheritors, the issue may be resolved by the court, whereby the licence may be sold via tender.
If the prospecting activity requires the licence holder to have access to a private property, the required permission may be obtained from the owner. If the owner withholds his consent, the licence holder may apply to the Administration for easement or compulsory acquisition by the State, whichever is most appropriate and such application must be determined within three months.
Under Article 26 of the Regulation if a company distributes or produces geothermal resources, it may be regarded as an industrial enterprise and subsequently it may be granted a geothermal resource distribution or production certificate. Companies with these certificates are able to apply for any incentives including reduced electricity tariffs and rights which are particular to industrial or waste treatment enterprises. However, the validity of the certificate is dependent upon the existence of the operating licence, which means that the cancellation of the latter results in invalidity of the former.
There are also other incentives regulated by the statutes other than Geothermal Energy Law. According to the Article 7 of the Law numbered 5346 regarding the Usage of Renewable Energy Resources for the Purpose of Electricity, any legal entity or real person which uses geothermal resources in order to meet its specific amount of electricity needs of a particular plan and project prepared by the Administration, may be exempt from the service fee.
The usage of geothermal energy will probably become more common in Turkey over the next decade. Moreover, the specific incentives mentioned above have been designed by the government to encourage and further geothermal investment. Areas with volcanic activity are the most suitable places to obtain high temperature geothermal energy with low cost and Turkey is regarded as one of them, in addition to Iceland, Italy and Greece in Europe. However, it should be noted that in order to reach higher temperature, there is a necessity of deep drilling which is more expensive and less economic.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ms Nazlican Kartal
Senguler ; Senguler Law Office
Cumhuriyet Cad. No. 25
Cinar Apt. Kat. 4 34437