On 28 October The Republic of Türkiye Ministry of Energy and Natural Resources (“Ministry”) announced its ‘Tender for the Allocation of Renewable Resource Areas and Connection Capacities Based on Wind Energy’ (“YEKA WPP – 2024 Tender(s)”) via publication in the Official Gazette numbered 32706. The Ministry also published the tender’s specifications (“Specifications”) and draft contract (“Contract”) on its website on the same date.

The YEKA WPP-2024 Tenders are regulated by the Renewable Energy Resource Areas Regulation which was published on 9 October 2016 in the Official Gazette numbered 29852. These tenders cover five (5) wind energy projects and aim to allocate a total connection capacity of 1,200 MWe in Edirne, Kırklareli, and Sivas while granting 49-year usage rights in these areas.

YEKA WPP-2024 Tender Projects and Connection Capacities:

The table below displays the cities, districts, area size and connection capacity information for the projects included in the YEKA WPP-2024 Tenders (each, a “WPP” and/or a “Project”):

Tender Application Procedure

Place and Date of Application: Applications for tenders will be received by hand-delivered mail addressed to the General Directorate of Energy Affairs (“General Directorate”) of the Ministry at the Ministry’s address in Ankara between 10.00 am and 12.00 pm on  21 January 2025. The voucher or receipt amount required for each tender application is 50.000 (fifty thousand) Turkish Liras. If an applicant wishes to apply for more than one tender, a separate voucher or receipt must be submitted for each tender.

The location, date and time of the YEKA WPP – 2024 Tenders will be announced on the Ministry’s website.

Participation Conditions: Bidders must be legal entities established as joint stock or limited liability companies in accordance with the Turkish Commercial Code; or foreign companies with capital company status. If a foreign company becomes an eligible bidder it must establish a joint stock or limited liability company in Türkiye with the same shareholding structure, or in which it holds a hundred percent share, by the date of the Contract’s signature.

Types and Amounts of Securities:

Provisional Security: Bidders must submit an unlimited letter of guarantee to the Ministry for USD 20.000 (twenty thousand United States Dollars) per megawatt which is valid for 1 year and fully or partially convertible into cash at the application stage for each tender.

Performance Security: Eligible bidders must submit an unlimited letter of security for the amount of USD 50,000 (fifty thousand United States Dollars) per megawatt which is valid for a period of 10 years. This must be fully or partially convertible into cash and submitted to the Ministry one (1) day before the Contract is signed at the latest. Provisional security in the form of the letter of guarantee shall be returned to the eligible bidder.

YEKA WPP-2024 Tender Process and Procedures

Open Auction by Underbidding: The YEKA WPP – 2024 Tenders will begin with sealed financial bids within a predefined ceiling (5.50 USD cents/kWh) and floor (3.50 USD cents/kWh) price range. Subsequently, an open auction via the underbidding method will be applied among the five lowest bids. Bidders must submit their offers in a sealed envelope with the price written within two decimal places. The Tender ends once the floor price or a lower bid is reached.

Determination of Contribution Fee: If the floor price is offered by a second bidder that bidder is deemed to have agreed to pay at least 10,000 USD per MW as a contribution fee. Contribution fee bids will then be collected via auction. The tender will conclude once the highest contribution fee is reached.

Contract Signing Process: The tender will be finalized with the approval of the Minister of Energy and Natural Resources and the eligible bidder invited to sign the Contract within 30 days. If the eligible bidder does not sign the Contract its security deposit will be forfeited and the opportunity extended to the remaining eligible bidders.

Contribution Fee Payment: The contribution fee must be paid to Enerji Piyasaları İşletme A.Ş. within 20 business days following the invitation to sign the Contract. The fee must be based on the Central Bank of Türkiye’s foreign exchange selling rate. If the contribution fee is not paid within the specified time, the security will be forfeited and the opportunity extended to the remaining eligible bidders.

Electricity Prices, Purchase Period and Conditions

Electricity purchase conditions, price range and period for the YEKA WPP-2024 Tenders are as follows:

Sale in the Free Market and Electricity Purchase Period: As per the table, electricity generated will be sold on the free market for 72 months (6 years) from date of Contract signing. Electricity generated for 20 years after the end of the free market sale period will be purchased at the determined purchase price.

YEKDEM Commitment: The Ministry undertakes to evaluate electricity generated by the WPP within the scope of the Renewable Energy Resources Support Mechanism (“YEKDEM”) and that prices paid will be in accordance with the Specification and Contract, even if there is a change in YEKDEM.

Exemption from Transmission Fees: Fees paid to the Turkish Electricity Transmission Company (TEİAS) that are within the scope of the transmission fee during the electricity purchase period will be reimbursed within the scope of YEKDEM.

Financial Predictability: Exemption from transmission fees and currency-based pricing will contribute to the Project’s financing and financial sustainability. These advantages are expected to increase financial predictability by reducing risks for investors. While currency-based pricing provides protection against inflation and exchange rate fluctuations, the exemption from transmission fees will support cash flow by reducing operating costs.

Other Important Conditions of the Tender

Individual Energy Source Condition: During the term of the Contract electricity at a WPP must be generated exclusively by wind power and the WPP cannot be used for any other purpose.

Local Content Requirement: Wind turbines must be manufactured or supplied in Türkiye in compliance with minimum local content rates. Each component listed in the annex of the Specification must meet local content scores specified in the relevant annex with turbines expected to achieve an overall local content rate of at least 55%.

WPP Primary Obligations: The Contract awardee is liable for all feasibility, permit and approval procedures and costs required to commission the WPP. The Project must be connected to the electricity transmission system in accordance with the relevant legislation including necessary measures to ensure public and property safety. The Contract awardee is accountable for implementing safety, occupational health, and environmental measures and may not seek compensation from the Ministry for any third-party damages. The Contract awardee is also responsible for recycling end-of-life equipment and its removal from the site where necessary.

Pre-License, License, and Construction Period: The pre-license period for each WPP is a maximum of 24 months. The license duration for each WPP to be established under the Contract is 49 years. The construction period is a maximum of 36 months from the date of license issuance.

Electrical Capacity Increase: No increase in the electrical capacity of the WPP is allowed during the Contract period.

Storage Facility: An electricity storage unit may be established at the WPP site provided it is located at the same measurement point and does not exceed license capacity. However, only electricity generated at the WPP may be stored in the unit during the free market sale period.

Conclusion

The YEKA WPP-2024 Tenders represent an important strategic step for Türkiye in expanding its renewable energy capacity and diversifying its energy portfolio. Focusing on wind power generation contributes to the goals of increased energy supply security and reducing dependence on energy imports. They will also be influential in boosting domestic production and supporting technological development.