Geothermal Energy Regulations and Incentives in the Light of Turkish Law

Introduction

The most suitable energy resources should be not only affordable and safe, but also environment-friendly and sustainable. Since unsustainable energy resources have several disadvantages such as being hazardous to environment and limited usage, renewable energy resources have become very important worldwide in recent decades. Consequently, most of the states have considered regulating the renewable energy field in such a way that will encourage investors for investing in this area and provide financial assistance. Among renewable energy resources, owing to the growing technological developments, geothermal energy has definitely got the potential to make the most significant contribution to such emerging necessity.

Geothermal energy can be briefly defined as literally the heat contained within the earth that generates geological phenomena on a planetary scale. Geothermal resources have three main components, namely heat source, fluid carrying heat from the earth’s crust to the surface, sufficient rock permeability to circulate thermal water.

What makes geothermal energy more preferable to other types including solar or wind energy is that it does not depend on or is affected by weather conditions or seasonal factors. However, it should be noted the effectiveness and advantages of geothermal energy may be mitigated, whereby the suitable environment for geothermal energy is situated in a very deep distance from the earth’ surface. Therefore, its competitiveness in the market is dependent on its cost level to the extent that it can be generated cheaper than the other resources such as crude oil or natural gas which their prices have raised dramatically.

The government has regulated the renewable energy including geothermal energy and has provided several incentives to encourage the market.

Legal Framework for Geothermal Energy in Turkey

In Turkey, geothermal energy is separately regulated by the Act numbered 5686. 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 in terms of the procedures of ownership rights, licences and their assignment or transfer.

Ownership

According to the Article 4 of Geothermal Energy Law, the ownership of above-mentioned resources is deemed to belong to the government rather than to the property-owner where the resources are located. Any activity relating to the resources will be subject to obtaining the necessary licenses set out into the same law. The real persons having Turkish citizenship or legal entities, duly incorporated under the 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; the latter enables its holder to produce the geothermal related-water, gas and steam and utilize them.

Prospecting Licence and Operating Licence

According to the Article 5 of Geothermal Energy Law and Article 6 and 7 of the Regulation, the applicant may apply to the Provincial Special Administration (‘Administration’) for the licence with the prospecting project, stating plate name. In case of more than one application for the same location, the first one will normally have priority over others. However, the Administration may give priority to another project with a more suitable proposal, in the event that there is more than one application at the same time.

Under the Article 6 of 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 until the expiration date of prospecting licence. The holder must specify a deadline to initiate the operation. The failure in starting 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 licence duration is thirty (30) years, commencing as of the date of the registration of the licence and may be extended up to ten (10) year periods. 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.

De Lege Ferenda!