LAW BULLETIN ABOUT

 STATE SPONSORED VOLUNTARY AGREEMENTS IN ENERGY EFFICIENCY

BULLETIN DATE: 07.05.2020

What is the situation in Turkey regarding energy efficiency?

Energy efficiency plays a high role in Turkey’s energy policies because it has financial, social and also environmental benefits. In accordance with national energy strategy objectives, several legal regulations have entered into force to encourage the companies and incentive steps have been taken respectively. The government is granting support to enhance the investment in energy efficiency field.  Companies are motivated within the framework of energy efficiency by getting support financially. One of these steps is voluntary agreements which will be tried to be highlighted in this law bulletin shortly.

What is the legal frame?

Law on Energy Efficiency was published in the Official Gazette dated 02/05/2007 and numbered 26510 and entered into force on the same date. Based on this Law, Regulation Regarding Increasing Efficiency in the Usage of Energy and Energy Resources (“Regulation”) was published in the Official Gazette dated 27/10/2011 and numbered 28097. An amendment was made in the Regulation and published in the Official Gazette dated 25/1/2020 and numbered 31019.

Application, evaluation, agreement, monitoring and practising the support phases of voluntary agreement support are stated in this Regulation. According to the Article 18 of the Regulation, voluntary agreements can be explained as the agreements between the Ministry of Energy and National Resources and real person or legal entity owning the industrial enterprise which undertakes to achieve a minimum of 10 % decrease in energy intensity over a three year period.

What are the criteria to apply?

The criteria that the applicants shall meet for voluntary agreements are as follows:

a) A certificate issued by the conformity assessment organizations accredited by the Turkish Accreditation Agency or accredited by the institutions accepted by the Turkish Accreditation Agency according to the TS EN ISO 50001 Energy Management System Standard in force that constitutes the basis for certification shall be possessed, or a document showing that an application for certification has been made and issued by the institution or organization before which the application for certification is made shall be submitted.

b) The industrial enterprise shall be registered before ENVER (Energy Efficiency Portal) portal as of the application date.  

c) To ensure energy management activities are carried out, the industrial enterprises with total energy consumption of 1000 TEP (TOE: Tons of Oil Equivalent) and above annually shall assign an energy manager possessing energy manager certificate among the employees in each industrial enterprise.

d) In accordance with the format determined by the Ministry, commercial and service buildings, enterprises, electricity generation facilities and organized industrial zones shall enter their notices in the ENVER portal by the end of March every year.

Who can apply?

Voluntary agreement support is not limited to the legal entities licensed for operating electricity generation. Enterprises with total energy consumption between 500 TEP and 1000 TEP annually, operating depending on the chamber of commerce and/or the chamber of industry and producing all kinds of goods, can also apply to receive voluntary agreement support.

How to apply?

The applications of industrial enterprises shall be sent to Directorate of Energy Efficiency and Environmental Affairs by mail and also by e-mail to the e-mail address mentioned in the website of the Ministry. Applications are made in May every year. By declaring on its website, the Ministry may not receive application, or postpone, extend or receive an application for more than one term. For 2020, the applications shall be made between 1^st of May and 1^st of July.

Application form is available online at the website. Along with the information of the enterprise belonging to the real person or legal entity, production capacity (product, amount, unit, unit price), information of electric energy consumed for the last five years, information of solid, liquid, gas fuels consumed for the last five years, facility information, project summary, are some of the matters that shall be notified in the form. In case that nonconformity, deficiency or error is detected in the application form as a result of the evaluation made by the commission, industrial enterprises are asked to complete the nonconformity, deficiency or errors.

The information shall be given starting from the year before the application period. For example, an industrial enterprise that applied for voluntary agreement support in 2020 shall list the information for the years of 2019, 2018, 2017, 2016 and 2015.

Evaluation Process

Applications are evaluated by the voluntary agreement evaluation commission established with the approval of the President of Energy Efficiency and Environment Affairs.

Despite fulfilling its commitments within the scope of the voluntary agreement it has signed with the Ministry, the applications of the real persons or legal entities are not evaluated if in the following years they have increased the energy intensity in the industrial enterprise for which the voluntary agreement was signed. Except the situations of force majeure, applications of those who do not fulfil their commitments under the voluntary agreement with the Ministry are not evaluated for a period of five years.

Force Majeure conditions can be listed as: 1) Natural disasters and epidemics 2) War, nuclear and chemical fall outs, mobilization, popular uprisings, assault, terrorist activities and sabotage. 3) Strikes, lockouts or other civil servant and worker movements. 4) General economic crises. 5) Specific force majeure conditions stated in the voluntary agreements. If the force majeure condition reported by one of the parties continues for less than three months in a calendar year, the duration of the voluntary agreement can be extended by a maximum of one year with the approval of the Minister. If the force majeure continues for more than three months, the voluntary agreement shall be terminated. It can be said that the Covid-19 pandemic can be accepted as a force majeure condition in this regard.

Result

The government is granting incentives to stimulate the investment in energy efficiency field. Companies are motivated within the framework of energy efficiency by getting support up to TRY 1.000.000,00. Following a successful application and evaluation process, if the real or legal entity owning the enterprise party to the voluntary agreement fulfils its commitments of minimum of 10% decrease in energy intensity over a three year period, 30% of the energy expenses of the industrial enterprise shall be covered from the Ministry’s budget on the condition that the amount does not exceed TRY 1.000.000,00.

Best Regards

Forensis Attorney Partnership

Note: The explanations in our bulletin have been prepared in a general manner to address the issue within the framework of the relevant legislation. We recommend you to contact a law firm for detailed information.