Turkey Renewable Energy Pricing System
You can boost your renewable energy profits by 50% in Turkey – but only if you know which local components to buy.
Most investors focus solely on Turkey's base feed-in tariffs, missing the real goldmine hidden in the domestic content bonuses. While everyone talks about the 13.3 cents per kWh for solar, few realize that using Turkish-made photovoltaic cells adds another 3.5 cents – that's a 26% instant boost. Wind farms get even better deals: choose all Turkish components and you're looking at 11 cents per kWh instead of 7.3 cents.
This article breaks down Turkey's complete renewable energy pricing puzzle, including the component-specific bonuses that can make or break your project's profitability. We'll show you exactly which Turkish-made parts deliver the biggest premiums and how smart developers are partnering with local manufacturers to maximize their returns for the full ten-year guarantee period.
Feed-in Tariff Structure for Renewables
Turkey has established a comprehensive feed-in tariff system called the YEK Destekleme Mekanizması (Renewable Energy Support Mechanism) to encourage clean energy investment. This mechanism guarantees fixed prices for renewable energy producers, providing financial certainty that helps secure project financing and reduces investment risk. The system applies to both licensed energy producers and those generating for their own consumption who feed excess electricity back to the grid.
Base Prices Across Energy Sources
Turkey's renewable energy law sets different base prices depending on the technology used. According to Table I, the base tariff rates are:
Hydroelectric energy facilities: 7.3 US cents per kWh
Wind energy facilities: 7.3 US cents per kWh
Geothermal energy facilities: 10.5 US cents per kWh
Biomass facilities (including landfill gas): 13.3 US cents per kWh
Solar energy facilities: 13.3 US cents per kWh
These rates were guaranteed for facilities that entered operation by December 31, 2020, with new rates determined by presidential decree for subsequent projects.
Premium Rates for Unlicensed Production
Individuals and organizations generating electricity primarily for their own consumption can sell excess energy to the grid at favorable rates. According to Article 6/A, these small-scale producers can benefit from the same feed-in tariff prices listed in Table I for ten years. The local supply company is obligated to purchase this excess electricity. This provision makes small-scale renewable installations more financially viable for homeowners, farmers, and small businesses looking to reduce energy costs.
Tariff Duration and Eligibility Requirements
The renewable energy support mechanism offers price guarantees for a fixed period of ten years, providing investors with predictable revenue streams. To qualify, facilities must:
Have a YEK (Renewable Energy Resource) certificate
Submit their application to EPDK (Energy Market Regulatory Authority) by the specified deadline
Cannot opt out during a calendar year once they join the support mechanism for that year
This structured approach gives investors clarity while allowing the system to be properly managed and budgeted.
Domestic Production Incentives
Component-Specific Bonuses for Hydro
Turkey's renewable energy law provides additional incentives when hydroelectric plants use locally manufactured components. According to Table II, hydroelectric domestic content bonuses include:
Domestically produced turbines: +1.3 US cents per kWh
Locally made generators and power electronics: +1.0 US cents per kWh
These bonuses apply for five years from the facility's operational date, making local sourcing significantly more attractive. For a small hydro developer, this could mean up to 31% more revenue just by choosing Turkish-made equipment.
Extra Payments for Local Wind Equipment
Wind energy investors can boost their income by installing Turkish-made components. Wind energy domestic content bonuses include:
Mechanical components in rotor and nacelle groups (excluding blade groups, generators, and power electronics): +1.3 US cents per kWh
Local generators and power electronics: +1.0 US cents per kWh
Turbine blades: +0.8 US cents per kWh
Towers: +0.6 US cents per kWh
A wind farm using 100% Turkish components could receive up to 3.7 cents extra per kWh – a 50% increase over the base rate!
Solar Components with Highest Premiums
Solar investors can significantly boost their returns by using locally manufactured components, especially photovoltaic cells. According to Table II, solar energy domestic content bonuses include:
Domestically produced PV cells: +3.5 US cents per kWh (highest premium for any renewable component)
Radiation collection tubes (for concentrated solar power): +2.4 US cents per kWh
Mechanical systems that collect sunlight to generate steam (for concentrated solar power): +2.4 US cents per kWh
These premiums make solar projects with high local content among the most financially attractive renewable investments in Turkey.
Biomass and Geothermal Support Rates
Biomass Technology Price Advantages
Biomass energy investors can earn substantial premiums by using Turkish-made equipment. Biomass domestic content bonuses include:
Domestically produced steam or gas turbines: +2.0 US cents per kWh (highest biomass incentive)
Internal combustion or Stirling engines: +0.9 US cents per kWh
Fluidized bed steam boilers: +0.8 US cents per kWh
Gasification and gas cleaning groups: +0.6 US cents per kWh
For a developer using all local components, these bonuses could increase revenue by nearly 40% over the base tariff, making biomass particularly attractive when paired with domestic manufacturing.
Geothermal Equipment Premium Breakdown
Geothermal energy facilities can increase their revenue through domestic content incentives, though the premiums are more modest than for other technologies. According to Table II, geothermal domestic content bonuses include:
Turkish-made steam or gas turbines: +1.3 US cents per kWh
Domestically produced generators and power electronics: +0.7 US cents per kWh
Steam injectors or vacuum compressors: +0.7 US cents per kWh
A geothermal plant using all local equipment could earn an additional 2.7 US cents per kWh – roughly a 26% premium over the base rate of 10.5 cents, enhancing the already attractive economics of geothermal energy.
Combined Production Benefits
The law provides a specific incentive for cogeneration systems (combined heat and power) in biomass facilities, adding 0.4 US cents per kWh when using domestically produced equipment. While this premium is modest compared to other components, it recognizes the efficiency advantages of cogeneration. By producing both electricity and useful heat, these systems can achieve efficiency rates of 80% or higher compared to about 35% for electricity-only generation. This makes cogeneration an attractive option for industrial facilities or district heating systems that can use the thermal energy productively.
Price Comparison Across Technologies
Highest Value Renewable Sources
When combining base rates with all possible domestic content bonuses, maximum potential revenue by technologyincludes:
Concentrated Solar Power: 22.7 US cents per kWh
Photovoltaic Solar: 20.1 US cents per kWh (13.3 base + 6.8 domestic content)
Biomass: 18.8 US cents per kWh
Geothermal: 13.2 US cents per kWh
Wind: 11.0 US cents per kWh
Hydroelectric: 9.6 US cents per kWh
These differences reflect both policy priorities and the varying maturity and cost structures of different renewable technologies.
Strategic Investment Opportunities
Turkey's renewable energy support system creates particularly attractive opportunities in solar and biomass technologies with high domestic content. For example, a solar manufacturer focusing on PV cells (with a 3.5 cent premium) could partner with project developers to create win-win scenarios. Similarly, turbine manufacturing for biomass plants (2.0 cent premium) offers strategic advantages. For investors, projects combining the highest base rates (solar and biomass) with maximum local content represent the most financially lucrative opportunities in the Turkish renewable energy market.
Financial Planning with Rate Tables
When planning a renewable energy investment in Turkey, the rate tables provide a clear framework for financial modeling. Key planning considerations include:
Start by identifying your technology's base rate from Table I
Add applicable premiums from Table II for any Turkish-made components you'll use
Remember that base rates apply for ten years, while domestic content bonuses apply for only five years
For projects initiated after June 30, 2021, rates will be in Turkish Lira rather than US dollars, potentially introducing currency risk
This should be factored into your financial projections and risk assessment.
Ready to Invest?
Turkey's renewable energy incentives are genuinely impressive – solar projects with local components can earn over 20 cents per kWh. That's real money on the table. But here's what we see constantly: foreign investors get excited about the numbers, then get tangled up in complex regulations and miss critical deadlines.
At Atlas Legal Partners, we help international clients with Turkish energy law every day. The difference between a smooth project launch and months of bureaucratic headaches usually comes down to getting the legal foundation right from the start.
So here's my question: What's your biggest concern about investing in Turkey's renewable sector? Is it regulatory compliance, or something else entirely?
