Recently, a few of our clients who operate unlicensed solar power plants have had problems in getting paid by the relevant supplier within the scope of the feed-in tariff (“FiT”). Our interaction with the Energy Market Regulatory Authority (“EMRA”) on behalf of these clients has been instrumental in the release of a draft Regulation in respect of Unpaid Amounts for Unlicensed Electricity Generation (the “Draft Regulation”) which provides for certain measures in respect of late payment or non-payment.

Feed-in Tariff Payments

The Regulation on Unlicensed Electricity Generation[1] provides that certain unlicensed power plant operators that are connected to the power grid may sell their excess generation to the relevant supplier within the scope of the FiT. Under this scheme, the relevant supplier estimates the total amount of payments due to such operators and informs EPİAŞ, the electricity market operator, of such amount. Once EPİAŞ pays the amount to the supplier, the supplier must then direct these payments to the relevant operators. However, this, according to our clients’ experience, does not happen on time. The Draft Regulation provides for measures to be taken in case these payments are delayed or not made.

Measures under the Draft Regulation

Under the Draft Regulation, if EMRA determines that a supplier does not pay or delays payments, EMRA may act to ensure that payments are in fact made. Once the Draft Regulation enters into force, suppliers that do not pay or delay payments will have their receivables blocked by the central settlement institution. EMRA is authorised to decide on how long this measure will last (up to 6 months). Such retained amounts will be put into an interest-bearing account and released to unpaid operators by the central settlement institution through a separate cash collateral account, opened for the relevant supplier.

Duties and Sanctions in the Draft Regulation

In this context, the central settlement institution that facilitates energy market transactions will be entrusted with certain operational duties, including the opening of separate cash collateral accounts, taking measures to block and release payments and informing EPİAŞ and EMRA of any actions taken in this respect.

The relevant suppliers must inform the central settlement institution of any amounts due to operators and, where the receivables blocked in the respective account do not satisfy the payments due to the relevant operators, transfer the shortfall to the central settlement institution.

EMRA is authorised to impose administrative fines on suppliers if they do not share the necessary information with EMRA. Under Article 16 of the Electricity Market Law No. 6446[2], these fines may reach an amount of up to TL 500.000.

Conclusion

In the current unlicensed electricity market, operators are facing difficulties in getting paid on time by suppliers. Following our interaction with EMRA on behalf of our clients, EMRA reacted very proactively and constructively in issuing the Draft Regulation. The Draft Regulation will ensure that suppliers are thenceforth forced to make timely payments to operators of unlicensed power plants.