The 1GWe Solar RE-ZONE Tender Officially Announced

The Ministry of Energy and Natural Resources (the “Ministry”) has officially announced the eagerly anticipated tender for Turkey’s second solar Renewable Energy Resource Areas (“RE-ZONE”) project with a total capacity of 1,000 MWe.

According to the official announcement, three separate tenders will be conducted for each of the three designated RE-ZONEs.

Background

The Ministry has officially announced the eagerly anticipated 1,000 MWe Solar RE-ZONE Tender.

The market was in eager expectation of the official announcement after the Ministry had distributed draft tender specifications to investors for market consultation in mid-September.

Readers may refer to our 21 September Legal Briefing for a summary discussion of draft terms though they are cautioned the final iteration of the specifications will likely incorporate changes coming out of the market consultation process.

The Project

Type and Capacity

The tenders will be for the rights to construct solar power plants in designated RE-ZONEs.

The Şanlıurfa-Viranşehir RE-ZONE will be allocated a capacity of 500MWe, the Niğde-Bor RE-ZONE will be allocated a capacity of 300MWe and the Hatay-Erzin RE-ZONE will be allocated a capacity of 200MWe.

Three separate tenders will be held for rights to each of the three designated RE-ZONEs.

Licence Period

Electricity generation licences will be issued for a period of 30 years, starting from the signing date of the “RE-ZONE Right of Usage Agreement”.

The Tender

Eligibility to participate in the tender

In typical fashion, the announcement provides that companies, joint ventures and consortia will be eligible to participate in the tender, subject to certain financial and technical eligibility criteria that are going to be set out in the tender specifications.

Tender Documents

Interested entities may obtain tender specifications from the General Directorate of Energy Works of the Ministry of Energy and Natural Resources by paying a fee in the amount of TL 5,000, to be paid separately for the separate tenders.

Initial price and electricity purchase period

The tender will be carried out by way of the Dutch auction method and the initial bidding price will be USD 6.50 cent/kWh.

The electricity purchase period is going to be 15 years, starting from the signing date of the “RE-ZONE Right of Usage Agreement”.

Bidding deadline

The bidding deadline for the tender as set out in announcement is 31 January 2019.

Interested companies must submit their applications to participate to the General Directorate of Energy Works of the Ministry of Energy and Natural Resources by hand by 12.00 on 31 January 2019.

Note that the Ministry of Natural Resources and Energy is entitled to postpone the bidding deadline or cancel the tender.

Place of the tender

According to the official tender announcement, the date, time and place of the tender will be announced at a later date.

Bid bond type and amount

Bidding entities must submit a bid bond in the amount of $3,000,000 for Şanlıurfa-Viranşehir, $1,500,000 for Hatay-Erzin and $2,000,000 for Niğde-Bor.

These bid bonds must be for a term of not less than one year and eligible to be cashed in partially or in full.

Following the tender, the successful bidder will be required to submit another bid bond in the amount of $15,000,000 for Şanlıurfa-Viranşehir, $8,000,000 for Hatay-Erzin and $12,000,000 for Niğde-Bor, for a term of 10 years and otherwise on the same terms. At this stage, the original bid bonds will be returned.

Conclusion

The tender for Turkey’s second solar RE-ZONE project, promising a substantial capacity of 1 GWe, has been formally commenced, marking another step in Turkey’s path towards reaching its ambitious renewable targets.

Renewables continue to benefit from some level of shelter from the currency pressures under the dollar-denominated feed-in tariff. However, this does not mean investors are going to be immune to all market constraints, given the large-scale nature of the projects being tendered, rising borrowing costs, and recent legislative developments that could impact long-standing business practices in managing currency risks.

In any event, it appears the Turkish solar market is forecast for some fast-paced days leading up to the tender in January.

 

Key contacts

For more information, please contact us:

Aykut Bakırcı, Senior Partner | [email protected] | +90 (212) 366 6805

Zekican Samlı, Avukat | [email protected] | +90 (212) 366 6817

Duru İyem, Avukat | [email protected] | +90 (212) 366 6811

 

Disclaimer

This material is for general information purposes only. It does not constitute legal advice and should not be relied upon as such. You should always seek specific legal advice about your specific legal circumstances before taking any action based on the contents of this material. While we make all reasonable efforts to ensure that all factual information set out in this material is obtained from external sources which we reasonably believe are reliable, we do not guarantee their accuracy or completeness.

© Bezen & Partners 2018