ENERGY

Acquiring Renewable Energy Projects in Türkiye: Pre-Licence, Licence and Share Transfers

Wind and solar projects in Türkiye are a significant investment field for foreign investors and energy companies. These investments are often made not by developing a project from scratch but by acquiring a project whose permitting has reached a certain stage, or the company holding that project. In energy projects, however, what is acquired is less a company's shares than rights granted by public authorities whose transfer is subject to strict rules.

The most serious risks in energy project acquisitions often arise from failing to determine correctly from the outset what stage the project is at and whether a share transfer is possible at that stage. The following sections address the main legal questions faced by investors considering the acquisition of a renewable energy project in Türkiye.

Pre-licence and licence stages

For generation facilities subject to licensing, the process generally begins with a pre-licence. The pre-licence gives the investor the opportunity, within a certain period, to acquire land rights, obtain the necessary permits and prepare for construction of the facility. Once these obligations are fulfilled, the pre-licence is converted into a generation licence, and the facility is built and operated under that licence.

This distinction is decisive for the structure of the transaction. During the term of the pre-licence, direct or indirect changes to the shareholding structure of the pre-licence holder are, as a rule, not permitted, apart from the exceptions provided for in the legislation. After the generation licence has been obtained, share transfers are subject to a more flexible regime, but licence holders whose tariffs are not regulated must notify changes in their shareholding structure to the Energy Market Regulatory Authority (EPDK). Moreover, the transfer of company shares and the transfer of the generation facility to another company are different legal transactions subject to different conditions. A purchase agreement for a project at the pre-licence stage must therefore defer the share transfer until after the licence has been obtained and regulate the interim period separately.

Legal due diligence

Besides the pre-licence or licence itself, the value of an energy project is determined by the land rights on which the project is based, the grid connection opinion and connection agreement, the environmental impact assessment decision and the zoning plans. In projects where part of the land belongs to the Treasury or is forest land, the term and conditions of the easement and usage permits granted by the relevant authorities must be examined separately.

Experience shows that whether the pre-licence term has been extended, whether the obligations under the pre-licence have been fulfilled on time and the status of the guarantees are often only incompletely documented in the project file. Since a deficiency in these areas carries the risk of the pre-licence expiring and the guarantee being forfeited, they are among the priority topics of pre-acquisition due diligence.

Structuring the purchase agreement

In energy project acquisitions, the purchase agreement often provides for a long period between signing and closing. During this period, conditions such as the conversion of the pre-licence into a licence, the completion of certain permits or the signing of the connection agreement are set as conditions precedent to closing; where the transaction requires the Authority's approval under an exception, that approval is also among the closing conditions. Linking part of the purchase price to later project stages is also common practice.

In this structure, it must be clearly specified how the seller will manage the project between signing and closing, which actions require the buyer's consent and how the agreement terminates if the conditions are not met. Structures aimed at circumventing the transfer ban during the pre-licence stage, such as transferring de facto control through share pledges or option agreements, carry the risk of being deemed invalid by the Authority and of the pre-licence being revoked, and must therefore be assessed with care.

Local content and support schemes

Support linked to the use of domestically manufactured components and tenders with local content requirements directly affect the economic value of a project. It should therefore be examined which support mechanism the project to be acquired is tied to and whether the obligations under that mechanism have been fulfilled. The consequences of local content requirements for suppliers are discussed separately in the wind energy article in this section.

Conclusion

In acquiring a renewable energy project in Türkiye, the structure of the transaction depends on whether the project is at the pre-licence or licence stage. Identifying transfer restrictions at the outset, examining land rights, grid connection and pre-licence obligations in detail and carefully structuring the period between signing and closing reduce the risk of the acquisition encountering an unexpected regulatory obstacle. General questions on company acquisitions are addressed on the page of the relevant practice area.