Can We Expect Electricity Storage Facilities/Units To Be Realized In Turkey Any Time Soon?
ARTICLE  To print this article, all you need is to be registered or login on Mondaq.com. Energy storage plays a key role in energy transition. Studies show that energy storage may pave the way to combat climate change as it would reduce relying on fossil fuels and decrease carbon emissions. Energy storage is critical not only for its environmental impacts but also, for ensuring the reliability of the grid as it provides backup electricity during power outages, improves power quality and frequency regulation. Turkey first defined energy storage facilities in the Electricity Grid Regulation in 2014 which stipulates that energy storage facilities can be used in ancillary services. In 2017, the Ancillary Services Regulation also recognized energy storage facilities as an ancillary service unit. In March 2018, Turkey included electricity storage activities in the Electricity Market Law ("Law") as an electricity market activity. The Ministry of Energy and Natural Resources' Strategic Plan ("Strategic Plan") for the period of 2019-2023 also included a plan to put in place an energy storage legislation. In line with the Strategic Plan, the Energy Market Regulatory Authority ("EMRA") issued a regulation on electricity storage activities, namely, the Regulation on the Storage Activities in the Electricity Market which was published in the Official Gazette and became effective on 9 May 2021 ("Regulation"). The EMRA also made amendments in related regulations such as the Electricity Market Licensing Regulation, the Electricity Market Balancing and Settlement Regulation, the Electricity Market Connection and System Usage Regulation, the Electricity Market Grid Regulation, the Regulation on Certification and Support of the Renewable Energy Resources (all together "Storage Related Amendments"). The Regulation's scope excludes pumped hydroelectricity power plants and uninterruptible power supplies ("UPS"). The electricity storage facility is defined in the Regulation as "a facility which could store electrical energy and transmit the stored energy to the system". As known, electricity storage facilities can convert electrical energy into another form (for example, chemical, heat, hydrogen) in which it can be stored until converted to other forms (such as steam) or back to electrical energy. We understand from the definition that the EMRA intends to cover all types of storage facilities without making any distinction regarding the technology utilized for storage. As also known, these facilities may be front-the-meter ("FMF") facilities or behind-the-meter ("BMF") facilities. The Regulation differentiates the storage facilities as (i) storage facilities that may be established by grid operators (Transmission System Operators "TSO"s and Distribution System Operators "DSO"s), (ii) stand-alone storage facilities, (iii) storage facilities integrated into generation facilities and (iv) storage facilities integrated into consumption facilities. Therefore, we understand that the Regulation generally regulates both FMF facilities (i.e. (i), (ii), (iii)) and BMF facilities (i.e. (iv)). The Law defines the electricity storage activity as "an electricity market activity which does not require a license". However, the Law does not specify whether the said activity is an electricity generation activity or not. The Regulation does not clarify this ambiguity, either. The Regulation states that the storage facilities integrated into generation facilities and stand-alone storage facilities are considered as a "separate supply-draw unit basis for settlement". The supply-draw unit basis for settlement is defined as an "energy generation or consumption unit" under the Law. Also, in terms of their connection to the grid, the Regulation refers to pre-license qualification requirements of generation facilities in the Electricity Market License Regulation. Therefore, one might conclude that the EMRA considers at least the storage facilities integrated into generation facilities and stand-alone storage facilities as generation units. On the other hand, stand-alone storage facilities should be established under a supply license. The Regulation does not clarify whether a storage facility would be considered as (i) a consumer when it draws electricity from the power grid, and (ii) as a generator when it discharges electricity into the power grid. We understand that the EMRA will further regulate the system utilization fees methodology for storage facilities/units under the tariffs legislation to clarify the fees for accessing the grid. Storage facilities that may be established by grid operators (TSOs and DSOs)  DSOs may establish storage facilities if (i) they prove that it is more economical than investing in grids; (ii) such an investment is supported by cost-performance analysis; (iii) they obtain the EMRA's Board approval; and (iv) such investment is included in the relevant investment plan. DSOs can build storage facilities only as a part of their distribution activities and cannot use them in any other activity. The TSO, Turkish Electricity Transmission Corporation ("TEA"), may establish storage facilities provided that the project is included in its investment plan as a pilot project which will not be operated commercially. Stand-alone Storage Facilities  Stand-alone storage facilities are storage facilities that are directly connected to the grid without any connection to a generation or consumption facility. Supply license holders may establish stand-alone storage facilities with a minimum installed capacity of 2 (two) MW. One or more stand-alone electricity storage facilities can be established under the same supply license. Stand alone storage facilities are not subject to any minimum share capital requirement, nor supply license holders are required to submit any security (guarantee) to the EMRA in order to establish a stand-alone storage facility. Stand-alone storage facilities can participate in the wholesale market activities (OTC market, organised market including balancing power market and ancillary services). In order to participate to the ancillary services (primer and seconder frequency control) such facilities need to meet the required conditions stated in the relevant legislation, and in order to participate to the balancing power market they need to meet the qualifications of a balancing unit. As per the Storage Related Amendments, if a supply license holder wishes to establish a stand-alone storage facility, it should apply to the EMRA for a license amendment. The EMRA decides on the application considering the opinion of TEA and/or the relevant distribution company on a case-by-case basis. In the event that the application is approved by the EMRA, the supply company will have to obtain the relevant Environmental Impact Assessment ("EIA") decision set forth in the EIA legislation within the period outlined in the EMRA approval. One might note that the electricity storage facilities are not listed among the facilities that are or may be within the scope of EIA in the current EIA Regulation. Therefore, we understand that the EIA Regulation might be amended to include electricity storage facilities within the scope of EIA as well. Upon submission of the relevant EIA Decision, the license is amended and includes the storage facility. Furthermore, as per the Storage Related Amendments, the storage facility construction shall be completed within the period outlined in the license. In this regard, the Acceptance Regulation Concerning Electricity Generation and Storage Facilities was published last year. Although its title and scope cover energy storage facilities, it states that the acceptance evaluation process regarding electricity storage facilities will be determined by the Ministry of Energy and Natural Resources ("Ministry") under a principles and procedures document to be published by the Ministry. As such principles and procedures are not published yet, acceptance procedure of storage facilities is yet to be clarified. Storage units integrated into generation facilities  The generation license holders may establish integrated storage units up to the electrical installed capacity inserted in their generation license. Similar to stand-alone storage facilities, these units can participate in the wholesale market activities (OTC market, organised market including balancing power market and ancillary services). For the generation licensees benefiting from the renewable energy source support mechanism or another guaranteed support mechanism, the integrated storage unit should be at the same measurement point with the generation facility and it can be up to the electrical installed capacity of the generation facility. As per the Regulation, the electricity drawn from the system by the storage unit cannot be subject to any incentive or purchase guarantee when it is discharged to the system. A storage unit integrated into a generation facility might commence conducting market activities only when the relevant generation facility is accepted completely or partially. In order to build storage units integrated into generation facilities, the generation license holders are not subject to any minimum share capital requirement, nor they have to submit any security (guarantee) to the EMRA. If a generation license holder wants to build a storage unit integrated into its generation facility, it should apply to the EMRA for a license amendment. A similar procedure explained above for supply license holders that will establish stand-alone storage facilities applies. It is also possible for pre-license holders to apply for the establishment of a storage unit. As per the Storage Related Amendments, the storage unit's construction shall be completed within the period determined in the license. Storage facilities integrated into consumption facilities  Storage facilities integrated into a consumption facility may be established only for the relevant consumption facility's needs. Since they are considered as behind-the-meter facilities, they cannot discharge real power to the grid. The Regulation regulates establishing a storage facility integrated into a consumption facility for (i) regular consumers, (ii) prosumers and (iii) organised industrial zones. Regular Consumers: The Regulation permits regular consumers to establish a storage facility if the facility and the consumption facility are on the same measurement point, (ii) the installed capacity of the storage facility is limited to the capacity set forth in the connection agreement of the consumption facility, and (iii) the relevant grid operator provides its positive opinion for the connection. Prosumers: The Regulation also permits the establishment of a storage facility concerning a consumption facility attached to an unlicensed generation facility (i.e. generation facility exempted from the license requirement) if the consumption and generation facilities are at the same measurement point and generation facility is based on renewable sources. Organized Industrial Zones: The Regulation permits the organized industrial zones to establish storage facilities. Application Time  Although the Regulation and the Storage related Amendments are in place now and the EMRA prepared the legislative basis for the electricity storage facilities/units which would definitely pave the way for electricity storage activities to commence, there are still legislative amendments needed such as tariff regulations, principles and procedures to be published by the Ministry regarding the acceptance of storage facilities and EIA regulations. Also, the System Operator (TEAS) is expected to prepare technical criteria for storage facilities'/units' system connection, their SCADA monitoring and their usage in the ancillary services. TEIAS is expected to announce the technical criteria until 1 September 2021. According to the Regulation, applications for electricity storage facilities could be made only after the elapse of one-month period following the said announcement by TEIAS. Therefore, time will show when the first electricity storage facility/unit application can be made but in any case, it will not occur before 1 October 2021. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.