Renewable Energy Investment in Turkey: A Complete Guide for Foreign Investors

Turkey has emerged as one of the most attractive destinations for renewable energy investment in Europe and the Middle East. With ambitious 2035 targets, strategic geographic advantages, and a comprehensive incentive framework, the country offers compelling opportunities for foreign investors looking to enter the clean energy sector.

In this guide, we’ll explore Turkey’s renewable energy landscape, investment incentives, licensing procedures, and practical considerations for foreign investors.

Turkey’s Renewable Energy Landscape

Market Overview

Turkey’s energy sector has undergone a remarkable transformation over the past decade. The country has invested heavily in diversifying its energy mix and reducing dependence on imported fossil fuels.

Key Statistics (2025-2026):

Total installed electricity capacity: ~110 GW
Renewable energy share: ~55% of installed capacity
Wind power capacity: ~13 GW
Solar power capacity: ~12 GW
Hydropower capacity: ~32 GW
Geothermal capacity: ~1.7 GW
Annual electricity consumption growth: 4-5%

2035 Renewable Energy Targets

Turkey’s National Energy Plan sets ambitious targets:

Source	2025 Capacity	2035 Target
Solar	12 GW	52.9 GW
Wind (Onshore)	13 GW	29.6 GW
Wind (Offshore)	0.2 GW	5 GW
Hydropower	32 GW	35 GW
Geothermal	1.7 GW	3 GW

This represents a massive investment opportunity of over $50 billion in new renewable capacity over the next decade.

Why Invest in Turkey’s Renewable Energy Sector?

Strategic Geographic Advantages

Solar Potential: Turkey enjoys exceptional solar irradiation, particularly in the southern and southeastern regions:

Average annual sunshine: 2,640 hours
Solar radiation: 1,527 kWh/m² annually
Highest potential regions: Konya, Karaman, Şanlıurfa, Gaziantep

Wind Potential: Turkey has significant wind resources, especially along the Aegean and Marmara coasts:

Technical wind potential: ~48 GW
Best wind corridors: Balıkesir, Çanakkale, İzmir, Manisa
Average wind speeds: 7-9 m/s in prime locations

Growing Electricity Demand

Turkey’s dynamic economy drives consistent electricity demand growth:

Population: 85+ million (largest in Europe after Germany)
Industrial expansion in manufacturing, technology, and services
Increasing electrification of transport and heating
Data center investments requiring clean energy

Liberalized Energy Market

Turkey operates a competitive wholesale electricity market (EPIAS/EXIST) with:

Day-ahead and intraday markets
Bilateral contracts (PPAs) allowed
Corporate PPA market developing rapidly
Increasing participation from international traders

Investment Incentives for Renewable Energy

Feed-in Tariffs (YEKDEM)

The Renewable Energy Resources Support Mechanism (YEKDEM) provided guaranteed purchase prices for renewable electricity. While the original scheme ended in 2020, projects commissioned before the deadline continue to benefit from:

Source	Feed-in Tariff (USD cents/kWh)	Duration
Hydropower	7.3	10 years
Wind	7.3	10 years
Geothermal	10.5	10 years
Biomass	13.3	10 years
Solar	13.3	10 years

Domestic Equipment Bonus: Additional 0.8-6.7 USD cents/kWh for using locally manufactured components.

New Support Mechanism (Post-2020 Projects)

For projects entering operation after July 2021, Turkey introduced a new market-based support mechanism:

Turkish Lira-denominated tariffs adjusted for inflation
Capacity-based support rather than energy-based
Competitive auction mechanism (YEKA) for large-scale projects
Market integration requirement for all generators

YEKA (Renewable Energy Resource Areas)

YEKA is Turkey’s flagship program for large-scale renewable energy deployment:

How YEKA Works:

Government designates specific areas for renewable development
Conducts competitive reverse auctions for capacity allocation
Winners receive long-term power purchase agreements (15-25 years)
Local content requirements ensure domestic manufacturing development

Recent YEKA Auctions:

YEKA GES-5 (2024): 10 GW solar capacity awarded
YEKA RES-3 (2023): 2 GW wind capacity awarded
Offshore Wind YEKA (2025): 1.2 GW capacity in planning

General Investment Incentives

Renewable energy projects qualify for Turkey’s standard investment incentive schemes:

VAT and Customs Exemptions:

VAT exemption on machinery, equipment, and construction materials
Customs duty exemption on imported equipment
No VAT on engineering and construction services

Corporate Tax Reductions:

50-90% corporate tax reduction depending on region
Extended to 10-12 years for energy investments in less developed regions

Land Allocation:

Priority access to treasury and public lands
Reduced lease rates for energy projects
Streamlined permitting for designated energy zones

Carbon Market Opportunities

Turkey ratified the Paris Agreement in 2021 and is developing its Emissions Trading System (ETS):

Pilot phase: 2024-2026
Full implementation: 2027 onwards
Renewable energy projects can generate carbon credits
EU Carbon Border Adjustment Mechanism (CBAM) compliance benefits

Licensing and Regulatory Framework

Key Regulatory Bodies

Energy Market Regulatory Authority (EPDK/EMRA):

Issues generation licenses
Regulates electricity tariffs
Oversees market operations

Ministry of Energy and Natural Resources:

Sets energy policy
Coordinates YEKA auctions
Manages strategic planning

Turkish Electricity Transmission Company (TEİAŞ):

Operates the transmission grid
Issues grid connection approvals
Manages system balancing

Licensing Process

Step 1: Pre-License Application

Required for projects above 1 MW
Application to EMRA with technical feasibility study
Environmental impact assessment (EIA) screening
Grid connection preliminary approval from TEİAŞ
Timeline: 3-6 months

Step 2: Pre-License Evaluation

Technical and financial capability assessment
Site suitability verification
Grid capacity confirmation
Local stakeholder consultation
Timeline: 6-12 months

Step 3: Generation License

Issued after completing pre-license requirements
Validity: up to 49 years
Renewable without additional auction/tender for existing sites
Timeline: 2-3 months after pre-license completion

Step 4: Construction and Commissioning

Building permits from local authorities
Environmental permits and approvals
Grid connection agreement with TEİAŞ
Testing and commissioning certification
Timeline: 12-36 months depending on project size

Unlicensed Generation (Below 5 MW)

Simplified procedures apply for smaller projects:

No generation license required
Direct application to distribution company
Net metering available for self-consumption
Excess energy sold at market rates
Popular for commercial and industrial rooftop solar

Corporate PPAs: A Growing Market

What Are Corporate PPAs?

Corporate Power Purchase Agreements allow businesses to contract directly with renewable generators:

Long-term fixed-price electricity supply (10-15 years typical)
Renewable energy certificates (I-REC) for sustainability reporting
Risk hedging against volatile market prices
Supports corporate ESG and carbon neutrality goals

PPA Structures in Turkey

Physical PPA:

Direct wire connection or sleeved through grid
Buyer takes physical delivery of electricity
Suitable for large industrial consumers

Virtual/Financial PPA:

Contract for differences without physical delivery
Generator sells to market, buyer settles price differential
Flexibility for distributed operations

On-site PPA:

Generator installed on buyer’s premises
No transmission charges
Popular for manufacturing facilities and warehouses

Major Corporate PPA Deals in Turkey

International and Turkish companies are increasingly signing PPAs:

Automotive manufacturers securing green electricity for EU compliance
Tech companies powering data centers with renewables
Textile and food exporters meeting sustainability requirements
Retail chains installing rooftop solar across store networks

Foreign Ownership and Investment Structures

No Restrictions on Foreign Ownership

Foreign investors can own 100% of renewable energy companies in Turkey:

No joint venture requirement
No nationality restrictions on shareholders or directors
Equal treatment with domestic investors

Common Investment Structures

Option 1: Turkish Subsidiary

Establish a Limited Liability Company (Ltd. Şti.) or Joint Stock Company (A.Ş.)
Hold generation license in subsidiary’s name
Full operational control
Recommended for long-term investments

Option 2: Special Purpose Vehicle (SPV)

Project-specific company for each asset
Facilitates project finance structures
Easier for future asset sales
Standard in infrastructure investments

Option 3: Joint Venture with Local Partner

Combine foreign capital with local expertise
Access to existing grid connections and permits
Local partner handles regulatory relationships
Common for first-time market entrants

Financing Renewable Energy Projects

Equity Financing:

Foreign direct investment
Private equity and infrastructure funds
Development finance institutions (IFC, EBRD, DEG)

Debt Financing:

Project finance from international banks
Turkish development bank (TSKB, Vakıfbank) green loans
Green bonds and sustainability-linked financing
Export credit agency support for equipment

Typical Capital Structure:

Debt/Equity: 70-80% debt / 20-30% equity
Loan tenors: 15-18 years for project finance
Interest rates: SOFR/EURIBOR + 2-4% for bankable projects

Practical Considerations for Foreign Investors

Site Selection

Key Factors:

Resource quality (irradiation/wind speed)
Grid proximity and connection capacity
Land availability and ownership status
Environmental and social constraints
Access roads and construction logistics

Due Diligence:

Independent resource assessment (minimum 1 year data)
Grid capacity study with TEİAŞ/distribution company
Environmental baseline survey
Land title verification and legal review

Local Content Requirements

YEKA projects include local content obligations:

Solar: Module manufacturing in Turkey
Wind: Turbine nacelle and blade assembly locally
Minimum Turkish workforce percentages
Technology transfer commitments

Non-YEKA projects have no mandatory local content but may benefit from domestic equipment incentives.

Currency Considerations

Turkey has experienced currency volatility. Risk mitigation strategies:

USD or EUR-linked PPA pricing
Inflation-indexed tariffs
Currency hedging through financial instruments
Hard currency financing to match revenue streams

Exit Strategies

Renewable energy assets in Turkey are highly liquid:

Active secondary market for operating projects
Infrastructure funds actively acquiring portfolios
Strategic buyers from Europe, Middle East, and Asia
IPO potential for larger portfolios

Emerging Opportunities

Offshore Wind

Turkey announced its first offshore wind tender in 2024:

Saros Bay (Aegean Sea): 1.2 GW initial capacity
Additional sites under assessment in Black Sea
Long-term contracts with inflation indexation
Local supply chain development requirements

Green Hydrogen

Turkey is positioning for the hydrogen economy:

National Hydrogen Strategy published
Pilot electrolyzer projects underway
Strategic location for hydrogen export to Europe
Renewable electricity input for green hydrogen production

Energy Storage

Battery storage deployment is accelerating:

Hybrid solar+storage projects eligible for enhanced support
Grid-scale storage procurement by TEİAŞ
Frequency regulation market opportunities
Behind-the-meter storage for industrial users

Floating Solar

Turkey’s reservoirs and lakes offer floating PV potential:

Reduced land use conflicts
Cooling effect improves panel efficiency
Co-location with hydropower facilities
Several pilot projects operational

How FDI Consultancy Can Help

Entering Turkey’s renewable energy market requires navigating complex licensing, incentives, and local business practices. FDI Consultancy provides comprehensive support:

Market Entry Strategy:

Sector analysis and opportunity assessment
Partner identification and due diligence
Investment structuring and optimization

Regulatory and Licensing:

Pre-license and license application support
Environmental permit coordination
Grid connection negotiations

Corporate Setup:

Company incorporation
Tax registration and incentive applications
Employment and operational setup

Transaction Support:

M&A advisory for asset acquisition
PPA negotiation and documentation
Project finance coordination

Conclusion

Turkey’s renewable energy sector offers exceptional opportunities for foreign investors. With ambitious government targets, strong natural resources, liberalized markets, and comprehensive incentives, the country is well-positioned for continued growth in clean energy investment.

Success requires understanding the regulatory landscape, accessing appropriate incentives, and building local relationships. Whether you’re considering a utility-scale YEKA project, a corporate PPA, or acquiring existing assets, Turkey’s renewable market rewards prepared investors.

Ready to explore renewable energy investment in Turkey? Contact FDI Consultancy for a personalized assessment of opportunities matching your investment criteria.

This guide provides general information about renewable energy investment in Turkey. Regulatory frameworks and incentive schemes are subject to change. For investment decisions, consult with qualified legal and financial advisors.