Sponsored Q&A: Kesikli Law Firm

1. Can you describe your journey into specialising as an energy lawyer in Turkey? What attracted you to the energy sector, and how have your interests and career evolved in response to Turkey’s energy landscape?

My specialisation as an energy lawyer in Turkey began while working as an in-house counsel for companies involved in energy project development and investment activities within the sector. This role immersed me in the complexities of the Turkish energy landscape and the realities of investing in energy businesses across different jurisdictions. This coincided with a burgeoning market in Turkey, providing me with a unique opportunity to witness and contribute to the sector’s rapid evolution, navigating through the nascent and evolving energy market laws of Turkey.

I was fortunate to gain experience on both sides of the table, which allowed me to understand the concerns of all stakeholders and devise solutions that aligned with everyone’s expectations. I have been involved in a wide array of projects, both local and cross-border, including significant energy investment projects with a focus on financing arrangements, project development, EPC contracts, financial guarantees, O&M contracts and dispute resolution. My portfolio also encompasses participation in major privatisation tenders for energy generation and distribution facilities, coal mines, natural gas-fired cogeneration power plants, renewable energy projects, and public tenders in the energy sector. My goal has always been to facilitate transactions by acting as a dealmaker, which necessitates a deep understanding of the needs of all parties involved, from financiers and developers to contractors, sponsors and investors. This experience made me realise that not only knowing the legal aspects but also having a comprehensive grasp of the regulatory, technical and commercial framework is essential in advising on energy projects.

In 2007, when I established my own law practice, the reputation I had built and the network I had developed led businesses to seek my legal advice for their projects and transactions. This transition marked a significant milestone in my career, enabling me to leverage my accumulated experience to provide targeted legal solutions in the energy sector.

2. Turkey has a dynamic energy sector with a mix of traditional and renewable energy sources. How do you navigate the regulatory framework governing this sector, and what are the most significant legal challenges facing your clients today?

Turkey’s energy market is indeed dynamic, driven by a robust economy and a young population that fuel substantial energy demand. The nation’s wealth in renewable energy resources further enhances its appeal for investment. However, the allure of these opportunities is tempered by infrastructural limitations. For instance, the grid capacity often falls short, hindering the ability of investors to establish solar power plants at desired locations. Additionally, the evolving regulatory landscape can be perplexing and complex, posing challenges for straightforward interpretation and compliance. This also brings challenges for the regulatory authorities in adopting the required measures and policies, which makes the regulatory framework a little complicated.

Our role becomes crucial in this context. We engage with regulatory authorities to navigate our clients through the maze of regulatory hurdles, ensuring they understand and effectively manage these complexities. Our involvement extends beyond mere navigation; we actively contribute to the regulatory process, offering insights and recommendations to help shape legislation. This proactive engagement ensures that the evolving legal framework aligns with the market’s needs, balancing the interests of consumers, investors and the broader energy sector.

By bridging the gap between investors and regulatory bodies, we facilitate a clearer understanding of the legal environment, enabling our clients to capitalise on investment opportunities while adhering to regulatory requirements. Our comprehensive legal support empowers businesses to thrive in Turkey’s vibrant energy sector, optimising their operations in sync with the country’s infrastructural and regulatory dynamics. We know that providing solutions that work in real business life is the key in adding value to our clients, so we strive to achieve this in our legal practice.

3. With Turkey’s increasing focus on renewable energy and sustainability, how has the legal landscape evolved in recent years? What role do you play in supporting clients to adapt to these changes, particularly regarding solar, wind and hydropower projects?

The legal landscape in Turkey has evolved significantly in response to its increasing focus on renewable energy and sustainability. The following could be highlighted as important developments in Turkey’s concrete steps on renewables and sustainability targets:

• Turkey ratified the Paris Agreement, committing to global efforts to combat climate change. In parallel with the same, the Ministry of Energy and Natural Resources’ National Energy Plan sets out targets for renewable energy and the reduction of energy intensity, aligning with the 2053 net zero greenhouse gas emissions goal.
• Amendments to the Electricity Market Law: Turkey has made amendments to its Electricity Market Law and Renewable Energy Law, paving the way for increased renewable energy generation and associated incentives. These legal reforms have been crucial for integrating renewable energy sources into the country’s energy mix. Further, the government has introduced incentives for renewable energy projects, including feed-in tariffs, local component incentives and regional investment incentives to encourage the development of solar, wind and other renewable energy sources.
• Unlicensed electricity generation: Regulations have shifted to promote unlicensed electricity generation, particularly for self-consumption. This has been supported by changes in laws that encourage auto-production and auto-consumption, enabling consumers and businesses to generate their own electricity primarily through solar installations.
• Privatisation of the transmission network: The legal framework has supported the privatisation of state-owned energy assets, leading to an increase in private investments in the energy sector. This includes the preparatory studies relating to the privatisation of transmission networks and plans to privatise TEİAŞ, Turkey’s transmission system operator, that are planned to be finalised by the end of 2024. Turkey has announced a Hydrogen Technologies Strategy and Roadmap, which mainly shows that Turkey aims to leverage its rich renewable energy potential to reduce green hydrogen production costs. The goal is to reduce green hydrogen production costs to below $2.4/kgH2 by 2035 and $1.2/kgH2 by 2053. The strategy also includes ensuring that the installed capacity of the electrolyzer reaches 2 GW by 2030, 5 GW by 2035, and 70 GW by 2053. The strategy emphasises the importance of domestically developing hydrogen technologies. It outlines a strategic roadmap for supporting and implementing domestic research and technology development. Further, the National Energy Plan targets net-zero emissions by 2053, with specific goals set for the energy sector by 2035. This includes blending hydrogen with natural gas and using hydrogen for on-site consumption and meeting the industry’s needs. The roadmap contains a plan to introduce an incentive mechanism for the local production of equipment.
• Energy storage: Turkey recently enabled the developers of energy storage systems to add a matching wind and solar power capacity to their projects. This has resulted in applications for renewable energy facilities with storage with a stunning 67.3 GW in combined capacity. The regulatory adjustments reflect an increased focus on energy storage, battery technologies and the flexibility of the energy system to accommodate the intermittent nature of renewable sources.
• EV charging networks: To support the transition to electric vehicles, Turkey has introduced regulations for the operation of EV charging networks, indicating an evolving legal landscape that supports cleaner transportation options.

These legal developments demonstrate a clear trend towards sustainability and the adoption of green technologies in Turkey. The evolving legal framework is aimed at making the Turkish electricity market more dynamic, competitive, and aligned with international environmental standards. As a legal professional specialising in the energy sector, my team’s role in supporting clients to adapt to the evolving landscape, particularly regarding solar, wind and hydropower projects, encompasses the following:

• Regulatory guidance: Given the complexity of energy regulations, we provide expert guidance on current laws and anticipated legal changes, helping clients understand the regulatory environment for renewable projects.
• Project development legal support: We support clients in the development and financing stages of renewable energy projects, including advising on project structure, drafting project agreements and ensuring compliance with financing regulations.
• Due diligence: We conduct legal due diligence for renewable energy transactions to identify potential legal risks and ensure that all regulatory requirements are met before project execution.
• Incentives and subsidies: We help clients navigate the various incentives and subsidies available for renewable energy projects, ensuring that they can maximise any available benefits.
• Permitting and licensing: We assist with obtaining the necessary permits and licences for renewable energy projects, managing the application process and interfacing with regulatory authorities.
• Contract negotiation: From negotiating power purchase agreements to equipment supply and maintenance contracts, we ensure that all contracts protect our clients’ interests and comply with legal and industry standards.
• Dispute resolution: In the event of disputes, we represent clients in negotiations, arbitration or litigation related to renewable energy projects. Personally, I also act as an arbitrator in the associated disputes.
• Support for energy policies: Where appropriate, we engage in efforts to influence energy policy in favour of renewable energy development and support industry advocacy groups.

In essence, our role is to provide comprehensive legal support tailored to the specific needs of clients in the renewable energy sector, enabling them to successfully navigate the legal complexities and capitalise on the opportunities presented by the transition to a more sustainable energy landscape.

4. Energy security is a critical issue for Turkey, situated at the crossroads of major energy-producing and consuming regions. How do international relations and geopolitical considerations influence your legal practice, especially in the context of cross-border energy projects and disputes?

Energy security is paramount for Turkey, given its strategic location connecting energy-rich regions in the Middle East and the Caspian area with European markets. International relations and geopolitical considerations significantly impact the legal practice around cross-border energy projects and disputes. In my legal practice, these dynamics play out prominently in the context of pipeline agreements, energy trade and regulatory compliance across jurisdictions. For example, the TurkStream gas pipeline, which transports Russian gas to Turkey and further into Europe, presents a case where international relations and geopolitical factors are deeply intertwined with legal work. Negotiations and contracts for such projects require a nuanced understanding of international law, bilateral agreements, sanctions regimes and the political climate. Legal considerations include the drafting and negotiation of intergovernmental agreements, host government agreements and transit fees, as well as addressing regulatory changes that may arise from geopolitical shifts. Additionally, the legal framework must consider the risk of disputes related to supply interruptions or contractual obligations impacted by international sanctions or diplomatic tensions.

In managing cross-border energy disputes, legal practice must account for the jurisdictional complexities and the applicability of international arbitration mechanisms. Disputes arising out of these cross-border projects would likely involve multiple legal systems and potentially the International Centre for Settlement of Investment Disputes (ICSID) given its prevalence in energy-related disputes.

In brief, the legal practice in cross-border energy projects and disputes in Turkey’s context demands a strategic approach that incorporates international relations, geopolitical risks and comprehensive legal expertise to navigate the intricate landscape of international energy law.

5. Looking towards the future, what trends do you anticipate will have the most significant impact on the energy sector in Turkey, and how should companies prepare to meet the legal and regulatory challenges these trends might present?

Several trends are likely to significantly impact the energy sector in Turkey. These include the transition to renewable energy sources, the digitalisation of the energy grid, the impact of the European Green Deal, and evolving international regulatory standards. The trends I anticipate to impact Turkey’s energy sector are the following:

• Turkey’s focus on increasing its renewable energy capacity, particularly in solar and wind energy, is expected to continue. This shift is driven by both global trends and domestic policy, including Turkey’s aim to reduce its dependency on imported energy. Legal and regulatory frameworks will need to adapt to accommodate the integration of these renewable sources into the national grid, including issues related to land use, licensing and environmental impact assessments.
• The digitalisation of Turkey’s energy infrastructure, with the development of smart grids and advanced metering infrastructure, will require legal frameworks that address data privacy, cybersecurity and the financing of digital infrastructure. Companies will need to navigate these regulations carefully to capitalise on the efficiencies and opportunities offered by digitalisation.
• Investing in hydrogen technologies will be another trend topic given the competition and efficiency concerns.
• The European Green Deal will have a substantial impact on multinational companies operating in Turkey, pushing them to minimise their carbon footprint or invest in green certificates. Legal challenges will arise from the need to comply with both Turkish regulations and EU standards. Companies must prepare for stricter environmental regulations, enhanced reporting requirements and potential carbon pricing mechanisms. Engaging with legal experts to develop sustainable business practices and ensure compliance will be crucial.

As Turkey’s energy market becomes more integrated with global markets, international regulatory standards will play a more significant role. Companies will need to adhere to a complex web of international, regional and national regulations, particularly in areas such as climate change, carbon emissions and sustainable development. Legal strategies will need to encompass a thorough understanding of these various regulatory environments to manage cross-border energy transactions and investments effectively.

I believe that to prepare for these trends, companies should engage in continuous legal education; stay informed about changes in the legal and regulatory landscape, both domestically and internationally; adopt proactive compliance strategies that anticipate regulatory changes, focusing on sustainability and digital transformation; collaborate with legal professionals who have expertise in energy law, environmental regulations and international trade; and work closely with government agencies, regulatory bodies and industry partners to influence policy development and ensure that regulatory frameworks support sustainable growth.

In conclusion, the energy sector in Turkey is set to undergo significant changes driven by renewable energy adoption, digitalisation, international regulatory standards and the impact of the European Green Deal. Companies operating in this sector should proactively prepare to meet these challenges by investing in legal and regulatory compliance, engaging with stakeholders and adapting to the evolving energy landscape.