Legal Framework Of Hydroelectric Power Plants In Turkish Energy Law

Introduction

Hydroelectric power plants (HPP) play a central role in Türkiye’s renewable energy strategy due to their low operating costs compared to fossil fuels, long operational lifespans, high efficiency rates, and clean structure that does not produce atmospheric emissions. The first planning and investments for hydroelectric energy production in Türkiye began in 1950’s, and historically, the majority of these investments have been carried out by the General Directorate of State Hydraulic Works (DSİ). As of the end of 2016, facilities developed by DSİ constituted 46.2% of the installed capacity; however, with the liberalization of the electricity market, the overwhelming majority of investments and operations have been transferred to the private sector.

In Turkish energy law, dams and HPPs are subject to a multidimensional legal regime where water resource allocation, zoning processes, environmental protection obligations, property restrictions, and market regulations intersect. This study analyzes the legal framework governing such investments, major legal disputes encountered in practice, and thematic directions for researchers intending to write academic articles in this field.

Classification and Structural Components of Hydroelectric Power Plants

One of the most fundamental factors determining the legal regime and permit processes applicable to HPP projects is the technical nature of the project. Under Turkish water and energy legislation, hydroelectric facilities are categorized based on their installed capacity, head, and storage characteristics.

From a technical perspective, a hydroelectric power plant consists of integrated structures such as the dam body, reservoir (dam lake), intake structure, water conveyance channels/tunnels, penstocks, powerhouse (turbine and generator units), switchyard, bottom outlet, and spillway. Each of these structures is subject to separate licensing and inspection processes in terms of environmental and zoning law.

Legislative Framework of HPP Investments in Turkish Energy Law

In Türkiye, dams and HPPs are regulated not by a single law but by various laws belonging to different legal disciplines, along with secondary legislation enacted pursuant to these laws. This fragmented structure complicates the legal supervision of investments.

Regulatory Laws and Their Functions

The main laws governing the licensing, water allocation, zoning, and expropriation processes of HPP projects are as follows:

• Electricity Market Law No. 6446: Provides the legal basis for pre-license and generation license processes conducted by the Energy Market Regulatory Authority (EMRA).
  • Law No. 6200 on Services Carried Out by the General Directorate of State Hydraulic Works: Grants DSİ authority over the protection, development, and operation of water resources.
  • Law No. 5346 on the Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy: Defines the conditions and limits for hydroelectric resources to benefit from renewable energy support mechanisms (YEKDEM).
  • Expropriation Law No. 2942: Regulates the expropriation of privately owned immovable properties within the investment area based on public interest decisions, particularly the conditions for applying the “urgent expropriation” procedure under Article 27.
  • Soil Protection and Land Use Law No. 5403: Regulates non-agricultural use permits for HPP structures to be established on agricultural land.
  • Environmental Law No. 2872: Establishes the legal framework for Environmental Impact Assessment (EIA) processes and ecological flow monitoring conducted to prevent adverse environmental effects of investments.

Implementing Regulations and the Dual Licensing Process

The most important secondary legislation concretizing the implementation of these laws is the Regulation on the Procedures and Principles for Signing Water Use Right Agreements for Electricity Generation Activities in the Electricity Market. According to this regulation, a company must sign a “Water Use Right Agreement” (WURA) with DSİ in order to establish an HPP.

The process begins with DSİ referring suitable projects to EMRA. EMRA grants the company a “pre-license” for a maximum period of 24 months under Article 6 of the Electricity Market Law to complete necessary approvals, permits, and zoning licenses. The pre-license period may only be extended in cases of force majeure. According to Article 12/5 of the Regulation, a company granted a pre-license must apply to DSİ within 30 days after obtaining either an “EIA Not Required” decision or an “EIA Positive” decision under the Environmental Impact Assessment Regulation published in the Official Gazette dated 25/11/2014 and numbered 29186, in order to sign the water use right agreement. The agreement is signed before a notary, DSİ notifies EMRA, and the company subsequently obtains a “generation license” from EMRA for a period ranging from 10 to 49 years pursuant to Article 5 of the Electricity Market Law. In certain projects, companies may also be required to sign a “Lease Agreement” with DSİ; in such cases, a copy of the lease agreement is submitted to EMRA and the pre-license/license is amended accordingly.

Special Regime for Unlicensed and Municipality-Owned HPPs

Article 52 of the Regulation provides special opportunities for municipalities to establish unlicensed HPPs on their drinking water, wastewater transmission lines, and irrigation networks. Applications for unlicensed HPPs by companies whose majority share capital belongs to municipalities are evaluated without public announcement. The operation period of HPPs on municipal irrigation networks is limited to the duration of the municipality’s operation of the irrigation network; if irrigation operations cease, the facility is transferred to DSİ. Additionally, municipalities may establish unlicensed HPPs with a capacity of up to 300 kW, with DSİ permission, to meet the electricity needs of recreational projects on rivers passing through city centers. In these facilities, pipe hydraulics, open channel criteria, and pressure breaker principles cannot be altered. As a general rule, Water Use Right Agreements are not concluded for unlicensed projects.

Legal Nature of the Water Use Right Agreement (WURA) and Obligations of Companies

The Water Use Right Agreement is the most critical document regulating the relationship between private sector investors and the public administration (DSİ). Its legal nature is of great importance in determining the rights and obligations of the parties and the competent jurisdiction in case of disputes.

Nature as an Administrative Contract and Competent Jurisdiction

As consistently accepted in the decisions of the Council of State and the Court of Jurisdictional Disputes, WURAs and their annex protocols are administrative contracts. The main reasons for this classification are:

• One party to the contract (DSİ) is a public authority.
  • The subject matter of the contract relates to the provision of a public service (electricity generation and water resource management).
  • The contract grants the public authority (DSİ) superior powers exceeding private law contracts, such as unilateral supervision, imposition of penalties, unilateral amendment, and termination (public power privileges).

As a direct consequence of this classification, all compensation and annulment actions arising from WURAs, their implementation, annex protocols, or administrative acts contrary to the contract fall under administrative jurisdiction rather than judicial courts. Historically, the first suspension decision rendered by the Council of State regarding a WURA is considered a milestone and has set precedent for subsequent HPP cases.

Main Obligations of Investor Companies

Under Article 21 of the Regulation, companies that sign or are entitled to sign an agreement must comply with strict obligations:

1. Company Structure and Share Transfer Restrictions: Until obtaining a pre-license or license (except for inheritance, bankruptcy, and exceptional cases), no direct or indirect changes may be made to the company’s shareholding structure, and shares cannot be transferred. This restriction must be included in the company’s Articles of Association. Additionally, the company name cannot be changed during the application process.
2. Financial Obligations and Definite Termination Criteria: The company must timely pay fees such as the Basin Hydrological Monitoring, Evaluation and Control Service Fee, Hydroelectric Resource Contribution Fee, or Joint Facility Fee. If the investor fails to make any of these payments on time and this failure occurs for the third time, DSİ may unilaterally terminate the Water Use Right Agreement without any notice.
3. Transfer at the End of License Period: In projects constructed or being constructed by DSİ where the HPP component is built by a private company, the company must transfer the facility to DSİ at the end of the license period in an operational and energy-producing condition, together with all immovable assets, without claiming any compensation or rights.

Environmental Flow (“Lifeline Water”) and Wildlife Protection Measures

The irreversible environmental impacts of HPPs are among the most frequently litigated issues in administrative courts. Irregularities in EIA processes may lead to the suspension or cancellation of projects.

According to Article 15 of the Regulation, HPP operators must release water downstream continuously and without fluctuation to ensure the sustainability of natural life in the riverbed. The amount of water to be released must be at least 10% of the average flow over the last ten years used as the basis for the project; if the river flow falls below this level, all water must be released into the riverbed.

However, this legal threshold is subject to serious criticism:

• Scientific studies and environmental advocates argue that diverting 90% of river water into pipes and tunnels while leaving only 10% in the riverbed leads to the destruction of aquatic life (fish migration, benthic organisms), and that international standards require at least 30% to 50% ecological flow.
  • Excessive reduction of surface water prevents the recharge of drinking water wells around riverbeds, leading to the depletion of groundwater resources.

Conclusion and Evaluations

The legal regime governing dams and hydroelectric power plants in Turkish energy law has a complex structure that aims to ensure energy supply security while also protecting fundamental constitutional values such as property rights and the right to live in a healthy environment. Dams and hydroelectric power plants in Turkish energy law are situated within a complex legal framework requiring a delicate balance between public interest and private sector investments. The fragmented nature of the legislation, the involvement of multiple administrative authorities, and the intensity of environmental impacts contribute to the increasing number of legal disputes in this field.

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.