Agreement signed with Saudi Arabia takes effect

The international agreement signed between the governments of Türkiye and Saudi Arabia regarding the construction of a 5,000 MW renewable energy power plant in Türkiye has taken effect following its ratification by President Recep Tayyip Erdoğan.

The “Intergovernmental Agreement Between the Government of the Republic of Türkiye and the Government of the Kingdom of Saudi Arabia Regarding Renewable Energy Power Plant Projects” was signed on February 3, 2026, in Riyadh, the capital of Saudi Arabia; a bill approving the agreement was also submitted to the Presidency of the Grand National Assembly of Türkiye on April 28, 2024.

According to the terms of the agreement the electricity generated at these plants will be purchased under a 30-year purchase guarantee by Electricity Generation Inc. (EÜAŞ) or by another legal entity under the control of the Republic of Türkiye that possesses the technical and financial capacity, as well as the creditworthiness, to fulfill its obligations under the Power Purchase Agreement. At the end of this period, ownership of the power plants will transfer to EÜAŞ.

In the first phase, a 2,000 MW solar power plant will be constructed

Under the agreement, in the initial “Phase 1,” two separate solar power plants—the Taşeli Solar Power Plant in the Taşeli region and the Sivas Solar Power Plant in Sivas—will be constructed, each with a capacity of 1,000 MWe.

The electricity generated by these projects will be purchased by EÜAŞ at a rate of 47.50 euros per megawatt-hour (MWh) for the first five years, starting from the moment they begin commercial operation.

Following this period, for the remaining 25-year term, EÜAŞ will apply a purchase price of 23.415 euros/MWh for the Sivas GES and 19.95 euros/MWh for the Taşeli GES.

For the land where the power plants will be constructed, the Republic of Türkiye will grant a 49-year easement right on public lands and a usage permit for forest areas.

EÜAŞ will be responsible for acquiring the rights to these lands in accordance with national legislation—including the preparation, approval, and implementation of zoning plans—as well as for leasing the lands in accordance with the schedules specified in the agreements.

Localization will be ensured to the extent possible and feasible

Under the agreement, the project companies will make every effort to use local labor, goods, and services within the Republic of Türkiye’s borders to the extent possible and feasible, and will explore opportunities for localization.

However, these goods and services must meet the projects’ quality and economic feasibility requirements, as well as the technical and financial requirements specified by the relevant institutions.

For the Investment Agreements, the project company will provide a performance bond of 30 million euros at a rate of 30,000 euros per MWe; this bond will be returned within one month after the power plant enters commercial operation.

Türkiye Electricity Transmission Inc. (TEİAŞ) will ensure that the transmission system capacity is sufficient to meet the projects’ installed electrical power requirements in accordance with the schedule to be determined under the Investment Agreements; however, it will not require a letter of guarantee under the Transmission Agreements.

The Project Agreements to be signed will include mechanisms to safeguard the project’s economic balance against any changes in Turkish legislation that may occur after the date of signing the Intergovernmental Agreement.

Control of the company must remain with the developer

The company developing the projects must initially hold 100% of the shares in each project, and control of this project company must always remain with the developer company.

Although the developer company may transfer shares in the project company, the transferable share ratio may not exceed 49% until the end of the second year following the project’s transition to commercial operation.

After this period, while transfers of a higher percentage may be permitted for the duration the agreement remains in effect, the developer company must retain a minimum 35% ownership stake in the project company.

Share transfers involving parties other than the project company’s existing shareholders and affiliates will be subject to approval by the Ministry of Energy of the Republic of Türkiye. The Ministry will conduct its assessment of potential buyers and affiliates based on national security considerations.

Power plants will not pay transmission fees

These power plants will not pay transmission fees for electricity they feed into the grid or draw from the grid for internal consumption.

The company will be exempt from paying compensation for deviations of up to 12.5% in the electricity it supplies to the day-ahead market; for deviations exceeding this, it will make reimbursements at a rate of 5 euros/MWh, up to a monthly cap of 40,000 euros.

The purchase period may be extended depending on the amount of electricity not purchased.

If electricity generated by the power plants cannot be fed into the system due to instructions issued by TEİAŞ or events affecting the power grid, the 30-year purchase period will be extended by a duration equivalent to the amount of energy that could not be sold. The rate for payments made during this extended period will also be 40% of the applicable rate.

The developer company will also use the electricity required for the Group’s or the power plant’s internal consumption at the price applicable to these power plants.

Except for the provisions covered by the agreement, the Law on the Use of Renewable Energy Sources for Electricity Production and the secondary regulations pertaining to this law will not apply to these projects.

However, other national legislation regarding power plants that generate electricity from renewable energy sources will apply.

Tax incentives will be provided to companies

The developer company will be eligible for a corporate income tax incentive without the need for an investment incentive certificate and will not pay corporate income tax on the profits it generates.

The company will be exempt from all taxes, fees, and financial obligations—except for customs service and document processing fees—on the import of equipment and materials necessary for the investment.

All equipment and materials procured by the company domestically will also be exempt from Value-Added Tax (VAT), and the company will also be exempt from paying Stamp Tax.

The Investment Agreement and the Power Purchase Agreement must be signed within 18 months

Within 18 months of the agreement entering into force, the Investment Agreement and the Power Purchase Agreement for both projects in Phase 1 must be signed.

If both agreements have not been signed within this period, either party may terminate the agreement via the exchange of diplomatic notes without assuming any liability.