Saudi Investment Agreement Takes Effect
The legal process for the renewable energy investment agreement signed between the Republic of Türkiye and the Kingdom of Saudi Arabia has been completed.
The agreement entered into force after a presidential decision approving the law ratifying the agreement by the Grand National Assembly of Türkiye was published in today’s Official Gazette.
The agreement was signed on February 3, 2026, in Riyadh, the capital of Saudi Arabia. A bill approving the agreement was submitted to the Presidency of the Grand National Assembly of Türkiye on April 30, 2026, and was adopted in a vote by the General Assembly on June 23, 2026. The law was published in the Official Gazette on June 27, 2026.
The agreement provides for a Saudi company or companies to make 5,000 MW of wind and solar energy investments in Türkiye. According to the text of the agreement, as the first phase of the project, the Saudi side was granted capacity rights totaling 2,000 MW for solar energy investments in Sivas and Taşeli, with 1,000 MW allocated to each.
The terms governing the 3,000 MW of capacity to be allocated in the second phase are not included in the current agreement.
Energy and Natural Resources Minister Alparslan Bayraktar said last week that the 3,000 MW of capacity constituting the agreement’s second phase would be announced during the COP31 climate summit. He did not, however, say whether the second phase would involve solar or wind energy investments.
The terms of the agreement that has entered into force are as follows:
• 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.
• 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.
• The company developing the projects must initially hold 100% of the shares in each project. Although shares in the project company may be transferred, control of the project company must always remain with the developer company.
• The developer company may not transfer more than 49% of the shares in the project company until the end of the second year following the project’s transition to commercial operation.
• After this period, 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 and Natural Resources. The Ministry will conduct its assessment of potential buyers and affiliates based on national security considerations.
• 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.
• 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 corresponding to an amount of generation equivalent to the energy that could not be sold. The rate for payments made during this extended period will 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.
• 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.
• 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.