Winds of Change in the Unlicensed Generation: Towards Hourly Net Metering
Introduction
Unlicensed electricity generation began to attract significant interest among businesses and industrialists in the post-pandemic period due to steep fluctuations in electricity prices. Particularly during this period, as fluctuations in the market price of electricity directly affected some businesses, they aimed to control their electricity costs through unlicensed solar power plant (“SPP”) investments, and thus large-capacity SPP installations were realized. Indeed, looking at the data published by EPİAŞ on its Transparency Platform, it is possible to see the extent of this interest. In summary, as of the time of drafting this article, a 73% capacity increase has occurred in unlicensed SPP plants over the last three years.[1]
During this period of increased interest in unlicensed SPP plants, numerous amendments were also made to the Regulation on Unlicensed Electricity Generation in the Electricity Market[2] (“UGR”). Last December, EMRA announced its intention to implement yet another amendment by publishing a new draft regulation on its website (“Draft Regulation”)[3] . This Draft Regulation indicates that the monthly net metering system currently applied to unlicensed generation facilities is planned to be abolished and replaced with an hourly net metering system. This article will examine the proposed change in the field of unlicensed electricity generation.
Current Net Metering Structure in the Legislation
While net metering in unlicensed electricity generation typically brings monthly net metering to mind, our legislation currently applies two distinct net metering structures: monthly and hourly. Indeed, article 5/4 of the UGR requires that if multiple generation facilities based on renewable energy sources are established for a single consumption facility, these facilities must be subject to the same net metering structure. The applicable net metering structure depends on whether the facility became entitled to receive the invitation letter before or after the UGR entered into force on 12.05.2019. For convenience, this article refers to these categories as pre-UGR facilities and post-UGR facilities.
- Net metering procedures for post-UGR facilities are governed by Article 26 of the UGR, titled “monthly net metering application.” Under this framework, electricity generation and consumption are assessed monthly, and simultaneous generation and consumption are not required. They qualify for net metering if they occur within the same month.
- For pre-UGR facilities, net metering is performed on an hourly basis pursuant to the repealed regulation published in the Official Gazette dated 02.10.2013 and numbered 28783. Under the hourly net metering method, generation and consumption must occur within the same hour to qualify for net metering.[4]
In summary, the current legislation operates under a dual structure. Monthly net metering, offering greater flexibility, is the primary approach for post-UGR facilities, while hourly net metering remains in effect for pre-UGR facilities. As a result, there are various provisions throughout the UGR to accommodate these different net metering structures.
Transition to Hourly Net Metering
The Draft Regulation seeks to eliminate this dual structure by converting the UGR’s monthly net metering procedures to an hourly basis. In this context, the first notable change concerns how net metering is defined. The current regulation uses the phrase “a certain time period” in its definition to accommodate both hourly and monthly net metering structures. However, the Draft Regulation changes this definition to “hourly time period.” The Draft Regulation also removes the reference to different net metering structures in Article 5/4 of the UGR, discussed above.
Like its predecessor, the Draft Regulation continues to categorize unlicensed facilities as either pre-UGR or post-UGR. However, both Article 23/1 (for pre-UGR facilities) and Article 26/1 (for post-UGR facilities) now require net metering to be performed on an hourly basis. The key distinction between the two categories now lies in which entity performs the net metering and the method used.
Pre-UGR Facilities
The net metering procedures for pre-UGR facilities will be carried out by the authorized supply company. In these facilities, the network operator will determine the generation and consumption data on an hourly basis and report them to the authorized supply company and EPİAŞ for each settlement period. The authorized supply company will then carry out the net metering procedures based on this data.
Post-UGR Facilities
For post-UGR facilities, the Draft Regulation introduces a more comprehensive overhaul. In addition to the transition from monthly net metering to hourly net metering, another major change is that net metering procedures will shift from the authorized supply company to EPİAŞ. Under the new system, the grid operator will measure generation and consumption data hourly and transmit it to EPİAŞ via the PYS (i.e., market management system). EPİAŞ will then carry out the net metering calculations and record the results in virtual meters, which will form the basis for settlement. The authorized supply company’s role will be reduced to simply paying generators the amounts calculated by EPİAŞ. As a result, EPİAŞ will have direct control over the net metering process for post-UGR facilities.
Status of Excess Generation Over Consumption
One question raised by the transition to hourly net metering is whether this change will affect the application of the rules regarding the determination of the amount of excess generation over consumption that can be sold. Following the amendment published in the Official Gazette dated 11.08.2022 and numbered 31920, the rules now provide that the amount of excess generation over consumption that all post-UGR facilities can sell cannot exceed the total consumption of the associated consumption facility, with any generation exceeding this threshold treated as a free contribution to YEKDEM. However, this amendment did not specify how total consumption should be calculated, leaving the matter to be determined by EMRA. In EMRA Decision numbered 11098 and dated 04.08.2022 (“EMRA Decision”), published in the same Official Gazette, EMRA determined that the total consumption amount would be evaluated as annual consumption.[5]
The publication of the Draft Regulation has raised question marks in the sector about whether the calculation of saleable excess generation would also shift to an hourly basis. However, as noted above, the definition of total consumption under the UGR is not set out in the UGR itself, but rather it is in the EMRA Decision. EMRA’s announcement accompanying the Draft Regulation contains no indication that the EMRA Decision will be amended. Accordingly, absent a further amendment, annual consumption metrics should continue to apply when determining excess generation, even after the transition to hourly net metering.
Conclusion
Hourly net metering in unlicensed electricity generation is nothing new to the energy sector. When the UGR replaced hourly net metering with monthly net metering, the sector widely viewed this as a positive development. Now, approximately seven years after the UGR came into force, a return to hourly net metering is on the horizon. It should be noted that, as of the date of this article, the Draft Regulation has not yet been published in the Official Gazette. Its provisions may therefore be amended before final adoption. That said, regardless of the specific details in the Draft Regulation, the shift from monthly to hourly net metering in unlicensed generation undoubtedly represents a fundamental change.
- According to the data published by EPİAŞ at https://seffaflik.epias.com.tr/, as of January 2026, the total installed SPP capacity in Turkey is 21,574 MW, of which 93% (20,105 MW) consists of unlicensed facilities. In addition, the growth experienced in the last three years is quite remarkable. The unlicensed SPP capacity, which was 7,891 MW as of January 2023, reached 20,105 MW in January 2026, which corresponds to an increase of 73%.
- Published in Official Gazette dated 12.05.2019 and numbered 30772.
- The Draft Regulation could be accessed from the following link: https://www.epdk.gov.tr/Detay/Icerik/4-16233/elektrik-piyasasinda-lisanssiz-elektrik-uretim-yo.
- Indeed, unlicensed generation facilities subject to hourly net metering have been excluded from the scope of the Procedures and Principles Regarding the Net Metering Transactions of Generation and Consumption Facilities Located in Different Distribution or Authorized Supply Company Regions, which was adopted by EMRA's decision dated 22.06.2023 and numbered 11917. In addition, with the provision of provisional article 4 of the UGR, some facilities within this scope have been granted the right to transition to monthly net metering.
- For our more detailed explanations regarding these changes made in the legislation in 2022, see: Rüştü Mert Kaşka, Important Amendments to the Regulation Concerning Unlicensed Electricity Generation in the Electricity Market (https://www.erdem-erdem.av.tr/en/insights/important-amendments-to-the-regulation-concerning-unlicensed-electricity-generation-in-the-electricity-market).
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