Learn how Change in Law clauses protect foreign investors in Turkish energy projects. This 2026 legal guide explains regulatory risk allocation, EMRA decisions, tax changes, environmental regulations, PPAs, EPC contracts, project finance, compensation mechanisms, and best drafting practices.

Renewable energy projects are long-term investments that often remain operational for 20 to 30 years. During this period, legislation, regulatory policies, tax rules, environmental standards, electricity market regulations, licensing requirements, and technical standards may change significantly.

For foreign investors financing solar power plants (GES), wind farms (RES), hydroelectric facilities (HES), geothermal projects (JES), battery energy storage systems (BESS), hydrogen projects, natural gas power plants, electricity transmission infrastructure, and EV charging networks, legal and regulatory changes represent one of the largest long-term investment risks.

Unlike construction risks or operational risks, regulatory changes originate from government action. They are generally beyond the control of either contracting party and may substantially alter project economics. A properly drafted Change in Law Clause ensures that these risks are allocated fairly between the parties rather than leaving one party to absorb the entire financial impact.

Turkish energy projects are principally governed by:

• Electricity Market Law No. 6446
• Renewable Energy Law No. 5346
• Turkish Commercial Code No. 6102
• Turkish Code of Obligations No. 6098
• Foreign Direct Investment Law No. 4875
• EMRA (EPDK) Regulations
• Competition legislation
• Environmental legislation
• Tax legislation
• Project finance documentation

This 2026 Updated Legal Guide explains how Change in Law clauses protect foreign investors and identifies the contractual provisions that should be negotiated before signing Turkish energy contracts.

---

What Is a Change in Law Clause?

A Change in Law Clause allocates the legal and financial consequences of legislative or regulatory changes occurring after the contract is signed.

The clause determines:

• Which legal changes are covered.
• Which party bears additional costs.
• Whether prices are adjusted.
• Whether project deadlines are extended.
• Whether compensation is payable.
• Whether renegotiation is required.
• Whether termination rights arise.

Without a clear clause, disputes often arise regarding who should absorb the financial consequences of new legislation.

---

Why Change in Law Clauses Are Essential

Energy projects require:

• Significant capital investment.
• Long-term financing.
• Stable cash flow.
• Predictable regulation.
• Reliable licensing.
• Long-term electricity sales.

Unexpected legal changes may affect:

• Project profitability.
• Construction costs.
• Operating expenses.
• Tax liabilities.
• Electricity pricing.
• Environmental compliance.
• Financing obligations.

A carefully negotiated clause improves bankability and investor confidence.

---

Contracts That Should Include Change in Law Clauses

The provision should appear in:

• Power Purchase Agreements (PPAs).
• EPC Contracts.
• Operation & Maintenance Agreements.
• Joint Venture Agreements.
• Shareholders’ Agreements.
• Equipment Supply Agreements.
• Battery Supply Contracts.
• Project Finance Agreements.
• Grid Connection Agreements.
• Long-Term Service Agreements.

Consistency across project documents is critical.

---

What Constitutes a Change in Law?

Typical examples include:

• New legislation.
• Amendments to existing laws.
• New regulations.
• EMRA regulatory decisions.
• Changes to licensing requirements.
• Tax reforms.
• Customs duty amendments.
• Environmental standards.
• Carbon pricing mechanisms.
• Renewable energy incentive reforms.
• Grid access regulations.
• Electricity market rules.
• Health and safety requirements.
• Foreign investment restrictions.
• Data protection obligations.

The clause should define covered events with precision to avoid unnecessary disputes.

---

1. Changes to EMRA Regulations

One of the most significant risks for energy investors involves changes to:

• Licensing requirements.
• Technical standards.
• Market participation rules.
• Reporting obligations.
• Compliance procedures.
• Administrative fees.
• Security requirements.

The agreement should specify whether compliance costs are shared or borne by a designated party.

---

2. Tax Law Changes

Future amendments may affect:

• Corporate income tax.
• Value Added Tax (VAT).
• Withholding tax.
• Stamp tax.
• Customs duties.
• Property tax.
• Environmental taxes.
• Carbon taxes.

The clause should clarify whether additional tax burdens trigger compensation or price adjustments.

---

3. Environmental Legislation

Environmental reforms may require:

• New permits.
• Additional monitoring.
• Emission reductions.
• Noise mitigation.
• Biodiversity protection.
• Waste management improvements.
• Battery recycling obligations.
• Carbon reporting.

Compliance costs can be substantial over the life of the project.

---

4. Grid Connection Rules

Changes may affect:

• Connection procedures.
• Capacity allocation.
• System usage charges.
• Curtailment rules.
• Grid reinforcement obligations.
• Technical standards.

Grid-related regulatory amendments should be addressed separately where possible.

---

5. Renewable Energy Incentives

Future reforms may modify:

• Feed-in tariff mechanisms.
• Renewable support schemes.
• Capacity incentives.
• Domestic component incentives.
• Storage incentives.
• Carbon credit mechanisms.

Investors should negotiate protection where incentive changes materially affect project economics.

---

6. Construction Standards

Changes during construction may require:

• Design modifications.
• Equipment replacement.
• Additional engineering.
• Revised foundations.
• Updated safety systems.
• Additional inspections.

Construction contracts should allocate these costs explicitly.

---

7. Labor Law Changes

Potential reforms include:

• Minimum wage increases.
• Occupational safety obligations.
• Social security contributions.
• Working time regulations.
• Employment benefits.

The parties should determine whether such increases are absorbed by the contractor or shared.

---

8. Import and Customs Rules

Renewable energy projects frequently rely on imported:

• Wind turbines.
• Solar modules.
• Inverters.
• Transformers.
• Battery systems.
• Switchgear.

Changes in customs legislation may significantly affect procurement costs.

---

9. Foreign Exchange Regulations

Although Turkey generally maintains a liberal investment regime, future legal developments could affect:

• Currency payments.
• Repatriation procedures.
• Banking documentation.
• Cross-border transfers.

The agreement should contain mechanisms for addressing significant regulatory changes affecting payment obligations.

---

10. Sanctions and Export Controls

International projects should address:

• Trade sanctions.
• Export restrictions.
• Import controls.
• Restricted technologies.
• Compliance obligations.

Sanctions-related legal changes should not automatically be treated as Force Majeure.

---

11. Cost Compensation

The agreement should determine:

• Cost calculation methods.
• Eligible expenses.
• Supporting documentation.
• Independent verification.
• Audit rights.

Objective calculation methods reduce future disagreements.

---

12. Price Adjustment

Possible mechanisms include:

• Contract price revision.
• Tariff adjustment.
• Index modification.
• Pass-through costs.
• Inflation adjustment.

The pricing formula should remain commercially balanced.

---

13. Time Extension

Where regulatory changes delay:

• Construction.
• Licensing.
• Grid connection.
• Testing.
• Commissioning.

The agreement should provide reasonable extensions.

---

14. Notification Requirements

The affected party should notify:

• Nature of the legal change.
• Financial impact.
• Expected delay.
• Supporting documents.
• Proposed mitigation measures.

Prompt notification preserves contractual rights.

---

15. Mitigation Obligations

The affected party should:

• Reduce additional costs.
• Seek alternative compliance methods.
• Cooperate with authorities.
• Minimize project delays.
• Continue unaffected obligations.

Mitigation obligations should be expressly stated.

---

16. Renegotiation Procedure

Long-term contracts should establish:

• Negotiation period.
• Senior management meetings.
• Expert determination.
• Mediation.
• Escalation procedures.

Renegotiation often preserves commercial relationships.

---

17. Material Adverse Effect Threshold

Not every legal amendment should trigger compensation.

The contract should define:

• Minimum financial impact.
• Percentage increase.
• Revenue reduction threshold.
• Cost increase threshold.

Materiality tests prevent trivial claims.

---

18. Termination Rights

If regulatory changes make performance commercially impossible, the agreement should specify:

• Termination procedure.
• Settlement mechanism.
• Compensation.
• Outstanding obligations.
• Asset ownership.
• Lender notification.

Termination should be reserved for exceptional circumstances.

---

19. Relationship with Force Majeure

Change in Law should remain separate from Force Majeure.

Force Majeure concerns extraordinary external events preventing performance.

Change in Law concerns legislative or regulatory action altering contractual economics.

Combining the two concepts often creates uncertainty.

---

20. Coordination with Project Finance

Lenders frequently require:

• Notification of legal changes.
• Revised financial models.
• Updated cash-flow projections.
• Compliance certificates.
• Additional security.

Financing documents should be consistent with contractual Change in Law provisions.

---

Top 30 Clauses Every Change in Law Provision Should Include

1. Definition.
2. Covered legislation.
3. EMRA regulations.
4. Tax changes.
5. Environmental law.
6. Grid regulations.
7. Customs rules.
8. Labor law.
9. Foreign exchange regulations.
10. Sanctions.
11. Notification.
12. Supporting evidence.
13. Cost calculation.
14. Price adjustment.
15. Time extension.
16. Mitigation.
17. Renegotiation.
18. Materiality threshold.
19. Independent expert review.
20. Audit rights.
21. Payment mechanism.
22. Lender notification.
23. Insurance coordination.
24. Regulatory cooperation.
25. Termination.
26. Governing law.
27. Arbitration.
28. Confidentiality.
29. Survival clause.
30. Entire agreement.

---

Common Drafting Mistakes

Foreign investors frequently:

• Use generic boilerplate clauses.
• Fail to define “Change in Law.”
• Ignore EMRA regulations.
• Exclude indirect regulatory changes.
• Omit compensation formulas.
• Forget materiality thresholds.
• Ignore financing requirements.
• Confuse Change in Law with Force Majeure.
• Fail to coordinate EPC and PPA provisions.
• Neglect notice requirements.

These mistakes may expose investors to substantial unexpected costs.

---

Best Practices Before Signing

Before executing any energy contract:

• Review all applicable legislation.
• Coordinate Change in Law provisions across project documents.
• Verify financing consistency.
• Analyze tax consequences.
• Review EMRA compliance obligations.
• Establish objective compensation mechanisms.
• Obtain specialist Turkish legal advice.

Carefully drafted Change in Law clauses significantly enhance the long-term stability of energy investments.

---

Why Professional Legal Assistance Is Essential

Negotiating Change in Law provisions requires expertise in:

• Turkish Energy Law.
• Electricity Market Law.
• Turkish Commercial Code.
• Turkish Code of Obligations.
• EMRA regulations.
• Project finance.
• Renewable energy law.
• International arbitration.

An experienced Turkish energy lawyer can:

• Draft project-specific Change in Law clauses.
• Allocate regulatory risks appropriately.
• Coordinate EPC, PPA, financing, and supply agreements.
• Negotiate compensation mechanisms.
• Protect foreign investors against adverse regulatory changes.
• Ensure compliance with Turkish energy legislation.
• Represent clients in arbitration and commercial litigation.

Early legal planning helps international investors safeguard project profitability while minimizing regulatory uncertainty.

---

Frequently Asked Questions

1. What is a Change in Law clause?

A Change in Law clause allocates the legal and financial consequences of legislative or regulatory changes occurring after a contract has been executed, helping determine which party bears the resulting costs or receives contractual relief.

2. Why is a Change in Law clause important in energy projects?

Energy projects operate for decades and are subject to evolving tax, environmental, licensing, and electricity market regulations. A well-drafted clause helps preserve the project’s commercial balance despite regulatory changes.

3. Does every regulatory amendment qualify as a Change in Law?

Not necessarily. Most contracts define the types of legislative or regulatory changes that are covered and often require the change to have a material financial or operational impact before contractual relief becomes available.

4. Should Change in Law clauses cover EMRA decisions?

Yes. Because EMRA regulations directly affect licensing, technical compliance, market participation, and operating obligations, the parties should address how regulatory changes issued by EMRA will be treated under the contract.

5. How is a Change in Law clause different from Force Majeure?

A Change in Law clause deals with government actions such as legislative or regulatory amendments, while Force Majeure addresses extraordinary external events beyond the parties’ control that prevent or significantly delay contractual performance.

6. Can a Change in Law clause allow price adjustments?

Yes. Many long-term energy contracts provide for tariff revisions, contract price adjustments, or compensation mechanisms where regulatory changes materially increase costs or reduce expected revenue.

7. Should lenders review Change in Law clauses?

Absolutely. Project finance lenders generally expect Change in Law provisions to be consistent with financing documents because significant regulatory changes may affect debt service, project cash flow, and financial covenants.

8. Why should foreign investors hire a Turkish energy lawyer?

A Turkish energy lawyer can draft and negotiate Change in Law clauses, allocate regulatory risks effectively, coordinate project documentation, ensure compliance with Turkish energy legislation and EMRA requirements, advise on project finance implications, and represent investors in disputes arising from regulatory changes.

Legal Support – Contact Our Energy Lawyers

Regulatory change is an inevitable feature of long-term energy investments. A carefully negotiated Change in Law clause protects project economics, improves bankability, and provides foreign investors with a clear contractual framework for addressing future legislative and regulatory developments.

Fırat Fesih Kaya and our legal team advise foreign investors, renewable energy developers, infrastructure funds, multinational corporations, EPC contractors, lenders, independent power producers, and institutional investors on Change in Law provisions, Power Purchase Agreements (PPAs), EPC Contracts, project finance, EMRA compliance, renewable energy investments, international arbitration, and all aspects of Turkish energy and commercial law.

24/7 Emergency Phone: +90 532 769 22 22

Office Phone: +90 312 434 22 22

Email: info@firatfesihkaya.av.tr

Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey