How can foreign lenders secure financing over Turkish energy assets? A 2026 guide covering share pledges, mortgages, movable asset security, bank accounts, receivables, project contracts, enforcement and energy regulatory risks.

Foreign banks, international financial institutions, private credit funds and infrastructure lenders financing energy projects in Turkey usually require a comprehensive security package before providing substantial project debt.

This is particularly important in solar, wind, hydroelectric, geothermal, battery-storage and hybrid power projects because the borrower’s value is rarely concentrated in a single asset.

The economic value of a Turkish energy project may consist of its power plant, project company shares, land rights, equipment, electricity-sale receivables, bank accounts, insurance proceeds, project contracts and regulatory position.

For a foreign lender, therefore, the correct question is not simply:

“Can we take security over the power plant?”

The more important questions are:

Which Turkish energy assets can be secured? How must the security be created and perfected? What happens after default? Can the lender enforce the shares of the project company? Will enforcement trigger regulatory approvals? Can the project remain operational while security is being enforced?

A properly structured security package should protect the lender without destroying the regulatory and commercial value of the underlying energy project.

Why Is Security Especially Important in Energy Project Finance?

Energy projects normally require substantial upfront capital.

A renewable project may spend most of its construction budget before meaningful electricity revenue begins.

The lender therefore assumes significant construction, regulatory and operational risk.

Security provides protection if the project company fails to repay the financing.

However, project-finance security should not be viewed only as collateral for liquidation.

Its broader purpose is to give lenders sufficient control to stabilize, restructure or transfer a distressed project before its value collapses.

What Assets Can Form Part of an Energy Security Package?

Depending on the project structure, lenders may consider security involving:

Project Company Shares – Project Land – Buildings and Immovable Assets – Generation Equipment – Movable Assets – Bank Accounts – Electricity Receivables – Insurance Proceeds – Contractual Receivables – Sponsor Support – Guarantees.

Different assets require different legal mechanisms.

There is no single security document that automatically covers every project asset.

Share Pledge over the Turkish Project Company

A share pledge is frequently one of the most strategically important components of an energy financing security package.

Most large energy projects are owned through a special-purpose company.

If lenders obtain effective security over the shares of that company, enforcement may allow the ownership of the project company to change without separating every physical asset from the company.

Conceptually:

Shares → Project Company → License + Land + Equipment + Contracts + Revenue.

This can help preserve the project as a going concern.

Why Share Security Can Be More Valuable Than Asset Security

Suppose a project company owns a 150 MW solar power plant.

The project may be worth considerably more as an operational licensed company than the combined liquidation value of its modules, inverters, transformers and land.

Share-level enforcement can potentially preserve the corporate structure within which the project operates.

This may reduce disruption to contracts and operations.

However, the regulatory consequences of a change of ownership must always be investigated.

Joint Stock Company Shares

Many Turkish energy project companies are structured as joint stock companies.

The method for creating security over shares can depend on whether the shares are represented by certificates and, where certificates exist, their legal form.

The lender should verify:

Company Type → Share Structure → Share Certificates → Articles of Association → Share Ledger → Existing Restrictions → Existing Pledges.

A generic pledge agreement should not be signed without confirming the actual corporate structure.

Limited Liability Company Shares

Security over participation interests in a limited liability company follows a different legal framework.

Foreign lenders should therefore identify the target company’s legal form before preparing the security package.

Formal requirements can differ materially.

Articles of Association

The articles of association should be reviewed before share security is created.

Relevant issues can include:

Transfer Restrictions

Approval Requirements

Share Classes

Voting Rights

Pre-Emption Rights

Special Shareholder Rights

Board Appointment Rights.

The lender should ensure that corporate restrictions do not unexpectedly interfere with enforcement.

Existing Shareholder Agreements

A shareholder agreement can also affect the practical value of share security.

For example, another shareholder may possess contractual rights concerning transfer, first refusal or change of control.

The lender should identify these provisions before financing closes.

Otherwise, a future enforcement sale may become subject to a major shareholder dispute.

Regulatory Risk in Share Pledge Enforcement

Energy-sector share security requires additional care because the project company may hold an electricity generation license.

Enforcement resulting in a change of ownership or control can trigger regulatory considerations under Turkish electricity-market legislation.

Therefore:

Valid Share Pledge + Successful Enforcement does not automatically equal unrestricted control of the licensed project.

The lender must separately assess the applicable energy regulatory requirements.

Share Pledge Enforcement Strategy

A lender should normally consider the likely enforcement route before taking the pledge.

Possible outcomes can include:

Transfer to Strategic Investor

Sale to Infrastructure Fund

Acquisition by Existing Sponsor

Restructuring With New Equity Investor

Other Legally Permitted Enforcement Outcome.

The objective is generally not for the foreign bank itself to operate a power plant indefinitely.

The objective is to preserve and monetize the value represented by the shares.

Mortgage over Energy Project Real Estate

Where the project company owns land or other immovable property, lenders may seek mortgage security.

A mortgage can provide significant protection because it establishes security over registered immovable assets.

Relevant property can include:

Project Land

Buildings

Certain Permanent Structures

Other Registered Immovable Assets.

The lender should perform comprehensive title due diligence before accepting the mortgage.

Land Title Due Diligence

The lender should verify:

Registered Owner → Existing Mortgages → Attachments → Easements → Rights of Way → Restrictions → Annotations → Litigation → Expropriation Issues.

A first-ranking mortgage over clean title is very different from a junior mortgage over heavily encumbered land.

The economic value of the security depends on priority as well as nominal property value.

Mortgage Ranking

Ranking is particularly important.

Suppose project land is worth EUR 20 million.

A foreign lender obtains a second-ranking mortgage securing EUR 15 million.

If a Turkish bank already holds a first-ranking mortgage securing EUR 18 million, the foreign lender’s practical recovery from the land may be limited.

Security due diligence should therefore calculate realistic enforcement value rather than simply confirming that a mortgage exists.

Foreign Currency Mortgage Issues

Cross-border energy loans may be denominated in EUR, USD or another foreign currency.

The mortgage structure should be prepared consistently with the financing and applicable Turkish rules.

Foreign lenders should ensure that the secured obligations are correctly identified and that the security documentation adequately covers principal, interest and other secured amounts.

Mortgage Enforcement

Following default, mortgage enforcement is generally conducted through the applicable Turkish enforcement procedures.

The lender should not assume that holding a mortgage allows immediate private possession of the property.

Enforcement formalities remain important.

Time, valuation, priority and competing creditor claims can all affect recovery.

Project Land May Not Be Owned

Not every energy project owns its site.

Some projects operate on leased land, public land, forestry areas or land subject to other usage arrangements.

In those circumstances, a conventional land mortgage may not be available over the entire project site.

The lender must identify precisely what land right the project company possesses.

Leasehold and Contractual Land Rights

Where the project operates under a lease, the lender should examine:

Lease Term

Termination Rights

Assignment

Change of Control

Payment Default

Lender Notice

Cure Rights

Direct Agreement Possibility.

A valuable power plant can become commercially unusable if its land rights terminate following financing default.

Movable Asset Security

Energy projects contain high-value movable equipment.

Examples include:

Solar Modules – Inverters – Transformers – Wind Turbines – Battery Units – Control Systems – Spare Parts – Certain Machinery and Equipment.

Depending on the nature and legal status of the asset, security may potentially be established under the applicable Turkish movable security framework.

Asset classification is critical.

Movable Pledge Registry

Certain commercial movable security interests can require registration through the applicable registry system.

The lender should identify which assets are capable of being included and whether any prior security already exists.

A security agreement that has not been properly perfected can create serious problems after default.

Equipment Identification

The security documents should identify important equipment sufficiently clearly.

For major assets, useful information can include:

Manufacturer

Model

Serial Number

Location

Technical Description

Ownership.

This can become important during enforcement or competing ownership claims.

Retention of Title Risk

The lender should verify that the project company actually owns the equipment being offered as collateral.

An EPC contractor or equipment supplier may retain contractual rights where equipment has not been fully paid for.

A project company cannot provide economically reliable security over an asset it does not fully own.

This issue is particularly important during construction.

Wind Turbine Security

Wind turbines are high-value assets but their legal and practical treatment requires careful analysis.

The lender should determine whether particular components are treated as movable assets or have become legally integrated with the relevant immovable property.

A blanket assumption about the classification of the entire turbine can create enforcement problems.

Solar Equipment Security

Solar projects contain thousands of individual modules.

It may be commercially unrealistic to rely primarily on module-by-module enforcement.

Security should therefore be designed around the overall project value, with share security, land security, account control and receivable security often providing complementary protection.

Battery Storage Assets

Battery-storage projects can involve extremely valuable equipment.

A BESS security package may cover:

Battery Containers

Battery Modules

Power Conversion Systems

Transformers

Control Equipment

Related Infrastructure.

Foreign lenders should also examine supplier warranties and whether warranties remain effective following enforcement or ownership change.

Security over Bank Accounts

Project bank accounts can be among the most valuable lender protections because they control cash before formal asset enforcement becomes necessary.

Project-finance structures may contain:

Revenue Account

Operating Account

Debt Service Account

Debt Service Reserve Account

Insurance Account

Distribution Account.

The security documents should establish the lender’s rights concerning these accounts.

Account Control and Cash Waterfall

The financing arrangement can determine how project revenue is applied.

A typical structure may prioritize:

Taxes → Operating Expenses → Senior Debt Service → Reserve Requirements → Permitted Distributions.

Following a default, shareholder distributions can be blocked.

This may preserve cash within the secured financing structure.

Electricity Sale Receivables

Electricity receivables can represent the project’s primary source of value.

A generator may receive revenue from:

PPA

Bilateral Electricity Sales

Market Transactions

Other Electricity-Related Receivables.

Security over these receivables can therefore be commercially significant.

The structure should clearly identify existing and future receivables intended to fall within the security package.

PPA Receivables

Where the project has a long-term PPA, lenders should review whether the agreement permits assignment or security over receivables.

Consent may sometimes be required.

The financing documents should therefore be coordinated with the PPA before closing.

Discovering an anti-assignment clause after default is far too late.

Future Receivables

Project-finance security often needs to capture revenue that does not yet exist at the date of financing.

The legal documentation should therefore be carefully structured to address future receivables where permitted.

The description of secured receivables should be sufficiently precise.

Notice to Contractual Debtors

Depending on the security mechanism, notice to the party owing the receivable can be important.

For example, the offtaker may need clear instructions regarding where payments must be made following enforcement.

The lender should ensure that contractual and security documentation work together.

Insurance Proceeds

Insurance is another important source of potential recovery.

Energy projects commonly maintain insurance covering areas such as:

Construction Risks

Property Damage

Machinery Breakdown

Business Interruption

Third-Party Liability

Marine Cargo.

Financing documents may require insurance proceeds to be paid into secured project accounts or applied according to an agreed waterfall.

Loss Payee Arrangements

Lenders may seek recognition in insurance arrangements where appropriate.

The objective is to prevent major insurance proceeds from being distributed outside the secured project structure after a serious casualty.

However, insurance proceeds may need to be used for reinstatement rather than immediate debt repayment where rebuilding preserves greater project value.

Security over Project Contracts

A lender may also seek rights connected with major project contracts.

These can include:

EPC Agreement

O&M Agreement

PPA

Equipment Supply Agreement

Land Lease

Other Material Contracts.

However, contractual rights cannot always simply be transferred without counterparty consent.

Assignment provisions must therefore be reviewed.

Direct Agreements

Direct agreements are frequently more practical than relying solely on an assignment.

A direct agreement can require the counterparty to notify lenders before terminating an essential project contract.

It may also provide lender cure and substitution rights.

A typical structure can be:

Project Company Default → Lender Notice → Standstill → Cure Opportunity → Step-In or Substitution → Termination Only After Process.

This protects project value.

Security over Regulatory Rights

Foreign lenders should exercise particular caution concerning licenses and regulatory authorizations.

A generation license should not simply be treated as privately transferable collateral in the same manner as ordinary equipment.

Energy-sector regulatory requirements can restrict how project ownership, control and licensed activities are transferred.

The security structure should therefore focus on legally enforceable interests while coordinating any eventual transfer with the applicable regulatory process.

Generation License Risk

A lender should verify throughout the financing period that the project company maintains its license in good standing.

Loan documents can require compliance with:

License Conditions

Regulatory Reporting

Project Completion Requirements

Permits

Grid Obligations

Required Approvals.

Loss of the generation license can materially impair virtually every other form of security.

Regulatory Covenants

The financing agreement should therefore contain regulatory covenants.

The borrower may be required to:

maintain licenses,

comply with EPDK requirements,

avoid unauthorized ownership changes,

maintain permits,

notify lenders of investigations,

and provide copies of material regulatory correspondence.

These obligations provide early warning.

Sponsor Guarantees

Security does not need to be limited to project assets.

Sponsors may provide guarantees or support undertakings.

These can be particularly important during construction before the project reaches stable operation.

Possible sponsor obligations include:

Equity Funding

Cost Overrun Support

Completion Support

Debt Service Support

Reserve Replenishment.

The lender should clearly distinguish a legally enforceable guarantee from a general statement of sponsor support.

Parent Company Guarantees

Where the sponsor belongs to a financially strong international group, a parent guarantee may substantially improve lender protection.

The guarantee should specify:

Covered Debt → Maximum Liability → Duration → Demand Requirements → Governing Law → Jurisdiction or Arbitration.

The lender should also verify the guarantor’s corporate authority.

Corporate Authorizations

Every security instrument should be supported by appropriate corporate approvals.

Foreign lenders should verify whether board, shareholder or other approvals are necessary for the project company and relevant security providers.

Defective corporate authorization can become a major enforcement issue later.

Security for Third-Party Debt

Particular care is required where one Turkish company provides security for another company’s debt.

Corporate benefit, authority and applicable legal restrictions should be reviewed.

This can arise in group financing where several affiliates secure the same facility.

Financial Assistance Issues

Acquisition financing requires additional analysis.

If financing is used to acquire shares in a Turkish company and that target is expected to provide security for the acquisition debt, applicable restrictions should be reviewed carefully.

Foreign lenders should not assume that acquisition financing structures commonly used in another jurisdiction can be copied directly into Turkey.

Existing Security Search

Before financing closes, lenders should investigate prior security.

This can include searches and due diligence relating to:

Mortgages

Share Pledges

Movable Security

Attachments

Existing Financing

Contractual Restrictions.

The objective is to avoid discovering after default that another creditor has superior security.

Negative Pledge

Loan agreements frequently include a negative pledge covenant.

The borrower agrees not to create additional security over project assets without lender consent.

This helps protect the lender’s ranking during the life of the financing.

The covenant should also cover indirect arrangements capable of undermining the agreed security position.

Disposal Restrictions

The borrower may also be prohibited from selling major project assets without lender approval.

This can prevent the company from disposing of valuable equipment or land while leaving lenders with weakened collateral.

Permitted disposals should be clearly defined.

Additional Debt Restrictions

Uncontrolled additional borrowing can dilute the original lender’s position.

The financing agreement may therefore restrict additional financial indebtedness.

Any permitted debt should be coordinated with security ranking and intercreditor arrangements.

Security Trustee or Security Agent

Syndicated financing often involves multiple lenders.

A security agent can administer security for the financing parties under the agreed structure.

However, each Turkish security category should be analyzed individually to ensure the agency structure is legally effective.

The foreign financing documents should not assume that one general security concept automatically applies identically to every Turkish asset.

Intercreditor Arrangements

Where several creditor classes exist, an intercreditor agreement may regulate:

Priority

Voting

Enforcement Control

Standstill

Application of Proceeds

Subordination

Security Agent Instructions.

These provisions can become decisive after default.

Enforcement of Security

Security documentation has little value if the lender does not understand how it will actually be enforced.

Before closing, lenders should model:

Trigger Event → Notice → Acceleration → Enforcement Procedure → Regulatory Approval → Asset Sale → Distribution of Proceeds.

The analysis should include realistic timing and costs.

Going-Concern Value Versus Liquidation Value

This is particularly important in energy finance.

Suppose:

Operating Wind Farm Value: EUR 120 Million

but

Separate Equipment and Land Liquidation Value: EUR 55 Million.

A lender focusing only on individual asset enforcement may destroy EUR 65 million of enterprise value.

The security package should therefore facilitate an orderly transfer or restructuring where possible.

Share Sale after Default

A share pledge may allow lenders to pursue an ownership-level solution.

A strategic investor may acquire the project company and refinance or repay the secured debt.

This can preserve:

Project Contracts

Employees

Operational Structure

Land Rights

Equipment Ownership.

Regulatory approvals and contractual change-of-control requirements must still be addressed.

Project Contract Change of Control

Security enforcement can inadvertently trigger contractual defaults.

The lender should examine whether a change of control requires consent under:

PPA

O&M Agreement

EPC Agreement

Land Lease

Financing Agreements

Equipment Warranties.

These consents should ideally be addressed before default through direct agreements or financing consents.

Enforcement and EPDK Requirements

Any enforcement strategy affecting ownership or control of a licensed energy company should be reviewed against the regulatory framework applicable at the time of enforcement.

The lender should determine whether prior approval, notification or another regulatory process applies.

The regulatory analysis should occur before the enforcement notice is issued—not afterward.

Foreign Lender Enforcement

A foreign lender can have enforceable security in Turkey where the relevant legal requirements are satisfied.

However, foreign-law loan documentation does not automatically determine how Turkish collateral is created or enforced.

The transaction should distinguish:

Financing Contract Law

from

Turkish Security and Enforcement Law.

Local perfection requirements remain critical.

Insolvency Risk

Security becomes especially important if the project company enters financial distress.

A lender should immediately assess:

Concordat

Bankruptcy

Competing Enforcement

Tax Liabilities

Employee Claims

Other Secured Creditors.

The insolvency treatment of each security interest should be considered during initial structuring, not only after distress begins.

Security Enforcement versus Restructuring

A strong security package does not mean the lender should always enforce immediately.

Security can also improve negotiating leverage.

If the underlying project remains economically viable, the lender may prefer:

Maturity Extension

Additional Sponsor Equity

Cash Sweep

Temporary Covenant Waiver

Partial Debt Reduction

Sale to New Investor

over immediate liquidation.

The decision should be based on recovery value.

Example: Foreign Bank Financing a Solar Plant

A foreign bank provides EUR 80 million to a Turkish solar project company.

The security package includes project-company shares, project land, selected equipment, project accounts and electricity receivables.

The project later defaults.

Before enforcement, the bank should determine which enforcement route preserves the project’s operating and regulatory value.

A coordinated sale of the project company may produce significantly better recovery than separate equipment sales.

Example: Land Is Already Mortgaged

A foreign lender discovers during due diligence that another bank holds a first-ranking mortgage over the project site.

The foreign lender should calculate the outstanding senior debt and realistic land value before relying on a junior mortgage.

Nominal collateral value alone is insufficient.

Example: PPA Prohibits Assignment

A lender intends to take security over PPA receivables.

The PPA contains restrictions on assignment.

The issue should be resolved before financing through consent, amendment or another legally appropriate structure.

Waiting until enforcement creates unnecessary risk.

Example: Share Pledge Enforcement Changes Control

A project company defaults and the lender prepares to enforce its share security.

The proposed purchaser would acquire control of the licensed generation company.

Before completing the transfer, the parties must assess applicable regulatory requirements and contractual change-of-control provisions.

Example: Battery Project Defaults During Construction

A BESS project defaults before commissioning.

Some battery equipment has been delivered, but suppliers remain unpaid.

The lender should establish ownership of each major asset before assuming that all equipment forms part of its enforceable collateral.

Supplier rights can materially affect recovery.

Security Due Diligence Checklist

Before financing a Turkish energy project, foreign lenders should verify:

Borrower Corporate Structure → Share Ownership → Generation License → Regulatory Restrictions → Land Title → Existing Mortgages → Equipment Ownership → Movable Security → Project Accounts → Electricity Receivables → PPA Assignment → Insurance → Project Contracts → Direct Agreements → Sponsor Support → Existing Debt → Intercreditor Position → Enforcement Route.

The security package should be designed only after this review.

Major Security Red Flags

Foreign lenders should investigate carefully where there are existing senior mortgages, unregistered security, missing share certificates, unclear equipment ownership, anti-assignment provisions, short land leases, regulatory transfer restrictions, unauthorized additional debt, missing direct agreements, expiring guarantees, unpaid suppliers, competing attachments or project revenues being paid outside secured accounts.

Any of these issues can materially reduce collateral value.

2026 Security Strategy for Foreign Energy Lenders

An effective lender strategy should follow:

Identify Project Assets → Determine Ownership → Check Existing Encumbrances → Review Regulatory Restrictions → Structure Share Security → Structure Real Estate Security → Secure Movable Assets → Secure Accounts and Receivables → Obtain Required Consents → Execute Direct Agreements → Perfect Security → Monitor Compliance → Recheck Security Periodically → Plan Enforcement Before Default.

Security should not be treated as a closing checklist that is forgotten once financing is disbursed.

Project assets, contracts and regulatory requirements can change during a 10- or 15-year financing period.

Frequently Asked Questions

1. Can a foreign lender take security over assets in Turkey?

Yes, subject to the applicable Turkish legal requirements for the relevant asset and security instrument.

2. Can shares in a Turkish energy company be pledged?

Potentially yes. The precise requirements depend on the company’s legal form, share structure and applicable regulatory framework.

3. Can project land be mortgaged?

Where the project company owns mortgageable real estate, mortgage security may potentially be established subject to Turkish law.

4. Can wind turbines, solar equipment and batteries be secured?

Potentially, depending on their legal classification, ownership and the applicable movable-security framework.

5. Can electricity receivables be used as security?

Potentially yes. The underlying contracts, assignment restrictions and applicable security requirements should be reviewed.

6. Can project bank accounts be secured?

Project-finance structures commonly use security and control arrangements concerning project accounts, subject to the applicable documentation and law.

7. Can the generation license itself simply be sold after default?

It should not be treated like an ordinary freely transferable asset. Electricity-market regulatory requirements must be considered in any ownership or project transfer.

8. Can a foreign lender enforce a share pledge and sell the project company?

Potentially, subject to the pledge, enforcement rules, corporate restrictions, project-contract requirements and applicable energy regulatory approvals.

9. What is the most valuable security in an energy project?

There is no universal answer. The strongest structure usually combines share security, asset security, project accounts, receivables and contractual lender protections rather than relying on a single asset.

10. What is the biggest security mistake foreign lenders make?

Focusing on whether security can technically be created without determining whether it can be effectively enforced while preserving the project’s generation license, contracts and going-concern value.

Legal Support for Foreign Lender Security in Turkish Energy Projects

Foreign lender security over Turkish energy assets requires coordinated analysis of project finance, corporate law, secured transactions, enforcement law and electricity-market regulation.

Firat Fesih Kaya Law Office assists foreign banks, international lenders, infrastructure funds, renewable-energy investors and project companies with financing and security structures involving Turkish energy assets. Firat Fesih Kaya can assist with share pledges, mortgages, movable asset security, project accounts, electricity receivables, direct agreements, lender step-in arrangements, security due diligence and enforcement following project default.

The central objective should be to create a security package that remains effective not merely on the financing date but also during a future default. For an energy project, this means protecting both the lender’s legal priority and the operating value of the licensed project.

Phone: +90 312 434 22 22
Mobile Phone: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yildirim Tower, Balgat, Cankaya / Ankara, Turkey