Did you discover an EMRA generation license problem after buying a power plant in Turkey? Learn the legal remedies available to foreign investors, including license amendments, regulatory applications, seller warranty claims, indemnities, compensation, SPA claims and emergency measures.

Buying an existing power plant in Turkey does not eliminate regulatory risk simply because the facility was already operating when the foreign investor acquired it. One of the most serious post-acquisition discoveries is that the generation license or underlying regulatory structure is defective, incomplete or inconsistent with the power plant that was actually purchased. The investor may discover that installed capacity differs from licensed capacity, a previous modification was never properly reflected in the license, regulatory obligations were breached before closing, an EMRA proceeding was not disclosed, ownership changes required additional regulatory action or information provided during the original licensing process was inaccurate. Because the economic value of a power plant depends fundamentally on its legal ability to generate and sell electricity, a licensing problem can quickly become an M&A, regulatory and damages dispute at the same time.

Turkey’s electricity-generation licensing system is administered by the Energy Market Regulatory Authority (“EMRA”) under Electricity Market Law No. 6446 and the Electricity Market Licensing Regulation. EMRA explains that a generation license constitutes the authorization granted to a legal entity to conduct generation activity and that licensing obligations are regulated in detail under the Electricity Market Licensing Regulation. (EPDK)

For a foreign investor discovering a problem after closing, the first question should therefore not simply be “Can we sue the seller?” The immediate priority should be determining whether the plant can continue operating legally, whether the licensing defect can be corrected and whether urgent regulatory action is required. Only then should the investor determine who must ultimately bear the financial loss.

First Step: Identify Exactly What Is Wrong With the License

Not every licensing problem has the same legal consequences. Some issues may potentially be corrected through a license amendment or another regulatory procedure. Others may involve historical non-compliance. More serious cases can threaten the continuing validity of the generation authorization itself.

The foreign investor should immediately conduct a targeted post-acquisition regulatory review comparing the generation license with the physical facility, installed capacity, generation source, grid arrangements, project acceptance documentation, corporate structure and historical regulatory correspondence.

The objective is to establish whether the problem concerns the license itself, compliance with the license, the physical project, corporate ownership, regulatory reporting or another project authorization.

Check the Current Generation License

The investor should obtain and review the current generation license rather than relying on the version uploaded to the acquisition data room.

The review should confirm the licensed entity, facility, source, capacity, duration and other material information.

EMRA’s licensing guidance confirms that the generation license is issued to the legal entity conducting generation activity and that the licensing framework imposes project-specific requirements. (EPDK)

If the license does not correspond with the power plant actually acquired, the discrepancy should be escalated immediately.

Compare the License With the Physical Plant

A frequent acquisition risk arises when the physical power plant has changed over time but the regulatory documentation has not been updated accordingly.

For example, previous shareholders may have changed equipment, increased capacity, added units, modified turbines or panels, integrated storage or otherwise altered the project.

Technical advisers should establish what physically exists while energy counsel determines whether the configuration corresponds with the regulatory approvals.

A mismatch should not automatically be treated as a paperwork issue.

Its regulatory significance must be determined first.

Determine Whether a License Amendment Is Possible

Some post-acquisition discrepancies may be capable of resolution through a license amendment.

EMRA expressly maintains procedures for license amendment applications and other licensing transactions. Its current licensing materials refer to amendment applications as well as merger, demerger and facility/project transfer approval applications. (EPDK)

The foreign investor should therefore determine whether the defect can be corrected through the applicable amendment procedure and what documentation, technical confirmation or other regulatory action will be required.

However, the possibility of filing an amendment application should not be confused with certainty that the amendment will be granted.

Review Historical License Amendments

The current license may not tell the entire story.

Request the complete history of amendments and compare each amendment against changes made to the plant.

This can reveal whether a seller failed to complete a regulatory process, incorrectly represented that an amendment had been approved or implemented a physical change before completing required regulatory procedures.

The acquisition SPA should then be reviewed to determine whether these circumstances constitute a breach of warranty.

Investigate Undisclosed EMRA Correspondence

A foreign investor discovering a license problem should immediately obtain all historical correspondence between the project company and EMRA.

Particular attention should be paid to information requests, deficiency notices, warnings, investigation correspondence, applications, regulatory submissions and decisions.

A seller may have disclosed the final generation license while failing to disclose correspondence revealing an ongoing problem.

That distinction can become crucial in a post-closing claim.

Was the Problem Already Known Before Closing?

This is one of the most important questions in determining seller liability.

If the seller knew before signing or closing that EMRA had raised concerns and failed to disclose them, the buyer may have significantly stronger contractual claims than where the problem arose unexpectedly after acquisition.

Preserve the entire transaction record, including the virtual data room, Q&A responses, management presentations, due diligence reports, emails, disclosure letter and drafts of transaction documents.

Do not allow the data room to disappear before it has been archived.

Check the SPA’s Generation License Warranty

A properly drafted power plant SPA should contain specific warranties concerning the generation license.

Depending on the wording, the seller may have represented that the license was valid, effective, correctly reflected the project and was not subject to undisclosed suspension, cancellation or sanction proceedings.

The precise contractual language controls.

The buyer should therefore compare each discovered fact directly against each seller warranty.

Check the Regulatory Compliance Warranty

The seller may also have warranted that the target complied with electricity-market legislation and material regulatory obligations.

This can be broader than a warranty stating merely that the license is valid.

A plant could hold a formally valid generation license while having committed historical regulatory violations.

If those violations occurred before closing, the compliance warranty may become central to the buyer’s claim.

Check the Disclosure Letter

Seller warranties are normally qualified by disclosures.

The foreign investor should determine whether the licensing problem was specifically disclosed.

The seller may argue that a relevant document existed somewhere in the virtual data room and therefore the buyer was aware of the problem.

Whether that argument succeeds depends heavily on the SPA’s disclosure standard and governing law.

This is why the disclosure letter can become as important as the warranty itself.

Check for a Specific Indemnity

If the licensing issue was partly identified during due diligence, the buyer may have negotiated a specific indemnity.

A specific indemnity can provide stronger protection than a general warranty because it addresses an identified risk directly.

The agreement should be reviewed immediately for notification requirements, financial caps, exclusions and claim deadlines.

Notify the Seller Quickly

Foreign investors should avoid delaying notification while they investigate every detail.

SPAs frequently contain strict claim-notification provisions.

The agreement may require written notice describing the nature of the breach, estimated loss and relevant contractual provision within a specified period.

Missing a contractual notification deadline can create an unnecessary dispute over whether an otherwise valid claim is time-barred.

Preserve Regulatory Evidence

The investor should preserve copies of the generation license, amendments, regulatory submissions, EMRA correspondence, project acceptance documentation, grid documents, board minutes and technical records.

Documents should be preserved in the condition in which they existed when the problem was discovered.

Post-acquisition management should also avoid rewriting historical files in a way that makes it difficult to determine what the seller knew.

Consider an Immediate EMRA Application

Where the problem can potentially be corrected, early engagement with the applicable regulatory process may prevent the situation from worsening.

EMRA’s procedures expressly contemplate licensing applications and other licensing transactions, including amendments and project-related approval processes. (EPDK)

The precise application should be determined according to the nature of the defect.

The investor should avoid filing an improvised application before understanding whether the proposed explanation could inadvertently admit a more serious historical violation.

Can the Plant Continue Operating During the Process?

This question requires transaction-specific analysis.

A foreign investor should never assume that submitting an amendment or corrective application automatically authorizes continued operation under the disputed configuration.

Counsel should determine whether the existing license covers current operations and whether any regulatory decision affects continued generation.

Where there is significant uncertainty, this issue should be treated as an emergency regulatory matter.

What If Installed Capacity Is Different?

Capacity discrepancies deserve particular attention.

EMRA’s licensing framework provides for generation licenses containing facility-specific information and, for renewable projects, information relating to installed capacity and generation. (EPDK)

The investor should compare licensed capacity, physically installed capacity, accepted capacity and grid connection capacity.

These figures should not be assumed to be identical.

A discrepancy can have regulatory and financial consequences and may also indicate that the seller’s representations concerning the project’s revenue capacity were inaccurate.

What If the Problem Concerns Project Completion or Acceptance?

Generation projects are subject to project completion and acceptance processes. EMRA’s guidance states that a generation facility is considered completed upon provisional acceptance and that commissioning is recorded through the relevant acceptance procedures. (EPDK)

If the investor discovers discrepancies between accepted facilities and the actual plant, the relevant technical and regulatory documentation should be reviewed together.

This can be particularly important where later modifications were made after original acceptance.

Ownership Changes Should Also Be Reviewed

The foreign buyer should investigate whether the acquisition itself required regulatory action that was overlooked.

EMRA’s licensing materials specifically require information concerning ownership structures and identify regulatory documentation relating to share transfers, mergers and other corporate transactions. (EPDK)

This issue should be examined not only at the project-company level but, where relevant, through the wider ownership chain.

What If the Seller Gave Incorrect Information to EMRA?

This can be significantly more serious than an ordinary technical discrepancy.

The investor should determine what information was submitted, who prepared it, whether management knew it was inaccurate and whether the incorrect information was material to obtaining or maintaining the relevant authorization.

The regulatory consequences and the buyer’s contractual claims against the seller should then be analyzed separately.

Historical Non-Compliance Can Survive the Acquisition

A share acquisition changes the shareholder but normally does not erase the history of the licensed project company.

If the project company committed a regulatory violation before closing, changing its owner does not necessarily eliminate the underlying exposure.

This is why post-acquisition regulatory investigations should always identify the date on which the relevant conduct occurred.

That date can become central to the indemnity claim against the seller.

Administrative Sanctions

Electricity-market non-compliance can result in administrative consequences under the applicable regulatory framework.

The foreign investor should determine whether the target has received warnings, notices, requests to remedy deficiencies or administrative sanctions and whether any proceeding remains pending.

Where the conduct predates closing, the buyer should simultaneously investigate recovery under the SPA.

Can the Foreign Investor Challenge an EMRA Decision?

Depending on the nature of the regulatory decision and applicable procedural rules, judicial remedies may be available against administrative decisions.

The investor should review the decision immediately because administrative litigation is subject to procedural deadlines.

The strategy may involve regulatory remediation, administrative litigation or both, depending on the circumstances.

The foreign investor should not allow negotiations with the seller to cause a regulatory or court deadline to expire.

Seller Dispute and Regulatory Dispute Are Separate

This distinction is extremely important.

Suppose EMRA takes action because the previous owner failed to comply with regulatory obligations.

The project company may need to challenge or remedy that regulatory problem.

Separately, the foreign investor may have a contractual claim against the seller because the seller warranted that the company was compliant.

Winning the SPA dispute does not automatically solve the license problem.

Likewise, solving the license problem does not necessarily eliminate the buyer’s damages claim.

Both workstreams should proceed in parallel where necessary.

Calculate the Investor’s Loss

License problems can produce losses far beyond administrative penalties.

Potential losses may include lost electricity revenue, curtailment of operations, regulatory remediation costs, technical modification costs, financing consequences, professional fees and reduction in the value of the project.

Where a serious license problem affects the long-term ability to generate electricity, diminution in enterprise value may become particularly important.

The damages analysis should therefore involve financial and technical experts as well as lawyers.

Lost Generation Revenue

If the plant must reduce or suspend generation because of a licensing defect, detailed production evidence should be preserved.

Historical generation, weather data where relevant, market prices, contractual electricity prices, downtime and grid availability can become important when quantifying loss.

The buyer should build the damages file while the regulatory problem is being addressed rather than months later.

Financing Consequences

A license problem may also trigger provisions in project finance agreements.

The investor should review representations, undertakings, events of default and material permit provisions immediately.

If lender notification is required, the timing and content of that notification should be coordinated carefully.

A regulatory problem can become substantially more serious if it simultaneously triggers loan acceleration.

Check Insurance

Although many regulatory problems will not fall within ordinary operational insurance coverage, the investor should nevertheless review relevant policies and transaction-specific insurance.

If Warranty and Indemnity insurance was obtained for the acquisition, notice requirements should be reviewed immediately.

Failure to notify the insurer promptly can create a second dispute unnecessarily.

Consider Escrow and Holdback Rights

If part of the purchase price remains in escrow or has been withheld, determine whether the licensing claim falls within the secured obligations.

The buyer should comply strictly with any claim-notification procedure before funds are automatically released.

An escrow release date should never be allowed to pass while a potentially covered regulatory claim remains unresolved.

Deferred Purchase Price

Where consideration remains payable after closing, the investor should review whether the SPA permits set-off or suspension of payment for valid claims.

Do not assume a general right to withhold deferred consideration.

The contractual language must be examined.

Earn-Out Adjustments

If part of the purchase price depends on future generation, EBITDA, YEKDEM revenue, capacity increases or another regulatory milestone, the licensing problem may affect the earn-out calculation.

The SPA should be reviewed to determine which party bears that risk.

Can the Buyer Terminate the SPA After Closing?

Post-closing termination or unwinding of an acquisition is much more complicated than exercising a pre-closing termination right.

Whether rescission, termination, damages or another remedy may be available depends on the governing law, SPA terms, nature of the breach and surrounding facts.

A serious license defect should therefore trigger immediate M&A dispute analysis rather than an assumption that the buyer can simply “return the company.”

Fraud or Deliberate Concealment

The situation becomes substantially more serious if evidence suggests that the seller knew about the license problem and deliberately concealed it.

The buyer should preserve evidence showing what the seller knew, when it knew it and what representations were made during the acquisition.

Management presentations, regulatory correspondence, emails, board minutes and data-room Q&A responses can become critical evidence.

Contractual liability limitations should also be analyzed specifically in the context of deliberate concealment or fraud.

What If Due Diligence Failed to Discover the Problem?

The seller may argue that the buyer should have discovered the defect.

Whether this defeats a claim depends on the transaction documents and applicable law.

Due diligence and seller warranties serve different functions. A buyer’s investigation does not automatically make inaccurate seller representations irrelevant.

However, actual knowledge, disclosure clauses and specific SPA provisions can materially affect the analysis.

Claims Against Due Diligence Advisers

In exceptional circumstances, the investor may also examine whether professional advisers failed to identify a problem that fell squarely within their agreed scope of work.

This requires reviewing the engagement letter, due diligence report, assumptions, exclusions and information available to the adviser.

Such claims should not be assumed merely because a problem was missed.

The key question is whether the professional standard and contractual scope were breached.

License Problems Can Affect the Purchase Price Retroactively

Suppose the buyer paid EUR 80 million because the plant was represented as having legally secure generation capacity supporting a particular EBITDA.

If post-closing investigation shows that part of that capacity cannot lawfully operate, the economic problem may be much larger than the cost of amending the license.

The buyer may have overpaid for the business.

This is why regulatory findings should be translated into valuation consequences.

Emergency Action Plan for Foreign Investors

When a serious license problem is discovered, the investor should immediately preserve the acquisition data room and regulatory files, identify the precise regulatory defect, compare the physical plant with the license, assess whether continued operation is lawful, review available amendment or corrective procedures, identify administrative deadlines, review the SPA warranties and indemnities, notify the seller where required, notify lenders or insurers where contractually necessary and begin quantifying financial loss.

These actions should be coordinated rather than performed independently.

Frequently Asked Questions

Can an EMRA generation license problem be corrected after acquisition?

Potentially. EMRA maintains procedures for license amendments and other licensing transactions, but whether a particular defect can be corrected depends on its nature and the applicable regulatory framework. (EPDK)

Does buying the company eliminate historical license violations?

No. A change in shareholders does not automatically erase the regulatory history of the licensed legal entity.

Can the foreign buyer sue the seller?

Potentially, particularly where the seller breached generation-license, regulatory compliance or other SPA warranties or a specific indemnity applies.

What should the buyer do first?

Determine whether the problem threatens continued lawful generation. Protecting the operating project should generally take priority over the seller dispute.

Should the buyer immediately contact EMRA?

Regulatory engagement may be necessary, but the issue should first be legally analyzed so that the investor understands the nature of the defect and appropriate application or response.

Can a license amendment solve a capacity discrepancy?

Possibly, depending on the specific facts and regulatory requirements. It should not be assumed that every unauthorized or inconsistent capacity change can simply be legalized retrospectively.

Can the investor challenge an adverse regulatory decision?

Depending on the decision and circumstances, administrative judicial remedies may be available. Applicable procedural deadlines should be checked immediately.

What if the seller concealed correspondence from EMRA?

That evidence may be highly relevant to warranty, indemnity, misrepresentation or other potential claims. The acquisition data room and correspondence should be preserved immediately.

Can the buyer recover lost electricity revenue?

Potentially, depending on the contractual basis for the claim, causation, applicable liability limitations and proof of loss.

What is the biggest mistake after discovering a license problem?

Focusing exclusively on suing the seller while allowing the regulatory problem, administrative deadlines, lender obligations or SPA claim deadlines to become worse.

Power Plant License Dispute Lawyer in Turkey

A post-acquisition power plant licensing problem requires two strategies at the same time. The first is regulatory protection of the project. The second is financial recovery from the party contractually responsible for the problem.

The foreign investor should establish whether the generation license accurately reflects the facility, whether corrective or amendment procedures are available, whether the plant can lawfully continue operating and whether any administrative decision should be challenged. EMRA expressly recognizes license amendment and other licensing procedures within its regulatory framework. (EPDK)

At the same time, the investor should examine the SPA, disclosure letter, warranties, indemnities, escrow arrangements and seller representations. If the problem existed before closing and was incorrectly represented or concealed, the buyer may have contractual remedies against the seller. Where the licensing defect reduces generation, creates remediation costs or materially lowers project value, damages should be documented from the moment the problem is discovered.

The central objective is therefore not simply to obtain compensation years later. It is to protect the generation business immediately, preserve the license where legally possible, prevent avoidable operational losses and preserve the foreign investor’s claims against the seller.

Fırat Fesih Kaya Law Office assists foreign investors, international energy companies, renewable energy funds and project sponsors with post-acquisition power plant license problems, EMRA proceedings, generation license amendments, energy regulatory disputes, power plant M&A disputes, SPA warranty claims, seller indemnity claims, hidden regulatory liabilities and power plant acquisition litigation in Turkey.

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