Learn how to negotiate a Power Purchase Agreement (PPA) in Turkey. This 2026 legal guide explains key PPA clauses, pricing mechanisms, change in law, curtailment, force majeure, payment security, EMRA compliance, dispute resolution, and legal protections for international companies.

Power Purchase Agreements (PPAs) are among the most important commercial contracts in the Turkish energy sector. Whether the project involves a solar power plant (GES), wind farm (RES), hydroelectric plant (HES), geothermal facility (JES), biomass project, battery energy storage system (BESS), hydrogen production facility, or corporate renewable energy project, the PPA determines how electricity will be sold, how revenue will be generated, and how commercial risks will be allocated.

For international companies investing in Turkey, negotiating a well-structured PPA is just as important as securing an EMRA generation license or obtaining project financing. Lenders, equity investors, and infrastructure funds closely examine PPA provisions because the contract directly affects the project’s bankability, long-term profitability, and investment value.

In Turkey, PPAs are shaped by the Electricity Market Law No. 6446, the Turkish Code of Obligations, the Turkish Commercial Code, EMRA regulations, EPİAŞ market rules, competition legislation, and, where applicable, international financing requirements.

This 2026 Updated Legal Guide explains the most important legal clauses that international companies should negotiate when entering into a Power Purchase Agreement in Turkey.

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What Is a Power Purchase Agreement (PPA)?

A Power Purchase Agreement is a long-term contract under which:

• A power producer agrees to sell electricity.
• A purchaser agrees to buy electricity.
• The parties determine pricing.
• Delivery obligations are allocated.
• Commercial risks are shared.
• Payment mechanisms are established.
• Default procedures are defined.

PPAs are commonly used by:

• Renewable energy developers.
• Industrial electricity consumers.
• Data centers.
• Manufacturing companies.
• Corporate sustainability programs.
• Infrastructure funds.
• International utilities.
• Electricity traders.

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Why Is a PPA So Important?

A well-drafted PPA provides:

• Revenue certainty.
• Financing support.
• Bankability.
• Price stability.
• Long-term investment security.
• Reduced market volatility.
• Risk allocation.
• Contractual certainty.

Poorly drafted PPAs frequently become the source of expensive international disputes.

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Types of PPAs in Turkey

Common structures include:

• Corporate PPA.
• Physical PPA.
• Virtual (Financial) PPA.
• Sleeved PPA.
• Bilateral Electricity Sale Agreement.
• Cross-border electricity supply arrangements.
• Private industrial supply agreements.

The most suitable structure depends on the project’s regulatory framework and commercial objectives.

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1. Parties to the Agreement

The PPA should clearly identify:

• Seller.
• Buyer.
• Guarantors.
• Parent companies.
• Lenders (where applicable).
• Operators.

Corporate authority should also be verified.

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2. Contract Term

The agreement should define:

• Commencement date.
• Commercial Operation Date (COD).
• Contract duration.
• Extension options.
• Renewal procedure.
• Early termination rights.

Long-term PPAs typically range from 10 to 25 years.

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3. Contract Capacity

Specify:

• Installed capacity.
• Contracted capacity.
• Maximum delivery.
• Minimum delivery.
• Seasonal adjustments.
• Capacity testing procedures.

Capacity definitions should be technically precise.

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4. Pricing Mechanism

Pricing is often the most heavily negotiated provision.

Common pricing methods include:

• Fixed price.
• Floating market price.
• Indexed price.
• Hybrid pricing.
• Floor price.
• Cap price.

Pricing should also address inflation and exchange-rate risks.

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5. Currency

International investors frequently negotiate:

• Euro.
• US Dollar.
• Turkish Lira.
• Currency adjustment clauses.
• FX protection mechanisms.

Currency risk allocation significantly affects project returns.

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6. Indexation

The agreement should specify:

• CPI.
• PPI.
• Foreign inflation.
• Energy indices.
• Escalation formulas.
• Annual adjustment procedures.

Clear indexation reduces pricing disputes.

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7. Quantity Obligations

The PPA should define:

• Contract quantity.
• Annual production.
• Monthly delivery.
• Forecast obligations.
• Minimum purchase.
• Maximum purchase.

Ambiguous delivery obligations frequently result in disputes.

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8. Delivery Point

Clearly define:

• Metering point.
• Grid connection point.
• Delivery location.
• Risk transfer point.
• Ownership transfer.

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9. Metering

The agreement should regulate:

• Meter ownership.
• Meter testing.
• Calibration.
• Data verification.
• Meter disputes.
• Replacement procedures.

Reliable metering protects both parties.

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10. Payment Terms

Specify:

• Invoice procedures.
• Payment deadlines.
• Currency.
• Taxes.
• Interest on late payment.
• Payment method.

Cash flow certainty is critical for project financing.

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11. Payment Security

International sellers frequently require:

• Parent guarantees.
• Bank guarantees.
• Letters of Credit.
• Escrow accounts.
• Security deposits.

Credit protection reduces default risk.

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12. Change in Law

One of the most important clauses should address:

• New legislation.
• Regulatory amendments.
• EMRA decisions.
• Tax changes.
• Environmental requirements.
• Grid regulations.

The agreement should allocate regulatory risk fairly.

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13. Force Majeure

Typical Force Majeure events include:

• Earthquakes.
• Floods.
• War.
• Terrorism.
• Government restrictions.
• Grid failure.
• Pandemic.
• Natural disasters.

Notice procedures should also be clearly defined.

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14. Curtailment

The agreement should regulate:

• Grid curtailment.
• Compensation.
• Production reduction.
• Planned outages.
• Emergency interruptions.

Curtailment risk significantly affects renewable projects.

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15. Grid Connection

Review:

• Connection Agreement.
• System Usage Agreement.
• Capacity allocation.
• Grid maintenance.
• Technical obligations.

Grid issues frequently affect project revenue.

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16. Environmental Compliance

Allocate responsibility for:

• Environmental permits.
• Emissions.
• Waste management.
• Reporting obligations.
• ESG compliance.

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17. Change of Control

The agreement should determine:

• Share transfers.
• Parent company changes.
• Mergers.
• Acquisitions.
• Lender step-in rights.

Many PPAs require buyer consent before a change of control.

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18. Assignment

The contract should regulate:

• Assignment rights.
• Lender security.
• Novation.
• Affiliate transfers.
• Successor obligations.

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19. Default

Define:

• Payment default.
• Insolvency.
• Failure to deliver.
• Regulatory breaches.
• Material contract breach.
• Notice periods.
• Cure periods.

Default provisions should be objective.

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20. Termination

The PPA should regulate:

• Convenience termination.
• Default termination.
• Force Majeure termination.
• Regulatory termination.
• Compensation.
• Settlement.

Termination provisions should also protect project financing.

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21. Liability

The agreement should allocate:

• Direct damages.
• Consequential damages.
• Liability caps.
• Indemnities.
• Third-party claims.

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22. Insurance

Specify:

• Property insurance.
• Business interruption.
• Liability insurance.
• Environmental insurance.

Insurance requirements should align with lender expectations.

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23. Confidentiality

Protect:

• Commercial pricing.
• Technical data.
• Forecasts.
• Financial models.
• Customer information.

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24. Compliance

Include obligations concerning:

• EMRA regulations.
• Competition law.
• Anti-corruption.
• Sanctions.
• Anti-money laundering.
• Data protection.

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25. Dispute Resolution

International companies commonly choose:

• ICC Arbitration.
• ISTAC Arbitration.
• LCIA Arbitration.
• SIAC Arbitration.

The governing law and seat of arbitration should also be agreed.

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Top 30 Clauses Every International PPA Should Include

1. Parties.
2. Definitions.
3. Contract term.
4. Commercial Operation Date.
5. Contract capacity.
6. Delivery obligations.
7. Pricing.
8. Currency.
9. Indexation.
10. Metering.
11. Payment.
12. Taxes.
13. Payment security.
14. Change in law.
15. Force Majeure.
16. Curtailment.
17. Grid connection.
18. Environmental compliance.
19. Regulatory compliance.
20. Assignment.
21. Change of control.
22. Default.
23. Termination.
24. Liability.
25. Insurance.
26. Confidentiality.
27. Governing law.
28. Arbitration.
29. Notices.
30. Entire agreement.

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Common Negotiation Mistakes

International companies frequently:

• Use template PPAs.
• Ignore Turkish regulatory requirements.
• Fail to negotiate change-in-law protection.
• Accept weak payment security.
• Ignore curtailment risk.
• Overlook tax implications.
• Neglect lender requirements.
• Draft vague pricing clauses.
• Ignore force majeure procedures.
• Choose inappropriate dispute resolution clauses.

These mistakes often reduce project bankability.

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Best Practices Before Signing

Before executing a PPA:

• Conduct legal due diligence.
• Verify EMRA compliance.
• Review grid agreements.
• Confirm generation licensing.
• Analyze tax consequences.
• Coordinate financing documents.
• Negotiate payment security.
• Obtain specialist Turkish legal advice.

Strong legal drafting significantly improves long-term project value.

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Why Professional Legal Assistance Is Essential

Negotiating a Power Purchase Agreement requires expertise in:

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

An experienced Turkish energy lawyer can:

• Draft and negotiate PPAs.
• Allocate commercial risks.
• Protect pricing mechanisms.
• Negotiate change-in-law clauses.
• Structure payment security.
• Coordinate lender requirements.
• Ensure regulatory compliance.
• Represent parties in disputes.

Professional legal support helps international companies secure commercially balanced agreements while minimizing regulatory and contractual risks.

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Frequently Asked Questions

1. What is the purpose of a Power Purchase Agreement?

A PPA establishes the legal and commercial framework for the sale and purchase of electricity, including pricing, delivery obligations, payment terms, and risk allocation.

2. Can foreign companies sign PPAs in Turkey?

Yes. Foreign investors and international companies may enter into PPAs in Turkey, provided the transaction complies with applicable Turkish energy, commercial, competition, and regulatory requirements.

3. Why is the pricing clause so important?

The pricing mechanism directly affects project revenue, financing, and long-term profitability. It should clearly address indexation, currency risk, and price adjustment mechanisms.

4. What is a change-in-law clause?

A change-in-law clause allocates the financial consequences of new legislation, regulatory amendments, tax changes, or administrative decisions that materially affect the parties’ rights or obligations during the term of the agreement.

5. How should curtailment risk be handled?

The agreement should specify when curtailment constitutes a compensable event, how losses are calculated, and which party bears the associated commercial risk.

6. Why is payment security essential?

Bank guarantees, letters of credit, parent company guarantees, and escrow arrangements reduce the risk of payment default and improve the project’s bankability.

7. Should disputes be resolved through arbitration?

Many international energy transactions favor arbitration because it offers confidentiality, flexibility, and international enforceability. The appropriate forum depends on the transaction and the parties’ commercial objectives.

8. Why should international companies hire a Turkish energy lawyer?

A Turkish energy lawyer can negotiate and draft PPAs, ensure compliance with Turkish energy legislation and EMRA regulations, coordinate project financing requirements, allocate contractual risks appropriately, and represent clients in negotiations, arbitration, and litigation arising from energy transactions.

Legal Support – Contact Our Energy Lawyers

A well-negotiated Power Purchase Agreement is the cornerstone of a successful energy investment. Careful drafting, balanced risk allocation, and full regulatory compliance help ensure stable revenue, protect financing arrangements, and minimize future disputes.

Fırat Fesih Kaya and our legal team advise foreign investors, multinational corporations, renewable energy developers, infrastructure funds, independent power producers, industrial electricity consumers, EPC contractors, and financial institutions on Power Purchase Agreements, EMRA licensing, project finance, renewable energy investments, regulatory compliance, international arbitration, and all aspects of Turkish energy and commercial law.

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Office Phone: +90 312 434 22 22

Email: info@firatfesihkaya.av.tr

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