Discover the 25 most common legal mistakes foreign energy investors make in Turkey. Learn how to avoid EMRA licensing problems, defective land rights, grid risks, tax exposure, weak EPC contracts, competition violations, and hidden liabilities.

Turkey offers major opportunities for foreign investors in solar energy, wind power, battery storage, electricity trading, EV charging networks, hydrogen, geothermal facilities, and conventional power generation. Foreign investors generally receive the same rights and obligations as domestic investors under Turkey’s foreign investment framework.

However, energy investments are highly regulated. A commercially attractive project can quickly become unprofitable if the investor overlooks licensing conditions, grid capacity, land rights, environmental approvals, financing restrictions, tax exposure, or shareholder protections.

The following 25 mistakes are among the most common legal problems encountered by foreign investors in Turkish energy projects.

1. Investing Before Completing Legal Due Diligence

Some investors rely primarily on financial forecasts and technical reports.

Legal due diligence should examine:

• EMRA licenses and correspondence.
• Land rights.
• Grid agreements.
• Environmental approvals.
• Corporate records.
• Financing documents.
• Tax liabilities.
• Pending litigation.

The investor should complete due diligence before signing an unconditional share purchase or investment agreement.

2. Assuming Foreign Ownership Eliminates Regulatory Requirements

Foreign investors may generally own Turkish energy companies, but equal treatment does not mean exemption from energy regulation.

The project must still comply with:

• Electricity-market licensing.
• Competition law.
• Land rules.
• Environmental requirements.
• Foreign exchange legislation.
• Tax and customs obligations.

Foreign ownership should be treated as an investment-structuring issue, not a regulatory shortcut.

3. Choosing the Wrong Company Structure

A limited liability company may be adequate for consultancy or smaller service operations. A joint stock company is often more suitable for utility-scale projects, institutional investment, project finance, share pledges, and future exits.

The company type affects governance, capital, share transfers, financing, and investor protection.

4. Failing to Verify the EMRA License

The investor should not rely solely on a copy of the license certificate.

The review should confirm:

• Licensed activity.
• Installed capacity.
• Project location.
• Generation source.
• License duration.
• Amendments.
• Compliance obligations.
• Previous investigations.

The Electricity Market Licensing Regulation governs licensing and continuing obligations in the Turkish electricity market.

5. Ignoring Pre-License Restrictions

Companies holding a pre-license may face strict limitations on share transfers, control changes, and project restructuring.

A transaction at the foreign parent-company level may also affect the Turkish project company indirectly. Any option agreement, convertible investment, pledge, or shareholder restructuring should be reviewed before implementation.

6. Assuming Grid Connection Is Guaranteed

A valid energy project cannot operate profitably without secure grid access.

Investors should verify:

• Allocated capacity.
• Connection point.
• Connection agreement.
• System usage agreement.
• Grid investment obligations.
• Curtailment exposure.
• Completion deadlines.

The commercial value of a project may be significantly lower if grid rights are conditional or disputed.

7. Purchasing Land Without Full Title Review

Land ownership alone does not guarantee that the site can lawfully host an energy facility.

The investor should examine:

• Mortgages.
• Attachments.
• Easements.
• Access roads.
• Zoning.
• Agricultural restrictions.
• Forestry permits.
• Protected areas.
• Pending title disputes.

Transmission routes and access roads should also be legally secured.

8. Using Short-Term or Defective Lease Agreements

A project with a 25-year operating life should not depend on an insecure five-year lease.

Leases should address:

• Duration.
• Renewal.
• Rent adjustment.
• Change of control.
• Assignment.
• Early termination.
• Site restoration.
• Lender rights.

The lease term should be compatible with the license and financing period.

9. Underestimating Environmental Approvals

Investors frequently assume that an existing EIA decision covers all future project modifications.

Capacity increases, battery additions, turbine changes, auxiliary facilities, or new transmission routes may require updated environmental review.

Environmental compliance should continue throughout construction and operation.

10. Ignoring Historical Environmental Liability

A target company may carry liability for:

• Soil contamination.
• Waste storage.
• Transformer oil.
• Groundwater pollution.
• Hazardous chemicals.
• Battery disposal.
• Unauthorized discharge.

Environmental problems may remain undisclosed in ordinary financial statements.

11. Signing a Generic EPC Contract

An EPC contract should be designed for the specific technology, site, financing structure, and grid requirements.

It should clearly regulate:

• Scope of work.
• Completion milestones.
• Performance guarantees.
• Delay damages.
• Testing.
• Defects.
• Warranty periods.
• Termination.
• Security instruments.

Generic construction templates rarely provide sufficient protection for energy projects.

12. Accepting Weak Performance Guarantees

Completion does not necessarily mean that the facility performs as promised.

Contracts should contain measurable guarantees regarding:

• Output.
• Availability.
• Efficiency.
• Capacity.
• Response times.
• Degradation.
• Storage performance.

The testing procedure and financial remedies should be objectively defined.

13. Failing to Coordinate EPC and O&M Contracts

An O&M contractor may deny responsibility for defects attributed to the EPC contractor, while the EPC contractor may blame inadequate maintenance.

Warranty, maintenance, reporting, spare-parts, and performance obligations should be coordinated across both agreements.

14. Ignoring Change-of-Control Clauses

An acquisition may trigger consent or termination rights under:

• PPAs.
• Loan agreements.
• O&M contracts.
• Land leases.
• Equipment warranties.
• Joint venture agreements.
• Grid-related documents.

The buyer should identify all change-of-control provisions before signing.

15. Overlooking Lender Consent Requirements

Project finance agreements often restrict:

• Share transfers.
• Dividend payments.
• Additional borrowing.
• Contract amendments.
• Asset sales.
• Management changes.

Closing without lender consent may trigger default or debt acceleration.

16. Using an Inadequate Shareholders’ Agreement

Ownership percentages alone do not protect a foreign investor.

The shareholders’ agreement should address:

• Board representation.
• Reserved matters.
• Information rights.
• Funding obligations.
• Anti-dilution.
• Related-party transactions.
• Deadlock.
• Tag-along and drag-along rights.
• Exit mechanisms.

A 49% shareholder without veto or information rights may have little practical control.

17. Ignoring Competition Approval

Energy company acquisitions and joint ventures may require approval from the Turkish Competition Authority.

Turkey revised its merger-control thresholds in 2026. The individual threshold increased to TRY 1 billion, the relevant Turkish turnover threshold to TRY 3 billion, and the worldwide threshold to TRY 9 billion, subject to the detailed notification tests.

A transaction should not close before required clearance.

18. Sharing Sensitive Information Before Closing

During due diligence, competing energy companies may exchange commercially sensitive data.

Risky information includes:

• Future pricing.
• Customer lists.
• Trading strategies.
• Production forecasts.
• Tender plans.
• Commercial margins.

Clean-team procedures, redaction, aggregation, and controlled data-room access should be used.

19. Ignoring Tax Structuring

Foreign investors should analyze:

• Corporate tax.
• VAT.
• Withholding tax.
• Stamp tax.
• Customs duties.
• Transfer pricing.
• Shareholder loans.
• Permanent establishment risks.
• Double taxation treaties.

Tax planning should be completed before the investment structure becomes difficult to change.

20. Applying for Incentives Too Late

Turkey offers incentive mechanisms that may include VAT exemption, customs-duty exemption, tax reductions, employment support, and land allocation depending on the project.

Purchasing machinery before obtaining the necessary incentive documentation may prevent the investor from receiving expected benefits.

21. Importing Equipment Without Customs Planning

Energy equipment imports may create disputes involving:

• HS classification.
• Customs value.
• Country of origin.
• Anti-dumping duties.
• Product conformity.
• CE documentation.
• Import licenses.

Customs review should take place before shipment, not after the equipment reaches a Turkish port.

22. Ignoring Foreign Currency Rules

Not every Turkish contract can automatically be denominated in euros or US dollars.

The analysis depends on:

• The residency of the parties.
• Contract type.
• Foreign ownership.
• Imported cost components.
• Applicable statutory exemptions.

EPC, O&M, equipment sale, lease, and consultancy agreements may receive different treatment.

23. Failing to Implement Compliance Controls

Energy projects create risks involving:

• Bribery.
• Competition law.
• Sanctions.
• Customs.
• Environmental matters.
• Occupational safety.
• Data protection.
• Public procurement.

Foreign parent-company policies should be adapted to Turkish law and implemented through training, audit, reporting, and investigation procedures.

24. Using Weak Dispute Resolution Clauses

A clause stating only that “disputes will be resolved by arbitration” is insufficient.

The agreement should specify:

• Governing law.
• Arbitration institution.
• Seat.
• Language.
• Number of arbitrators.
• Interim relief.
• Expert determination.
• Service of notices.
• Enforcement.

Certain corporate and regulatory matters may still require proceedings before Turkish authorities or courts.

25. Seeking Legal Advice Only After a Problem Arises

Late legal intervention is one of the costliest mistakes.

Investors should involve Turkish energy counsel during:

• Project screening.
• Due diligence.
• Company formation.
• Licensing.
• Contract negotiation.
• Financing.
• Construction.
• Acquisition.
• Regulatory investigations.
• Exit planning.

Preventive legal work generally costs far less than litigation, project delay, or regulatory sanctions.

Practical Pre-Investment Checklist

Before investing, a foreign energy investor should confirm:

1. The project’s legal and corporate structure.
2. Validity of all licenses and permits.
3. Secure land and access rights.
4. Reliable grid capacity.
5. Environmental compliance.
6. Tax and customs consequences.
7. Financing and lender restrictions.
8. Competition filing requirements.
9. Contractual performance protections.
10. Enforceable shareholder and exit rights.

Frequently Asked Questions

1. Can foreigners own energy companies in Turkey?

Yes. Foreign investors generally receive equal treatment with domestic investors, subject to sector-specific regulatory requirements.

2. What is the biggest legal risk?

The most serious risks usually involve defective licenses, insecure grid rights, land problems, hidden environmental liability, and weak transaction documents.

3. Is technical due diligence sufficient?

No. Technical review should be combined with legal, tax, environmental, corporate, and financial due diligence.

4. Does buying shares transfer historical liabilities?

In a share acquisition, the target company generally retains its existing regulatory, contractual, tax, employment, and environmental liabilities.

5. Is Competition Authority approval always required?

No. It depends on whether control changes and whether the applicable turnover thresholds are met.

6. Can foreign investors obtain government incentives?

Yes. Qualifying projects may benefit from Turkey’s investment incentive mechanisms.

7. Should the investor use a Turkish project company?

Frequently, yes. However, the correct structure depends on licensing, tax, financing, governance, and exit objectives.

8. Why hire a Turkish energy lawyer?

A Turkish energy lawyer can conduct due diligence, verify EMRA compliance, negotiate contracts, protect shareholder rights, coordinate incentives and financing, and represent investors in regulatory or commercial disputes.

Legal Support – Contact Our Energy Lawyers

Foreign energy investment in Turkey can be highly profitable when regulatory, contractual, tax, and financing risks are identified before capital is committed.

Fırat Fesih Kaya and our legal team advise foreign investors, renewable energy developers, infrastructure funds, EPC contractors, banks, and multinational energy companies on legal due diligence, EMRA licensing, project finance, acquisitions, shareholder agreements, competition approval, customs compliance, and energy disputes.

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Email: info@firatfesihkaya.av.tr
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