By Kesikli Law Firm

Security Package Structuring Under the New Licensing Regime A Practitioner’s Guide for Lenders, Sponsors, and Investors

Introduction

Türkiye’s renewable energy sector has entered a new and remarkably dynamic phase. The country’s ambition to more than double its wind capacity and quadruple its solar capacity by 2035, combined with a net zero target for 2053, has created an environment in which project finance transactions are becoming larger, more complex, and more demanding in terms of legal structuring. As of 2025, Türkiye ranks among the top five European countries in installed renewable capacity and continues to attract significant attention from both international development finance institutions and commercial lenders. At the same time, the regulatory landscape has undergone substantial transformation. The amendments introduced in the last quarter of 2025, the enactment of Law No. 7554 (commonly referred to as the “Super Permit” legislation) in July 2025, and the continued evolution of EMRA’s licensing framework have fundamentally reshaped the way renewable energy projects are developed, financed, and secured in this jurisdiction. For those of us advising on these transactions daily, the interplay between the new licensing rules and the requirements of a bankable security package has become one of the most critical areas of legal practice in the Turkish energy market. This article draws on our experience in structuring and negotiating project finance transactions across the wind, solar, and hybrid segments in Türkiye. We aim to provide a practical, grounded analysis of how security packages should be approached under the current regime, with particular attention to the issues that matter most to lenders and their counsel.

The Evolving Licensing Framework: What Has Changed

To properly structure security in a Turkish renewable energy project financing, one must first understand the licensing architecture and the recent shifts within it. The two-tier system of preliminary licence ("ön lisans") followed by a generation licence ("üretim lisansı") remains the backbone of the regulatory framework under the Electricity Market Law No. 6446. However, the practical operation of this system has been significantly refined. One of the most consequential changes introduced by the December 2025 amendments is the new deadline regime for licence transfers. EMRA approval for transfers of licensed generation facilities now comes with a mandatory completion window, which cannot be shorter than six months. If the parties fail to complete the transfer within this period, the approval lapses automatically. This is a critical consideration for lenders structuring step in rights, since the enforceability of share pledge arrangements and the ability to substitute sponsors ultimately depend on the transferability of the underlying licence. The harmonisation of YEKA (Renewable Energy Resource Area) project timelines with general electricity market licensing rules is another meaningful development. Previously, YEKA projects operated under a somewhat parallel regulatory universe, with their own extension mechanisms and timelines. The 2025 amendments have brought these projects into closer alignment with the standard regime, including the notable change that extensions of preliminary licence periods for YEKA projects are no longer automatic but require the affirmative consent of the Ministry of Energy and Natural Resources. For lenders to YEKA projects, this introduces a degree of discretionary risk that was not present before. The “Super Permit” legislation under Law No. 7554 merits particular attention. This law, which took effect in July 2025, grants EMRA the authority to conduct urgent expropriation procedures for renewable energy investments through the end of 2030, with a possible five-year extension by presidential decree. It also extends the 85% discount on permit, lease, and easement fees to generation facilities commissioned before 31 December 2030 (previously, the cutoff was 2025). These provisions are designed to remove land acquisition bottlenecks and reduce costs, but they also create new dynamics for security structuring, particularly around land rights and the enforceability of mortgages on project sites. On the unlicensed generation side, facilities with installed capacity of 5 MW or less continue to benefit from a lighter regulatory framework. The November 2025 amendments clarified the technical review procedures for these projects, requiring centralised evaluation through the YEKİS monitoring system with strictly defined deadlines. While unlicensed projects typically involve simpler financing structures, the tightening of procedural requirements means that lenders should no longer assume that the regulatory risk profile is negligible.

The Architecture of a Turkish Project Finance Security Package

Turkish law does not recognise the concept of a floating charge over all present and future assets as it exists in common law jurisdictions. Security must therefore be structured on an asset-by-asset basis, with each element of the package requiring its own perfection steps and documentation. This reality makes the construction of a comprehensive security package in Türkiye both technically demanding and strategically important. We set out below the principal components of a well-structured security package in a Turkish renewable energy project financing, drawing on current market practice and the latest regulatory requirements.

Share Pledges and Sponsor Security

The pledge over the shares of the project company (the SPV) is typically the cornerstone of the security package. For joint stock companies ("anonim şirket"), which are the standard vehicle for licensed energy projects, perfection requires execution of a written pledge agreement, endorsement of the share certificates (or temporary certificates), physical delivery of those certificates to the lenders or their security agent, and recording of the pledge in the company’s share ledger. Where the SPV is structured as a limited liability company, the pledge agreement must additionally be notarised. The share pledge is the primary mechanism through which lenders exercise control over a distressed project. Upon an event of default, enforcement typically proceeds through public auction under the Enforcement and Bankruptcy Law No. 2004. However, the Movable Pledge Law No. 6750 also opens the possibility for the pledgee to request transfer of ownership of the pledged shares, or to assign the receivable under the pledge to a licensed asset management company. These alternative enforcement routes, while not yet extensively tested before the courts, are increasingly being documented in project finance agreements. One must also bear in mind the regulatory overlay. Any change of control in a licensed generation company requires EMRA notification (and, depending on the threshold, approval). The 2025 amendments have extended this notification obligation to all licence holders whose tariff is not subject to regulation, not just generation licence holders. Lenders should therefore ensure that their step-in and enforcement provisions are structured to allow sufficient time for regulatory approvals, particularly given the new mandatory completion windows for licence transfers.

Mortgages Over Project Land and Real Property

Mortgages over the project site are a standard feature of any renewable energy financing. Under Turkish law, a mortgage must be executed before the relevant land registry ("tapu müdürlüğü") and registered to be perfected. Türkiye employs a fixed rank system for mortgages: the creditor holding the highest-ranked mortgage is paid first upon foreclosure, regardless of the date the security interest was actually created. This makes the priority of lender mortgages a matter of considerable commercial importance. For foreign currency-denominated loans (which remain common in project finance), the mortgage amount may be expressed in the relevant foreign currency, which avoids the currency mismatch that would otherwise arise if the mortgage were denominated in Turkish Lira. This is one of the exceptions to the general rule requiring mortgage amounts to be stated in Lira. The Super Permit legislation introduces new considerations for mortgage structuring. Where EMRA exercises its urgent expropriation powers to acquire privately owned land for a renewable energy project, the nature of the project company’s interest in the land may shift from ownership to a right of use or easement. Lenders will need to confirm that their mortgage (or, where applicable, their usufruct pledge) properly covers the specific form of land interest that exists following any expropriation or administrative reallocation. In our experience, this is an area where careful title due diligence at the outset pays significant dividends.

Pledges Over Movable Assets and Equipment

Wind turbines, solar panels, inverters, transformers, and balance of plant equipment represent a substantial portion of the capital value in any renewable energy project. Pledges over these assets are governed primarily by the Movable Pledge Law No. 6750, which introduced a registry-based system for commercial movable pledges. Perfection requires execution of a notarised pledge agreement and registration with the TARES electronic movable pledge registry. The law also permits the pledge of entire commercial enterprises, which can capture a broad range of present and future assets (though not immovable property). An important practical point: certain categories of movables, including ships, aircraft, motor vehicles, trademarks, and mining rights, fall outside the scope of the Movable Pledge Law and require registration with their own specialised registries. While these exclusions are less commonly encountered in renewable energy projects, they become relevant in hybrid or multi-purpose facilities.

Assignment and Pledge of Receivables

The assignment of receivables under key project contracts is one of the most commercially significant elements of the security package. This typically covers revenues under offtake agreements or power purchase agreements, payments under EPC and O&M contracts, insurance proceeds, and any other material income streams of the SPV. Under Turkish law, the assignment of receivables requires a written agreement and takes effect without the debtor's consent. However, as a matter of prudent practice, lenders invariably require notification of the debtor and an acknowledgement of the assignment. Without such notice, a debtor that makes payment in good faith to the original creditor (the project company) may be discharged from its obligation, which obviously undermines the purpose of the assignment from the lender’s perspective. Future receivables are also assignable under Turkish law, provided that they are sufficiently identified or identifiable at the time of assignment. This is particularly relevant for project finance, where the revenue stream from a power plant may extend decades into the future. A valid assignment automatically transfers all ancillary rights attached to the assigned receivable, including any security interests that secure it. In the context of the updated YEKDEM (Renewable Energy Sources Support Mechanism), lenders should pay close attention to the revised settlement methodology. The 2025 amendments clarified that energy stored under the YEKDEM framework and fed into the grid after the facility exits the support scheme will not count toward YEK settlement. This may affect projected revenue streams and, consequently, the value of assigned receivables for lenders relying on YEKDEM income as part of their base case.

Account Pledges and Cash Waterfall Mechanisms

Control over the project company’s bank accounts is central to any project finance security package. Account pledges are perfected through execution of a pledge agreement and notification to (and acknowledgement by) the relevant account bank. The bank then records the pledge in its internal systems, confirming the lenders’ priority. In practice, the cash waterfall is typically documented through a combination of the account pledge agreements and a detailed accounts agreement or common terms agreement. The waterfall governs the priority of disbursements from project revenues: first to operating expenses, then to debt service, then to maintenance reserves, and finally (if surplus remains) to equity distributions. Lenders normally require exclusive control over the project’s banking arrangements, which is achieved by requiring all project revenues to flow into pledged accounts maintained with an acceptable account bank.

Insurance Assignments and Creditor Protections

Insurance is a critical but sometimes underappreciated element of the security package. Under Turkish Insurance Law No. 5684, insurable interests located in Türkiye belonging to Turkish residents must, as a general rule, be insured by insurance companies operating in Türkiye. However, reinsurance abroad is standard practice and both original policies and reinsurance contracts are assignable. Market standard protections include recording the lenders or security agent as loss payee and, where appropriate, as additional insured or co-insured. Restrictions on cancellation or material amendment without prior notice to lenders are also customary. Insurance proceeds from material claims should be directed into controlled accounts and applied through the agreed cash waterfall. Importantly, Turkish law permits insurance proceeds to be payable to, and security to be created for the benefit of, foreign secured creditors, which remains a critical consideration in cross-border financings.

The Parallel Debt and Security Agent Structure

Turkish law treats pledges and mortgages as accessory ("ancillary") security interests, meaning that the holder of the security right must also be the creditor of the secured obligation. This principle presents a structural challenge in syndicated loan transactions, where multiple lenders share a common security package held by a single agent. The solution that has become market standard in Türkiye is the parallel debt structure. Under this arrangement, the project company acknowledges an independent, abstract obligation (the “parallel debt”) in favour of the security agent, in an amount equal to the aggregate obligations owed to all lenders under the facility agreement. The security interests are then established to secure this parallel debt, with the security agent as the direct creditor and security holder. While the parallel debt mechanism is now deeply embedded in Turkish project finance practice, it has not yet been definitively tested before the Turkish courts. In our view, the structure is consistent with the principles of Turkish civil law: the certainty of the pledged claim is satisfied because the parallel debt arises from a specific legal transaction, and the accessory principle is preserved because the security agent is both the creditor and the security holder. Nevertheless, prudent counsel should be transparent with clients about the residual enforceability uncertainty and should ensure that parallel debt provisions are carefully drafted to withstand judicial scrutiny.

Direct Agreements, Step In Rights, and Substitution

Direct agreements between lenders and key project counterparties (the EPC contractor, O&M provider, offtaker, and sometimes the relevant governmental authority) are a fundamental part of the security architecture. Their purpose is to give lenders the right to step in and cure defaults under the relevant project contracts before those contracts can be terminated, and to facilitate the substitution of the project company or its sponsors if enforcement becomes necessary. The enforceability and practical utility of step in rights in Türkiye depend heavily on the transferability of the underlying licence. Under the current regime, any transfer of a licensed generation facility requires EMRA approval, and the 2025 amendments have imposed strict completion deadlines. Lenders should therefore negotiate step in and substitution mechanisms that explicitly account for the regulatory approval timeline, including standstill provisions that prevent counterparties from terminating project agreements while the EMRA approval process is underway. For YEKA projects, an additional layer of complexity arises from the relationship between the YEKA contract and the licence. If the Ministry terminates a YEKA contract and notifies EMRA, both the preliminary licence and the generation licence may be revoked. This means that the value of step in rights in YEKA projects is directly linked to the stability of the YEKA contractual framework. Lenders to these projects should seek robust cure periods and consultation rights before any ministerial termination can take effect.

Perfection, Priority, and Enforcement: Practical Considerations

Each element of the security package carries its own perfection requirements, and failure to observe these formalities can be fatal to the enforceability of the security. We summarise the key points below. For share pledges over joint stock companies, the sequence is: written agreement, endorsement, physical delivery of certificates, and entry in the share ledger. For account pledges, the critical step is notification to and acknowledgement by the account bank. Movable pledges under the Movable Pledge Law require notarisation and registration in TARES. Mortgages require execution before and registration at the land registry. One favourable aspect of Turkish project finance practice is the blanket stamp duty exemption applicable to security documents where one of the parties qualifies as a financial institution. This means that, in most cases, there are no meaningful duties or fees payable to perfect security interests in project finance transactions, a material cost saving compared to many other jurisdictions. On enforcement, the general rule under Turkish law is that secured creditors have a right of preference over the sale proceeds of the secured assets. However, certain public receivables (such as tax claims) may rank ahead of or alongside the lender’s security in a bankruptcy scenario. Additionally, lenders face clawback risk: other creditors of an insolvent debtor may apply to courts to set aside certain transactions entered into during the suspect period before insolvency. Careful structuring and timing of security perfection can help mitigate these risks, but they cannot be entirely eliminated.

YEKDEM, Revenue Risk, and the Impact on Security Valuation

The commercial viability of any renewable energy project finance transaction ultimately depends on the predictability of the revenue stream. In Türkiye, the YEKDEM feed in tariff mechanism has been the primary revenue support instrument for renewable projects. Facilities commissioned before 30 June 2021 benefit from USD denominated feed in tariffs for a period of ten years. Those commissioned after that date are subject to a revised mechanism with TL denominated tariffs adjusted quarterly based on a basket of indices (PPI, CPI, USD, and EUR), subject to USD indexed caps. The new YEKA tender framework introduces further variations. For projects awarded under the latest YEKA tenders, a minimum feed in tariff of USD 4.95 per kWh applies for the first five to six years, followed by a fixed rate for the subsequent twenty years, with the remaining licence period subject to free market conditions. These structures offer a degree of revenue visibility, but they also introduce step down risks and transition periods that must be carefully modelled in the financial projections underpinning any lending decision. From a security perspective, the value of assigned receivables is only as strong as the revenue certainty behind them. Lenders should ensure that their base case financial models conservatively reflect the applicable tariff structure, including any phase out or transition provisions. Where the project is approaching the end of its YEKDEM support period, the shift to merchant risk is a material factor that will affect both the terms of the financing and the structure of the security package.

ESG, Green Finance, and Evolving Compliance Expectations

The green finance dimension of Turkish renewable energy project finance has matured significantly. Türkiye’s sustainable finance taxonomy, which is being developed in alignment with the EU taxonomy framework, will require institutions subject to sustainability reporting rules to report taxonomy aligned revenue and capital expenditures from 2026 onwards, with mandatory disclosures following from 2027. This alignment is expected to facilitate cross border green investments and should, over time, reduce the cost of capital for compliant projects. International lenders increasingly require compliance with the Equator Principles and IFC Performance Standards as a condition of financing. Adherence to these frameworks involves environmental impact assessments, stakeholder engagement, biodiversity management, and ongoing monitoring and reporting obligations. While these requirements add to the upfront cost of project development, they also serve a risk mitigation function. Projects that meet international ESG standards are less likely to face regulatory enforcement actions, community opposition, or reputational damage, all of which can materially affect the value of the lender’s security. The proposed streamlining of Environmental Impact Assessment procedures under the Super Permit framework, which envisions EIA completion within three to six months and the possibility of conducting other permit applications simultaneously, has drawn some criticism from environmental organisations. Lenders should be mindful that expedited EIA processes may increase the risk of subsequent legal challenges to project permits, which could in turn affect the stability of the licence and the enforceability of security interests tied to it.

Structuring Recommendations for Market Participants

Based on our experience across a wide range of Turkish renewable energy financings, we would highlight several key structuring considerations for market participants navigating the current environment. First, the new deadline regime for licence transfers demands that step in and enforcement provisions in facility agreements and direct agreements be carefully calibrated to the regulatory timeline. Lenders should build in sufficient buffer periods and ensure that standstill mechanisms prevent premature termination of project contracts while EMRA approvals are pending. Second, the extension of the commissioning deadline for the 85% permit fee discount to 2030 under Law No. 7554 creates opportunities for projects to benefit from reduced land costs, but it also means that lenders should verify the precise nature of the project company’s land interest (ownership, leasehold, easement, or right of use) and tailor their mortgage or pledge documentation accordingly. Third, the evolving YEKDEM and YEKA tariff structures require lenders to model revenue streams with a high degree of granularity. Security packages should be stress tested against downside scenarios, including tariff step downs, currency fluctuations, and the transition from supported to merchant pricing. Fourth, the parallel debt structure, while well established in practice, should be documented with meticulous care. Given the absence of definitive court precedent, the drafting of the parallel debt clause, the abstract acknowledgement of debt, and the related security documents should leave no room for ambiguity about the independent nature of the security agent’s claim. Fifth, with Türkiye’s sustainability taxonomy and mandatory ESG disclosures on the horizon, sponsors and lenders alike should proactively integrate ESG compliance into their project development and financing frameworks. Projects that are taxonomy aligned from the outset will find it materially easier to access green bonds, concessional finance, and international development bank support.

Conclusion

Türkiye’s renewable energy sector stands at a point of genuine inflection. The regulatory reforms of 2025, the Super Permit legislation, and the continuing evolution of the licensing and incentive frameworks have created a more structured but also more demanding environment for project finance. For lenders, the quality of the security package is not merely a legal formality; it is the foundation upon which the entire risk allocation of the transaction rests. We believe that the Turkish market offers compelling opportunities for well-structured renewable energy investments. The key to realising those opportunities lies in rigorous legal analysis, careful coordination between regulatory, corporate, and financing workstreams, and a willingness to engage with the nuances of a legal system that, while civil law in origin, has developed its own distinctive project finance practice. Those who take the time to get the structuring right will find that Türkiye rewards diligence with bankable, enforceable, and commercially sound transactions. By Kesikli Law Firm

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