Turkiye has approved the intergovernmental agreement with Saudi Arabia for the development of renewable power plant projects (the “Agreement”).

Building on the countries’ existing energy cooperation and investment protection arrangements, the Agreement aims to strengthen partnerships between Turkish and Saudi companies, diversify energy sources and promote the development and efficient use of renewable energy and innovative green technologies. It also seeks to facilitate further renewable energy projects in Turkiye, supporting the countries’ energy security and green transition objectives.

The Agreement provides a framework for renewable energy projects totalling 5,000 MWs. The first phase covers two 1,000 MW solar power plants in Sivas and Taseli, Karaman, while a further 3,000 MW is envisaged under the second phase, with locations and tariffs subject to further agreement.

Of particular interest to investors and lenders, is that the framework combines long-term electricity purchase arrangements and euro-denominated tariffs with tax incentives and support for land access, licensing and grid connection. It also provides for mechanisms to preserve the projects’ economic balance following changes in law and international arbitration for dispute resolution in key project agreements.

The Agreement provides for entry into force upon the final diplomatic notification confirming completion of both countries’ domestic procedures.

Our energy team would be happy to assist with any queries regarding the Agreement and its implications for your business.