Long-term renewable Power Purchase Agreements (PPAs) have moved to the center of Europe’s electricity market reforms. Designed to shield consumers and companies from price volatility while accelerating clean energy investment, they are now seen as structural tools rather than niche instruments.
In Türkiye, however, long-term PPAs remain limited.
This is not due to a lack of renewable capacity or market experience. Türkiye has a mature generation sector and growing corporate demand for green electricity. The constraints are systemic.
Investor confidence is the primary barrier. Long-term PPAs depend on long-term predictability. Frequent regulatory changes, macroeconomic volatility, and elevated country risk make long-term pricing difficult and increase financing costs, discouraging both buyers and sellers from committing to extended contract tenors.
Market transparency is another limiting factor. Effective PPAs depend on credible price signals and access to reliable market data. Limited forward-looking indicators reduce liquidity, complicate negotiations, and weaken risk management.
Legal enforceability also plays a decisive role. A PPA is only as strong as the system that enforces it. Uncertainty around dispute resolution timelines and outcomes shortens contract durations and raises counterparty risk.
Infrastructure constraints further undermine bankability. Renewable generation in Türkiye is increasingly decentralized, placing pressure on transmission, distribution, and system balancing. Grid congestion, limited storage capacity, and delays in upgrades introduce operational risks that directly affect long-term contracts.
Financing reflects all of these conditions. Banks assess PPAs within the broader economic and regulatory environment, not as standalone agreements. Where stability is limited, financing becomes more expensive — or unavailable — regardless of contract design.
Climate policy, market competition, data management, and risk mitigation mechanisms all influence outcomes, but none can compensate for weak fundamentals. Long-term PPAs do not function in isolation; they mirror the systems in which they operate.
Türkiye’s energy sector is technically and institutionally ready for long-term PPAs. Unlocking their full potential depends less on new instruments and more on addressing economic stability, legal certainty, market transparency, and grid readiness.
Until then, long-term PPAs will remain the exception rather than the rule.
Authors Note: Somewhat discouragingly, little appears to have changed since I first wrote on this topic on March 31, 2023. Many of the structural constraints limiting the development of long-term renewable PPAs in Türkiye remain largely intact.
