ESCO, EPC, and Corporate PPAs in Turkey: A Net-Zero Roadmap for Multinational Companies
The Energy Dilemma Facing Foreign Companies in Turkey
Imagine you operate a manufacturing facility in Turkey. Your global headquarters has committed to net-zero by 2030; your EU customers are demanding Scope 2 emissions disclosures; and as of 1 January 2026, the Carbon Border Adjustment Mechanism (CBAM) is fully in force. Meanwhile, your Turkish site still runs on a grid that is over 40% fossil fuel-based. What do you do?
The answer lies in Turkey’s growing suite of corporate PPA and ESCO/EPS structures — models that allow multinational companies to decarbonise their Turkish operations quickly, compliantly, and in many cases without spending a single dollar of capital expenditure.
What Is an ESCO and How Does EPS Work in Turkey?
An Energy Service Company (ESCO) model is a financing structure in which the full capital cost of a renewable energy installation is borne by a third-party energy services firm. The corporate tenant or facility owner — your factory, warehouse or retail site — gains access to clean energy infrastructure with no upfront CAPEX.
The Energy Performance Contract (EPS) is the legal framework that governs this relationship. In Turkey, EPS contracts have had a statutory basis since 2014, with the regulatory scope significantly expanded in 2022.
Here is how the workflow operates:
- The ESCO (or Intercon acting in this capacity) funds the entire rooftop or ground-mounted solar installation
- The facility pays a pre-agreed share of the energy savings — typically less than the current electricity bill
- At the end of the contract term (usually 8–15 years), the system transfers to the facility owner at no additional cost
- Throughout the contract, the facility enjoys lower operating costs and measurable carbon reduction — from day one
This is precisely the model Intercon deployed in the BURULAŞ Rooftop Solar project: a public transport operator achieving clean energy procurement with zero capital outlay, locking in energy costs against rising tariffs while meeting sustainability targets.
Corporate PPA Structures Available in Turkey
A Corporate Power Purchase Agreement (PPA) is a long-term electricity supply contract signed directly between a renewable energy producer and a corporate buyer, bypassing the spot market. Turkey’s corporate PPA market gained significant momentum following the 2022 regulatory reforms that enabled large-scale self-consumption without a generation licence.
Three main PPA structures are available in Turkey:
1. Physical PPA (On-site or Off-site) The renewable energy facility is directly connected to the buyer’s site or feeds into the grid under a bilateral contract. Most common application: rooftop or adjacent-land solar installations above 5 MWp.
2. Virtual PPA (VPPA) The facility and the energy source are not physically connected. Settlement occurs on the basis of the price differential. Many European multinationals prefer this model for its geographic flexibility — the corporate buyer can claim renewable energy benefits regardless of where the generation asset is located in Turkey.
3. Sleeve PPA Structured through a third-party licensed energy supplier acting as intermediary. Both generator and buyer deal with a single counterparty, reducing legal complexity — though the cost structure differs accordingly.
Typical contract durations run 10 to 15 years, providing the generator with bankable revenue certainty and the buyer with a predictable, inflation-linked energy price.
YEK-G Certification: Your CBAM Compliance Tool
Turkey’s official mechanism for verifying and documenting renewable electricity consumption is the YEK-G (Renewable Energy Source Guarantee of Origin) certificate — one certificate issued per 1 MWh of renewable generation. For Turkish manufacturers exporting to the EU under CBAM, and for European companies procuring from Turkish supply chains, YEK-G is the primary instrument for demonstrating Scope 2 emission reductions.
YEK-G operates on standards compatible with the European Association of Issuing Bodies (AIB) framework, with full cross-border interoperability under ongoing regulatory alignment. Physical PPA and ESCO arrangements enable automatic access to YEK-G certificates, making Scope 2 disclosure straightforward and auditable.
Choosing the Right Model: A Practical Comparison
| Model | CAPEX Required | Operational Complexity | CBAM/Scope 2 Compliance | Typical Duration |
|---|---|---|---|---|
| Self-financed on-site solar | High | Low | Full | — |
| ESCO/EPS | Zero | Very low | Full (with YEK-G) | 8–15 years |
| Physical Corporate PPA | Low–Medium | Medium | Full | 10–15 years |
| Virtual PPA (VPPA) | Zero | Medium | Full | 10–15 years |
| YEK-G certificate purchase only | Zero | Very low | Partial (no generation) | Annual |
Worked Example: Automotive Plant, 50,000 m²
Consider a Turkish-based automotive components plant with 50,000 m² of covered floor area consuming 12 GWh of electricity annually.
5 MWp Rooftop Solar — ESCO Model:
- Installed capacity: 5 MWp
- Annual generation: approximately 7,500 MWh
- Share of site consumption offset: ~62%
- Annual CO₂ avoided: approximately 4,500 tonnes
- Annual cost saving to facility (at current Turkish industrial tariffs): USD 150,000–250,000
- Facility CAPEX: USD 0
- System transfer at contract end: included
From the first day of operation, the facility benefits from lower energy costs, measurable carbon reduction, and a bankable YEK-G certification trail for CBAM reporting — all without touching the balance sheet.
Adding battery storage (BESS) to the system extends renewable coverage into evening hours, further strengthening the Scope 2 position and reducing reliance on grid electricity.
Turkey’s 2022 Regulatory Reform: Unlocking Scale
The 2022 amendments to Turkey’s electricity market regulations effectively removed the hard 5 MWp ceiling on unlicensed self-consumption installations. Permitted capacity is now determined primarily by grid connection and transformer specifications rather than a fixed threshold.
For large industrial consumers — logistics hubs, shopping centres, steel mills, food processors — this means multi-megawatt ESCO and PPA arrangements are now fully achievable without a generation licence. The reform has materially widened the addressable market for corporate clean energy procurement in Turkey.
Managing Currency and Regulatory Risk
One of the most common questions from foreign investors: “What happens to our PPA if the Turkish lira weakens?”
Several structural protections apply:
- Large corporate PPA contracts in Turkey typically include USD or EUR indexation clauses
- For projects winning capacity under the YEKA scheme, the government provides a 10-year USD-denominated feed-in tariff — a sovereign guarantee of dollar-denominated revenue
- EPS contracts can include adjustment mechanisms tied to energy price indices and exchange rate benchmarks
Intercon additionally facilitates access to MIGA (Multilateral Investment Guarantee Agency), DFC (U.S. International Development Finance Corporation), and UKEF (UK Export Finance) frameworks to further de-risk project structures for foreign corporate buyers and investors.
Intercon’s Track Record in ESCO and PPA
Intercon brings over two decades of hands-on experience in Turkey’s energy infrastructure market. The BURULAŞ Rooftop Solar project stands as a live reference for the full ESCO model: a public transport authority achieving clean energy procurement at zero capital cost, with full system handover scheduled at contract end.
Intercon’s services for corporate ESCO and PPA clients include:
- Feasibility assessment and energy audit
- ESCO/EPS/BOT contract structuring
- YEK-G certificate procurement and registry management
- PPA negotiation and legal advisory support
- CBAM Scope 2 technical documentation
- Connection between international investors, financiers and Turkish counterparties
With offices in London (16 Upper Woburn Place, WC1H 0AF) and Istanbul (Ataşehir), Intercon is positioned to serve both European and Gulf-based companies entering the Turkish market.
Frequently Asked Questions (FAQ)
Does the ESCO model mean the facility pays nothing at all?
The facility pays no CAPEX. Under the EPS contract, it makes a pre-agreed contribution from energy savings — typically structured so that the net payment is lower than the current electricity bill. The result is positive cash flow from day one.
Is YEK-G sufficient for CBAM Scope 2 compliance?
YEK-G is the primary instrument for demonstrating renewable electricity consumption in Turkey, and is accepted for Scope 2 reporting under the GHG Protocol. Detailed guidance on CBAM-specific documentation requirements is being clarified through 2026 implementing regulations; Intercon monitors these developments actively and advises clients accordingly.
Does a Virtual PPA require physical presence in Turkey?
No. A VPPA is a purely financial instrument. The corporate buyer does not need a physical facility in Turkey to benefit from the renewable energy offset and associated YEK-G certificates.
What is the maximum size for an unlicensed solar installation in Turkey?
Following the 2022 reform, there is no fixed upper limit for unlicensed self-consumption systems. Permitted capacity is determined by grid connection specifications and transformer ratings. Installations below 1 MWp are unlicensed regardless of connection type.
Who owns the solar system after the ESCO contract ends?
Full ownership transfers to the facility at the end of the EPS contract term. From that point, all electricity generation is effectively free for the site owner.
Get in Touch with Intercon
Is the right model for your Turkish operations an ESCO arrangement, a corporate PPA, or a hybrid structure combining both? Intercon’s London and Istanbul teams offer complimentary preliminary assessments for multinational companies evaluating clean energy transition options in Turkey.
Our Related Services
- Investment Projects Research
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- Energy Storage Solutions
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