Amendments to the Procedures and Principles Concerning the R&D and P&D Activities of Electricity and Natural Gas Distribution Companies

I.Introduction

The New Framework introduces extensive amendments to the existing Procedures and Principles (“Existing Framework”) published in the Official Gazette dated 4 April 2020 and numbered 31089. With the New Framework, the current regulatory environment for the research and development (“R&D”) activities of electricity and natural gas distribution companies has been significantly expanded to include development activities relating to “products”, “methods”, “digital platforms”, “equipment”, “materials” and “field applications” (“P&D”) in the system; new procedures and principles have been introduced concerning project development and budget management processes, intellectual and industrial property rights, and commercialisation.

II. Key Changes and New Provisions

1.P&D Definition and the Mandatory Allocation of at Least 15% of the R&D Budget to P&D Activities

P&D was defined and incorporated into the Existing Framework under the New Framework. As such, prototype development, pilot implementation, validation, testing, certification, integration, localisation and pre-commercialisation maturation activities relating to information, technology, software, hardware, algorithms, data analytics solutions and systems developed as a result of R&D for use in electricity and natural gas distribution activities will be considered P&D activities.

In this respect, distribution companies have been required to allocate at least 15% of their approved R&D budgets to P&D activities. The New Framework aims to ensure that R&D outputs progress beyond the research stage and are transformed into tangible products and directly integrated into sector-specific field applications.

The New Framework provides that applications concerning P&D activities must be submitted within 3 (three) months of the submission of the final report of the relevant R&D project, and that the process concerning P&D activities will commence upon the approval of the commission (“Commission”) established with the approval of the President of the Board. The duration of P&D activities may not exceed half the approved duration of the relevant R&D project, and their budget may not exceed 30% of the approved R&D project budget. Investments intended for commercial production, mass manufacturing or widespread use have been excluded from the scope of P&D.

In addition, the New Framework provides that applications for P&D activities relating to projects completed before the date on which the New Framework entered into force must be submitted within a maximum of 3 (three) years.

2.Expansion of the Scope of Ancillary Expenses Eligible to Be Covered by the R&D Budget and Update to the Definition of Entrepreneur

The New Framework has expanded the scope of expenses that may be covered by the R&D budget. It provides that the costs of establishing R&D, Design and Incubation Centres, as well as expenditure relating to entrepreneurship, acceleration programmes, idea competitions, fairs/events and technopark collaborations, may be covered by the R&D budget, provided that they do not exceed 10% of the R&D budget for the tariff period and excluding those covered under other legislation. Ancillary expenses within this scope such as transportation and accommodation may also be covered within the same limit.

On the other hand, the definition of “Entrepreneur (start-up)” has been amended and broadened to include not only businesses operating in technoparks or incubation centres, but also businesses that have obtained a “Technopreneurship Badge” in accordance with the Regulation on the Identification and Certification of Technology and Innovation-Oriented Start-ups, published in the Official Gazette dated 3 July 2025 and numbered 32945. This amendment aims to broaden the scope of the support mechanism to cover a wider range of participants in the technology entrepreneurship ecosystem.

3.Increase in the R&D Budget Incentive for Projects for Which Patents Are Obtained

The patent incentive mechanism under the Existing Framework has been updated with the New Framework. Accordingly, where a patent is obtained as a result of an R&D project approved by the Commission, an amount corresponding to 5% of the approved project budget for each patent will be added to the R&D budget of the relevant distribution company. The New Framework increased the cap previously set at TRY 500,000 per project, to TRY 1,500,000 and it further provides that this cap will be indexed to the July 2026 Consumer Price Index and adjusted based on the month in which the patent is obtained.

4.Mandatory Allocation of at Least 20% of Intellectual and Industrial Property Rights to Distribution Companies

Under the Existing Framework, intellectual and industrial property rights arising or likely to arise from R&D projects had been left at the disposal of the distribution companies acting as the coordinator and partner of the relevant project and the stakeholder. In addition to this structure, the New Framework requires that at least 20% of such intellectual and industrial property rights belong to the distribution companies acting as the coordinator and partner of the relevant project. The principle that intellectual and industrial property rights remain at the disposal of the distribution companies and the stakeholder has been retained.

It is also stated that such intellectual and industrial property rights will be transferred to the Turkish Electricity Distribution Corporation in respect of electricity distribution licences, and to EMRA in the natural gas sector following the termination of the distribution companies’ licences. It is provided that, without prejudice to the intellectual and industrial property rights of the distribution companies acting as the project coordinator and partner and the stakeholder, inventions such as technical knowledge, software or models developed during or as a result of the implementation of R&D projects may also be used by EMRA.

5.Regulation of the Relationship Between Commercialisation Revenues and Tariff Practices and the Shares to Be Allocated to Distribution Companies

The New Framework provides that revenues generated from products, software and technologies developed as a result of R&D and P&D activities will be considered in tariff calculations. It also provides that at least 10% of the annual net turnover generated from software products and systems, and at least 1% of the annual net turnover generated from activities aimed at developing tangible products, will be allocated to the distribution companies acting as the project coordinator and partner.

III.General Assessment

With the New Framework, the existing regulatory framework for the R&D activities of electricity and natural gas distribution companies has been expanded to include P&D activities; a more comprehensive structure has been established for the development and commercialisation of R&D results. In this context, significant amendments have been introduced concerning patent incentives, intellectual and industrial property rights, and commercialisation revenues, as well as the principles governing P&D activities and budget use.

The New Framework facilitates the further development of R&D outputs through P&D activities and their integration into sector-specific applications and commercialisation processes.

You may access the Board Decision containing the New Framework buradan

You may access the board decision containing the Existing Framework buradan

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