Turkey

RECAI: Country focus

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RECAI 39 - Country Focus: Turkey

 

Electricity price challenges FITs. The Government is committed to its 2009 pledge to generate 30% of power from renewables by 2023, up from less than 10%, which will require around 20GW of renewable capacity over the next decade. The introduction of FITs in 2011 helped create a large project pipeline, but the interesting dynamics of Turkey’s power market means the tariffs are actually more of a “safety net.” The FIT for wind and hydro of US$0.073/kWh for example, compares with a market power price of around US$0.09/kWh, resulting in power often being sold through bilateral contracts or in the open market.

Revisions signal efficiencies. The Government also enacted a new energy law to bolster competition by increasing the private sector’s investment share in the electricity market to 75% from just one-third a decade ago. Legislative revisions in March 2013 also saw an increase in the threshold over which projects need licenses, from 500kW to 1MW, and a new 24-month time limit on pre-construction licenses to address the hoarding of licenses by companies investing in renewables only to diversify without any strategic interest in the sector.

Turning up the power. Rapidly increasing electricity consumption and an overreliance on energy imports is a key driver of the Government’s plans to diversify the power mix. Projected electricity demand of around 6%–8% a year compare with an average of less than 1% across Europe, while fossil fuel imports account for 71.8% of Turkey’s energy needs. In early 2013, the Government claimed it would need to spend US$10b a year on new power generation until 2023 to double capacity from the current 55GW, citing renewables as one of the most important aspects of economic growth.

Wind starts the race. The Government has historically expected wind to be the main driver in meeting its 2023 target, after a 2007 wind tender resulted in 750 applications totaling 78GW of capacity, of which 350 were taken to evaluation. It says around 11GW of projects are already licensed, with actual installed wind capacity of just over 2GW at the end of 2012.

But will solar overtake? It seems solar is finally picking up the pace to challenge wind. With less than 30MW of solar capacity at the end of 2012, the Government initiated the first round of bidding for 600MW of solar licenses in June 2013, receiving almost 9GW of applications within the five-day submission period. EMRA will grant licenses in the first half of 2014 based on specific sites defined in 2011, and further tenders are expected given the Government’s goal to install 3GW of solar by 2023. The market for self-generation by corporates with large rooftops is also expected to be opened up by the new 1MW threshold below which licenses are not required, with companies now looking to lower energy bills rather than FITs.

Also in this article:

  • Geothermal coming up behind
  • Supply chain incentives
  • Funding favorite
  • Private participate
  • Jewel in the crown

Read full article (pdf, 2.8MB)

 

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