Turkey: Commercial rooftop systems prove an interesting market10. June 2013 | Applications & Installations, Global PV markets, Industry & Suppliers, Markets & Trends | By: Hans-Christoph Neidlein
With its booming economy and growing energy demand, Turkey is one the world's most promising new PV markets, but difficulties in financing and bureaucracy remain obstacles.
Turkey is one of the most promising new photovoltaic markets. By 2020,the country expects an additional 4 to 6 GW to be installed. Funding and bureaucracy, however, remain obstacles. For the moment, short-term investments in commercial rooftop systems for self-consumption with a power rating of up to 1 MW offer the best opportunities. This was the conclusion at Solarpraxis and pv magazine’s inaugural PV Turkey investment workshop that took place on June 6 in Berlin.
"The growing energy demand of the country’s booming economy and the high electricity prices are the main drivers behind Turkey’s PV market," stressed Matthias Kittler from consulting firm Apricum. Currently, a kilowatt hour of electricity costs around $0.14 (TRY 26) for the industrial sector and $0.16 (TRY 32) for private households. Electricity prices have increased an average of 11% a year since 2006. In order to meet the growing demand for electricity (which rises 6% annually), the country would need new power plants with a capacity of 29 GW by 2021 while also replacing outdated plants with a generating capacity of 20 GW, said Kittler. The political desire for greater independence from Russian and Iranian gas imports coupled with a sharp fall in prices of photovoltaic systems offer enormous opportunities for solar power in Turkey.
The average solar irradiation in the country lies at an annual average of 1,527 kWh per square meter, although there are strong regional differences between the north of the country, with some 1,400 kWh per square meter annually, and the south with around 2,000 kWh per square meter a year.
"The interest in photovoltaic is growing rapidly," said Kittler. The time is now ripe for solar power in Turkey to grow beyond its niche. Indeed, by the end of 2012, Turkey had less than 10 MW of installed PV systems. Kittler expects the number of PV systems in the country to double annually through 2020, an increase of installed capacity of between 500 and 800 MW in 2015 and a rise of between 3.8 and 6.5 GW by 2020. He also sees average PV electricity production costs of less than $0.15 per kilowatt hour as achievable. Commercial rooftop systems of up to 1 MW and ground-mounted facilities of more than 1 MW are the country’s main growth areas.
Turkey’s current feed-in tariff is $0.133 per kilowatt hour with a duration of 10 years. For a five-year term, a surcharge of $0.067 is paid for electricity from PV systems with a high proportion of locally produced components. Plants with a capacity of up to 500 kW can be operated without a license. According to Engin Yaman of China Sunergy (CSUN) Europe, the government is expected to approve legislation that will increase this licensing limit to 1 MW in the next few weeks.
The licensing process for larger installations (more than 500 kW to 1 MW) will begin on June 10. Applications can be filed with the regulator EPDK by June 14.
This first round of licensing for large systems is limited to 600 MW. Initial inquiries from 409 companies have already been received and a total of more than 10 GW in requests are expected, according to Kittler. It will be interesting to see how the Turkish regulator deals with the flood of applications and how quickly they are processed, said Niels Kröner of AEE Renewables Group. The experience with Turkish bureaucracy has been "very sobering" up until now and the responsible government agencies have often been very slow to implement new laws. Even for the smaller license-free PV systems, the necessary permits can often take up to nine months.
A further obstacle for the PV market in Turkey, according to Kröner, is the complicated issue of land rights, the low cultural understanding of long-term contracts and especially the difficult financing.
Firstly, photovoltaic projects are new territory for the banks. In addition, expected returns for such projects are often in the double digits. AEE Renewables has had its best experience with pilot projects that have had no participation of local banks, such as a 10 kW rooftop system atop the Honda factory in Gebze.
Stefan Müller, CEO of Enerparc, had a similar experience with the financing of rooftop installations in Turkey. The Hamburg-based company recently developed a 500 kW rooftop system at Prokon Manufacturing in Ankara as an EPC project. The power will be used for self-consumption. A decisive factor in the project was the commitment of the owner, who wanted to become more independent from his energy supplier.
"The entrepreneurial potential, especially in the SME sector, is very high in Turkey," Mueller said, adding that this would spur the further expansion of PV. In particular, Müller sees great potential in the development of commercial rooftop systems for self-consumption, financed by Turkish companies themselves. Moreover, the diverse economic and cultural relations between Germany and Turkey are seen as very conducive to the involvement of German companies in the country. Other advantages for German companies include the very good logistical links between the two countries, the fact that Germans do not need a visa to travel to Turkey and the possibility of duty-free imports.
The PV Turkey investment workshop in Berlin provided a view of the great potential the country offers for the PV sector, but it also illustrated the inherent difficulties for international companies seeking to do business there and the need for a distinct approach to the fast-growing market.
Translated by Edgar Meza
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