New Turkish FITs disappointing

Widely unnoticed by the public, and almost clandestinely, the Turkish Parliament passed the amended bill on December 29, 2010. Under the new law, the FITs are now based on the U.S. dollar as opposed to the euro, with compensation for solar-based energy set at a mere USD$0.133, which is around €0.10 or half of what had been proposed over a year earlier. The state’s commitment to purchase energy fed into the national grid at this tariff will be valid for only 10 years.

If mechanical and electro-mechanical components "Made in Turkey" are used in the facility, an additional incentive of USD$0.004 to USD$0.024 per KWh will reportedly be granted for five years. Additionally, it has been said that the total installed power of all facilities combined will be limited to 600 megawatts until December 31, 2013.

Taner Yildiz, Minister of Energy and Natural Resources, praised the new bill for reducing costs to investors in the renewable energy sector, while providing incentives to domestic equipment producers. However, Stefan de Haan, analyst at iSuppli has told pv magazine that the numbers appear "really, really low". "The whole industry has just started and the infrastructure is not yet in place," he explained. "Therefore, system installation prices are at the high end in comparison to places like Spain. So the tariff is too low to really ensure a good investment case. On a first analysis, I am quite suspicious."

He continued: “Everyone has expected Turkey to be one of the next big markets, but the FIT will not help it to skyrocket. Last year, the market developed by around five to 10 megawatts and we expect more than that this year. The fundamental conditions in the country are good – the installation conditions are good, it has a booming economy and there is a growing need for energy." Consequently, he believes that the country could see more than 10 gigawatts installed by 2020, althoughh the new law is not supporting that at the moment.

Lingering

An amendment to Turkey’s Renewable Energies Act, designed to raise FITs for renewable energy sources to a level attractive to investors, has been lingering in Parliament for years. Initially, the compensation was to be increased from the previous level of €0.055 per kilowatt hour (KWh) to €0.28 for the first 10 years and €0.22 for the second 10 years.

In a revised proposal, the tariff was then scaled down to €0.25 and €0.20, respectively. However, about to be passed in June 2009, the proposal was blocked at the last minute by powerful government officials. The official reason was that final adjustments would need to be made, in order to prevent a conflict with the World Trade Organization over additional incentives for employment of domestically produced equipment.