Change is the only constant
Making sense of the regulatory framework for solar deployment in Turkey is difficult at best and mostly impenetrable at worst. While projects are undoubtedly being developed, and official approvals have been granted for a multi-GW pipeline of both licensed and unlicensed projects exists, the future of many of those projects, and the solar market more widely is threatened by an ever-shifting policy landscape.
Some of the key policy factors to be noted include:
– Very high project license costs resulting from the bidding process – in the licensed sector;
– Changes to the unlicensed sector, which appears to prohibit retroactively the trading of unlicensed projects that have received regulatory approval, potentially threatening the promising unlicensed project pipeline;
– A mooted "Energy Zone" initiative targeted at encouraging local manufacturing that may result in a GW-scale pipeline of projects awarded to individual developers, if coupled with PV cell and module production in Turkey;
– And looming antidumping or minimum price regulations likely to be applied to imported components.
Each of these factors remains multifaceted and could be reviewed or changed going forward, but collectively they represent a veritable policy minefield for project developers and component suppliers looking to do solar business in Turkey.
2016 deployment to grow
What is clear is that cumulative PV capacity in Turkey continues to grow. While there has been no boom, the volume of PV connected to Turkey's grids has grown steadily over the past years. While forecasts for the market vary widely, in fact almost more so than any markets pv magazine has investigated in the past, it looks likely that Turkey will pass 1 GW of installed solar projects by the end of 2016, from an installed base of some 350 MW today.
This deployment will predominately come in the form of utility scale projects, with growth in the domestic and small commercial rooftop sector retarded by very high import taxes on solar modules – levied on a per-kilogram basis. A waiver on this tax can be obtained by developers looking to install larger projects, however, the tax of US$35/kg of solar module is prohibitively high for the small rooftop sector, potentially doubling the price of a solar module imported into Turkey.
The import tax, mentioned above, is a policy measure that appears aimed at carving out the small rooftop sector for local PV producers in Turkey, and a manufacturer sector has become established in the country. While China's CSun operates the largest facility in Turkey, it is located in a special economic zone and not considered a Turkish operation by local solar operators. Besides the CSun module assembly facility, it is reported that there are some 18 PV module assembly operations in Turkey, although they all tend to be sized around 25 – 30 MW of annual output and reports are that currently many are operating at low utilization rates. Cell manufacturing operations are reportedly in the works, and RCT Solutions reported that it has signed a 130 MW bifacial cell fab to a Turkish manufacturer – for delivery in early 2017.
Domestic manufacturers are well represented in the solar policy discussion in the Turkish capital Ankara, and expectations at this year's Solarex show were that some form of government market protection is likely to be introduced to Turkey. Precisely what form this will take is yet to be officially confirmed by Turkish legislators. However, pv magazine heard reports of a minimum price – such as in the EU – or protective anti-dumping tariffs – such as those applied in the U.S. – are likely to be imposed in the near term.
Flexibility and innovation
As challenging as Turkey's solar regulation is, so too are project developers operating in the country innovative. The so-called ‘unlicensed' project mechanism, PV power plants that can be developed outside of the official government license structure, has seen the most activity regarding realizing utility scale solar projects in Turkey. Project size is limited to 1 MW. However, developers have been able to place multiple 1 MW projects side-by-side, with the largest project to date coming in a 22.5 MW – developed by Tekno Ray Solar, in the Konya City area.
Developing projects in this manner results in multiple companies having to be created to own 1 MW project blocks and certain project layout peculiarities. However, it does represent how with a creative mindset large projects can be realized in Turkey. Recent changes to the unlicensed market may undermine this potentially lucrative market, in particular, prohibitions on the trading of projects that have received approval before construction. Over 2 GW of unlicensed projects have a regulatory green light, but how many of these meet the new unlicensed provisions, crucially the retroactive prohibition on the trading of projects with a so-called ‘call letter' but have not been constructed, may mean much of this pipeline will not be developed.
Despite the looming dark clouds of market protectionism and changes to the regulatory landscape, the fundamentals of the Turkish PV market remains encouraging. While there has been no short-term boom, with GW of PV going in overnight, there should also be no overnight bust. Turkey's growing economy and therefore thirst for energy, its strong irradiation, increasing electricity costs, its domestic manufacturing sector – particularly capable of delivering mounting structures for solar projects, strong domestic interest in the financing of projects, and its ever-innovative businesses, all point to a sustainable PV market in the future. Just what shape it will take in the future, is anyone's guess.
The April edition of pv magazine includes a feature article including analysis of recent regulator changes. The May edition will include a full review of the Solarex event including exclusive interviews with component suppliers and project developers.