Will high domestic content requirements fuel or hinder Turkish solar sector growth?

Turkish Minister of Energy

by Kanije Hablemitoğlu

Turkey’s solar power market continues to lure foreign investors as Saudi energy giant ACWA Power recently announced preparations to bid at the auction for the 1 GW Karapinar solar project, scheduled to be held on February 21.

Aside from potentially being the largest PV power plant project in Turkey, this will be the first time that the Regulation on Renewable Energy Resource Sites is going to be applied, which stipulates that the total percentage of required domestic content is to be determined in tender specifications.

For the Karapinar project, Turkish Minister of Energy and Natural Resources Berat Albayrak revealed the anticipated local content requirements during his presentation of the Ministry’s 2017 budget at parliament last month. The ministry plans to build an integrated factory where 75% of the PV module components will be domestically manufactured, and launch an R&D center with a minimum of 80% local employment.

Turkish PV panel manufacturers have previously faced challenges in competing with Chinese solar cells and to remain in the market, however the Turkish government incentivizes the PV manufacturers with a US$0.133 per kilowatt-hour feed-in tariff rate and incremental tariffs that entail 55% local content.

The Regulation aims to expedite the investment procedures as well as increase the domestic manufacturing of components but whether it will be effective on the Turkish solar sector remains to be seen.