Exponential or slow growth?

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According to SolarPower Europe, Turkey is ranked eighth in terms of its installed solar capacity scenarios (2018-2022), where 7.6 GW could be realized in the low scenario and 13.2 GW in the high scenario by 2022.

Considering licensed projects account for only 82 MW of Turkey’s total 5 GW of installed PV, and the slow progress of the gigawatt-scale YEKA-1 project (Yenilenebilir Enerji Kaynak Alanları, or Renewable Energy Resource Areas), it is clear that utility-scale projects are struggling. Given that unlicensed projects at scale, bundled into 1 MW lots, will no longer be allowed, the focus of Turkish PV players has shifted either to small-scale, self-consumption, or utility-scale YEKA tenders.

The most discussed business models today are based on self-consumption. Increasing electricity rates provide an opportunity to commercial and industrial (C&I) consumers considering installing solar PV at the point of consumption.

A draft net metering policy was published in October 2018, which excited market participants. New legislation is expected shortly. A regulation exempting renewable arrays in industrial areas from value-added tax was introduced in January 2019. However, the volatility of the USD/TRY exchange rate, lack of competitive financing, and general market challenges continue to be issues. Nevertheless, some new initiatives at the corporate level are being announced, such as that from the Garanti Bank, which is planning to build three solar plants totaling 93 kWp in three different cities, based entirely on self-consumption. I believe that this is the start of a strong corporate trend.

YEKA tenders

Unfortunately, the YEKA-1 project has not moved forward at the speed initially expected. Reports are mounting though that the dispute between the winners of the tender has been resolved.

A new YEKA tender was announced as 2018 drew to a close. However, on January 13 it was canceled, due to foggy financial and market conditions and little interest from potential investors.

The Ministry of Energy’s priority for 2019 will remain YEKA tenders. These projects are expected to support local manufacturers, which appears to be a prerequisite of the government. I believe that the YEKA-2 tender will come back into discussion once authorities see that financing and market conditions are good enough to create a competitive result.

Even though many are not comfortable with the YEKA projects, tenders still attract the interest of global players. The structure and conditions differ from standard IFC tenders, but it doesn’t mean that the project itself is not bankable. Bidders should use local and global expertise to get an advantage in the process.

Success in a YEKA project requires the bidding process and market potential to be digested diligently, together with local experts. Without local insight, a risk is that potential local partners may not align with the bidder’s profile, strategy, and interest.

Mini YEKA

Further to the canceled or postponed YEKA-2 tender, a new hope was raised by the prospect of mini YEKA tenders. It has been discussed by Turkish solar associations for almost a year and was proposed to the Ministry of Energy. The proposal suggests capacities be spread over various cities based on projects around
20-30 MW. This type of tender will allow many companies to be involved in the process, which is positive for the local industry. The Turkish solar industry is facing a slowdown. Authorities should manage this by supporting small to mid-scale PV projects, to keep the industry growing. Otherwise, experienced local industry players will see deep crisis, if not bankruptcies.

About the author

Muren Guler is the managing director of Global Energy Ltd, which provides consultancy on project and business development in renewable energy, particularly utility-scale solar. Guler worked for SkyPower as a regional manager where he was involved in project development activities in Europe, Asia, and Africa.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.