Turkey’s rooftop PV seeks a market

Turkey’s Solar Energy Society, Solarbaba – which organized this year’s ICCI Rooftop Solar event – centred discussion on the rooftop segment of its domestic PV market and examined three main areas: policy, technology and finance.

All three sessions were oversubscribed, indicating the level of interest in Turkish rooftop solar, especially since the ‘unlicensed' PV market has peaked and is not expected to add significant amounts of capacity in the years after 2018.

In theory unlicensed projects – those of up to 1 MW in size – can be installed on rooftops. In practice though, such schemes have never taken off. “We don’t have a rooftop PV market in Turkey today,” Ibrahim Erden, business development manager at distribution network operator Enerjisa told the event.

Net metering
“We have to consume at the moment we generate the electricity,” said Evren Evcit, vice general manager at Zorlu Solar, a subsidiary of power developer Zorlu Enerji.

“We need the metering settlement to match production with consumption,” added Evcit, who told delegates he wished Turkey had a net settlement policy in place. He wasn’t the only one.

Evcit told the ICCI that “due to the increases in electricity prices, we see industrial consumers wanting to invest in rooftop PV, which can be paid back – on average, in 7.5 years.”

Burcu Sirin, assistant general manager at Yapı Kredi Leasing, noted revenues from rooftop projects are lower than for ground-mounted unlicensed PV projects, and suggested seven to 10 years are needed for an investment to pay for itself. “Technology [PV and component] efficiency is increasing and the investment payback period [in rooftop PV] may reduce, but not to less than seven years,” she told the conference.

Plenty of ideas
ICCI panelists made numerous suggestions to support the rooftop market. Evcit, for example, said a net metering settlement could be on a monthly basis for the industrial sector and possibly differ for residential.

Ceren Su, counsel at law firm Baseak, argued tax incentives – e.g. exemptions – and a simpler application process would help the rooftop PV segment. Su proposed the idea of compulsory PV rooftops for shopping malls and also referred to power purchase agreements (PPAs), pointing out the legislative barriers on trade regarding PPAs that need to be removed.

Solar PV jobs
Enerjisa's Erden went a step further, saying: “We need net settlement but in two years we won’t need it, because of cheap storage, and the DNOs [distribution network operators] will be okay with that.”

Erden warned however, until Turkey reaches the point when unsubsidized rooftop PV and storage make economic sense, the country needs to keep the workforce it has developed via the unlicensed PV market and Evcit agreed, adding the rooftop market can create jobs as the unlicensed market did.

Financing
Everyone at the ICCI agreed financing is needed to boost the rooftop market, with the discussion session making clear current financing does not match Turkey’s rooftop potential or demand.

The European Bank for Reconstruction and Development's Turkey Sustainable Energy Financing Facility (TurSEFF) program is a case in point. TurSEFF’s team in Turkey provides consultancy support to clients who want to access finance for generation and energy efficiency projects. The technical assistance provided by TurSEFF is funded by the European Union.

Seyran Hatipoglu, a senior finance and business manager for the TurSEFF team, told the ICCI that while the facility has supported plenty of projects, there was not huge success in rooftop PV. In Hatipoglu’s experience, “some investors do not get finance, or struggle to get it”.

Hatipoglu noted it has been mainly the private sector interested in rooftop PV, although the public sector has now started to express interest too.

The TurSEFF representative also appeared hopeful industrial rooftop PV will take off this year because electricity bills have started hurting, and argued customized, tailor-made cashflows define rooftop PV, which because of its nature is a risky investment as it needs static and other studies.

Financial products
A recurring problem is banks failing to offer financial products for rooftop decentralized energy. Bankasi's Efsun Kucukgoze, for example, said although the bank has been active in solar financing for five years, it is mainly targeting large investments.

But Bankasi monitors the decentralized sector, Kucukgoze added, “[To] prepare … products for [decentralization and digitization] trends, and later we will move to [offering products for] smaller investments too”.

Halil Demirdag, of EPC firm Smart Energy, said “banks will provide loans and financing for high quality [rooftop] products if they see some government incentives – e.g. tax incentives – being rolled out”.

Turkish currency
Timing does not help. Turkey’s currency has lost about a fifth of its value since the beginning of the year, inflation has hit double digits and the country’s national deficit has widened sharply.

International economic analysts doubt there are any easy fixes, due to the Turkish central bank's inability to make policies independently of the populist, AK Party-led government.
The government's populist measures have kept economic growth artificially high but have in turn surrendered the trust of the international markets and the value of the Turkish lira.

Businesses have borrowed money locked in foreign currency exchange rates and have consequently piled up huge debts due to the weakening lira. Less money and weaker purchasing power are unlikely to encourage them to develop rooftop PV any time soon.