An interesting market

Turkey: With its booming economy and growing energy demand, Turkey is one of the most promising new PV markets, but financing and bureaucracy hurdles remain. Almost 9 GW of projects have applied for the first licensing round for large-scale installations, but commercial rooftop installations of up to 1 MW offer the best opportunities.

Issue 07-2013

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“The growing energy demand of the country’s booming economy and the high electricity prices are the main drivers behind Turkey’s PV market,” stressed Matthias Kittler from consulting firm Apricum. Currently, one kilowatt-hour of electricity costs around US$0.14 (TRY 26) for the industrial sector and US$0.16 (TRY 32) for private households. Electricity prices have increased by an average of 11% per year since 2006.
In order to meet the growing demand for electricity (which rises 6% annually), the country would need new power plants with a capacity of 29 GW by 2021, while also replacing outdated plants with a generation capacity of 20 GW, said Kittler. The political desire for greater independence from Russian and Iranian gas imports coupled with the sharp fall in prices of photovoltaic systems offer enormous potential for solar power in Turkey.
The annual average solar irradiation in the country is 1,527 kWh per square meter, although there are strong regional differences between the north of the country, with some 1,400 kWh per square meter annually, and the south with around 2,000 kWh per square meter per year.
“The interest in photovoltaics is growing rapidly,” said Kittler at Solarpraxis’ and pv magazine ’s inaugural PV Turkey investment workshop that took place in Berlin at the beginning of June.
The time is now ripe for solar power in Turkey to grow beyond a mere niche market. Indeed, by the end of 2012, Turkey had less than 10 MW of installed PV systems.
Kittler expects the number of PV systems in the country to double annually through to 2020: an increase in installed capacity of between 500 and 800 MW in 2015, and a rise of between 3.8 and 6.5 GW by 2020. He also predicts average PV electricity production costs of less than US$0.15 per kilowatt hour as achievable. Commercial rooftop systems of up to 1 MW and ground-mounted facilities of more than 1 MW will be the country’s main growth areas.
Turkey’s current feed-in tariff is US$0.133 per kilowatt hour guaranteed for a duration of 10 years. For a five-year term, a surcharge of US$0.067 is paid for electricity from PV systems with a high proportion of locally-produced components.
Plants with a capacity of up to 500 kW can be operated without a license. According to Engin Yaman of China Sunergy (CSUN) Europe, the government is expected to approve legislation that will increase this licensing limit to 1 MW soon.
The first round of licensing for large systems, which took place in the second week of June, is limited to 600 MW. Initial inquiries from 496 companies have been received with a total of 8.9 GW, according to Ertug Babatas, business developer at Germany’s Enerparc AG.

Sobering experience

It will be interesting to see how the Turkish regulator deals with the flood of applications and how quickly they are processed, said Niels Kröner of AEE Renewables Group. The experience with Turkish bureaucracy has been “very sobering” up until now and the responsible government agencies have often been very slow to implement new laws. Even for the smaller license-free PV systems, the necessary permits can often take up to nine months. A further obstacle for the PV market in Turkey, according to Kröner, is the complicated issue of land rights, the low cultural understanding of long-term contracts, and especially the difficult financing.

New territory

First, photovoltaic projects are new territory for the banks. In addition, expected returns for such projects are often in the double digits. AEE Renewables has had its best experience with pilot projects that have had no participation of local banks, such as a 10 kW rooftop system atop the Honda factory in Gebze.
Stefan Müller, CEO of Enerparc, had a similar experience with the financing of rooftop installations in Turkey. The Hamburg-based company recently developed a 500 kW rooftop system at Prokon Manufacturing in Ankara as an EPC project. The power will be used for self-consumption. A decisive factor in the project was the commitment of the owner, who wanted to become more independent from his energy supplier.
“The entrepreneurial potential, especially in the small and medium enterprise (SME) sector, is very high in Turkey,” Müller said, adding that this would spur the further expansion of PV. In particular, Müller sees great potential in the development of commercial rooftop systems for self-consumption, financed by Turkish companies themselves. Moreover, the diverse economic and cultural relations between countries like Germany and Turkey are seen as very conducive to the involvement of foreign companies in the country.
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Manufacturing in Turkey

The growing domestic demand, local content ruling, attractive neighboring markets and the pending EU-trade case are the driving forces behind the development of a PV industry in Turkey. In January China Sunergy (CSUN) opened a solar facility in the Free Trade Zone in Istanbul with local partner Seul Energy Investment. The first PV plant of a Chinese manufacturer in Turkey, which is thus far the biggest in the country, was officially opened at the end of May.
When fully ramped the module production capacity will be 300 MW and the cell capacity will be 100 MW. Currently module lines with a capacity of 150 MW are already running. Most of the equipment comes from the existing Chinese CSUN facilities in Shanghai. In mid-June CSUN sent a shipment of 6.4 MW of modules to an unnamed French customer. On top of being able to circumvent EU tariffs on Chinese crystalline PV imports, an additional benefit of the new facility is that CSUN can supply the European market from Turkey more quickly. CSUN’s Engin Yaman said that the company would be able to supply Europe in three to four weeks from its new facility. This is a 50% reduction in delivery time when compared to supplying Europe from its Chinese base. Yaman, CSUN’s General Manager for Central Europe, said that the company plans to source the majority of materials for its modules from Turkish suppliers by Q4 2013, meaning its modules will qualify for domestic content bonuses under the country’s FIT scheme. While Turkish employees are continuing to be trained to work at the new facility, 60 CSUN engineers have traveled to Turkey to assist with ramping up the fab. Half of those engineers will be in place for six months, while the remaining Chinese staff will stay on for a full year.
Meanwhile Germany-based Schmid Group has sold three module turnkey lines totaling 150 MW to an unnamed customer in Turkey. The module line is able to manufacture 60-cell modules and both mono as well as multicrystalline modules. Furthermore, the module lines also offer the possibility to manufacture glass-glass modules. For the fast ramp-up of new lines at customer sites, Schmid already certifies production steps, materials and modules in its own technology center.

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