Turkey solar market beating growth expectations
It is never too late to create a thriving PV market, and at the pace at which Turkey has been moving, opportunities have far exceeded the industry's expectations.
Turkey's latest incentives for PV power generation along with the removal of size limits for self-consumption projects have revolutionised the country's solar market in recent months.
Fuelled by the government's target to add 3 GW of solar power by 2023, and by the feed-in-tariff of US$0.133/kWh for the first 10 years of operation, Turkish manufacturers are now ramping up their production facilities ahead of the anticipated project pipeline.
Unlicensed plants in particular, which are up to 1 MW in size and do not require a license from the government, are attracting commercial energy consumers as they seek to benefit from lower-cost electricity and the ability to sell surplus solar energy.
The incentives, however, become more lucrative and worthwhile when domestically manufactured components are used, as that would qualify a project for a bonus of up to US$6.7 cents/kWh over the first five years of operation.
"International developers generally find unlicensed stations very unfeasible, but it's a protection policy for the local industry," says Orkun Çoruh, associate at the Photovoltaic Energy Commission in the Chamber of Physics Engineer in Ankara.
"When you look at Turkish solar regulations, you will find that as the percentage of local production of a solar system increases, the price of the electricity bought by government increases too."
Nevertheless, global PV manufacturers are witnessing increased sales in the country. Chinese modules to Turkey alone jumpedby 267% from June to July of this year, rising from 15 MW to 55 MW in just one month, according to Chinese Customs data.
While Yingli Green Energy, Zhongli Talesunand Upsolar have all set up local subsidiaries in Turkey, Jinko Solar and Trina Solar are supplying local projects from overseas factories.
One Chinese company, though, decided to take full advantage of the incentives by setting up a production facility in Turkey. China Sunergy opened its Eurasia module and cell factory in Istanbul last year and is now supplying projects of various sizes as well as nearby markets like Romania.
"Our top priority has been to fully ramp up productions at our Turkey plant to timely satisfy demand backlogs, expand cooperation with our most important customers, and score competitive wins with solid contract terms," China Sunergy's CEO Stephen Cai said earlier this year.
The company already signed a 15 MW agreement with Turkish EPC contractor PV-Systems, and a 50 MW agreement with Germany's KosiFrankensolar for their Turkish projects.
"The smartest way for a (foreign) developer is to invest in the local industry for solar system components," Çoruh tells PV Insider.
Solar EPC contractors, such as Germany's Eurosol, US-based First Solar, and Belgium's Ikaros Solar, have also established a local presence through joint ventures with Turkish firms.
After all, the market offers opportunities for larger PV plants as well. However, those eyeing a slice of the licensed projects will have to do so with patience.
Turkey's first licensing round opened in 2013 to offer 600 MW of solar projects ranging from 1 to 50 MW. But the programme ended up attracting gigawatts worth of applications, overwhelming the government in the process and slowing down evaluations.
So far, only two licenses have been awarded; one to Solentegre Enerji for an 8 MW solar park in Eastern Anatolia, and one to Halk Enerji for a 5 MW project in the eastern city of Erzurum. This leaves 587 MW of projects to be allocated, despite the announcement of the next licensing round, set to be held in April 2015.
"Licensed applications that were done last year need to be concluded as soon as possible. There is a 6-9-month application period for license production; these processes need to be reduced by public organizations," says Ahmet Muslehiddinoglu, a Turkey-based renewable energy professional.
Moreover, to apply for a licensed project, an entity has to be established as joint stock or limited liability company, provide a letter of guarantee, among other requirements.
Room for residential PV
Due to the administrative challenges in licensed projects, and given that solar parks are prohibited from being built on farmland, the majority of PV installations in Turkey are unlicensed rooftop systems, yet only a small portion are residential.
"Rooftop installations are only common in industrial zones and factories," says Muslehiddinoglu. "Most of the cities have apartment blocks and those are not suitable for residential PV, although many summer houses in the south and west of the country have started to install, but still not enough for the power demand."
The limited deployment of residential PV could stem from the fact that unlicensed projects are treated equally, regardless of their size. As Muslehiddinogluhighlights, unlicensed projects, whether 1 KW or 1 MW, have the same application cost and process. "The procedures need to be separated," he suggests.
When it comes to the most promising technologies for Turkey's environment, Çoruh believes that crystalline silicon and thin film are the most suitable. "In my opinion, there is a room for glass photovoltaics too, because, besides industrial applications, I think residential applications will rise dominantly with time."
With the anticipated growth in unlicensed commercial projects and residential installations, Turkey's PV capacity could easily rise above the 2023 target of 3 GW.
"The Turkish market is still fresh and needs some development; however, everyone is optimistic about the future," concludes Muslehiddinoglu.