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Turkey

Turkey

End looms for Turkey wind glut regulations muddle

TURKEY: The end to nearly three years waiting for Turkey's Energy Market Regulator (EMRA) to decide how to process 78GW of applications for wind power projects may at last be in sight.

In mid-May the Turkish minister of energy and natural resources, Taner Yildiz, said that the previously announced auction of grid connection rights would start in three months and amount to 7-8GW. The industry is now waiting to hear how it will be organised.

The problem dates back to 2007, when EMRA briefly opened its doors to new production licence applications. In a day it was deluged with requests for 750 projects totalling over 78GW.

Since then it has been trying to work out how to evaluate them all. This February, EMRA announced the selection would be based on available grid capacity and, with the Turkish Electricity Transmission Corporation (TEIAS), determined that over 7GW was up for grabs.

Applicants were invited to re-apply, and to choose a different substation and modify the project size if they wished. This, in addition to around 10GW that has dropped by the wayside or were rejected for environmental reasons, has cut the task down to 722 projects with a combined capacity of 32GW.

These applications are now being processed using the usual evaluations. At the same time, TEIAS will assess the grid connection selected by the applicant. If it gives a negative opinion - for example, if there is a more viable alternative - the project will be rejected.

Of those that remain, EMRA says it will soon issue licences for those that are not competing with others for grid access. If approved, they will be eligible for the guaranteed purchase price of EUR0.050-0.055/kWh.

However, all owners so far have chosen to sell their output on the day-ahead - or spot - market instead, where prices average around EUR0.075/kWh, or directly to eligible consumers at a price negotiated bilaterally. Where projects are in competition for grid access, TEIAS will auction the connection rights.

However, there is still no news as to whether or not the government is going to increase the guaranteed purchase price. The original draft of the long-promised renewable energy law proposed a hefty increase to EUR0.08/kWh for wind energy (Windpower Monthly, March 2010). While this looks increasingly unlikely, many developers are still hoping for EUR0.07/kWh. But, in his statement at the Istanbul International Energy and Environment Fair, the minister only said it was being developed.

Real risk

If there is no decision on the tariff before the auction starts, there is a real risk it will not yield the desired results. "Everyone will be bidding in the dark," explains Murat Durak, chairman of the Turkish Wind Energy Association (TUREB). Some developers may propose unrealistically high prices, only to find they then cannot secure financing or lose money once the plant is operating.

The lack of clarity on price is compounded by a longstanding problem of insufficient wind data, with 70% of local developers reportedly not carrying out measurements. It is partly a chicken-and-egg situation, adds Christian Johannes of Ankara-based Re-Consult. "They don't know if they will get a licence, so they think why invest in wind measurement."

In the meantime, there are indications that potential investors, particularly those from abroad, are being put off by the uncertainty and constant changes in the regulatory framework, or are simply bored of waiting and have moved on to other things.

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