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Market Status: Turkey - Rising power demand fuels wind market

TURKEY The country is poised to maintain a similar growth rate this year to that seen in 2014, when just over 800MW of new capacity came online.

Current political backdrop

The conservative Justice & Development party that has governed Turkey since 2002 has reassured investors by reaffirming its commitment to a target of 20GW of wind by 2023High point of 2014 Announcement of 3GW tender for new wind power capacity

Low point

Permitting process continues to be cumbersome

Key issue in 2015

Despite a recent dip in electricity prices, the government's need to meet growing power demand means it will seek growth in a variety of indigenous power sources, including wind

According to Turkey's wind energy association (TWEA), about 1.2GW of additional capacity was under construction as 2015 began.

As market players look further ahead, the focus of investor attention has been on a 3GW licensing round for new capacity with an end-April deadline for submitting projects. Development activity in 2014 was concentrated on carrying out wind studies and preparing projects for that tender. If all goes according to plan, this licensing round is expected to inaugurate a practice of issuing tenders annually.

A regular rollout of new capacity is seen as essential for Turkey to meet its ambitious wind target and attract more international investors. Turkish wind investment has been dominated by local conglomerates, although a growing number of foreign investors are targeting the country.

Bolstering business case

EDF EN is a long-time player in the market and owns 45% of Turkish renewable group Polat Enerji, currently the leader in terms of Turkey's installed wind capacity. TWEA statistics show 5.5% of wind farms under construction are being built by German power group and market newcomer Steag.

Gokhan Baykam, CEO of Italian developer Relight, says he has been approached by both European and Middle Eastern utilities and industrial groups potentially interested in the roughly 1GW Relight is bringing to the upcoming licensing round. Baykam says the tender, which comes with more stringent requisites than previous licensing rounds, could also help ensure that the best projects are licensed, bolstering the business case for Turkish wind investments.

While most wind-farm investors in Turkey have historically opted to receive wholesale power prices for revenue, there are signs that this is changing. Global information provider IHS says that the weakening of power prices has prompted increasing interest in the country's feed-in tariff (FIT) and its local content requirements for receiving a more attractive tariff.

"This could spur investments in the country's supply chain, which remains undeveloped," says Gael Hankus, IHS senior analyst for European power.

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