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Turkey

Turkey

Turkey keen to get renewables law -- A potential huge market

After three years of frustrating standstill, the Turkish government is proposing a 12% renewables target as part of its bid to join the EU, coupled with a renewable energy law. The legislation is scheduled to go before parliament in the spring for implementation later next year.

At last some promising news from Turkey. After three years of frustrating standstill, the government is proposing a 12% renewables target as part of its bid to join the EU, coupled with a renewable energy law. The legislation is scheduled to go before parliament in the spring, for implementation later in 2004. If all goes according to plan, the legislation could yet pave the way to one of the largest wind power markets in Europe.

The renewables initiative is part of a national program for adopting EU directives during what Turkey hopes is a transition period before being accepted into the European club. Engineering consultant company and Turkish wind developer Interwind, based in Zürich, welcomes the initiative. "Given the current cost of renewable energy sources and Turkey's huge wind potential, it is fairly safe to assume that wind will play the most important role in achieving the renewables target," says the company's Mehmet Hanagasioglu. But he is sceptical about the timing. "If past experience is any measure to go by, it will be early 2005 before all accessory regulations attached to the law are in place."

unclear

The outlines of the law are hazy. The draft states that power distributors, in the process of undergoing privatisation, will be required to include renewables in their supply portfolios, but there is little detail. One novel proposal suggests that a premium be paid for renewables electricity for the first six years of operation, followed by six years without a premium, while in the third six year period, the premium should be paid back to the issuing institution. The model assumes a standard payment of EUR 0.055/kWh and a premium payment over the first six years of EUR 0.025/kWh -- a total payment of $0.08/kWh. After six years without a premium, an operator would pay back the original subsidy, leaving it with $0.049/kWh for the next six years.

applications pending

Critics are sceptical. They doubt the government can finance the premium for what could be hundreds of megawatt of wind power. Up to June this year, applications were pending for 5000 MW of electricity generation licences, of which more than 4000 MW were for wind projects. Furthermore, recently privatised local power distributors will have no track record to back power purchase agreements (PPA) with project developers, not least because their success in collecting payment from consumers will be untested. The state electricity trading organisation, Tettas, could possibly step in to sign the PPAs, assuming conflict with market rules can be avoided.

Hanagasioglu is cautiously optimistic. "There is light at the end of the tunnel," he says. It all now depends on the support mechanisms, whether they can be financed, and how confident foreign investors feel about the law.

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