'There's an incentive to build quickly' says SGRE

TURKEY: The consortium involving Siemens Gamesa Renewable Energy (SGRE) is moving full-speed to implement 1GW of capacity after signing a power purchase agreement (PPA) with the energy ministry earlier this week.

SGRE will need to build a nacelle factory in Turkey to meet local content requirements
SGRE will need to build a nacelle factory in Turkey to meet local content requirements

The consortium, which also includes Turkish infrastructure company Kalyon Enerji and investment group Turkerler Holding, won the 1GW capacity last August, in a winner-takes-all auction known by its Turkish acronym Yeka.

"With the signing of the PPA, the clock starts ticking, so there is an incentive to build quickly," explained, SGRE chief executive onshore for North Europe and Middle East, Hans Joern Rieks.

Indeed, the PPA lasts 15 years but also covers the period when the supply chain is being set up to satisfy local content requirements and wind farms are being constructed.

Rieks said SGRE expects to deliver the first turbines — which it will also service for 15 years after commissioning — in the summer of 2019, while the first capacity should come online by early 2020.

That means the $0.0348/kWh price, with which the consortium elbowed out competing consortia involving Vestas, GE, Enercon, Nordex, Senvion, Goldwind and Ming Yang in August, will actually be paid out for roughly 13 years at the most.

At least 700MW of wind turbines must be installed by 2022.

A key part of the tender agreement will see SGRE construct a nacelle factory to help satisfy a 65% local content requirement.

Rieks said the factory layout has already been decided, while final selection of the factory site, now narrowed down to a shortlist of two, should come in the next month or so.

SGRE has 21 months after PPA signing to complete the factory.

"I think the biggest challenge to comply with local content requirements is to be able to ramp up to meet the volumes needed in a relatively short time," said Rieks.

"We have not seen any constraints in finding suppliers to do this in Turkey, although, of course, a lot of work is going into this. We are quite comfortable with investing in Turkey. It has good infrastructure and a good industrial footprint."

After working on identifying sites for projects, Rieks said the consortium has reached a general agreement with Turkish authorities on the five locations, connected to five interconnection points, to make up the 1GW.

Kalyon and Turkerler are now in the process of obtaining remaining approvals for the sites, located mainly in the western part of the country near the coast. Wind speeds at the sites vary from 8-8.2m/s, Rieks noted.

Rieks said Turkey has demonstrated a long-term commitment to developing wind energy, both through the Yeka tender and the licensing of other projects, with nearly 3GW of so-called preliminary licences issued to other projects last year.

"We know that there will be other rounds of Yeka for onshore wind and a commitment has also been made recently to doing offshore wind," he said.

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