Turkey

Turkey

SGRE ramps up production, but investors seek more clarity

Siemens Gamesa Renewable Energy (SGRE) has completed construction of Turkey's first nacelle factory and is set to ramp up production until it reaches full capacity of about 100 nacelles, or 500MW, a year.

Ambitious plans… The Turkish government aims to more than triple installed wind capacity to 25GW by 2030 (pic: EnBW)
Ambitious plans… The Turkish government aims to more than triple installed wind capacity to 25GW by 2030 (pic: EnBW)

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Setting up the plant was a condition of the country’s first wind tender held through the system known as Yeka — the Turkish acronym for "renewable-energy designated area" — in which a consortium of SGRE and local firms Kalyon Enerji and Türkerler Holding won the right to build up to 1GW in August 2017.

SGRE said its new factory will create about 100 direct jobs, plus a number of indirect jobs in the local supply chain.

The consortium won the tender with a bid of $0.0348/kWh — less than half the auction ceiling price of $0.070/kWh and Turkey’s feed-in-tariff (FIT) base price of $0.073/kWh.

It has committed to building the first 700MW by 2022.

Market recovery

The factory is opening amid signs of renewed life in the country’s wind sector. Cumulative capacity now stands at about 7.6GW, but additions have fallen from a high of nearly 1.4GW in 2016 to less than 500MW last year.

Following last year’s currency crisis and financial turmoil, a flurry of turbine orders was announced this year, and prospects for financing wind projects have improved as the Turkish economy has stabilised.

Turkey is targeting around 25GW of wind capacity by 2030, more than triple its current level, but policy uncertainty must be cleared up if that objective is to be feasible.

"Everyone knows wind power is part of the future in Turkey. The biggest challenge for investors is having greater visibility on the capacity and timing of tenders," said Guray Erol, country manager for developer RES.

The government is expected to announce a tender for 2GW of onshore wind capacity this spring, initially slated for 2018.

Investors are also awaiting the announcement of a third Yeka tender for onshore wind, after Turkish utility Enerjisa and turbine manufacturer Enercon each won the right to build 500MW each of capacity in a second Yeka tender earlier this year.

An offshore tender is likely to be a few years in the offing, after an auction announced for 2018 proved to be premature and was quietly cancelled amid a lack of investor interest.

Meanwhile, Turkey’s FIT mechanism is currently set to run until 2020, although Erol thinks it should carry on past then.

"Banks are looking for some certainty on prices to finance these projects, particularly as we move on to more complex and less windy sites," he said.

Banks and investors would be satisfied with lower tariffs, as the first merchant wind projects look likely to come online starting in 2021, he added.

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