Turkey no to nuclear signals new hope

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A new mood of optimism is flowing among Turkey's wind developers now that nuclear power has been turned down as an option for additional power generating capacity. Fairer regulations are already falling into place

After months of controversy, Turkey said "no" to nuclear power in July, a step away from atomic power that is being interpreted as a step towards wind. Turkish prime minister Bülen Ecevit even remarked that more investment will be made in renewables. In a country with a huge wind potential, developers have hope that some of the 175 MW of wind projects awaiting final approval for more than a year might now see the light of day (Windpower Monthly, March 2000). The government is sitting on 71 proposals for Build-Operate-Transfer wind projects amounting to 2400 MW, reports Mehmet Hanagasioglu from Interwind, one of the major players on the Turkish wind scene -- and wind monitoring is proceeding at 250 of 717 "approved locations."

German developer Umweltkontor Renewable Energy, which has a Turkish subsidiary at Kahramanmaras, calls the nuclear decision a "confession of faith" in renewables. With a local presence, Umweltkontor intends to help develop the country's "enormous" potential, which includes 7000 kilometres of coastline, says the company's Andreas Köster. In June, Umweltkontor's 10.2 MW wind station at Bozcaada was officially opened, bringing the country's wind total to 19.6 MW.

Turkey had been wrestling with the idea of using nuclear generation for some 30 years. Over the last couple of years placement of an order for a reactor planned at Akkuyu, close to the Turkey's eastern Mediterranean coast, was repeatedly postponed before Ecevit finally said no after a cabinet meeting in late July. The no vote was blamed on financial reasons, although growing protest from environmentalists and others about the planned site -- in a region hit by earthquakes -- probably played an important role. Perhaps the conclusive argument was recognition that a nuclear plant, which takes five to eight years to build, cannot help reduce the country's current 10% energy deficit. "Finally somebody made a sensible decision," says Hanagasioglu. He is appalled by the time and money spent over ten years in the project's planning.

Interwind and its Turkish partner, Atamer, have been just two of many companies that have suffered from legislative changes that have put wind projects on ice for over a year. A concession contract for an Interwind/Atamer 30.36 MW project in Canakkale had been initialled but not signed by the Supreme Court of Turkey in July 1999. Such concession agreements were required for the right to generate electricity for sale. In December, new legislation abolished such agreements, placing new energy projects into the realms of normal business law.

Seven other projects were hit by the uncertainties in the changeover and a period of confusion ensued, says Hanagasioglu, but wind developers finally know where they stand. "Seven or eight projects have lost a year but at last the law is clear," he says ruefully. "All the companies involved are now back in negotiations with the energy ministry and most of the projects should be started this year. The players are the same but the rules are better," he adds.

The abolishment of concession agreements has meant that international rules on financing now apply. That means that international arbitration between contractors and the ministry is standard procedure. Furthermore, under the concession system, the state could never be in default; now it can be. The contract also includes a new risk definition, which can mean contractors are eligible for compensation if their concessions is annulled. Banks are now allowed to recommend and execute mitigation measures or corrective actions if the contractor (developer) is at default and unable to fulfil the contract conditions. Lastly, both the contractor and the administrating authority are in a position to cancel a contract, whereby formerly only the authority could do so. "Projects are now internationally bankable," Hanagasioglu points out. He says that full ownership is still not allowed under the Build-Operate-Own structure, but he expects this to come "in time."

Meantime, the state now favours competitive tenders for energy development, which Hanagasioglu says is not appropriate for wind at such an early stage of its development in Turkey. In a round of tenders for 240 MW of "grey" capacity divided into nine projects that closed in April 2000, one of the lowest bids was reportedly for $0.051/kWh, and this for just a 7 MW project. Since the costs of wind monitoring alone -- often in difficult and remote terrain -- lie in the range of $50,000-$70,000, tendering becomes a risky business, says Hanagasioglu.

He is also disquieted by discussions between the World Bank and the Turkish government to abolish the treasury guarantee for Teas, the state-owned generator and high voltage grid operator -- as well as its sister enterprise, the local distributor with low voltage grid, Tedas. The state guarantee has given confidence to independent power project operators that they will be paid for the power they generate. "Take it away and investor confidence could decline," Hanagasioglu fears.

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