Turkey

Turkey

Short term hot but long term not -- Lots of questions remain in Turkey

A dramatic expansion of wind power is likely over the next two years in Turkey, which had a modest 19.2 MW installed at the end of 2000. The government has approved 17 wind stations with a total installed capacity of 493.8 MW, due to be built by 2002 (table). The wind projects are among 29 Build Operate Transfer (BOT) energy projects with a combined capacity of 1379 MW. These BOT projects, built and operated by private developers before transfer to the state, are the last to benefit from treasury finance guarantees.

While wind developers are generally pleased about the secure framework for the 17 wind BOT stations, they must now seek alternative contract structures to get projects built. With the new system of implementation agreements from the state -- replacing the traditional concession agreements -- international financing is now possible.

Last year, the Turkish government appeared to be moving away from BOT and towards a tender procedure. It invited bids in April to build 240 MW of wind capacity and heralded a second round of bidding in May for 390 MW. The results of the first bidding round have still not been announced, however, and there is no certainty that the second round will take place, according to Mehmet Hanagasioglu of Swiss wind developer Interwind, which has projects underway in Turkey.

Several other factors contribute to the current confusion among wind developers. Privatisation of the state owned generator and high voltage grid operator, TEAS, and its sister enterprise, a local distributor and operator of the low voltage grid, TEDAS, was scheduled last year but failed to happen. At present only these two companies can buy wind generated power, aside from operators who generate electricity for their own consumption.

The government is planning new energy legislation, but the proposed law is still unclear. Gas contracts are proving more difficult to clinch than anticipated, dams for hydro electricity are subject to debate with Turkey's southern neighbours, and Turkish lignite, although plentiful for power generation, gives expensive pollution problems.

"Against this background wind has a good chance and it would be crazy not to use it," says Hanagasioglu. "But a financial model has to be found." BOT projects were attractive because developers managed to clinch contracts with prices of initially $0.085-0.090/kWh. The guarantee for uptake and payment of the power over a number of years has meant healthy cash flows. "What is to follow is not clear," he says.

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