Turkey raises purchase prices -- Five years of stability

Improvements to Turkey's 2005 renewable energy law, including higher purchase prices for wind power, may be on the way if discussions in parliament on amendments to the law are successfully concluded. The government is proposing to raise the guaranteed minimum price at which state distribution companies in Turkey are obliged to buy electricity from renewable energy generators from EUR 0.05/kWh to EUR 0.06/kWh for the first five years of operation. After this period, the rate is to drop to EUR 0.05/kWh for the next five years.

At the same time, a currently applicable purchase price ceiling of EUR 0.055/kWh will be removed and replaced with the previous year's average wholesale price. The measure will apply to all plant brought into operation before 2016.

Christian Johannes of Turkish wind energy consultancy Re-Consult believes the proposed measures will have no real impact on investment. At an average 0.055/kWh over the first ten years, only really windy sites can be operated at a profit, he argues. Even though Turkey is a windy country, it cannot reach the government's stated goal of 20 GW by 2020 with a price fixed at just EUR 0.055, says Johannes. He thinks that it is likely that most producers will continue to sell their output on the open market, as allowed under existing law, for higher prices.

Bottleneck processing

Meanwhile, a decision has been made on how to handle the vast number of applications for construction of wind farms with a combined capacity of 78,000 MW submitted to the Energy Market Regulatory Authority (EMRA) on November 1, 2007 (Windpower Monthly, December 2007). A moratorium on applications was lifted by the authority for that one day.

The applications will now undergo a two-step evaluation. First, the Electrical Power Resources Survey and Development Administration will evaluate the projects on a technical basis. Those that are retained will then be invited by the Turkish Electricity Transmission Corporation to bid for connection rights where several companies are competing for access to the same substation.

While acknowledging that "tendering" for grid access is the easiest way for EMRA to resolve the "chaos," Johannes considers it a "great danger" to the sector. Few applicants have "enough quality wind data in order to properly assess the feasibility of their projects," he argues. This could lead to overbidding and a repetition of what happened in Britain in the 1990s when many licences were granted but few projects ever realised.