Renewables law finally passed after five year debate deemed acceptable
1 June 2005
After five years of debate, the Turkish parliament has finally passed a renewable energy law. It was due to be published in the official gazette at the end of May and will take effect immediately. Under the law, utilities are obliged to buy power generated from renewables for the first seven years of a project's operation at a fixed price. The price, to be revised annually, will be indexed to the average wholesale price of electricity. For the first year, it is set at EUR 0.049/kWh, which is low, says Mehmet Hanagasioglu of Swiss wind power developer Interwind, which has long had designs on Turkey's wind potential. "This is the market price, with no advantage for renewables whatsoever," he says. A group based in Germany and calling itself the World Wind Energy Association agrees. While welcoming the law, the tariff is "much below the average remuneration in the leading European wind markets," it states. Hanagasioglu concedes, however, that while the EUR 0.049/kWh "is tough, it is not as bad as it seems." The returns for a Turkish project with a capacity factor of 31% and receiving around EUR 0.049/kWh a year for ten years would be equivalent to what a German project with a 20% capacity factor and a pay rate averaging EUR 7.62/kWh would get under the German renewables law over the same period, he says. While Turkish projects at the offered price may not be sufficiently attractive to compete with German projects for the attention of foreign investors, projects with capacity factors of 35-40% may be "very attractive," Hanagasioglu says. Around 1500 MW of wind projects have been licensed for construction by the Turkish regulatory authority. "With the new law there is now sufficient information to be able to decide if and what can be done in Turkey," he adds.
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