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Trends in Turkish wind energy

Esra OkçuogluAsl¦ Orhon

Back in 2007, Turkey's Energy Market Regulatory Authority (Emra) received more than 700 applications for wind power plants – a clear indication of wind energy companies' keenness to invest in Turkey. By contrast, the last two years have been less profitable, as deficiencies in prevailing legislation combined with the global economic crisis interrupted the trend. Yet regulations are still evolving to please investors, and in turn, investors continue to announce new projects in Turkey.

In 2009, the Electricity Market Licence Regulation underwent several revisions, pursuant to which only joint stock companies and limited liability partnerships would qualify to apply for licences. In addition, before Emra's approval, licence transfers would be submitted to the Electrical Power Resources Survey and Development Administration (EIE) for technical assessment. In making its evaluation, Emra will now consider the wind energy capacity connected to the transformers announced by the Turkish Electricity Transmission Corporation (TEIAS). Moreover, from now on, applicant wind energy companies will have to execute a wind energy plant contribution agreement with TEIAS. Other amendments to the Licence Regulation include new requirements for licence amendment applications, and new provisions on renewable energy-based production facilities' requests for connection to the transmission and/or distribution system. Recent revisions give priority to local and renewable energy sources (Res) in system connections. Either TEIAS or the legal entity holding the distribution licence must approve an applicant wind energy company's connection request.

The Regulation on Technical Assessment of Wind Energy Licence Applications also underwent several positive changes. Accordingly, before technical assessment, applicants no longer have to submit an environmental impact assessment report to EIE for projects with an installed capacity of 10 mW or more. Such revision has facilitated the evaluation process for projects with multiple applicants. Also, Emra will reject applications which conflict with the plant areas for which a license has already been issued. Other important amendments concern the format of the technical assessment report and the method of assessment.

Several amendments were also introduced to the Electricity Market Compensation and Reconciliation Regulation and the Electricity Market System Regulation at the end of 2009. The former's revisions include amendments to the definitions of several technical terms, the day-ahead planning process, proposals and formulas on the sale and purchase of systems, and evaluation of proposals in the day-ahead market. Changes to the System Regulation have introduced new terms such as "regional capacity leasing," "distributor system operator" and "day-ahead market." In addition, legal entities owning certain facilities providing frequency control, momentary demand control and reactive power control will have to execute a peripheral service agreement with TEIAS.

Even though the Turkish government has so far adopted important regulations to boost wind energy, the sector still has financial problems and awaits further legislative innovation. To promote renewable energy investment and improve the modest – and thus uncompetitive – financial incentives, two separate draft laws are awaiting enactment. A bill amending the Law on the Utilisation of Renewable Energy Resources for the Purposes of Generating Electricity (Renewable Energy Law), submitted in late 2008, attracted positive attention from investors, offering greater price advantages for Res-generated electricity, and awaits the Parliamentary Planning and Budget Commission's report. The Ministry of Energy and Natural Resources (MENR) has prepared another draft law on Res incentives, stipulating better price advantages than in the other bill. Currently, MENR is negotiating this law with the Undersecretariat of the Treasury.

Furthermore, though its publication was contemplated for 30 June 2009, the draft regulation governing principles and procedures for competition between multiple Res license applications filed on November 1 2007 for the same transformer stations or regions is still pending, subject to the relevant authorities' opinions on the system connections. As per the current draft regulation, companies willing to pay the highest contribution fee for 20 years will receive wind energy licenses. The authorities expect to complete the competition phase and licensing these applications in the first half of 2010.

Despite the current regulatory regime's shortcomings and the adverse effects of the global crisis, most Emra-approved projects were implemented in 2009. Investors announced the following during 2009:

  • EnerjiSA is setting up a wind power plant with an installed capacity of 30 mW in Çanakkale. The Siemens consortium will contruct the facility with €37 million in investments. The plant is expected to come into service in 2010 and generate 90 GWh of electricity every year.
  • By 2013, Akkök Group plans to increase its installed capacity to 3,000 mW with a US $3 billion investment.
  • Renewable Energy Systems Holding Limited announced it had purchased a portfolio in the amount of 500 mW. The total investment value of these wind energy projects has been announced as €750 million, and their completion is contemplated in the next three to four years.
  • Bilgin Enerji Yatirim Holding A.½. announced it had invested a total of €336 million in five wind energy plants. The company plans to generate 360,120,000 kWh of electricity from a plant with a 90 mW installed capacity, which it intends to establish in Soma and which should come on line in 2010.
  • Danish wind turbine-producing company Vestas plans to achieve an installed wind power capacity of 300 mW in Turkey.

Despite the still nascent legislation governing this sector, new amendments can be anticipated to eliminate renewable energy's regulatory shortcomings, and Turkey may continue to be a focus of investor attention indefinitely.

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