Turkey Photovoltaic (Solar PV) Market in 2015. The way ahead.

Current energy market situation

Turkey's energy demand was doubled between the years 2000–2010 and is expected to fourfold between the years 2000–2025. This rapid increase in demand is due to the high economic development rate in Turkey. The biggest growth area in recent years has been natural gas imported from Russia and Iran. In 1995, 20% of Turkey’s electricity needs were generated from natural gas. Today (in 2014), that has increased to 45%.

The target Turkey should meet by 2023 in terms of the share of RES-electricity in the gross final consumption of electricity of 30 % according to Electricity Energy Market and Supply Security Strategy Paper adopted in 2009 from Higher Board of Planning of the State Planning Organization. Turkey, which continues efforts to construct a nuclear power plant, aims to use 36,000 MW hydroelectric, 20,000 MW (20 GW) wind, 3,000 MW (3 GW) solar, 600 MW geothermal and 2,000 MW biomass energy by 2023.

Current photovoltaic market situation

Turkey is an up-and-coming emerging market for photovoltaic energy investments amongst SEE countries, according to Turkey Photovoltaic Market Outlook 2015 - 2025. With the introduction of support mechanisms in the law in 2005 and the subsequent amendments in 2007, 2010, 2012 and 2013, Turkish photovoltaic energy market is supposed to start growing in the next years. The country had insignificant cumulative photovoltaic installed capacity by the end of 2014. The much-anticipated decision of Turkish government from October 2013 to increase the eligibility criteria for payment under feed-in tariff (FIT) scheme of photovoltaic power plants from the capacity of up to 500 KW to capacity of up to 1 MW, and to remove any size limits about renewable power generation for self-consumption purposes is expected to create serious growth in the next years in so-called "unlicensed market segment".

Licensed vs Unlicensed market segment

Which market segment (licensed or unlicensed) will drive the market growth in 2015 and beyond?

Answer to this question are looking investors, analysts, EPC contractors and other solar market participants. A lot of pros and cons can be given from supporters and haters of both market segments. 

On the one hand, the licensed market segment is a more sustainable, stable and predictable way of any PV market development. Projected licensed photovoltaic power plants could be integrated into the national power and grid system without significant surprises and imbalances because their power production has been initially well calculated and assumed in the licensing and permitting process. On the other hand, issuing all necessary permits to start construction is very slow in Turkey at the moment. Improvements in this process are expected in 2015. Turkish administration has approved at the beginning of December 2014 construction of 2 licensed photovoltaic power plants with a total capacity of 13 MW. This fact is a positive signal for the development of a licensed market segment in the country.

Unlicensed market segment has the advantage that photovoltaic power projects under 1 MW could be easily developed and connected to the gird compared to licensed projects in any place in the country. Currently, the prevailing majority of cumulative installed photovoltaic capacity in Turkey belongs to unlicensed solar installations. However, this may lead to a concentration of many solar projects in the sunniest areas of Turkey or in the areas where government administration and DSO's are managing better with the permitting process. This finally could lead to the bubble of projects and imbalances into the national power and grid system.

Risks

The issues related to grid access to the local distribution or transmission network and timeline of the authorization process should not be neglected. Authorization processes must not only be streamlined, but they must enable plans to be successfully realized, bolstered by flexibility and an infrastructure that allows new photovoltaic power plants to be connected to the grid.

A feed-in tariff (FIT) for solar energy in Turkey

The Turkish feed-in tariff for photovoltaic now stands at USD cents 13.3 per kWh. The government offers additional incentives for local procurement if there is a domestic component in the manufacture of the photovoltaic equipment. Local involvement can increase the tariff with additional 6.7 USD cents per kWh, which will result in total USD cents 20 per kWh. Local procurement incentives apply for the first five years of operation of the photovoltaic power plants. Preferential rates are guaranteed for 10 years. In relation with local procurement incentives first factories for the production of photovoltaic modules of Anel Enerji, Atsco Solar and China Sunergy (CSUN) have been established, with new factories expected to follow them on the market in next 2 years.

The solar resource potential of Turkey

Turkey has excellent solar resource potential as the geographical location is highly favourable for utilising solar energy.  According to studies done by EIE, Turkey's average annual total sunshine is 2,640 hours (total daily 7.2 hours), average total radiation intensity 1,311 kWh / m²-year (daily total of 3.6 kWh / m²) has been identified with the help of Government Meteorology Affairs General Directorate (DMI)’s measured sunshine duration and radiation intensity between 1966-1982 years.

Profile of electricity consumption and production in the country

The industry is the key consumer of electricity for the country (metallurgy, chemical industry, energy and machine construction), followed by households and transportation industry. The Turkish economy is overall more energy-intensive than the economies of the countries in the EU. Total installed electrification generating capacity is approaching 53.7 GW at the end of 2012 and growing at around 5% per year. Some 35% of that capacity is hydro. Coal accounts for 23%. Wind accounts for approximately 3 %, while photovoltaic accounts at the moment for less than 0.5 %. Interconnections with EU countries have improved, stabilizing the power system.

More information about this promising solar market you may read here: Turkey Photovoltaic Market Outlook 2015 - 2025