March 1 (Bloomberg) -- Turkey decision to simplify the process for developing solar power projects of up to 500 kilowatts will spur a boom in installations, the industry’s main lobby group said.
The government published legislation last week that allows the plants to start production without getting a license, Nafiz Kaya, a spokesman for the Turkish Energy Market Regulatory Authority, said yesterday. Projects of this size can power about 700 homes, he said. Rules for bigger projects are due next year.
Developers are likely to add as much as 1,100 megawatts in photovoltaic capacity by the end of 2014, according to Ates Ugurel, founder of the Turkish Solar Energy Industry Association. This compares with the 3 megawatts installed so far in the country.
“There is no cap, so you can install multiples of 500-kilowatt systems anywhere in the country,” said Ugurel, who is also chief executive officer of Ires Enerji, a developer based in Istanbul.
Turkey passed renewable energy legislation in December 2010 that fixed feed-in tariffs, or premium rates for clean energy. That included a plan to develop 600 megawatts in photovoltaic capacity by 2015. The country aims to generate 30 percent of its power from renewable sources by 2023.
Solar companies including Germany’s Phoenix Solar AG and Gehrlicher Solar AG are already joining with local companies to get a foot in the market. Phoenix signed an exclusive partnership with Ires Enerji in January, and Gehrlicher established a joint venture with Merk, a unit of Istanbul-based energy group Akfel Group, on Feb. 1.
“Due to its fast growth and increasing energy demand, Turkey is a highly attractive market for solar power,” Chief Executive Klaus Gehrlicher said at the time. “The government acted thoughtfully when creating a tariff which allows interesting investments in renewable energies but is at the same time very close to the general electricity tariff.”
The country pays a feed-in tariff of $133 per megawatt hour of solar power. That’s less than a third of the average Greek tariff and half of what Italy pays. Plant owners can earn an additional premium of as much as $67 per megawatt if components are made locally.
Even so, Ugurel expects 4 megawatts to 5 megawatts in new installations this year, 50 megawatts to 100 megawatts next year and as many as 1,000 megawatts in 2014. Utility scale projects cannot be built until 2014, he said.
The government will start accepting applications for licenses to develop the first utility-scale solar plants in the last quarter of 2013, according to the Ires CEO. Developers will start measuring solar radiation in the second half of this year so they can apply with the minimum one year of data. The lowest bids will secure the licenses, he said.
In August, Turkey’s Ministry of Energy defined grid connection points in 27 provinces in the country’s south where developers can take measurements in order to seek licenses for some of the 600 megawatts.
Akfel Group aims to obtain “a good share” of these megawatts, its CEO Murad Baltaci said in a statement on Feb. 1. Ires and Phoenix Solar will try to get at least 5 percent of this capacity while focusing on smaller commercial rooftops, according to Ugurel. The two companies are already in talks to develop 500-kilowatt projects, he said.
The tariff is not enough, so many investors are just looking to secure the licenses for large projects and may sell electricity directly to end users in 2014 and 2015, the board member of the lobby group. He said there’s speculation the tariff may be extended to 20 years from 10 years and increased to $150 per megawatt hour.
“The Turkish solar market is developing rapidly, with grid parity expected as early as 2013 in some areas of the country,” Klaus Ullrich, vice-president for international sales at Phoenix Solar, said. “We are convinced that Turkey has the potential to become an important growth market in the future.”
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