Renewable Energy in Turkey

For more information regarding potential investment opportunities in the Turkish energy market, a law firm should be consulted.

Turkey has abundant reserves of renewable energy, such as solar, wind and geothermal. The benefits of exploiting these sources would be enormous because of several resaons:

• By relying completely on indigenous resources, renewables would reduce reliance on imported fuels and enhance Turkey's energy security.
• The environmental impact of renewable technologies is far less than that of nuclear and fossil fuel power plants however there are no emissions of greenhouse gases or toxic wastes;
• The cost of electricity from some renewable energy sources is already competitive with many conventional technologies, and is dropping rapidly;
• Renewable technologies have no fuel costs and are virtually inexhaustible;
  
  

Turkey has vast untapped hydropower and wind potential. Renewable potential in Turkey in MW terms is 10000 Wind, 35000 Hydro and 35000 geothermal. Presently there are 150 hydropower plants with combined installed capacity of 13.0 GW. Moreover, a total capacity of 3.0 GW is under construction, and 20.6 GW more is in planning phase.

According to Turkish renewable energy act, all non-fossil based energy sources are considered a renewable energy source. Most preferred generation types like wind power, river-run hydropower plants and dammed hydro plants with reservoir areas smaller than 15 km2 are all identified as renewable energy sources and eligible to sell to DUY market regardless of the generation capacity.

Wind power is also attracting the attention of many companies. EMRA has issued 59 wind farm licenses, with combined capacity of 856 MW; however, only 32 MW of that capacity is currently operational. In December 2006, the Ministry of Energy published the wind map of Turkey, which has stimulated wind power investments. Wind Power and Hydropower Plants Businessmen’s Association (WHPBA) puts the potential Turkish wind power figure at 10.0 GW.

• The escape from high natural gas prices has benefited renewable energy the most, especially hydro and wind generation.
• There are several reasons why independent generators are turning to renewable energy. Government incentives play an important role in making renewable energy more attractive. Turkish Government is in the process of passing a new energy law to require the retail electricity licensees to purchase at least 8 % of its annual electricity sales volume from renewable energy resources
• There are two incentive schemes widely used in the world: renewable energy feed-in tariffs (REFITs) and renewable energy obligations (REO). REFITs refer to favourable fixed or variable price for renewable energy, while REO require utilities to supply a certain percentage of their electricity from renewable sources.
• Turkey has adapted a hybrid system. Renewable power plants built before 2012 (the deadline set by the law could be extended for another two years period) are eligible for the €50 – €55 per MWh (≈ USD 79 per MWh, compared with USD82 regulated electricity sale price after tax and levies) REFIT for first 10 years of operation, providing a hedge against foreign exchange risk. Furthermore retail licence owners are required to allocate (as REO) a portion of the electricity purchases to renewable power.