Grow Turkish Solar Investments

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Array Technologies is continuing to expand across the world, with sustainable and robust growth. Most recently, Array Technologies completed new projects with Turkish partner, STC Elektronik. Cesar Alberte, Vice President International at Array Technologies and Vedat Sahin, Head of Business Development and Marketing at STK Elektronik spoke about the growing Turkish market and the new partnership at the SOLAREX Conference in Istanbul.

Q&A WITH CESAR ALBERTE, ARRAY TECHNOLOGIES

What is your impression of the Turkish solar marketplace? What opportunities are there?
First of all, I realized that the market is more mature than I previously thought, and that is not bad news for Array Technologies. Previously, Turkish developers and EPCs had been focused on fixed mounting structures. But now, they have built a significant number of PV plants. So, I think this is a very good moment for Array to continue our growth here and fortify partnerships, such as the one we have formed with STC Elekronik, which will allow us to gain traction in the Turkish solar marketplace.

This naturally leads to my second question, which is how important you think partnerships will be for the solar sector in Turkey to reach its potential?
The establishment of key partnerships will be very important for the Turkish solar market. Turkey is a large country, and it is quite diverse, geographically speaking. There are different regions with varying geographies, and it would be impossible for Array to cope with the dispersion of the country by ourselves. Array’s clients will be distributed across Turkey, so we need variability, and we need capillarity. An agreement with a partner like STC, who already knows the market, is really perfect for us to work with and accomplish this.

What are your expectations for the market going forward?
That is a hard question, because it is quite difficult to foresee how fast the market will develop. The current installed electricity generation base in Turkey is 85 gigawatts if we consider all the energy generation sources, including conventional, the share of renewables, and specifically solar, is below five percent. Taking this into account, then the opportunity for growth is huge. The question now is about speed: Is this going to be a market of one gigawatt a year? I believe that if things stay as they are, we will for sure see between 500 megawatts and one gigawatt of solar per year in Turkey. And, if there is more support and a larger appetite from investors, the speed can be three to four times larger than that. There is great opportunity for the growing Turkish solar market.

Q & A WITH VEDAT SHAIN, STC Elekronik

How would you describe the development of solar in Turkey over the last few years?
Solar in Turkey has developed in two ways primarily, through ‘licensed’ and ‘unlicensed‘ projects. Around 600-megwatts of licensed projects have been awarded to various companies. Then, the government opened up the unlicensed project segment – which are supposed to be one MW per person or company. However, developers are pulling together 1 MW projects to make larger projects, developing 5, 10 or 20 MW projects.

With these unlicensed projects around 6 GW has been granted through what are known as ‘call papers’ – which is like a licensed for the ‘unlicensed project’ for developers.

Through today, around 4.5 GW has been realized in the official figures, and we are hoping this year that 750 MW will be realized again in Turkey.

From this year onwards the ‘unlicensed’ market is going to die down, and a new solar development project has been announced by the government, called YEKA – meaning Renewable Development Areas, in Turkish. Already 1 GW has been auctioned out under the YEKA program.

The feed-in tariff (FIT) level in Turkey was initially US$13.3 cents/kWh. With these YEKA projects what the government aims to do is bring this FIT level down to less than US$10 cents/kWh, and the first YEKA project, the Konya Karapinar came down to US$6.99 cents/kWh.

Shortly before the 2018 Solarex event, the government has announced another three YEKA sites. One of them will be realized in Hatay City in the south of Turkey and is going to be 3.78 GW in total. The other two YEKA sites have been announced both with around 1 GW. So, all-in-all, with Konya, there is going to be something like 7.2 GW of PV in Turkey that is to be realized within the next 2 – 3 years.

When you think that the totalled installed capacity is around 4.5 GW, add to that 7.2 GW, then there is around 12 GW of solar in Turkey within five years or so.

To realize such a large amount of PV generating capacity within the next few years there will clearly be a role for partnership such as the one that STC has signed with Array, but also for international investment and finance. Are you confident this will be attracted to Turkey?
Of course. Companies like Array have got a great chance within these YEKA projects. This is because the investors and financing companies are looking for bankable solar projects. What the YEKA projects will require is some international expertise, a good bankable track record for the product, like Array. Local or lesser known companies might be interested in bidding for these project, but at the end of the day financing companies will make the decision on what they are willing to buy and they will be looking for major companies with a good track record of projects – to make them bankable.

Beyond the YEKA regions, what else do you think will be the next steps for solar in Turkey?
The initial financial incentive that is being given for solar projects will end in December 2020. The system is then focused on the YEKA projects, based on lowering the FIT price. The ‘licensed’ projects include a fee to the government for every kWp of solar developed, and this contribution fee ranges from something like US$100,000 for every MWp, right up to US$500,000/MWp – and this includes all of the initial 600 MW ‘licensed’ projects. Because of these fees, of the 600 MW only around 20 MW has been realized. However, the new YEKA fee is based on lowering the FIT price and we can already see prices below US$7 cents/kWh and for the next round the expectation is below US$6 cents/kWh.

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