Solar Energy in Turkey: Challenges and Expectations

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Solar energy has been attracting increasing media coverage and discussion in Turkey. Frequently bringing solar energy to the agenda is not a bad thing; however, it also does not imply that the problems related to this topic have been completely resolved. I will briefly explain the reason why Turkey, one of Europe’s sunniest countries, has not been able to make the necessary breakthrough in solar energy and I will list the 10 biggest challenges facing this industry.

One of the obstacles facing solar energy is decision makers. It can be said that almost every party supports solar energy; however, when it comes to laws and regulations, the result is not as effective as the verbal support. Among legal entities, there is a combination of those supporting solar energy, as well as those hindering it. This division is heightened in both respects by the existing information pollution. In my opinion, in Turkey, solar energy generation will be put into practice in three different ways:

1) Power generation from solar energy in locations that are not connected to the grid (this is an option that is not currently subject to any law or regulation).

2) Power generation by individuals or institutions that are connected to the grid, but who do not want to apply for a license as they are not big investors and only intend to generate their own power or engage in micro-scale sales by benefiting from the regulation on electricity generation without a license (in Turkey, installed capacity of under 500 kilowatt (kW) can generate power without a license).

3) Energy companies willing to set up systems with an installed capacity equal to or more than 4-5 megawatt (MW) will find appropriate locations and conduct solar measurements. Most probably, these companies will vie to win tenders. The winners will be granted licenses and establish large solar energy plants.

Reading the legal documents is likely to scare you. You may well end up saying, “I should give up on investing in solar energy and put my money in the bank and collect interest at the end of the month”. You would be correct in this thinking. This is the first time an investment limit of 600 MW was introduced to an energy source in Turkey. This is a one-of-a-kind practice in the world through which the obligation to measure the solar energy potential was introduced into law. Was that enough? No. They also announced that applicants would be subject to a competition. Our dear readers will get the message when they compare the time the government spends on a law they wish to see quickly enacted and the time spent on a law that is adopted rather unwillingly.

Much more can be written on this issue; however, one example would be striking enough. The easiest action that can be taken by a government that supports clean energy is to cut VAT (at least for a certain period), which can be accomplished through a single decision of the Council of Ministers.

In our country, the VAT on frozen animal sperm is 1%, while the VAT on a solar panel is 18%.

At this stage, we should have a look back in time. The Renewable Energy Law, keenly awaited by many real and legal entities, including companies operating in the renewable energy sector in particular, was discussed and adopted by the Grand National Assembly of Turkey in the last days of November 2010. However, the result was a big disappointment for those involved in the solar energy business. Under the Law, the incentive for power generation from solar energy was forecast to be 13.3 USD cents for 10 years. By comparison, in Greece the same incentive is 45 USD cents with a purchase guarantee of 20 years. Simply put, there is seven times more incentive for solar energy in Greece.

According to another interesting provision, the use of domestically manufactured technologies in your investment to generate solar electricity provides you with a 50% increase in the incentive rate for a period of five years. So, instead of 13.3 USD cents, you receive 20 USD cents for five years. Here, the situation is a little strange as the incentive to promote domestic manufacturing is not given to the manufacturer of these systems, but to those who use domestic products. This is similar to giving owners of domestic cars the right to buy gas at cheaper prices. We shall see who will rely on this provision and began manufacturing solar panels.

The law is targeting installations equal to and greater than 500 kW as well as legal entities capable of obtaining the license, which, in a way, indicates that it is instead for solar power plants (SPP) that are to be erected in open fields. However, the option for less than 500 kW that has been waiting for regulation for three years, although the law was there, is targeting those who would produce structures and generate power by themselves. Briefly, what this option entails is that you first use the electricity that you have generated from solar energy and cover the rest of your needs from the grid. If your generation surpasses your consumption, you supply the surplus to the grid. The main idea is to create a building that requires zero energy by balancing out generation and consumption. Additionally, there are no large technical or legal obstacles to starting the implementation as the system allows for netting on kilowatt hour (kWh) and the use of a simple meter to measure the electricity generated. The critical issue here is not the legislation or regulations; it is rather, related to how much money is spent on electricity in buildings with appropriate roofs for installation of such systems, how this price is going to change in the coming years, how much solar energy can be captured in the region and the reduction of prices for solar energy systems.

The expectation is to equalize the price of solar electricity with the price of power from the grid within a couple of years in places such as hotels and shopping malls that pay great sums for electricity. This will trigger the birth of a huge solar energy market in Turkey and subscribers will opt for solar power, even without any incentives, as this type of energy will be cheaper (and cleaner). So, one can say that it will be the beginning of the real “green energy revolution” in Turkey.

The obstacles to the development of the solar energy sector in Turkey should not be limited to legislation only. This is a market where uninformed entrepreneurs organize fancy celebrations in five star hotels when they step into the solar energy business. These “so-called entrepreneurs” asked for abnormally high incentive rates from the Ministry of Energy and Natural Resources when the law was being drafted, they had no vision, no experience in domestic manufacturing, and no long-term strategy for solar energy. All they wanted was to hit the goldmine as soon as possible. Fortunately, the majority of these people and enterprises disappeared after some time since the cost of solar energy systems and the incentives provided are only making it possible for long-term planners to stay in the market. However, some of the entrepreneurs I described above are still doing business to the detriment of the market and to the potential solar energy customers. It is not easy to step in their way either; they even appear at international conferences and give unrealistic presentations that do not make any sense. For instance, they claim that “Solar power is now cheaper than coal”. It would be to the benefit of all if conference and exhibition organizers act carefully so as to not invite such people to deliver presentations or papers.

An inadequate civil society organization is another problem facing the sector. Many non-governmental organizations have been, and are still are being established in Turkey. Still far from being institutional, these organizations should immediately begin collaborating with large, experienced, national and international renewable energy companies and NGOs to benefit from their economic power and knowledge in order to be strong and effective. In Turkey, the ultimate goal of the clean energy NGOs should be to create a sector where their members, in particular, reach a sustainable income level. Unfortunately, to develop the solar power sector in Turkey, there is not much to be done by the organizations in companies that only employ a few people.

No one notices, but we keep saying that roofs constitute a great potential to capture solar power; however, in Turkey, roofs and buildings are in terrible condition. This is a problematic area because all small and medium scale installations will be on buildings and the part of a building closest to the sun is generally constructed when the contractor is running out of money. I am wondering how the solar power sector will find a place for system installation on rooftops lacking insulation, statically so unbalanced that even a cat would be scared to climb there and sometimes full of cooling equipment, solar collectors and satellite dishes. Therefore, the main target group will probably be newly constructed buildings within the scope of urban transformation, as long as the architects make the necessary preparations in advance. The roofs of buildings should be available for the installation of solar panels in terms of direction and slope. Right to sunlight (a building should not be deprived of the sunshine it receives when a new building is constructed nearby) should find its place in the settlement plans.

Finally, the issue of finance needs to be raised. Seeing a solar panel still makes most finance institutions in Turkey react like so: “How much water can this system heat? I had a similar thing installed in my summerhouse and I’m quite happy with it. Why do you need us?”, etc. Which brings us to the understanding that the financial institutions, which are to provide long-term (5-10 years) financing between the implementing company and the customer, are unaware that electricity can be generated from solar power and, therefore, need immediate training. This is an important point because many foreign funds can be accessed through banks and financial institutions in Turkey, and when these institutions lack the necessary knowledge on this area, the solar power sector will not be able to reach the desired level of growth. Adding the global financial crisis into the combination may lead to a reduction in such investments as well as the attraction of solar energy in the eyes of customers due to the increase in interest rates.

In spite of these problems, we still prefer to be part of the solar energy sector in Turkey, which is awaiting more regulation. This, I believe, is an appropriate point at which to conclude the paper. After the revision of the Solar Measurement Communiqué, the General Directorate of Meteorology should draft and publish another piece of legislation (a circular, or a directive, etc) to provide guidance about measurement practices. The second action required is from the Energy Market Regulatory Authority (EMRA). The deadline for license applications, documents and information required for solar energy license applications are to be identified and announced by EMRA. Afterwards, all eyes will turn to the Electricity Transmission Company of Turkey, which is in charge of preparing regulations on contests for tenders.