Wind Energy

WIND ENERGY IN TURKEY

On Nov. 1, 2007, the Energy Market Regulatory Agency (EPDK) issued a new call for license applications for wind farms. In just one day, they received a record number of 756 wind power plant applications totaling 78,000 MW -- about twice the existing total energy supply in Turkey

Many foreign and domestic companies have shown quite an interest in the renewable energies market in Turkey. A number of Turkish companies, acting alone or in joint ventures with foreign partners, have already started constructing wind farms, and many others have expressed a desire to invest in wind energy. Global players have also shown interest in the Turkish market.

Experts argue that Turkey, which relies heavily on imported energy resources, has a huge potential for wind power, putting estimates from 50,000 to as high as 150,000 MW in electricity generation. The European Wind Energy Association has estimated that Turkey could meet 20 percent of its electricity demand from wind power with a target capacity of 20,000 MW, even assuming an average 8 percent annual growth in power consumption. Today it has the 13th highest wind power capacity in Europe, and it could very well position itself as one of the top three biggest wind energy producers in Europe in the near future.

So far only about 1,000 MW of capacity is generated by wind farms in operation in Turkey, accounting for 1 percent of the total electricity consumed. Turkey currently ranks 19th in terms of its global wind power capacity. Only around 30 percent of the total energy demand is met by domestic sources, mostly from hydro-power and coal-fired plants. The Ministry of Energy and Natural Resources has set a target of up to 20,000 MW of wind energy by 2023.

Turkey is facing serious challenges in satisfying its growing energy demand as the country's electricity consumption is increasing by an average of 8-9 percent every year. It is also a security issue for Turkey as it has very limited oil and gas reserves. Building plants on renewable energy resources means curbing dependence on imported gas from Russia and Iran, thereby making Turkey more independent. What is more, EU hopeful Turkey would also bring its standards in line with European norms and upgrade its environmental policy. Ankara also ratified the Kyoto Protocol as an Annex I country, putting pressure on policymakers to place more emphasis on the role of renewables in the country's future energy mix.

Industry advocacy groups argue that legislative complications put the brakes on tapping into renewable energy resources in Turkey. Lack of a clear regulatory framework would deter some investors from committing, while the delay in handing out licenses has put off large investment projects. Although the Energy Market Regulatory Agency (EPDK) claims regulations are not yet ready and that legislation is still pending at the Environment Commission in Parliament, industry observers claim the pricing controversy is hampering the passage of legislation. According to them, the problem centers around the uncertainty regarding pricing. The current law on electricity production from renewable sources guarantees that the government will buy this electricity at a price of 5 to 5.5 euro-cents per kilowatt-hour (kWh) for all types of renewable energy. This implies that if the producers cannot find buyers in the market, the government is willing to present itself as a buyer.

Industry advocacy groups argue this guaranteed price is significantly lower than the free market price of 7 euro-cents per kWh, which makes it difficult for renewable energy projects to obtain credit. A new bill guarantees a price of 8 euro-cents per kWh for electricity produced from wind, but it was not advanced to the floor for a vote because of a disagreement amongst Cabinet ministers over subsidies.