Turkey: A Closer Look To Opportunities On Solar Energy

In recent years, scientists have focused on renewable and alternative energy sources, like solar and wind energies, due to energy prices and environmental problems of fossil fuel consumption. It is well known that solar energy is the source of life on earth. The solar energy affects positively all living organisms and the planning and design of building heating and cooling systems. Turkey has a very high solar energy potential since its location is exposed with a very high solar radiation.

Especially, the amount, direction and variation of radiation are very important for heating and cooling systems for the necessary calculations of heat gain from solar energy. The solar energy potential is also necessary to estimate maximum solar energy loads on walls, windows and roofs.

The solar industry is undergoing a critical transition. The rules of the game are changing, and many current players could face significant challenges as the industry restructures. But those who believe the solar industry has run its course may be surprised. Solar companies that reduce their costs, develop value propositions to target the needs of particular segments, and strategically navigate the evolving regulatory landscape can position themselves to reap significant rewards in the coming years.

According to International Energy Agency ("IEA") analysis, under extreme assumptions solar energy could provide up to one-third of the world's final energy demand after 2060. A number of assumptions are made to see what might be possible in terms of solar deployment, while keeping affordability in sight. These include policy makers successfully reducing greenhouse gas emissions beyond the current international targets, and electricity-driven technologies fostering significant energy efficiency improvements and displacing fossil fuels in many uses in buildings, industry and transportation.

Over the past three years, Solar Photovoltaic ("PV") installed system prices, module prices, and module production costs have all fallen by more than 50% and as a result of these falling prices, manufacturing consolidation and a more balanced supply-demand picture, PV demand will continue to grow and the solar industry will shift from a demand-constrained market into a classic supply-driven market in 2014. Therefore, the PV industry is once more at a pivotal stage. There are strong indicators suggesting that the industry will reach new heights in 2014, but there is also significant risk, possibly coming more from industry participants themselves than from end-market factors. In this regard, the leading PV market research firms are predicting a good year in 2014.

The subsidies that made solar PV economically attractive for many consumers set the conditions for the boom. Demand rose, new entrants flocked to the industry, and the innovation has been accelerated. Manufacturing capacity increased dramatically (particularly after large-scale, low-cost Chinese manufacturers entered the market) and the market became oversupplied. Prices dropped suddenly, which increased demand but put pressure on margins.

- Solar Energy Power in Turkey

Turkey's importance in the energy markets is growing, both as a regional energy transit hub and as a growing consumer. Turkey's energy demand has increased rapidly over the last few years and likely will continue to grow in the future.

The country's energy use is still relatively low, although it is increasing at a very fast pace. According to IEA, energy use in Turkey is expected to double over the next decade, while electricity demand growth is expected to increase at an even faster pace. Meeting this level of growth will require significant investment in the energy sector, much of which will come from the private sector. Large investments in natural gas and electricity infrastructure will be essential.

Turkey is located in a relatively advantageous geographical position. The solar energy potential evaluations, based on the data measured by the State Meteorological Services revealed that the annual average total insolation duration as 2640 hours (7,2 hours/day) and the average annual solar radiation as 1311 kWh/m²-year (3,6 kWh/m²-day).

However, it is known that the existing meteorological data is lower than the actual solar energy data of Turkey. Although the measurements have not been completed yet, the collected data indicates that the actual solar energy radiation values are 20-25% higher than the existing data.

Utilization of photovoltaic systems is limited with the usage of some governmental organizations in remote service areas such as telecom stations, forest fire observation towers and highway emergency. In June 2013, the first tender was announced, creating the long awaited start of the Turkish market. With the opening of the tender for 600 MW there were projects submitted for 9 GW by 409 companies.

The commercial segment (up to 1 MW) seems to be the most interesting issue for the interested persons. There is no license requirement for systems up to 1 MW which makes this segment attractive and relatively easy for developing PV projects.

- New Regulation and New Opportunities with Unlicensed Electrical Energy Generation

According to solar legislation in Turkey, everyone will be able to produce his/her own electrical energy in certain amounts without any license requirement imposed by Energy Market Regulatory Authority ("EMRA"). According to the Regulation on Unlicensed Electrical Energy Generation ("Regulation") numbered 28783 which has been entered into force on 02.10.2013, every residence may produce a certain amount of its electricity and sell the surplus to the main grid.

It is to mention that the intention of the respective Regulation is (i) to contribute the small production plants to the countries' economy, (ii) to provide the electrical energy for consumers and (iii) to reduce the respective losses in electrical energy.

Furthermore, according to the respective Regulation, every natural or legal person as an electricity subscriber may establish electricity generation plant as solar PV without being required to apply for a license at EMRA; provided that they are officially subscribers. However, subscribers such as apartment building management not being a natural or legal person may not establish such plants. Therefore, it is a fact that such Regulation will be of interest especially to the universities, building complexes and as well as to the large shopping malls.

- Application Procedure for a Connection

Any related person who intends to establish an electricity production plant shall apply for a connection and for use of the system with the documents required by law to the related network operator. These documents shall indicate the right of usage of the applicant on the related real property, the right of usage on renewable energy resource (landfill gas, solar and wind energy are exempted) and the technical specifications of the established plant.

Applications will be evaluated within the first twenty (20) days of the following month. Upon request of the application owner, a generation resource document may be issued to the producers. According to such Regulation, the generation and consumption plants may be located in the same places. This measurement has been determined to avoid the additional costs and to make the intended projects more productive.

It is also possible to establish a generation plant based on renewable energy resource. Principally, electrical energy shall be generated for supply own needs of producers. However, it is also possible to consume the produced electrical energy in other consumption plant of the same person or legal entity. The related network operator determines the surplus energy amounts. This surplus energy is purchased by Supplier Company for 10 years at the prices according to the Renewable Energy Resources Support Mechanism. The generated net energy amount may be sold to the consumers. The usage of domestic products is supported by this Regulation. However, the term of benefit from this support is limited to five (5) years as of the date of temporary acceptance of the production plant.

- Technical Liability and Sale and Purchase of Generation Plants

According to Article 14 of the respective Regulation, the real or legal person who produces electrical energy is liable for the establishment and operation of plants and work safety. Accordingly, these persons shall employ an operation officer. This officer and the producer are jointly and severally liable for the damages arising from breaches of legislation concerning the operation of generation plants.

Furthermore, the generation plants may be assigned to third persons through sale, transfer or another way provided that their temporary acceptance certificate has been issued. These plants may not be transferred without temporary acceptance certificate. The transfer shall be applied to the related network operator and applications are evaluated within thirty (30) days.

Moreover, it is possible to transform a licensed generation plant into an unlicensed plant. The terms and principles of such cases have been regulated by Article 30 of the Regulation. According to the Regulation the unlicensed electrical energy generation limit has been increased from 500 kW to 1000 kW (1 MW) and the application and other procedures have been enabled.

In this context, the electricity generation through solar power will dominate the next twenty years of the Turkish energy market. The decreased financial costs, solar PV prices and investment figures will let the solar energy market boom and the investors will be highly attracted to the opportunities deriving from solar energy.

Finally, this may be favorable for persons if the establishment costs are high, on the other hand, the energy generation costs may be amortized in solar energy if the sunshine duration in Turkey is evaluated. It will be helpful in the future especially with regards to minimize the dependence of Turkey on the electrical energy import. In conclusion, it can be stated that such advantages in energy production may be very useful especially for decrease of electricity bills and to provide the independence regarding energy supply & demand structure of Turkey.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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