January 17, 2011 - Datamonitor -- Turkey's $0.072/kWh introductory feed-in tariff (FIT) from 2004 lured few to set up solar installations. Now, the country is increasing its FIT and introducing bonuses (and restriction), in an attempt to shift 30% of its power generation to renewables by 2023.
Europe's photovoltaic (PV) market has experienced some seismic shifts in recent times, characterized by the radical action taken by the Spanish government following the failed subsidy program that led to an investment bubble in 2008.
The Turkish Ministry of Energy and Natural Resources has introduced new support for clean energy technology that aims to strengthen its domestic renewables industry, improve its energy security prospects, and meet its climate change objectives. Turkey relies on gas, coal, and hydro for its energy, and thus far renewable power has played only a very limited role. But as the country strives to diversify its energy mix, domestically generated renewable energy will become increasingly important as it attempts to get 30% of its power supply from renewables by 2023. Despite Turkey passing a renewable energy law in 2004 that supports photovoltaic (PV) installations, the uncompetitive feed-in tariffs of $0.072/kWh meant that very few investments were made.
Under the new program the subsidy for PV installations will be extended to $0.175/kWh in a base tariff, plus an additional bonus of up to $0.067/kWh for PV systems consisting of locally produced components and $0.092/kWh for all concentrated solar power systems built with local equipment. The program also guarantees a price of $0.13/kWh for wind and hydro, $0.14/kWh for geothermal, and $0.17/kWh for energy generated from waste.
However, by the government's own admission these new subsidies only address the short-term prospects of its renewables industry. The newly favorable subsidies will only apply to operators that have previously obtained authorization from the government for selling energy back to the grid, and even then "licensed solar energy companies" are restricted to producing no more than 600MW up to December 31, 2013. The Turkish parliament will determine the limits thereafter.
Instead of fully supporting a fledgling renewables sector, Turkey's new program limits production and places bureaucratic barriers in the way of small-scale operators that could deter investors. Turkey has excellent potential for wind, solar, and hydro power production, but placing too much control over the long-term prospects of its renewables industry in the hands of the nation's cabinet is likely to prove a hindrance rather than a help.
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