Turkey Photovoltaic Market Outlook 2012 by Ilko Iliev

T E K R A M C I A T L O V O T O H URKEYP T

2 1 0 2 k oo l Out

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TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2012 This market report offers an incisive and reliable overview of the photovoltaic sector of the country. Turkey has the sixth-largest electricity market in Europe and one of the fastest growing in the world. In view of recent cuts in FIT’s announced in Germany, Spain, France, UK, Czech Republic, Slovakia and Italy, Turkey represents a stable investment environment in South-East Europe with clear rules and fair FIT rates. Current cumulative installed PV capacity in the country is insignificant, but a number of fully permitted and ready to build project is promptly increasing. Turkish market has good chances to reach more than 250 MWp in the next 2 years. The report provides a complete picture of the market situation, dynamics, current issues and future prospects. You will find more than 50 pages of valuable information in this unique in-depth analysis of the Turkish photovoltaic market. With comprehensive market data this report brings clear and concise insights, to help investors in their decision making process. As 2011 was challenging year for photovoltaic industry, the time for taking right decisions during 2012 is limited. Fast changing market environment with falling module prices, requires relevant and accurate information. For your convenience we offer opportunity for orders with customized report content. Reasons to buy this market report include:  Brief overview of the Turkish political and economic environment  Solar resource potential in Turkey  Overview of Turkish photovoltaic energy market development 2007 ÷ 2012  Grid connected photovoltaic power plants for 2011/2012  Future market trends and planned photovoltaic projects for 2012/2013  Current market prices of fully permitted and operational photovoltaic projects  Turkey legal and energy regulatory framework for renewable projects  Key companies in photovoltaic sector  Review of most relevant financing and supporting incentives  SWOT Analysis Early bird discount of 10 % is available by the end of April 2012, together with 2 free updates about the market development by the end of 2012. At next pages you will see the full table of content of this report. To order this report just fill in and send us the enclosed at the last page order form. If you have any other questions please do not hesitate to call us on ++359 887 342 475 or write an e-mail to orders@ineaconsulting.eu

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2012

TABLE OF CONTENTS

FOREWORD ................................................................................................................ 6 1

METHODOLOGY ................................................................................................ 8

EXECUTIVE SUMMARY .................................................................................... 10

TURKEY POLITICAL AND ECONOMIC ENVIRONMENT ....................................... 13 3.1 Basic country data .............................................................................................. 13 3.2 Political Climate and Ruling Party ...................................................................... 16 3.3 GDP and Economic Growth ................................................................................ 17 3.4 Electricity Imports and Exports. Electricity prices for business and households 19 3.5 Taxes ................................................................................................................... 21 3.5.1 VAT .................................................................................................................. 21 3.5.2 Income and Corporate Taxes .......................................................................... 21

TURKEY PHOTVOLTAIC ENERGY MARKET ........................................................ 22 4.1 General electricity market information ............................................................. 22 4.1.1 Electricity Consumption and Production ........................................................ 22 4.1.2 RES targets ...................................................................................................... 23 4.2 PHOTOVOLTAIC ENERGY market ....................................................................... 26 4.2.1 Why invest in photovoltaic energy in Turkey? ............................................... 27 4.2.2 Turkey solar resource potential...................................................................... 28 4.2.3 Overview of Turkey photovoltaic market ....................................................... 30 4.2.4 Market prices for photovoltaic energy projects in Turkey ............................. 32 4.2.5 Development projects and operational photovoltaic power plants in Turkey33

EUROPEAN RENEWABLE ENERGY POLICY LANDSCAPE ..................................... 36 5.1 RES Regulations and EU Directives..................................................................... 36 5.1.1 Precedent EU regulations ............................................................................... 36 5.1.2 Most recent EU renewable energy policy developments .............................. 36

TURKEY RES LEGAL AND REGULATORY FRAMEWORK ...................................... 38 6.1 Main laws and regulations ................................................................................. 38 6.2 Zoning, planning and construction related authorizations ................................ 43 6.3 Environmental related authorizations ............................................................... 43 6.3.1 Natura 2000 Network ..................................................................................... 43 6.3.2 Joint Implementation ..................................................................................... 44 6.4 Energy law authorizations .................................................................................. 44 6.4.1 Power Generation Licensing ........................................................................... 44 6.4.2 Grid Interconnection ...................................................................................... 45 6.4.3 Power Off-Take ............................................................................................... 45 6.4.4 Feed-in tariff (FIT) ........................................................................................... 46 6.4.5 RES Certificates ............................................................................................... 47 6.5 Financial Incentives and Support for RES electricity .......................................... 47

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2012 6.6 Future market pricing mechanisms ................................................................... 48 6.7 Key Co-financing opportunities .......................................................................... 49 6.7.1 Turkey Sustainable Energy Financing Facility (TURSEFF) ............................... 49 7

KEY ORGANIZATIONS AND INSTITUTIONS ....................................................... 53 7.1 Government ....................................................................................................... 53 7.1.1 The Ministry of Energy and Natural Resourses (MENR) ................................. 53 7.1.2 Energy Market Regulatory Authority (EMRA) ................................................ 53 7.1.3 Ministry of Environment and Forestry (MoEF)............................................... 53 7.2 ELECTRICITY GENERATION AND DISTRIBUTION COMPANIES ............................ 54 7.2.1 TEIAS ............................................................................................................... 55 7.2.2 EUAS and IPP’s ................................................................................................ 55 7.2.3 TETAS .............................................................................................................. 57 7.2.4 TEDAS and Private distributions companies .................................................. 58 7.3 KEY PHOTOVOLTAIC COMPANIES OPERATING ON TURKEY MARKET ................ 59

SWOT ANALYSIS ............................................................................................. 61

CONCLUSIONS ................................................................................................ 66

LIST OF ABBREVIATIONS ................................................................................. 69

REFERENCES ................................................................................................... 70

DISCLAIMER ................................................................................................... 79

APPENDIX I. SOLAR IRRADIATION MAPS OF EUROPE AND TURKEY ............................ 81

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2012 LIST OF MAPS, CHARTS AND TABLES Map 1: Where is Turkey on the world map ....................................................................... 13 Map 2: Major transport corridors passing through Turkey ............................................... 14 Map 3: Turkey regions ....................................................................................................... 16 Map 4: Solar potential of Turkey ....................................................................................... 27 Map 5: Turkey Solar Energy Map ....................................................................................... 30 Map 6: Electricity grids network of TEIAS .......................................................................... 55 Map 7: Hydro Power Plants of EUAS ................................................................................. 56 Map 8: Thermal Power Plants of EUAS .............................................................................. 57 Map 9: Districts covered by TEDAS .................................................................................... 58 Map 10: Solar irradiation and solar electricity potential for horizontally mounted photovoltaic modules in Turkey, JRC PVGIS 2008 ............................................................. 81 Map 11: Solar irradiation and solar electricity potential for optimally inclined photovoltaic modules in Turkey, JRC PVGIS 2008 ............................................................. 81 Map 12: Solar irradiation and solar electricity potential for optimally inclined photovoltaic modules in Europe, JRC PVGIS 2008 ............................................................. 82 Chart 1: Real GDP growth for the period 2000-2012 (including estimates)...................... 18 Chart 2: Turkish GDP growth compared to EU-27 for the period 2002-2011(Q1) ............ 19 Chart 3: Electricity imports and exports for the period 2004-2011 (in million MWh) including estimations ......................................................................................................... 20 Chart 4: Corporate tax income in the region .................................................................... 21 Chart 5: Structure of Turkish electricity market ................................................................ 22 Chart 6: Share of RES electricity in gross energy consumption 2010 ................................ 23 Chart 7: Turkish RES targets ............................................................................................... 24 Chart 8: Cumulative developments of photovoltaic power plants in Turkey in MW from 2006 to 2013, including estimates ..................................................................................... 35 Chart 9: TURSEFF Structure................................................................................................ 51 Chart 10: Market Shares by Sales of the Major Utility Companies in Turkey in 2011 ...... 54 Chart 11: Share of power producers in Turkey by installed capacity ................................ 56 Table 1: Electricity prices for business and households .................................................... 20 Table 2: Support schemes for RES generation in the EU countries ................................... 27 Table 3: Market prices for photovoltaic projects in Turkey for 2012 ................................ 33 Table 4: Selected operational, under construction and planned photovoltaic projects in Turkey ................................................................................................................................ 34 Table 5: Feed-in-tariffs for electricity from photovoltaic sources in Turkey ..................... 47

ÂŠ 2012, Inea Consulting Ltd., Bulgaria; Last Edition on 08.04.2012.