Dr. Yüksel MALKOÇTWEA Vice President

Emerging European Markets: Resilient in the crisis?

Policies, Markets & Programmes

Outline

• Turkey’s current financial outlook, • Demand growth and supply development,• Wind potential and capacity development,• Policy and regulatory environment of the

renewable energy market,• Current wind projects and other

investment areas in the wind market.

Current Financial Outlook and Electricity Demand Growth

Electricity Demand

Installed Capacity Development

Turkey has substantial amount of renewable energy potential and the utilization rates are growing. Hydro, wind and solar energy resources are the major portions of our renewable portfolio.

Turkey has at least;• 160000 GWh/a. economic hydro, • 48000 MW wind capacity• 380000 GWh/a. solar (*)• 31500 MWt geothermal capacity• 8,6 MTOE biomass• 1,5-2 MTOE biogas(*) Considering the parabolic CSP technologies.

Wind Potential

Wind Potential

Wind speed distribution, 50 m agl

ON-SHORE (MW)

OFF-SHORE(MW)

37.836 10.013

Resource potential

Wind class

Annual wind power density (W/m2)

Annual wind speed (m/s)

Total capacity

(MW)

Good 4 400 – 500 7,0 – 7,5 29.259,36

Excellent 5 500 – 600 7,5 – 8,0 12.994,32

Outstanding 6 600 – 800 8,0 – 9,0 5.399,92

Superb 7 > 800 > 9,0 195,84

TOTAL CAPACITY 47.849,44

Wind energy potential (annual average wind speed>7 m/s), 50 m a.g.l.

Wind Potential

Wind Potential and Capacity Development

WPPs in OperationWPPs in ConstructionLicenced WPPs

Competitive Market Structure

• State:

- Macro scale policy development through Ministry of Energy and Natural

Resources (MENR)

- Regulations, control, supervision of markets through Energy Market Regulatory Authority (EMRA)

• Private Sector: Generation, distribution, trade

Energy Market –Structure

Energy Policy

Energy security and sustainable energy supply are among the main policy concerns of Turkey. Turkey attributes significant importance to;

• encouraging the energy production from renewables in a secure, economic and cost effective manner,

• expanding the utilization of our renewable resources for generating electrical energy,

• increasing the diversification of energy resources, • reducing greenhouse gas emissions, • making use of waste products and protecting the environment, • developing the related mechanical and/or electro-mechanical

manufacturing sector.

Strategy

Turkish Government revised the “Electricity Energy Market and Supply Security Strategy Paper” in 2009. In this paper, some targets defined related with renewables until 2023 are as follows;

• At least 30% of total electricity production from renewables,• The whole economically feasible hydropower potential of Turkey will be provided for generating electrical energy,• 600 MWe geothermal energy will be implemented, • 20,000 MW capacity of wind power plant will be in operation, • Utilization of solar energy for generating electrical energy will be expanded.

Strategy Roadmap

Until now, TEIAS has confirmed connection of around 12.5 GW WPPs. TEIAS announced investments in

transmission infrastructure and thus will be able to deliver 1 GW each year starting from 2013 until 2020. All in all,

TEIAS has declared that the grid connection will be able to support the “20 GW WPP by 2023” target of Supply

Security Strategy Paper.

Policy and Regulatory Environment

Trade Possibilities

Export Opportunities

Currently Turkey has interconnections with Greece, Bulgaria, Georgia, Armenia, Iran, Iraq, and Syria; however, so far import and exportfi gures are almost negligible in comparison to Turkey’s overall electricity demand Eventually, ENTSO-E synchronization will increase the amounttraded. In 2010, Turkey imported 1,883 GWh and exported 2,674 GWh of electricity. The map below illustrates the existing interconnection capacitiesand the table indicates seasonal capacities.

Incentives provided in the New Renewable Energy Law

• The New Law provides a Renewable Energy Support Mechanism ("Mechanism") which covers different incentives and benefits for renewable energy projects including feed-in tariffs (fixed minimum electricity sale prices). The New Law covers different feed-in tariffs depending on the type of the renewable energy projects as follows:

– Turkish Lira equivalent of USD 0.073 per kWh for hydroelectric power plants, – Turkish Lira equivalent of USD 0.073 per kWh for wind power plants, – Turkish Lira equivalent of USD 0.105 per kWh for geothermal power plants, – Turkish Lira equivalent of USD 0.133 per kWh for biomass power plants, and – Turkish Lira equivalent of USD 0.133 per kWh for solar power plants.

• The above mentioned feed-in tariffs will be applicable for the legal entities holding generation licenses which start operations during the period from 18 May 2005 to 31 December 2015 and for a period of ten years from the operation date.

• The New Law also features further price incentives from 0,004 to 0,024 kWh for the license holders which use locally produced mechanical and/or electro-mechanical equipment/components in renewable energy facilities, for a five-year term provided that they start producing energy before the end of 2015.

Table 1

Type of Facility

$ cent/ kWh

Hidro 7,3

Wind 7,3

Jeothermal 10,5

Biomass 13,3

Solar 13,3

Table 2 (For wind)

Local ComponentAdditional Local

Content$ cent/ kWh

Blade 0,8

Generator and Power electronics

1,0

Tower 0,6

Rotor, Nacel all part of the mechanical

components1,3

Incentives provided in the New Renewable Energy Law

• Purchase guarantee and guaranteed feed price,• An option to make use of forested land and state-owned land to construct a renewable energy plant , • A 99 per cent reduction in the license application fees,• Exemption from annual license fee payments, • Ability to purchase electricity from private wholesale and generation companies,• Promote the manufacturing of renewable energy plant equipment in Turkey, • Priority for system connection,• Purchasing priority,• Eligible consumers (>25000 kWh/year),• Renewable energy plant investments up to 500kW and micro-cogeneration plant investments are exempt from

license and company establishment requirements and they can be connected to the grid,• WPPs lower than 10 MW capacity are exempt from EIA report liability,• Additional revenue generation for renewable power projects exists in Turkey through voluntary or verified

emission reduction credits (VERs),• Others (local and other ministries)…

Before

1 st November 2007

1 st November 2007 Up to 2023

3527 MW(93 Projects)

7571 MW 8902 MW+ + = 20.000 MW

1800 MWOperation

600 MWUnder

Construction

2027 MWSingle Application

(61 Projects)

5544 MWTEİAŞ Races(147 Projects)

11.098 MW

TURKEY

IS THE BIGGEST MARKET

IN EUROPE

Turkish Wind Energy Sector will show a rapid development in the coming years.

1800 MWOperation

600 MWUnder

Construction

11.000 MWLicensed WPP Project

20.000 MW2023 Target

48.000 MWTechno-economic potential

THANK YOU FOR YOUR ATTENTION….

Dr. Yüksel MALKOÇTÜREB/TWEC Vice Presidentyuksel.malkoc@tureb.com.tr