Turkey Driving Hard Bargain for Renewables

Turkey Driving Hard Bargain for RenewablesTurkey Driving Hard Bargain for Renewables

Turkey is seeking to become a manufacturing hub for the renewable-energy industry by implementing the world’s strictest rules on local content.

The nation that straddles the European and Asian continents is opening itself to overseas investors in a tender for utility-scale renewable energy contracts. Winners will be required to build photovoltaic panels within Turkey, Bloomberg reported.

“The aspiration of the Turkish government is to actually encourage investors to establish a manufacturing facility in Turkey, for job creation, R&D and transfer of know-how,” said Andi Aranitasi, senior banker at the European Bank for Reconstruction and Development, in a phone interview.

Turkey’s new rules would make it more difficult for developers to work there, according to Bloomberg New Energy Finance. More than three-quarters of all the photovoltaics sold are made in China, where companies including Trina Solar Ltd. and JinkoSolar Holding Co. have been driving down production costs.

While local content requirements have been a staple of oil-rich countries for decades, it has only recently begun to seep into the clean energy space. Brazil made it mandatory for developers to make a certain percentage of wind turbines within its borders, although the machines are mostly just assembled locally.

The Turkish government’s solar tender may be valued at as high as $1.3 billion and will take place mid-December, according to the EBRD. The deal offers the winning bidder a 15-year power purchase agreement with a price ceiling of $80 per megawatt-hour. Building a solar panel manufacturing plant is mandatory.

“That’s a lot to ask of your bidder, and the price isn’t that high. I would be surprised if there were many bidders,” said Jenny Chase, head of solar analysis at Bloomberg New Energy Finance. “Historically solar tenders have always been oversubscribed. This might be the turning point.

“I genuinely don’t think you’re going to get globally competitive solar manufacturing right away in Turkey,” Chase said. “It’s not an existing manufacturing base, the cost of materials is much cheaper in Asia.”


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