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Final Report
Turkey: Rooftop Solar PV Market Assessment
Submitted By: Tetra Tech
511, 5th Floor, D Mall,
Netaji Subhash Place, Delhi, India- 110034
www.tetratech.com
DISCLAIMER:
“This report has been disclosed in response to a public access request, in accordance to the World Bank’s Policy on Access to Information. The report and its content, including the opinions, findings, interpretations, and conclusions contained therein have not been endorsed by the World Bank. Under no circumstance should anything in this report be attributed to the World Bank, its Executive Board of Directors, officers, or any of its member countries. Nor should this report be construed as an endorsement or recognition by the World Bank, its Board, officers, or member countries of the validity or authority of anything contained in the report.”
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Final Report
Turkey: Rooftop Solar PV Market Assessment
January 31, 2018
Prepared by:
Tetra Tech ES India Pvt. Ltd.
511, 5th Floor, Plot No. A-1,
D Mall, Netaji Subhash Place,
Pitampura, New Delhi, India
WWW.TETRATECH.COM
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Acknowledgements
This report presents a summary of the main findings from the activity “Turkey: Rooftop Solar PV
Assessment,” which was financed by the Energy Sector Management Assistance Program (ESMAP)
together with the World Bank’s Europe and Central Asia Region.
The report was prepared by the Tetra Tech team, which included Ujjwal Bhattacharjee, Rakesh
Kumar Goyal, Apoorv Nagpal, Sugandha Chauhan, Shahab Alam from Tetra Tech ES India Pvt. Ltd.;
Wietze Lise, Mehmet Kocaoglu, Gokhan Tosun, Duygu Kucukbahar-Beygo and Ismail Ozdamar from
AF Mercados Turkey; Shirish Garud and Alekhya Datta from TERI India. The Tetra Tech team
acknowledges the close cooperation and support from the Ministry of Energy and Natural Resources
(MENR), including Mr. Oguz Can, Ms. Dilan Kavruk, Mr. Mustafa Caliskan and Mr. Sebahattin Oz. The
Tetra Tech team also appreciates the guidance from the World Bank team, led by Jas Singh and
Yasemin Örücü, and included Almudena Mateos Merino and Pranay Kohli (Solar Consultant).
A roundtable discussion was held on December 14, 2017 in Ankara to discuss and debate some of
the report’s findings and recommendations. The Tetra Tech team appreciated the comments and
feedback received from the many government and private sector participants.
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Table of Contents
ACKNOWLEDGEMENTS _____________________________________________________________ I
ABBREVIATIONS AND ACRONYMS ___________________________________________________ V
EXECUTIVE SUMMARY ____________________________________________________________ VII
1. ROOFTOP SOLAR IN TURKEY AND LESSONS FROM INTERNATIONAL EXPERIENCE __________ 1
1.1 INTRODUCTION ________________________________________________________________ 1
1.2 RSPV LESSONS FROM INTERNATIONAL EXPERIENCE _______________________________________ 4
1.2.1 CALIFORNIA - UNITED STATES _____________________________________________________ 4
1.2.2 INDIA______________________________________________________________________ 5
1.2.3 GERMANY __________________________________________________________________ 5
1.2.4 CHINA _____________________________________________________________________ 5
1.2.5 JAPAN _____________________________________________________________________ 6
1.3 BUSINESS MODELS ______________________________________________________________ 9
1.3.1 SELF-OWNERSHIP MODEL (FIT) ____________________________________________________ 9
1.3.2 RESCO OR ROOFTOP-LEASING MODEL (FIT) ___________________________________________ 9
1.3.3 RESCO MODEL (NET-METERING) _________________________________________________ 10
2. POLICIES AND BARRIERS TO RSPV DEVELOPMENT IN TURKEY _________________________ 11
2.1 POLICIES ____________________________________________________________________ 11
2.1.1 REGULATORY _______________________________________________________________ 11
2.1.2 TARIFF ____________________________________________________________________ 11
2.1.3 LICENSING PROCEDURE ________________________________________________________ 11
2.1.4 UNLICENSED RSPV SYSTEMS _____________________________________________________ 12
2.1.5 METERING, MONITORING AND VERIFICATION _________________________________________ 12
2.2 BARRIERS ___________________________________________________________________ 13
2.2.1 LEGAL, REGULATORY AND PROCEDURAL _____________________________________________ 13
2.2.2 FINANCIAL AND TARIFF _________________________________________________________ 13
2.2.3 TECHNICAL CAPACITY AND AWARENESS ON RSPV SYSTEMS ________________________________ 14
2.2.4 CONSUMER PERCEPTION _______________________________________________________ 14
2.3 SUMMARY OF BARRIERS, INTERNATIONAL EXPERIENCE AND RECOMMENDATIONS FOR TURKEY _________ 15
3. RSPV MARKET POTENTIAL FOR TURKEY ___________________________________________ 18
3.1 MARKET SURVEY ______________________________________________________________ 18
3.2 MARKET POTENTIAL ____________________________________________________________ 20
3.1.1 REALIZABLE SOLAR INSTALLATION RATIO _____________________________________________ 23
3.1.2 ESTIMATION OF THE MARKET POTENTIAL ____________________________________________ 24
3.1.3 GRID CAPACITY ______________________________________________________________ 24
3.1.4 GROWTH IN SALES OF RSPV _____________________________________________________ 25
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3.1.5 INCOME LEVEL ______________________________________________________________ 25
3.1.6 CREDITWORTHINESS __________________________________________________________ 26
4. APPLICATIONS OF RSPV: PRE-FEASIBILITY ASSESSMENTS OF BUILDINGS ________________ 28
4.1 RSPV SYSTEM SIZE AND BUILDING SELF-CONSUMPTION RATIO ______________________________ 30
4.2 FINANCING RSPV _____________________________________________________________ 32
5. FINANCIAL VIABILITY OF RSPV IN TURKEY _________________________________________ 33
5.1 RESIDENTIAL SECTOR ___________________________________________________________ 34
5.2 INDUSTRIAL SECTOR ____________________________________________________________ 35
5.3 COMMERCIAL AND PUBLIC SECTORS _________________________________________________ 35
5.4 SENSITIVITY ANALYSIS __________________________________________________________ 36
6. RECOMMENDATIONS AND ROADMAP FOR RSPV DEVELOPMENT IN TURKEY_____________ 38
6.1 RECOMMENDATION 1 – SET ANNUAL TARGET FOR RSPV __________________________________ 38
6.2 RECOMMENDATION 2 – ESTABLISH DEDICATED, LOW-INTEREST LENDING FACILITY WITH BANKS FOR RSPV
SYSTEMS ________________________________________________________________________ 39
6.3 RECOMMENDATION 3 – TRANSITION FROM FIT TO NET METERING ____________________________ 39
6.4 RECOMMENDATION 4 – INCENTIVIZE THE INDUSTRIAL SECTOR TO ADOPT RSPVS __________________ 40
6.5 RECOMMENDATION 5 – WAIVE THE SURVEILLANCE CERTIFICATE AND OTHER TRANSACTION COSTS ______ 40
6.6 RECOMMENDATION 6 – ESTABLISH SINGLE WINDOW/ONLINE DISCOM APPROVAL FOR RSPV SYSTEMS UP TO
150 KW ________________________________________________________________________ 41
6.7 RECOMMENDATION 7 – CREATE CAPACITY BUILDING PROGRAMS _____________________________ 41
6.8 RECOMMENDATION 8 – CREATE OUTREACH PROGRAMS ___________________________________ 43
6.9 RECOMMENDATION 9 – DEVELOP TECHNICAL STANDARDS __________________________________ 43
7. IMPLEMENTATION PLAN_______________________________________________________ 44
7.1 TARGETS, AND MONITORING AND EVALUATION FRAMEWORK _______________________________ 44
7.2 SCHEDULE ___________________________________________________________________ 46
REFERENCES ____________________________________________________________________ 48
APPENDIX-1 ____________________________________________________________________ 50
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List of Tables TABLE 1-1: ELECTRICITY GENERATION CAPACITY IN TURKEY, 2014-2017 (MW) 1 TABLE 1-2: COMPARISON OF KEY FEATURES OF VARIOUS RSPV MARKETS 7 TABLE 2-1: PERMITS REQUIRED AND ISSUING INSTITUTION 13 TABLE 3-1: QUESTIONNAIRE FOR VARIOUS STAKEHOLDER GROUPS 18 TABLE 3-2: CLASSIFICATION OF BUILDING CATEGORIES IN TURKEY 22 TABLE 3-3: USABLE AREA ESTIMATION OF WEIGHTED AVERAGE RATIO OF F-TYPE AND P-TYPE BUILDINGS 22 TABLE 3-4: ESTIMATION OF USABLE AREA FOR RSPV 23 TABLE 3-5: ACCESS FACTORS FOR BUILDING CATEGORIES 23 TABLE 3-6: ESTIMATION OF ACTUAL REALIZABLE SOLAR AREA AND TECHNICAL POTENTIAL OF RSPV 24 TABLE 3-7: GRID CAPACITY LIMIT FOR RSPV 25 TABLE 3-8: RSPV MARKET POTENTIAL BASED ON INCOME LEVEL AND CREDITWORTHINESS 26 TABLE 4-1: BUILDING CHARACTERISTICS INCLUDED IN PRE-FEASIBILITY STUDIES 29 TABLE 4-2: BUILDING ROOF TYPE AND PROXIMITY TO ELECTRIC DISTRIBUTION NETWORK 30 TABLE 4-3: RSPV SIZE AND SELF-CONSUMPTION RATIO 31 TABLE 5-1: PARAMETERS FOR ESTIMATION OF THE FINANCIAL AND ECONOMIC VIABILITY OF RSPV 33 TABLE 5-2: RESIDENTIAL SECTOR – RSPV FINANCIAL VIABILITY 34 TABLE 5-3: INDUSTRIAL SECTOR - RSPV FINANCIAL VIABILITY 35 TABLE 5-4: COMMERCIAL AND PUBLIC SECTORS - RSPV FINANCIAL VIABILITY 35 TABLE 5-5: RSPV CAPITAL COST SENSITIVITY ANALYSIS 36 TABLE 5-6: BUSINESS MODELS FOR THE RESIDENTIAL SECTOR 36 TABLE 5-7: BUSINESS MODELS FOR COMMERCIAL SECTOR RESULTS 37 TABLE 5-8: SUMMARY OF KEY FINDINGS 37 TABLE 6-1: ANNUAL TARGETS FOR RSPV 38 TABLE 6-2: FINANCIAL RETURNS FOR INDUSTRIAL RSPV 40 TABLE 6-3: RECOMMENDATIONS FOR CAPACITY BUILDING PROGRAM 41 TABLE 6-4: EXPECTED IMPACTS OF OUTREACH PROGRAMS 43 TABLE 7-1: KEY PERFORMANCE INDICATORS (KPIS) TO MONITOR RSPV TARGETS 46
List of Figures FIGURE 1-1: EVOLUTION OF SOLAR POLICY IN TURKEY 2 FIGURE 1-2: STAKEHOLDERS SUPPORTING SOLAR DEVELOPMENT IN TURKEY. 3 FIGURE 1-3: SOLAR RADIATION MAP OF TURKEY 3 FIGURE 1-4: EVOLUTION OF FIT IN CHINA (JULY 2008 TO JANUARY 2015) 6 FIGURE 1-5: GROWTH OF SOLAR PV IN JAPAN DUE TO FIT 6 FIGURE 1-6: GROSS-METERED SELF-OWNERSHIP BUSINESS MODEL 10 FIGURE 1-7: GROSS-METERED RESCO OR ROOFTOP-LEASING BUSINESS MODEL 10
FIGURE 1-8: NET-METERED SELF-OWNERSHIP BUSINESS MODEL 10
FIGURE 1 9: NET-METERED RESCO BUSINESS MODEL 10 FIGURE 2-1: RECOMMENDATIONS FOR QUICK APPROVAL OF RSPV IN TURKEY 12 FIGURE 3-1: AWARENESS OF SOLAR ROOFTOPS AND INFORMATION MEDIUMS 19 FIGURE 3-2: MOTIVATION FOR ADOPTION OF ROOFTOP SOLAR 19 FIGURE 3-3: PERCEIVED BARRIERS TO RSPV ADOPTION 20 FIGURE 3-4: PREFERRED INCENTIVES FOR ROOFTOP SOLAR ADOPTION 20 FIGURE 3-5: ESTIMATED ANNUAL RSPV PENETRATION 27 FIGURE 4-1: EXAMPLES OF TYPICAL ROOF TYPES IN TURKEY 28 FIGURE 6-1: RSPV PENETRATION BY SECTOR 38 FIGURE 6-2: COMPARISON OF RSPV COST AT FIT AND NM 39 FIGURE 7-1: KEY FACTORS ANALYSED IN PREPARING THE IMPLEMENTATION PLAN 44 FIGURE 7-2: PRELIMINARY SCHEDULE FOR IMPLEMENTATION PLAN 47
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Abbreviations and Acronyms Abbreviation Full Name
AC Alternating Current
ADB Asian Development Bank
CAGR Compounded Annual Growth Rate
CAPEX Capital Expenditure
ÇATIDER Association of Roofing Industrialists and Businessmen, Turkey (Cati Sanayici ve Is Adamlari Dernegi)
CERC Central Electricity Regulatory Commission, India
CNM Community Net Metering
CTF Clean Technology Fund
CUF Capacity Utilization Factor
DC Direct Current
DGRE Directorate General of Renewable Energy. YEGM (Yenilenebilir Enerji Genel Müdürlüğü)
DISCOM Distribution Company
DSM Demand Side Management
EBRD European Bank for Reconstruction and Development
EE Energy Efficiency
EEG Erneuerbare Energien Gesetz (Renewable Energy Act), Germany
EIRR Economic Internal Rate of Return
EMRA Energy Market Regulatory Authority, Turkey
EPC Engineering Procurement Construction
ESCO Energy Service Companies
FAQ Frequently Asked Questions
FI Financial Institution
FiP Feed-in-Premium
FIRR Financial Internal Rate of Return
FiT Feed-in-Tariff
F-type Flat roof type
GENSED Turkish Solar Energy Industry Association (Güneş Enerjisi Sanayicileri ve Endüstrisi Derneği)
GIS Geographic Information System
GUNDER International Solar Energy Society – ISES Turkish Branch
GW Giga Watt
GWh Gigawatt hour
HGT High Tariff Growth
Hr. Hour
IEA International Energy Agency
IND Industrial
IRENA International Renewable Energy Agency
IRR Internal Rate of Return
KfW KfW Development Bank, Germany
KPI Key Performance Indicator
kWh Kilowatt hour
LCOE Levelized Cost of Electricity
LRMC Long Run Marginal Cost
M&E Monitoring and Evaluation
M&V Monitoring and Verification
MAB Multifamily Apartment Buildings
MENR Ministry of Energy and Natural Resources, Turkey
METI Ministry of Economy, Trade and Industry, Japan
MNRE Ministry of New and Renewable Energy, India
MOE Ministry of Environment, Japan
MW Mega Watt
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Abbreviation Full Name
MWh Megawatt hour
NM Net metering
NPV Net Present Value
NREAP National Renewable Energy Action Plan
O&M Operation and Maintenance
OIZ Organized Industrial Zone
OPEX Operational Expense
PACE-D Partnership to Accelerate Clean Energy Deployment Technical Assistance
PLF Plant Load Factor
PPA Power Purchase Agreement
PPP Purchasing Power Parity
P-type Pitch roof type
PUB Public
PV Photovoltaic
R&D Research and Development
RE Renewable Energy
RES Renewable Energy Sources
Res. Residential
RESCO Renewable Energy Service Company
RETCOM Retail Company
RPO Renewable Purchase Obligation
RPS Renewable Portfolio Standards
RSPV Rooftop Solar Photovoltaic
S.M.A.R.T. Specific, Measurable, Attainable, Relevant and Time-bound Targets
SETNET Solar Energy Training Network
SIR Solar Installation Ratio
sq. ft. Square feet
sq. m Square meter
STG Stable Tariff Growth
tCO2 Tonne of CO2
TEDAS Turkey Electricity Distribution AS (Turkiye Elektrik Dagitim AS)
TEIAS Turkish Electricity Transmission Company
TENVA Turkey Energy Foundation
TERI The Energy and Resources Institute, India
TLY Turkish Lira
TPDDL Tata Power Delhi Distribution Limited
TURKOTED Turkish Cogeneration & Clean Energy Technologies Association
TurSEFF Turkey Sustainable Energy Financing Facility II
USD US Dollar
VAT Value Added Tax
W Watt
WACC Weighted Average Cost of Capital
WB World Bank
YEKA Renewable Energy Resource Areas (Yenilenebilir Enerji Kaynak Alanları)
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Executive Summary Turkey has significant renewable energy (RE) potential, including solar, mainly as a result of its geographic location. Taking advantage of this potential will decrease the country’s dependence on imported fossil fuels as well as reduce greenhouse gas (GHG) emissions. Recognizing this, the government has established a target of at least 30% (or 127.3 TWh) of the total electricity generation from RE by 2023. In addition, it has set targets of 3 GW of installed solar power by 2019 and 5 GW by 2023. As a result, the solar market in Turkey has grown exponentially over the last few years, with installed solar capacity growing from 40 MW in 2014 to 3,421 MW at the end of 2017. The solar boom in Turkey has been primarily limited to larger projects. Most of them are, however, under 1 MW in size in order to take advantage of the unlicensed feed-in-tariff (FiT) schemes. In contrast, in countries with more developed solar markets, such as Germany, the United States and Japan, a significant portion of solar capacity is produced by rooftop solar photovoltaic (RSPV) applications with 1 kW to 10 MW capacities. Given the fast pace of urbanization and corresponding residential, commercial and industrial markets, this study concludes that there is a significant potential for RSPV deployment in Turkey. A first-order assessment of the RSPV market potential has been carried out at the request of the Ministry of Energy and Natural Resources (MENR) and its Directorate General for Renewable Energy (DGRE) with financial and technical support from the World Bank. This report also presents a roadmap for the development of the RSPV market in Turkey. The market assessment includes three main consumer sectors: 1) residential, 2) commercial and industrial, and 3) public buildings. In order to gain an understanding of the current state of RSPV in Turkey, several market examination tools were employed. These included a review of existing solar-related policies and regulations, solar resources, usable rooftop areas, and a market survey of key stakeholders. Field visits to representative buildings were then used to collect the data needed to carry out financial and economic analyses of representative sites. The study also benefited from inputs from the DGRE and World Bank teams. Finally, a workshop was conducted on December 14, 2017 in Ankara to share findings and gather feedback from stakeholders. This further informed the study and aided in developing the final recommendations and roadmap.
Status of RSPV in Turkey
As of the end of 2017, roughly 200 MW of RSPV had been installed in Turkey. The installations are mainly in large industrial and commercial establishments. A FiT for renewable energy generation was introduced in 2010. For solar photovoltaics (PV), the FiT has been fixed at US$133/MWh. However, depending upon the use of locally produced equipment, the FiT can go up to US$196/MWh. The FiT is applicable to both licensed and unlicensed projects up to 1 MW capacity, but only licensed projects with capacities above 1 MW can benefit from the local FiT premium. As a result, only 17.9 MW had been installed until 2017 under the FiT scheme. A draft regulation was introduced in January 2018 to incentivize RSPV below 10 kW capacity. The regulation is expected to be notified in the coming months. While the FiT can be a good driver for RSPV in Turkey, as in other countries, MENR has indicated the ending of the FiT in 2020. As international experience shows, a FiT alone may not be sufficient to achieve ambitious national RSPV targets. As the RSPV sector is still developing in Turkey, much can be learned from established solar markets. Table ES1 illustrates the important features of RSPV policies in the United States, Germany, India, China and Japan. The far-right column shows what Turkey can learn from these global experiences.
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Table ES1: Lessons on RSPV development from international experience
Parameter USA Germany India China Japan Lessons for Turkey
Permitting and Licensing Requirements
• On-line permitting practice
• Single-window clearance
• Streamlined permitting process
• No permit fee for small residential PV systems
• Single-window clearance
• Technical standards are pre-defined
No data available • Online application system
• Requires both a pre- and final inspection
• Licensing and permitting procedure should be simple, online and time bound
FiT vs. Net-Metering
• Net-metering • Market-based net-metering
• Net-metering is mostly used
• Net-metering (self-consumption) and FiT co-exist
• A FiT policy has been implemented
• Move towards net-metering
Self-Consumption
• Net-metering and self-consumption are popular in the United States
• Self-consumption is legally permitted under the Renewable Energy Act (amended in 2014)
• 25 of the 29 states have prepared policies on net-metering and self-consumption
• Self-consumption is allowed
• FiT is the main option
• Self-consumption must be encouraged
Other Key Incentives
• Green building incentive, soft loans, guaranteed loan, property tax exemption, capital subsidy, tax credits, up-front rebates on RSPV system cost
• Guaranteed grid inter-connection for all RSPV plants and low-interest loans
• Accelerated depreciation, capital subsidy, training and capacity development programs
• National Renewable Energy Fund with tax benefits, renewable purchase obligation (RPO) for utilities, capital subsidies as high as 30 – 50% for distributed generation
• Residential incentive of $0.20/W for systems priced below $4.10/W. A lower subsidy of $0.15/W for systems priced between $4.10/W and $5.00/W. RPO, tax incentives of 30% against standard purchase prices or 7% tax deduction (for small & medium enterprises)
• Initial push to consumers for whom RSPV is less financially attractive
• Variable incentive scheme based on solar resource availability
• Develop capacity building and outreach programs.
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Energy Storage for Rooftop Solar
• AB 2514: Directing utilities to set an energy storage target
• Self-Generation Incentive Program (Law AB 327): To identify optimal locations for distributed resources
• Electric Tariff Rule 21: Interconnection and smart inverters, permitting, inspection and safety
• KfW 275 incentive: 30% investment grant on equipment purchased with low-interest loans
• Pilot projects to demonstrate energy storage in supporting a national-level action plan
• Capital subsidy for PV systems with energy storage
• Innovation in the Energy Storage Technology Revolution: New Action Plan (2016-2030): R&D grants for energy storage
• Outline for the Strategy of Driving National Innovation
• R&D grants for storage with SPV
• Storage Battery Strategy: integrated strategic policies for storage batteries
• Technical requirements by METI include a guideline for grid interconnection to secure electricity quality
• Electricity Business Act: A requirement for the approval of large electricity storage systems of more than 80,000 kWh
• Evaluate battery storage option with RSPV. In Turkey, the peak energy demand falls between 5 to 10 PM and the peak tariff is 90% more than the day tariff. Such tariff difference is likely to offer a business case for battery storage with RSPV
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RSPV Market Potential in Turkey
Market Survey
A market survey was conducted with the following objectives: 1. To assess the gaps in current policies and procedures pertaining to RSPV implementation. 2. To determine the barriers and difficulties faced by various stakeholders in RSPV implementation.
This included consumers and financial institutions (FIs), as well as engineering, procurement and construction (EPC) companies.
3. To determine what support measures are required to encourage the various stakeholders to adopt RSPV.
4. To gain a better understanding of the RSPV market potential. A market survey was issued to a sample of 243 stakeholders, mostly over the telephone using a pre-developed questionnaire. Survey respondents were selected to provide a representation of the country and to cover all key stakeholders. Stakeholders received a questionnaire based on their stakeholder category. The survey results for each category of stakeholders were analyzed for building characteristics, use of roofs, motivation for RSPV, barriers in the implementation of RSPV, selected business mode, financing requirements, market potential, etc. The key findings from the survey were:
• 92% of respondents indicated that, at present, their roof was not being used.
• 64% of the rooftops are of the pitch type (P-type), 24% are flat and 12% are a mix of flat and P-type construction.
• 58% of the respondents declared that environmental concerns were the main motivation for RSPV adoption; 51% of respondents declared a reduction in their electricity bill as their main motivation.
• For 36% of respondents, a lack of awareness on related policies and regulations constitutes the greatest barrier to RSPV implementation. For 34% of respondents, the greatest barrier is a lack of knowledge on how to arrange financing.
• In terms of incentives, 65% of the respondents indicated a preference for the FiT scheme, while the remaining respondents preferred the net-metering model. 46% of respondents indicated a preference for buy-down incentives. A further 26% of respondents indicated a need for low-cost financing.
• Half of the EPC community believes that RSPV development in the commercial sector is most appealing. An overwhelming 83% of the EPC community believes that the lack of skilled labor is a critical barrier to RSPV adoption.
• FIs expressed difficulties in providing finance to EPC companies, because most of them are early-stage firms with weak balance sheets. A mismatch between the current FiT (which only lasts 10 years) and most RSPV systems (with 25-year lifespans) was also concern.
Estimation of Market Potential for RSPV
A three-step bottom-up approach was adopted to estimate the RSPV market potential in Turkey: 1. Determination of usable roof area using building data and geographic information system
(GIS) imagery mapping. 2. Technical potential of RSPV. 3. Market potential of RSPV.
Determination of Usable Roof Area: Seven of the Tukey’s 81 provinces were selected as representative states to cover country’s varying features, such as solar radiation, availability of sun, roof type, building density, and consumer categories. A random data set of 909 polygons across seven provinces for residential, commercial and public categories was prepared and building stock data from 1992 to 2016 was used for further analysis. All 909 polygons were mapped on Google Earth to develop the solar polygon largely based on roof type (Figure ES1).
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Figure ES1: Main and solar polygons
The ratio of the main polygon area and solar polygon area was determined for all 909 polygons under three categories: residential, commercial and public. To determine the representative multiplication factor for each category, a weighted average was used. These multiplication factors were applied to building data to determine the usable roof area. In this way, the total usable area for RSPV installation in Turkey was estimated at 1.1 billion square meters (m2). Technical Potential of RSPV: The total usable area was further adjusted to account for 1) shading from other parts of the roof or from neighboring buildings and trees, 2) the use of roof space for other applications, such as ventilation, heating/air conditioning, dormers or chimneys, and 3) installation and racking of the PV panels. To account for these factors, an access factor was estimated based on similar global studies. Considering all the aforementioned factors, the technical potential of RSPV in Turkey is estimated at about 46.8 GW, as shown in Table ES2. It should be noted that the technical potential assumes RSPV system, regardless of physical or economic viability and, thus, it is not practically achievable. Table ES2: Estimation of RSPV technical potential
Building Type # of Buildings (in thousand)
Base Area (million m2)
Weighted Average
Usable Area
Usable Area (million m2)
RSPV Technical
Potential (GW)
Residential 8,230 1,269 47% 596 23.2 Commercial and Industrial 950 875 57% 499
21.5
Public 69 93 45% 42 2.1
Total 9,248 2,237 - 1,137 46.8
Market Potential of RSPV: The market potential is the technical potential that is economically viable and achievable. To estimate the RSPV market potential, four key elements were considered:
1. Grid capacity 2. Growth in RSPV sales 3. Income level 4. Creditworthiness
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The grid capacity available for RSPV was estimated by considering the total energy demand in Turkey in GWh and a 25% absorption capacity of the grid for intermittent RE (i.e., wind and solar)1. Further considerations were the grid capacity available for RE after subtracting the solar and wind capacities already in operation and an estimated 30% contribution from RSPV to the total available RE grid capacity. Thus, the grid capacity for RSPV is estimated at approximately 6.5 GW over the next 10 years. The grid capacity was further adjusted to take into account the impact of affordability and creditworthiness, as shown in Table ES3. Table ES3: Estimated grid capacity for RSPV in Turkey
RSPV Sectors Grid Capacity for RSPV (MW)
Income Level - Impact Factor
Creditworthiness - Impact Factor
RSPV Market Potential (MW)
Residential: Single-family 764 0.5 0.8 306
Residential: Multi-family 2,519 0.3 0.5 378
Residential: Total 3,283 683 Commercial 1,488 1 1 1,488
Industrial 1,523 1 1 1,523
Commercial & Industrial: Total 3,011 3,011 Public 291 0.7 0.8 163
Total (MW) 6,585 3,858
Based on this analysis, the market potential for RSPV in Turkey has been estimated at 3.9 GW. Annual RSPV penetration was estimated using an S-curve trajectory as shown in Figure ES2. According to the study of DGRE, the market potential of RSPV for residential buildings over next 10 years is estimated as: (a) 1.8 GW - Basic Scenario, (b) 4.0 GW - Medium-advanced Scenario, and (c) 7.5 GW - Advanced Scenario.
Figure ES2: Estimated annual RSPV growth in Turkey
Pre-Feasibility Assessment of RSPV
Field visits to 18 buildings were conducted to gather data for prefeasibility assessments. These buildings were selected as representative buildings in the residential, commercial and industrial, and public sectors. Key considerations in conducting the prefeasibility assessments included:
1. Solar PV system size, including roof structural stability. 2. Solar generation potential. 3. Accessibility and grid interconnection.
1 25% grid renewable energy absorption capacity is based on study by AF Mercados, Turkey.
200431
866
1,543
2,335
3,006
3,435 3,662 3,770 3,819
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
An
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SPV
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4. Financing requirements. 5. Financial and economic assessments.
Based on modelling carried out for India, a RSPV system with a capacity of 80% of the building connected load was shown to cause losses (concerning RSPV energy not self-consumed) of around 1%. Thus, in the interest of maximizing self-consumption, it is recommended that the RSPV system size not exceed 80% of the building’s connected load. For the 18 surveyed buildings in Turkey, four financial indicators were estimated: electricity (or the levelized cost of electricity, LCOE), internal rate of return (both economic – EIRR and financial – FIRR), net present value (NPV), and payback period. The analysis also looked at economic indicators based on both net-metering2 and 10-year FiT schemes3. An Excel-based model was developed based on a standard cash flow methodology to determine these financial and economic parameters. All financial and economic parameters – such as interest rate, debt equity ratio, and operation and maintenance costs – were taken based on Turkey’s current market. The results for the residential and industrial sectors are given in Table ES4. Table ES4: The EIRR and FIRR for residential and industrial consumers
Building RSPV Capacity
EIRR FIRR NPV Payback Period
LCOE
(kW)
Net-metering FiT-10 y ($) (Years) ($/kWh)
AE1_Res 15 21% 16% 15% 14,355 7.9 0.15
AE2_Res 15 22% 16% 15% 14,355 7.9 0.15
Batikent_Res 56 40% 29% 28% 81,527 6.5 0.12
Nezih_Res 30 25% 19% 18% 29,279 7.4 0.14
Doga_Res 6.5 14% 8% 8% 1,058 9.8 0.20
Aydinlar_Ind 48 17% 5% 24% -5,114 9.4 0.13
Turanlar_Ind 60 12% 2% 11% -16,192 10.1 0.15
Temsa_Ind 100 12% 2% 11% -26,284 10.1 0.15
In the residential sector, the projected financial rates of return (FIRR) on RSPV investments are generally high, largely due to the higher grid-based electricity tariff. The results indicate that the sample projects using a net-metering (or self-consumption) scheme are all financially attractive to these consumers. In the industrial sector, the FIRR is relatively low for all industrial buildings, mostly due to the lower industrial tariff. In these cases, a 10-year FiT scheme offers a better return on RSPV investments for these customers. The financial and economic results for the public and commercial sectors show that the size of the RSPV system and availability of solar resources cause differences in the FIRR and EIRR. Detailed results for the respective buildings are given in Table ES6. Table ES6: The EIRR and FIRR for public and commercial consumers
Building
RSPV Capacity
EIRR FIRR NPV Payback Period
LCOE
(kW) Net -metering FiT-10y ($) (Years) ($/kWh)
IBC_Com 4 1% Very Low Very Low -5,547 13.2 0.26
Muyar_Com 32 24% 5% 9% -2,967 8.8 0.16
Batikent_Com 600 Very High 42% Very High 394,664 6.3 0.11
Ulusoy_Com 72 29% 8% 13% 2,081 8.3 0.15
2 Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. 3 Feed-In tariffs are payments to electricity users for the renewable electricity they generate.
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Building
RSPV Capacity
EIRR FIRR NPV Payback Period
LCOE
(kW) Net -metering FiT-10y ($) (Years) ($/kWh)
Ikizler_Com 280 Very High 23% 953% 118,803 6.9 0.12
DGRE_Pub 192 58% 14% 26% 44,779 7.6 0.13
Guzel_Pub 160 58% 14% 29% 37,002 7.6 0.13
EEE_Pub 160 Very High 22% 404% 73,785 7.0 0.12
MOH_Pub 40 70% 14% 29% 10,225 7.6 0.13
Menderes_Pub 75 70% 14% 32% 20,817 7.6 0.13
A sensitivity analysis was conducted using three variables: 1) solar resource, 2) capital cost, and 3) business model4. The findings show that for the residential sector, a 1 kWh/m2/day reduction in solar resources results in a corresponding reduction in the IRR by approximately 6%. For the industrial sector, it changes by around 10%. The pubic and commercial sectors incur an even larger change of roughly 19%. The IRR for public and commercial consumers is more sensitive to capital costs than the IRR for residential and industrial consumers. The FiT model yields a higher IRR than net metering due to a higher FiT than the grid tariff. In terms of business models, the RESCO model, whereby a private company owns the RSPV system and sells electricity to the consumer, offers higher returns due to lower costs. The difference between the IRR in RESCO and self-owned models increases as the system size increases.
Barriers to RSPV Development in Turkey
As part of the assessment, several barriers to achieving the RSPV market potential were identified. They include:
Legal, Regulatory and Procedural
• Complex and lengthy licensing/permitting procedures, complex decision-making for multi-family apartment buildings, lack of obligations and guidance for DISCOMS to connect RSPVs.
• Residents are not eligible to trade electricity; only firms are allowed to do so.
• There is no RE purchase obligations (RPOs) for RETCOMs, DISCOMs, and large industries.
• Lengthy and complex processes for obtaining surveillance certificates5 to import solar panels.
• Lack of awareness of the RSPV program and promotion by the government among various stakeholders.
Financial and Tariff
• The FiT scheme lasts 10 years, while the typical lifespan of a RSPV system is 25 years. This creates uncertainty regarding the future revenues and thus profitability of investments.
• Banks require collateral to provide loans, which is difficult for small consumers to arrange.
• Banks are hesitant to finance EPC companies, as most of them are relatively new firms and have neither a track record nor a strong balance sheet.
• Companies lack capacity and financing to develop the RESCO business model which has proven to be popular in other countries.
Technical
• Lack of skilled technicians, which is a main concern for EPC companies.
4 For all the analyses, the self-owned business model has been used. The sensitivity of the results was tested on the Renewable Energy Service Company (RESCO) model. In the RESCO model, a service company typically leases the roof for generating and selling electricity from RSPV systems. 5 The surveillance certificate is a certificate for a waiver of duties on imports of materials for RSPV installations.
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• Low availability of quality suppliers and installers.
• Non-availability of standards for products, workmanship, grid connection and installation in general.
Recommendations
Based on the analyses, the following recommendations are proposed to achieve the estimated RSPV market potential of 3.9 GW over a period of 10 years. Set Annual Target for RSPV: The Ministry of Energy and Natural Resources (MENR) should set a target of ‘3.9 GW of RSPV by 2026’ and communicate this target to all stakeholders. The target should include annual milestones and sub-targets for each market segment. To make needed mid-course corrections, the targets for all three consumer categories should be monitored on a quarterly basis. Establish a Dedicated, Low-Interest Credit Line through Commercial Banks for RSPV Systems: The
market survey showed that 25% of survey respondents indicated a preference for low-cost finance
as an incentive for RSPV investments. Such a measure is consistent with global experience, which
suggests that implementing financial incentives in the initial deployment period (up to 500 MW) can
help stimulate the RSPV market. Some EPCs may also need credit enhancement mechanisms.
Transition to Net-Metering: MENR has indicated that the FiT policy will end in 2020. As the financial analysis shows, over the next six years the rates of return under net metering schemes will surpass those under the existing FiT for consumers in all sectors, except the industrial sector, because the FiT will remain higher than the grid tariff until 2027. A net metering scheme will also impose a reduced financial burden on electricity consumers as compared with the current FiT. It is thus recommended that the government transition from the FiT to net metering for RSPV systems. Offer Additional Incentives to the Industrial Sector to Promote RSPV: Given its high potential, high electricity consumption and better access to financing, the industrial sector represents a significant segment of the RSPV market. The profitability on industrial RSPV systems, however, is low under the net metering scheme, with IRRs of 2 to 5%. MENR should develop a program specifically targeting the industrial sector with additional incentives, which may include tax rebates for using electricity generated from RSPV, up-front cash incentives, a higher tariff (equivalent to that for the residential sector) for supplying electricity to the grid from RSPV after self-consumption, simplified procedures, easy access to information, special connection protocols, etc. Remove the Surveillance Certificate and Reduce Transaction Costs: The requirement for a surveillance certificate (certificate for imported PV systems issued by the Turkish Ministry for Economy) should be waived for RSPV systems. Alternatively, the application process should be simplified to make it easier for a residential consumer to obtain a certificate. Create a single Window/Online Approval for RSPV Systems6 up to 150 kW: MENR should work with EMRA, TEDAS and others to simplify the permitting and licensing process. Having an online single-window and time bound, integrated permitting and licensing platform, would substantially reduce the transaction costs for new RSPV installations. Develop and Implement Capacity Building and Training Programs: Training programs should be developed at all levels: for policy makers, FIs, DISCOMs and EPC firms. In addition, training should be
6 All permits, licenses and approvals such as construction, grid connection, safety, environment, etc. should be provided by making a single application on one platform.
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provided to create a large pool of skilled technicians that EPC firms and other relevant players can draw upon. Conduct Outreach Programs: Creating stakeholder awareness of government programs and policies, business models, technical aspects, etc. should be done through targeted outreach programs. Develop Technical Standards: Technical standards should be developed for RSPV products, workmanship, grid connections and installations.
Implementation Plan for RSPV
An implementation plan was prepared to develop the RSPV market in Turkey drawing from the following resources: international experience, the market assessment, the financial and economic analyses, identification and analysis of key barriers, the roadmap and stakeholder consultations. For the implementation of the RSPV program, the capacity of all stakeholders at all levels should be built by using various capacity building techniques, e.g., the capacity of DGRE and regulators should be built for policy making and program development/implementation through technical assistance activities including engaging with similar institutions in countries where RSPV programs are running successfully. To build the capacity of the general public, train-the-trainers programs should be implemented. The media for outreach should be selected based on the targeted stakeholder. For example, tailored workshops should be held for policy makers, and exhibitions and roadshows for the public at large and customized approaches for sector-specific consumers. The implementation plan should be monitored using four key performance indicators: RSPV capacity installed, electricity generated from RSPV, number of RSPV projects installed, and number of RSPV projects financed. Each indicator has been detailed for its importance, measurement methodology, and base and annual target values across the three consumer categories. The implementation program consists of a detailed plan for capacity building, outreach, change management, and the implementation of recommendations made. The plan has been mapped on a 10-year Gantt chart.
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1. Rooftop Solar in Turkey and Lessons from International
Experience 1.1 Introduction
Turkey has given significant priority to electricity generation from renewable energy sources. This was supported by way of legislation in 2005 (Law No. 5346- Utilization of Renewable Energy Sources for the Purpose of Generating Electrical Energy) and subsequent policies on the generation of electricity through the utilization of Renewable Energy (RE) resources. The total installed capacity at the end of 2017 was 85,200 MW with a breakdown as follows: 32% hydro, 27.1% natural gas, 21.9% coal, 7.6% wind, 1.2% geothermal, and 10.2% other sources (Table 1-1). This capacity included 628 hydro plants, 41 coal fired plants, 207 wind plants, 40 geothermal plants, 290 natural gas plants, 3,616 solar plants and 199 other types of power plants7. Total solar capacity reached 3,421 MW at the end of 2017. Table 1-1: Electricity generation capacity in Turkey, 2014-2017 (MW)
Installed Power Capacity By Fuel/ Resource 2014 2015 2016 2017
Geothermal 405 624 821 1.064 Hydro from Reservoirs 16,607 19,077 19,559 19,776 Hydro from Rivers 7,034 6,791 7,123 7,490 Hydro (unlicensed, < 1 MW) - - - 7 Wind (licensed) 3,630 4,498 5,738 6,482 Wind (unlicensed, < 1 MW) - 5 13 34 Solar (licensed) - - 13 18 Solar PV (unlicensed, < 1 MW) 40 249 820 3,403 Renewables: Biomass, biogas, landfill gas and Waste 288 345 467 575
FO Nafta, DO 659 866 369 304
Local coals, namely Hard Coal, Asphalt and Lignite 8,573 9,023 9,842 9,873 Imported Coal 6,063 6,064 7,474 8,794 Single fuel: Natural Gas and LNG 21,476 21,222 22,156 23,064 Multi-fuels: Solid and Fluid Fuels 668 653 667 683 Multi-fuels: Fluid fuels and Natural Gas 4,074 3,674 3,354 3,434 Thermal (unlicensed, < 1 MW) 57 82 201 Total 69,516 73,148 78,497 85,200
Source: TEIAS The country introduced Feed-in-Tariffs (FiT) for RE generation in 2010. Within the requirements of the FiT, the price is fixed at US$133/MWh for solar photovoltaics (PV) and can go up to US$196/MWh based on the use of locally produced equipment for licensed projects. Both licensed and unlicensed solar projects up to 1 MW capacity benefit from the FiT; however only licensed projects can benefit from the premium for locally produced products. Several developments in the RE sector, such as decreasing investment costs of solar equipment, development of technical know-how and new regulatory amendments for unlicensed generation have accelerated the growth of solar PV. Applications for solar PV systems, mostly ground-based, with a total capacity of 9,000 MW were received by June 2013 for 600 MW announced capacity, where a total capacity of 582 MW has received the right for pre-license authorizations. Out of these solar PV projects with pre-licenses,
7 Installed capacity data from Transmission System Operator TEIAS. Source: http://www.teias.gov.tr/sites/default/files/2018-01/Kguc2017.pdf (accessed 24-01-2018)
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only 18 MW had been developed by the end of 2017. No further licensed solar PV has been approved since then. The Supply Security Strategy Paper (2009) and National Renewable Energy Action Plan (NREAP, 2014), published by the Ministry of Energy and Natural Resources (MENR), have set targets for 2023: 49% of installed power capacity and 38% of total electricity generated to be supplied by RE. The aim is to have 3 GW of installed solar PV by 2019 and 5 GW by 2023. Figure 1-1 presents the development of policies relevant to solar in Turkey.
Figure 1-1: Evolution of solar policy in Turkey There are a number of key stakeholders engaged in and supporting the development of the solar and RE sector in Turkey. These include public institutions, Engineering Procurement Construction (EPC) companies, private investors, financial institutions and many others as can be seen in Figure 1-2.
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Figure 1-2: Stakeholders supporting solar development in Turkey. Solar radiation varies greatly throughout the different regions of Turkey. The Southeast and Mediterranean regions have the most favorable conditions with 3,038 and 3,014 hours of average annual peak sunshine duration, respectively. The two regions receive 1,650 kWh/m2 and 1,590 kWh/m2 of average annual irradiation, respectively. In contrast, the Marmara and the Black Sea regions are less suitable for solar energy production since they receive only 2,519 and 2,317 hours of average peak annual sunshine duration and 1,396 kWh/m2
and 1,338 kWh/m2 of average irradiation levels, respectively. The Figure 1-3 illustrates levels of solar radiation across Turkey.
Figure 1-3: Solar radiation map of Turkey Source: The Directorate General of Renewable Energy (http://www.eie.gov.tr/MyCalculator/Default.aspx)
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By the end of 2017, around 200 MW of RSPV had been installed in Turkey. RSPV can play an important role in achieving the target for solar generation. For the promotion of RSPV in Turkey, a draft regulation was introduced in April 2017 to incentivize RSPV up to 10 kW and published in January 2018 by EMRA. The policy lays out certain provisions for the installation and execution of RSPV systems. It includes a provision on the application process for establishing solar facilities and for selling electricity generated from such facilities.
In countries with developed solar markets, RSPV has made a significant contribution to the total installed capacities. Examples include Germany, USA, Japan and the emerging economies of China and India. As the RSPV sector in Turkey is still developing, a number of valuable lessons can be learned from established solar markets. In the following section, some of the more critical lessons from these countries have been identified.
1.2 RSPV Lessons from International Experience
1.2.1 California - United States The United States has one of the most developed solar markets and has experienced a significant growth in overall installed solar capacity, with an increase from 1.2 GW in 2008 to an estimated 40 GW in 2016. The United States has a comprehensive policy landscape regarding RSPV. The making and implementing of energy policy in the US takes place at several levels: federal, state and local, with a large number of policies being drafted and executed at the local (municipal and state) level. (This is in contrast to Germany and China where policies were drafted and executed on a national level.) An example of U.S. state level policy is California, which has numerous solar policies governed by the state itself. This state has as many as a hundred policies including financial incentives, regulatory policies detailing mandates on California’s Renewable Purchase Obligations (RPO), building codes and related regulatory concerns such as solar power installation rebate, solar energy development standards, and interconnection standards for small generators, etc.8 The state of California has ramped up its RPO requirements in recent years. Known as the Renewable Portfolio Standards (RPS), the original legislation required 20% of energy to be produced by RE by 2017. However, since 2006, this original requirement was amended towards a more aggressive RPO initiative of 20% by 2010, seven years earlier than originally planned. A further amendment in 2011 called for 30% by 2020 and a last amendment in 2015 called for 50% of energy to be produced by RE as of 20309. As early as 1979, California introduced net metering (NM) to encourage solar deployment. NM is designed to compensate for excess power generated from solar sources at the retail price of electricity (generally around 17 to 20 US cents/kWh). NM and subsequent financial compensation has been highly successful in the United States. The most popular business model used to execute compensation is the third-party model. In California, this includes all parties who avail of the state’s Power Purchase Agreement (PPA) through a Renewable Energy Service Company (RESCO). Throughout the country, NM and subsequent compensation is promoted and encouraged through financial benefits in the form of tax rebates and soft loans and several incentive schemes.
8 For a detailed list of policies, please refer to the following link: http://www.dsireusa.org/ 9 http://www.energy.ca.gov/renewables/tracking_progress/documents/renewable.pdf
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1.2.2 India The government of India has set an ambitious target of 175 GW of electricity to be added by RE by 2022. Of the total 175 GW, 100 GW have been assigned to solar power of which 40 GW is to be added by decentralized and RSPV projects. According to a study conducted by The Energy and Resources Institute (TERI) in 2014, the market potential of RSPV in India was estimated at 124 GW. In 2016, the cumulative installed PV capacity stood at 12.3 GW, with grid connected rooftop capacity at roughly 1 GW. Similar to the United States, India has a comprehensive and complicated policy landscape. It was a late entrant in the solar market and, as such, its policies are based on the experiences of developed countries. Both central and state level policies are in place for solar and RSPV. Most of the Indian utilities have made provisions for RSPV including single window clearance procedures. Technical standards for various solar systems are also well defined. Most of the states have provided options for NM with exception of only few states allowing for a FiT scheme. The most popular model for RSPV in India is the self-consumption model - in this model, the owner consumes the electricity produced by the RSPV system and sells any excess power to the grid. The Ministry of New and Renewable Energy provides incentives in the form of Central Financial Assistance. For the residential consumer category, this entails a 30% capital subsidy on the benchmark cost of RSPV in all states except special category states10 where there is a 60% capital subsidy on the benchmark cost.
1.2.3 Germany Germany has one of the world’s largest solar PV markets, with 42 GW of installed capacity and an annual growth of 2.4 to 2.6 GW in the installed capacity until the target of 52 GW is achieved11. Nearly 65% of Germany’s solar PV capacity comes from RSPV. Germany’s rooftop solar development is primarily led by the national RES Act and its amendments (also known as the EEG Act). The RES Act highlights the key market driving policies, which include legislation on FiT, Feed-in-Premium (FiP) and market tendering. The country has set RE targets of 40%-45% by 2025 to 55%-60% by 2035. A final target is set for an increase to 80% by 2050 (150-200 GW). A key to Germany’s successful solar market is its pre-defined and streamlined permitting process for standardized solar systems. In addition, local permits and inspections are not required for residential RSPV installations. There are also no permit fees for small residential RSPV systems. Germany promotes the “Self-Consumption” model for RSPV to achieve greater growth in the national solar market. The government has also promoted a multi-owner/investor scheme in which many users own or invest in a single rooftop project, such as for multifamily apartment buildings (MABs).
1.2.4 China China has the world’s largest PV market, with almost 46% of the global solar PV capacity. As of 2016, it had an installed PV capacity of 77.4 GW. The rapid growth in China’s solar sector has been the result of the government’s declaration that any projects operational by June 30, 2016 would be eligible for a FiT rate of roughly 15 US cents/kWh. Projects completed after this date would receive a lower FiT rate. This led to a significantly high capacity addition in 2015. According to the National
10 Refer to the following link for more information: https://factly.in/what-are-special-category-states-history-numbers-behind-scs/ 11 http://mnre.gov.in/file-manager/UserFiles/workshop-gcrt-0870616/german.pdf
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Energy Administration, the country aims to add over 110 GW in solar PV in the period of 2016-2020. The FiT incentives that led to the boom in the Chinese solar market were especially tailored to include distributed generation, as shown in the Figure 1-4 below12. Further enablers to the growth of the solar market included low cost materials and human resources, an increased electricity tariff and soft loans provided by state-owned Chinese banks.
Figure 1-4: Evolution of FiT in China (July 2008 to January 2015)
1.2.5 Japan Japan had an early lead in the solar PV technology market. In 1994, subsidies for solar systems were available for 50% of the system cost. These incentives were gradually reduced to 33% in 1999. As a result, over 250,000 residential PV systems were set up and increased the cumulative solar PV capacity from 43.3 MW (1994) to 1,422 MW (1999)13. The country has set a target of 64 GW of solar PV by 2030. In 2012, Japan introduced a FiT scheme. This led to an increase in solar PV installation and added significant PV capacity across all consumer segments. As a result, installed PV capacity in Japan increased from 3.81 GW in 2012 to 8.55 GW in 2013 (Figure 1-5). Up until mid-2014, a total of 10.5 GW of new PV capacity was installed. Cumulative rooftop capacity stood at 16.3 GW out of 23.3GW total solar PV installed in 2014.
Figure 1-5: Growth of solar PV in Japan due to FiT
12 https://d2oc0ihd6a5bt.cloudfront.net/wp-content/uploads/sites/837/2015/06/2015_06_03_ASEF_ADB_AECEA_Frank_Haugwitz_FINAL.pdf 13 https://www.eu-japan.eu/sites/default/files/imce/minerva/pvinjapan_report_minerva_fellow.pdf
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Although FiT levels have been steadily declining since their introduction, it is still cost-effective to install RSPV systems. The current FiT for solar power in Japan is 42 Yen (or about 38.6 US cents/kWh). Japan has different FiTs for various RE technologies, e.g. Wind (23.1 Yen/lWh for=> 20 kW and 57.7 Yen/kWh for <20 kW capacity) or Geothermal (27.3 Yen/kWh for=> 15 MW and 42 Yen/kWh for < 15 MW capacity)14. Regarding permits and licensing, Japan uses a similar system to the United States and Germany of online applications. A comparison of key parameters of the five countries is provided in Table 1-2. Table 1-2: Comparison of key features of various RSPV markets
14 http://www.meti.go.jp/english/policy/energy_environment/renewable/pdf/summary201207.pdf 15 https://pubarchive.lbl.gov/islandora/object/ir%3A158830/datastream/PDF/view 16 http://m.klgates.com/files/Event/b9e44c37-184a-4d2d-8edb-356ee4a10af1/Presentation/EventAttachment/8a62eb09-014c-47e7-9b7d-a4e41d36ade8/FAQ_Japan_Feed-in-Tariff_System.pdf 17 http://www.nrel.gov/docs/fy14osti/60419.pdf 18 IEA PVPS – Review and Analysis of PV Self-Consumption Policies
Parameter California (USA) Germany India China Japan Permitting and Licensing Requirements
• Online permitting practice
• Single window clearance.
• Streamlined permitting process
• No permit fee for small residential PV systems15
• Single window clearance
• Technical standards as pre-defined
• Data Not Available
• Online application system
• Requirement for both a pre- and final inspection1617
FiT Vs Net Metering
• Net-metering (NM)
• FiT • Most states have NM policy with exception of few states offering FiT
• Both Net-metering (Self Consumption) and FIT co-exist in China
• Japan has both FiT and net-metering but uses mostly FiT
Self-consumption18
• Net-metering and self-consumption is popular in the US
• Self-consumption is legally permitted under the Renewable Energy Act (amended in 2014)
• 25 states out of the 29 states have prepared policies on net-metering and self-consumption.
• Self-consumption is allowed
• Self-consumption is allowed
Other Key Incentives
• Green building incentive, soft loans, guaranteed loan, property tax exemption, capital subsidy (e.g. California Solar Initiative), tax credits,
• rebates for purchasing renewable solar generation equipment
• Guaranteed grid inter-connection for all RSPV plants, cross subsidy (EEG surcharge) is not levied on energy generated from RSPV
• Accelerated depreciation, capital subsidy, modifications in the building bye-laws to encourage rooftop solar, Renewable Energy Certificates (for both residential and commercial), RPO, training
• National RE Fund with tax benefits, RPO for utilities, capital subsidies as high as 30 – 50% for distributed generation
• Residential incentive of $0.20/W for systems priced below $4.10/W whereby a lower subsidy of $0.15/W is available for systems priced between $4.10/W and $5.00/W, RPO, tax incentives of 30% against
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The following are key lessons and features from these five countries which can help inform the policy and strategy for accelerating the installation of RSPV in Turkey:
19 https://www.gtai.de/GTAI/Content/EN/Invest/_SharedDocs/Downloads/GTAI/Fact-sheets/Energy-environmental/fact-sheet-energy-storage-market-germany-en.pdf?v=7 20 http://mnre.gov.in/file-manager/advertisement/EoI-Energy-Storage-Demonstration-Project-for-supporting-Renewable-Generation.pdf 21 http://www.intersolar.in/en/news-press/news/industry-news/energy-storage-in-india-an-overview.html 22 http://en.cnesa.org/featured-stories/2016/5/8/chinas-energy-innovation-action-plan 23 http://www.china.com.cn/zhibo/zhuanti/ch-xinwen/2016-05/23/content_38515829.htm
programs for solar professionals and rebates
standard purchase prices or 7% tax deduction (only applies to small and medium enterprises)
Energy Storage for Rooftop Solar
• AB 2514: Directing utilities to set Energy Storage target
• Self-Generation Incentive Program (Law AB 327): To identify optimal locations for distributed resources
• Electric Tariff Rule 21: Interconnection and smart inverters permitting, inspection and safety
• KfW 275 incentive: 30% investment grant on equipment purchased with low-interest loans provided by KfW19
• Pilot projects on demonstration of energy storage in supporting RE20
• National level action plan
• Capital subsidy for PV systems with energy storage21
• Innovation in the Energy Storage Technology Revolution: New Action Plan (2016-2030): R&D grants for energy storage22
• Outline for the Strategy of Driving National Innovation: R&D grants for storage for SPV projects 23
• Storage Battery Strategy: formulate and implement integrated strategic policies for storage batteries
• Multiple subsidy programs by the Ministry of Economy, Trade and Industry (METI) and the Ministry of Environment (MOE)
• Technical requirements by METI including a guideline of grid interconnection to secure electricity quality as of 2013
• Electricity Business Act: A requirement for the approval of large electricity storage systems of more than 80,000kWh
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1. Rooftop Solar Policy • Set specific targets for RSPV capacity installations, as in India and Japan.
• Set solar RSPV size ranges and limits. India set limits for a solar PV system size to be in the range of 1 kW to 1 MW. A cap on the system size is also specified in the range of 80 to 100% of a facility’s connected load. A further minimum limit on self-consumption at the source is set around 80% of the energy produced from an RSPV system.
2. FiT vs Net Metering • Promote NM schemes, as was done in the United States and India. • Consider additional incentives when justified, such as China, which offered an additional
financial incentive (roughly 6 US cents/kWh) over the retail electricity tariff to encourage self-consumption.
3. Availability of Consumer Finance: • Improve access to financing. In developed markets, such as the United States, Japan and
Germany, access to financing from commercial banks was important. In developing markets, access to low-cost financing, such as from state banks in China or through International Financial Institutions for India, for the RSPV sector24 were needed.
4. Permits and Licensing: • Streamline licensing and permitting. Pre-defined and streamlined procedures, as was
done in Germany and the United States, is important. California introduced the Expedited Solar Permitting Act (solar bill AB 2188) in 2014 to streamline and encourage adoption of RSPV, giving a deadline of one year for implementation to all 540 jurisdictions in California. This has led to an increase in RSPV and a general growth of California’s solar market.
5. Capacity Development • Extensive capacity building program can help in achieving RSPV targets, such as in India.
USAID’s PACE-D program and the Indian Government’s SETNET program aim to train over 400,000 skilled workers in the solar sector.
1.3 Business Models
Business models are also important in operationalizing investments in RSPV implementation. A brief description of different business models from international experience is provided below.
1.3.1 Self-Ownership Model (FiT) For FiT self-ownership business model, the roof owner is also the owner of the RSPV assets. The owner finances the RSPV with equity or receives a loan from a bank. The owner engages an EPC firm to install the RSPV system and then enters into a PPA contract with the electric utility to sell the generated electricity at the FiT rate. The owner makes separate payments to the electric utility for the electricity consumed on site, as shown in Figure 1-6. The above business model appears to be the preferred investment model for RSPV in Turkey.
1.3.2 RESCO or Rooftop-Leasing Model (FiT) Under these business models (shown in Figure 1-7), the RESCO is the owner of the RSPV assets and, as such, finances the system and signs a PPA with the DISCOM (Rooftop leasing model) or the building owner (RESCO model). The RESCO pays monthly rent for the rooftop use to the building owner(s). This scheme allows building owners to create revenue from roof space without being associated with any bank or electric utility transactions. The 5 MW rooftop solar program in Gandhinagar, India is an example of the rooftop-leasing/RESCO model under a FiT scheme.
24 Some Financial Institutes (FI’s) in India have in fact set up dedicated credit lines for solar power development in India. For example, Punjab National Bank, State Bank of India, etc.
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Self-Ownership Model (Net-Metering or NM) This business model is similar to the self-ownership model under a FiT in that the facility or roof owner owns the RSPV assets and transacts with the bank and DISCOM (Figure 1-8). The key difference is that the power generated is not sold at the FiT, but rather deducted from the owner’s utility bill. In other words, the owner pays the utility for the net electricity consumed (calculated as grid electricity consumed minus the solar electricity fed into the grid). If the solar generation exceeds the owner’s grid consumption, the excess energy can be rolled over month to month. This business model is more commonly used in the residential sector in other countries.
1.3.3 RESCO model (Net-Metering) RESCO model can also be applied in conjunction with a NM scheme. In this case, the RESCO owns the RSPV assets and transacts with banks, EPC firms and the utility (Figure 1-9). The building owner enters into a PPA with the RESCO and consumes the solar power generated by the RSPV system. Any excess solar generation is netted with the electricity consumption from the grid. An example of this are the utility assisted businesses, offering a solution to high RSPV adoption costs, which are prevalent in the United States.
The following sections explore the different elements of the analytical framework concerning RSPV development. Section 2 outlines the policies and barriers impeding RSPV uptake in Turkey. Section 3 presents the technical and market potential for RSPV in Turkey. Section 4 offers a pre-feasibility assessment of a set of surveyed buildings identified in field visits to various provinces. Section 5 presents the results of financial and economic analyses of representative systems. Finally, Sections 6 and 7 provide a recommended roadmap and implementation plan.
Figure 1-8: Net-metered self-ownership business model
Figure 1 9: Net-metered RESCO business model
Figure 1-6: Gross-metered self-ownership business model
Figure 1-7: Gross-metered RESCO or Rooftop leasing business model
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2. Policies and Barriers to RSPV Development in Turkey While the last decade has seen an increase in solar installations in Turkey, there is a need to further strengthen and streamline solar-related regulations and policies. Key issues need to be clarified, including licensing and grid connection procedures, grid connection costs and tariffs. Further issues that require clarification include metering, monitoring and verification. For each of these, the existing conditions have been analyzed, as well as the national energy policies and targets.
2.1 Policies
2.1.1 Regulatory The Electricity Market Law25 is the main legislation concerning the electricity sector in Turkey. It governs the electricity generation, transmission, distribution, wholesale and retail sale, import and export, and market operation activities. The rules and procedures related to the licensing issues, as well as the necessary permits (granted by EMRA), are regulated under the Electricity Market Licensing Regulation26.
2.1.2 Tariff The Turkish solar market is currently supported by a feed-in-tariff (FiT) mechanism, in which the tariff is fixed at US$0.133/kWh. Solar projects using locally produced equipment can access a maximum FiT of US$0.196/kWh. However, local equipment premiums are only available for licensed solar PV. This may accelerate in 2018 once licenses can be provided in accord with the 600 MW tender procedure27. As of 2017, licensed projects with a combined installed capacity of 18 MW were completed. Within the framework of providing additional incentives for local equipment production in Turkey, a tender notice was published on October 20, 2016 for the first solar Renewable Energy Resource Area (YEKA) of 1 GW. After some delays in the tender process, the final bids for the solar YEKA tender in the Karapinar region were submitted to DGRE on 14 March, 2017. The Kalyoncu - Hanwha Q Cells Group won the tender with the lowest bid of US$69.9/MWh, just below the tender’s ceiling price of US$80.0/MWh.
2.1.3 Licensing Procedure Solar generation projects over 1 MW of installed capacity have to obtain a license for grid interconnection. Under the 2013 Electricity Market Law (No. 6446), MENR is required to annually announce the maximum total capacity that can be connected to the grid. The Turkish Transmission Company (TEIAS) then approves the announced capacity28. If a region has more than one developer, the bidding for license is conducted by TEIAS. The developer offering the highest contribution fee is selected. Upon selection, the developer receives an invitation letter from EMRA. A grid connection agreement is then submitted to TEIAS to allow for transmission connected generation. The agreement is also sent to the local DISCOM to allow for distribution-grid connected generation. Connection requirements are defined in Appendix 18 of the Turkish Grid Code. The connection investment can be made by either TEIAS or the developer and is paid back to the developer over a 25 Electricity Market Law of 2001 (Law no: 4628); replaced by Electricity Market Law of March 14, 2013 and numbered 6446. Further published in the Gazette dated March 30, 2013 and numbered 28603. 26 Electricity Market Licensing Regulation; published in the Official Gazette dated November 2, 2013 and numbered 28809. 27 This tender procedure was completed in June 2013. This comprised a total installed capacity of 600 MW. 9000 MW applied to this tender, but due to grid constraints only 600 MW of projects were approved. The next steps involved various additional requirement to obtain a generation license. Until end-2017, projects amounting to 18 MW were completed. More projects can be expected in 2018. Note that new tenders for licensed solar PV are not planned, except for YEKA. 28 Bidding is conducted if there are multiple applications for the same grid capacity. There is much interest for solar PV, so this always led to multiple applications and the need to organize a tender.
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period of ten years. Lastly, the cost of interconnection is borne by the developer.
Figure 2-1: Recommendations for quick approval of RSPV in Turkey
2.1.4 Unlicensed RSPV systems At present, solar generators below 1 MW capacity do not require a license. There is, however, no provision for power off-take (either in transmission or distribution grid) despite the RSPV system being connected to the grid29. These generators do qualify for the FiT scheme, but not for the additional local equipment premium incentive. DGRE has proposed a simplified licensing and interconnection process (shown in Figure 2-1) for RSPV up to 10 kW capacity.
2.1.5 Metering, Monitoring and Verification There are a couple of concerns regarding the use of FiT for RSPV, such as the cost difference between the higher FiT tariff and the lower average wholesale power purchase cost of DISCOMs, and the inability to assess the impact of bi-directional power flow into the grid. This is especially relevant in Turkey where commercial losses are high. In some areas, the retail tariff is lower than the FiT, such as in the Organized Industrial Zones (OIZ) where the FiT is nearly double the retail tariff. Such cost differentials put enormous strain on the financial health of the system and electricity consumers who eventually have to pay the difference. In the next section, the key barriers regarding RSPV in Turkey are summarized along with recommended mitigation measures.
29 Grid connection procedure exists. The solar PV (as well as RSPV) requires to obtain an approval letter (cagri mektubu), among others in order to qualify for grid connection and FiT.
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2.2 Barriers There are several barriers to achieving the RSPV market potential in Turkey. These barriers, described below, are grouped into four categories – 1) legal, regulatory and procedural, 2) financial and tariff, 3) technical, and 4) consumer perception.
2.2.1 Legal, Regulatory and Procedural 1. Lengthy grid connection and permitting procedures. Small-scale investors in RSPV systems face
a lengthy application process for RSPV system to various authorities for various permits Table 2-1. Even though a separate regulation has recently been published for RSPV systems up to 10 kW, small-scale investors will still have to go through the same steps as larger investors (those who invest in systems of 10 kW up to 1 MW). For small-scale investors, this leads to a long connection time (around 6-12 months) with high transaction and application processing costs of around $1000, irrespective of the size of the installation. To demonstrate, the following permits are required for installation of RSPV systems:
Table 2-1: Permits required and issuing institution
Permit required Agency
Connection Opinion & Invitation Letter DISCOM
Connection Agreement DISCOM
Distribution System Usage Agreement DISCOM
Connection Capacity Approval TEIAS
Provisional Acceptance TEDAS
Fire Report Relevant department in the fire brigade
Technical Evaluation Form Approval DGRE
Project Approval Municipality
Special Building Permit Municipality
2. Complex decision-making for multifamily apartment buildings (MABs). Until recently, the legal
status and subsequent leasing rights of MAB roofs were unclear. However, this has now been clarified. The process for MAB owners to jointly make decisions about investing in RSPV systems, applying for collective loans, selecting contractors, signing contracts, determining ways to equitably share the power generated, etc. are complicated with multiple owners.
3. Lack of incentives for DISCOMS to connect RSPV systems. DISCOMs and large industries are not obligated to purchase RE and do not have incentives to connect many small RSPV systems to their network.
4. Homeowners cannot trade electricity: At present, only firms are allowed to sell renewable energy. This excludes homeowners in the residential sector, who make up a significant part of the rooftop market. This restriction includes RSPV systems of up to 1 MW and poses a challenge to homeowners since they would not be remunerated for excess power delivered to the grid.
5. High import costs. A Surveillance Tax is applied to imported solar panels. The Surveillance Tax waiver certificate can be obtained from the Ministry of Economy. However, it is a lengthy process and imposes an added barrier for early stage solar EPC firms from foraying into the RSPV market. This increases the overall cost of RSPV systems which impacts their overall cost-effectiveness.
2.2.2 Financial and Tariff 1. Low incentives for unlicensed generation. Non-availability of financial incentives, such as VAT
exemption or investment initiatives as many other countries have used, does not encourage RSPV systems.
2. Lack of streamline in application for loans for MABs. For MABs, the building management unit or homeowner association is generally not eligible to take a loan for common purpose
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equipment such as RSPV installations. Apartment owners often have to take individual loans, which imposes practical limitations in mobilizing debt for RSPV.
3. Nascent EPC industry. Not all EPCs are financially and technically competent. Many EPCs are relatively new firms and have weak balance sheets. Consequently, they may not qualify for finance, either for working capital loans or to pursue a RESCO business model.
4. Short loan tenures. As some RSPV systems, particularly in the industrial sector, have longer payback periods, with some longer than the current FiT tenure of ten years, long-term debt is needed.
5. High systems operation fee: For small-scale RSPV systems (between 10 to 250 kW), the system operation fee could potentially limit investment. The system operation fee for unlicensed generation has been revised for 2018 as the following (decision No. 7516-9):
• 0-10kW: 0 TLY/year
• 10-250kW: 833.99 TLY/year
• >250kW: 1667.98 TLY/year
2.2.3 Technical Capacity and Awareness on RSPV Systems 1. Lack of skilled technicians. A large pool of capable technicians will be needed to handle a major
growth in the RSPV market. 2. Lack of knowledge on impact of RSPV on the grid. Impact of RSPV on the local and central grid is
not well understood.
2.2.4 Consumer Perception There is a general lack of information about RSPV systems, current policies, their costs and benefits, financing options, business models, and technical considerations. Perceptions of consumers including perceived risks of RSPV adoption have been determined by a market survey. These barriers generally refer to a lack of information and awareness about the following aspects of RSPV:
• Policies or regulations (36%)
• Funding arrangements (34%)
• Information sources (22%)
• Quality suppliers and installers (21%)
• Cost-benefit aspects (19%)
• Maintenance of RSPV systems (11%)
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2.3 Summary of barriers, international experience and recommendations for Turkey S. N
Barriers International Experience Turkey Recommendations
1 • No mandate requiring RSPV deployment.
• DISCOMs are not RE obligated entities.
• Japan has a target of 45 GW RSPV by 2030.
• India has a target of 40 GW RSPV by 2022.
• California state has a target of 30 GW solar by 2020
• Germany has a target of 2.4 -2.6 GW of solar addition per year as per their EEG Act30
• China has a target of 105 GW of solar PV capacity by 202031
• In India, the RPO targets for each state are fixed by the respective state regulators. It is generally 0.5% to 1% of the total power purchase
• Recommendation number 1 – Set annual target for RSPV.
• EMRA should set RPO targets for each DISCOM.
2 • Trading of excess energy is not clearly defined. FiT is currently the only available incentive. Financial uncertainty among users as FiT only lasts for 10 years, while the life span of an RSPV system is 25 years.
• How to arrange funding for rooftop solar remains difficult and unclear.
• Many EPC firms are new or start-up companies with weak balance sheets and consequently do not qualify for securing finance.
• Germany uses FiT, FiP and market tendering as its key market driving policies.
• The driving factors for RSPV in the United States are its local policies (at state, utility and municipality level). There are 117 rebate programs in the United States.
• India has several programs of dedicated low interest financing for RSPV, including the following:
• World Bank: $625 Million ($125 Million from CTF – a highly concessional loan).
• Asian Development Bank: $500 Million.
• KfW Development Bank: Proposed Euro 1 Billion (mostly for RSPV).
• Indian Govt.: Around $1.2 Billion in capital subsidy.
• Recommendation number 2 – Dedicated credit line for an initial 500 MW of RSPV capacity (with low interest lending).
• Thorough cost-benefit analysis to demonstrate the extent to which loans can be recovered during the FiT term.
• Develop consumer finance products.
• Consider credit enhancement mechanisms for EPC firms.
30 Energytransition.org 31Goal of solar energy development in China will increase to 230 GW. Frontnews. Available from: https://frontnews.eu/news/en/10910. Accessed on Jan 24, 2018
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S. N
Barriers International Experience Turkey Recommendations
• India’s MNRE “Channel Partner” program for EPC accreditation.
3 • MABs are not allowed to seek loans collectively.
• Unfavourable cost-benefit aspects of rooftop solar32.
• Unclear or not properly defined regulations for various aspects of RSPV (e.g. offtake of excess generation for small consumers).
• Lack of information on rooftop solar.
• Lack of technical standards.
• Concerning trading of excess energy, invoicing liability is a constraint when a resident is not registered as a firm.
• Net metering and/or an additional incentive are very common in international markets, including Germany, the United States and Japan. This is especially due to high retail tariffs.
• Recommendation number 3 – Transition towards net-metering as it offers an attractive return on investment for RSPV.
4 • Subsidized Organized Industrial Zones (OIZ) retail prices will slow down the transition to net-metering for industrial clients.
• No data available • Recommendation number 4 – Provide greater incentives to industrial RSPV users.
5 • The costs of the Surveillance Certificate and various other permits discourage RSPV system investors. Those applying undergo high transaction and application process costs (around $1000).
• No data available • Recommendation number 5 – Re-evaluate the Surveillance Certificate and transaction costs.
6 • Complex permitting process. Multiple permits and approvals are required, in construction, electric utility, municipality, fire department, buildings, etc.
• Irrespective of the size of RSPV, permitting procedures are the same and can take roughly 6-12 months to complete.
• The State of California and India have an online permitting application process.
• Recommendation number 6 – Single window/online approval for RSPV systems of up to 150 kW.
• Process of obtaining permits and approvals must be streamlined and standardized.
7 • The capacity for developing RSPV is very limited in Turkey. There is a lack of skilled manpower.
• Lack of quality suppliers and installers.
• The Indian government’s SETNET program is aiming to train 400,000 skilled workers in solar.
• Recommendation number 7 – Create capacity building programs.
• Develop training programs on RSPV.
8 • Lack of outreach programs in Turkey. • Japan’s national outreach program to promote RE though print, radio and audio-visual media
• Recommendation number 8 – Create outreach programs and targeted awareness campaigns.
32 RSPV costs (inclusive of panels, installation, balance of plant, etc.) are high
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S. N
Barriers International Experience Turkey Recommendations
9 • Impact of RSPV on the grid needs to be assessed.
• Lack of standardization of safety requirements in design, installation and integration with the grid.
• Japan has two layers of inspection requirements to ensure a high quality of RSPV installation.
• Recommendation number 9 – Prescribe technical standards.
• DISCOM must make site inspections of the RSPV installation. Only DISCOM staff should be authorized to connect the RSPV to the grid.
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3. RSPV Market Potential for Turkey
3.1 Market Survey A market survey was undertaken to better understand the perceptions and difficulties faced by various stakeholders in implementation of RSPV in Turkey. The survey also sought to identify what kind of support stakeholders preferred for the acceleration of RSPV deployment. Stakeholders were sampled in all the concerned sectors. This included 234 potential end-users (in the residential, commercial and industrial, and public sectors)33, six DISCOMs and RETCOMs, eight EPC firms, and three financial institutions. Specific questionnaires were developed for each type of stakeholder. The elements in the questionnaire for each participant category are presented in Table 3-1. Table 3-1: Questionnaire for various stakeholder groups
Stakeholder Survey Elements
End-Users/ Consumers Residential Commercial Public
• Rooftop characteristics: type of roof, available area, usage pattern, electricity consumption and cost of electricity
• Stakeholder motivation, awareness of solar rooftops: knowledge and perception of rooftop solar PV systems, motivation to adopt a new and upcoming technology, and barriers that may hinder the adoption of RSPV system
• Preferred business model: financing options • Product related questions: perception of stakeholders on safety of solar
PV systems, major purchase and usage related concerns
EPC • EPC Business Profile: target market segments, installed capacity, plans for expansion in RSPV projects
• Availability of skilled solar professionals • Key challenges and barriers: in Regulations, licensing, grid connection
procedures and costs, tariffs, metering and monitoring and verification (M&V)
DISCOM • DISCOM’s current experience in RSPV: current installations, connected RSPV projects
• Opinion on development of RSPV: investment potential, areas with high RSPV installation potential, market size
• Permissions and licensing requirements: regulatory requirements, time taken by the DISCOM, licensing procedure, quality standards
• Grid integration: quality standards, connection procedure
• Perceived impact of increasing RSPV projects
Financial Institutions • Experience of FIs in RSPV: experiences of financing RSPV projects and future plans for entering the RSPV finance market segment. Perceived challenges in developing a lending product for solar PV rooftops.
• Perception of FIs on financing models: hire/purchase product, interest rate subvention, refinance/line-of-credit facility designed exclusively for RSPV
Of the 234 surveyed stakeholders, 109 resided in Istanbul, 54 in Ankara, 68 in Izmir and one each in Kocaeli and Konya. Three respondents owned RSPV systems. A majority of stakeholders surveyed were from the residential sector (46% of the total). Twenty-eight percent of responses came from the commercial sector and a further 26% from the public sector.
33 According to Chuan and Penyelidikan (2006), a sample size of at least 120 end-users is recommended for a cross-sectional survey. The in-study sample size of 234 can be considered a sufficient sample size for a reliable data set.
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Around 93% of the respondents mentioned that their rooftop space is not in use. Roughly 64% of the reported rooftops were found to be of the pitch type (P-type)34, with 24% of being of the flat type (F-type) and a last 12% being a mix of F-type and P-type. A large percentage of respondents (51%) were aware of the existence of RSPV systems. This points to a positive overall market awareness. Respondents indicated that “word of mouth” (32%) and “media (including print media, TV and Social media)” (41%) were the major sources of information on RSPV systems. The results on the different sources of information dissemination are presented in Figure 3-1.
Figure 3-1: Awareness of solar rooftops and information mediums Regarding the motivation for adoption of rooftop solar35, 58% of respondents noted that environmental concerns was their main driver for RSPV adoption. A further 51% of respondents declared a reduction in electricity bills as their main motivation.
Figure 3-2: Motivation for adoption of rooftop solar A major determinant in the correct estimation of the realizable market potential for RSPV is the barriers (actual or anticipated) that consumers perceive in RSPV adoption (Figure 3-3).36 A lack of awareness on the policies and regulations (36% of respondents) and a lack of knowledge on how to arrange funding (34% of respondents) were considered main barriers.
34 P-type: Pitch rooftop type with tilt of more than 10 degrees. F-type: flat rooftop type with tilt of less than 10 degrees 35 Respondents were allowed to select more than one option for this question. 36 Respondents were allowed to select more than one option for this question.
41%
25%
7%9%
13%
Newspaper, TV,social media
Friends & peers Trade fair, exhibition Government website Seen a solar systemon roof
Per
cen
tage
Res
po
nse
51%
32%
58%
25%22%
0%
Reduction inelectricity bills
Generateadditional
income
Saveenvironment
Productive use ofroof
Backup power Others
Per
cen
tage
Re
spo
nse
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Figure 3-3: Perceived barriers to RSPV adoption Roughly 65% of the survey participants believe that a government incentive scheme is needed to make RSPV investment appealing. The respondents were asked which of the following four types of incentives they would prefer:
• Upfront cash subsidy (also known as a buy-down incentive). Commonly, a certain percentage of the capital cost of a solar system is subsidized.
• Low cost financing
• Tax rebates
• Accelerated depreciation
The survey indicates that 46% of respondents prefer the buy-down incentive, followed by 25% of the respondents preferring low cost financing as a government incentive for RSPV adoption.
Figure 3-4: Preferred incentives for rooftop solar adoption Participants were also asked which business and financing model they would prefer among Self-ownership, RESCO, and Rooftop leasing (see Section 1.3). The results of the survey show that 39%, 37% and 29% of consumers prefer RESCO, self-ownership and roof-leasing models, respectively.
3.2 Market Potential This section outlines the methodology used in estimating the RSPV market potential in Turkey. A three-step approach has been used in determining the RSPV market potential:
a. Usable Roof Area: This has been estimated through geographic information system (GIS) mapping in certain regions and further extrapolated for the entirety of Turkey.
46%
25%
16%12%
Buy-down incentive Low cost financing Tax rebate Accelerated depreciation
Per
cen
tage
Res
po
nse
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b. Technical Potential: To determine the technical potential, the usable areas determined above are multiplied by the Solar Installation Ratio (SIR). The SIR accounts for a number of varying factors, including shading, other uses of the roof, and the orientation of the building and the panels. The SIR differs across countries depending on the conditions of the building and the use of the roofs.
c. Market Potential: Further factors such as grid capacity constraints, affordability and credit-worthiness are then considered against the technical potential to estimate the market potential.
The technical potential measures the theoretically available capacity of RSPV and is not achievable. The market potential measures the realistic capacity as defined by various physical and economic limitations. Considerations to derive the capacity of total potential RSPV installation include the specific policy framework and existing procedures, grid absorption capacity, the existing tariff for both retail and solar generation, and user incentives. Further considerations include user awareness and availability of finance, technology, equipment and skilled labor. However, all such figures are estimates and make a variety of assumptions. The first step in estimating the technical potential of RSPV is determining the total suitable rooftop area. The suitable rooftop area is defined as the total usable rooftop area for residential, commercial and public buildings. Various primary and secondary sources have been used to determine the following:
• Total urban area in Turkey.
• Total area earmarked for residential, commercial and public uses.
• Total usable area for construction of buildings, as a percentage of marked up area.
• Total rooftop area as a percentage of constructed area. The building stock data was sourced from the Turkish Statistical Institute. To achieve accurate results, the following two steps were applied to determine the technical potential: GIS Imagery Mapping: Seven key provinces were selected out of the total 81 provinces in Turkey. These provinces were selected as they have similar features to the other provinces and therefore serve as a representation of the entire country. A random data set of 909 roof polygons was prepared across the seven provinces in the three respective sectors. Under each marked polygon, the total area and the usable area was indicated (that which can be used to set up RSPV systems). This analysis allowed the determination of the usable area for each type of building. Building Stock: In this step, data was collected for buildings in Turkey from 1992 to 2016. The initial data received for 21 building types was then aggregated into 12 categories. The information was further condensed into residential, commercial and public categories as shown in Table 3-3. After preparing the data stock, the usable area ratio (derived from the GIS imagery) was used to calculate the total available area. Although the total available area can be calculated, the entire roof area is not usable for solar generation. To account for this, the total available area was multiplied by a reduction factor determined from various similar studies. The revised and reduced area is taken as the total area available for installation of RSPV. Finally, in order to calculate the technical potential for the total available area, it is assumed that a solar PV panel of 10 m2 will have an electricity generation capacity of 1 kW. In the next step, the usable area for rooftop solar from the GIS imagery data was determined. A subsequent usable roof area ratio was defined to show the extent to which roof types in different user categories can be used for RSPV installation. The results are presented below in Table 3-3.
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Table 3-2: Classification of building categories in Turkey Type of Building (Turkish) Type of Building (English) Assigned
Category Main Building
Category
Bir daireli binalar Single dwelling residential buildings 1 Residential
İki daireli binalar Two-dwelling residential buildings 2
Üç ve daha fazla daireli binalar Three-dwelling residential buildings 2
Halka açık ikamet yerleri Residences for communities 2
Otel binaları Hotel buildings 3 Commercial
Diğer kısa süreli konaklama
binaları Other short-term residence buildings 3
Ofis (işyeri) binaları Office buildings 4
Toptan ve parekende ticaret
binaları Wholesale and retail trade buildings 5
İletişim binaları,istasyonlar,
terminaller ve ilgili binalar Communication buildings, stations etc. 5
Sanayii binaları Industrial buildings 6
Spor salonları Gym buildings, sport centers 10
Garaj binaları Garage buildings 11
Su depoları, silolar, depolar Warehouses, water reservoirs, silos 11
İkamet dışı çiftlik binaları Non-residence ranch buildings 11
Kamu eğlence binaları Public entertainment buildings 7 Public
Müzeler ve kütüphaneler Museums and libraries 7
Okul, üniversite ve araştırma
binaları School, university and research buildings
8
Hastane veya bakım kuruluşları
binaları Hospital or institutional care buildings 9
İbadet veya dini faaliyetler için
kullanılan binalar Religious buildings 12
Tarihi ve koruma altındaki
abideler Historical and protected buildings Not
Considered
Başka yerde sınıflandırılmamış
diğer binalar Non-categorized/other buildings Not
Considered
Table 3-3: Usable area estimation of weighted average ratio of F-type and P-type buildings
Building Category # of Buildings in 2016
(thousand)
Building Share
F-TYPE Roof
Usable Area Ratio
P-TYPE Roof
Usable Area Ratio
Weighted Average Ratio of Usable
Area
1) Single Dwelling Residential Buildings
2,999 32.4% 53% 44% 45%
2) Multi Dwelling Residential Buildings
5,231 56.5% 66% 43% 48%
3) Hotel Buildings 68 0.7% 34% 44% 39%
4) Office Buildings 94 1.0% 32% 45% 42%
5) Commercial Buildings 435 4.7% 70% 48% 60%
6) Industrial Buildings 232 2.5% 86% 50% 58%
7) Museums, libraries etc. 14 0.2% 81% 46% 54%
8) School, university etc. 34 0.4% 83% 47% 50%
9) Hospitals 12 0.1% 60% 47% 53%
10) Sport centers 6 0.1% 89% 53% 62%
11) Warehouse/Garage 114 1.2% 89% 50% 56%
12) Religious Buildings 9 0.1% 0% 0% 0%
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The weighted average ratio derived from this data was then multiplied by the building stock data to determine the countrywide area available for rooftop-solar installation. This is shown below in Table 3-4. Table 3-4: Estimation of usable area for RSPV
Building Type # of Buildings (in thousand)
Base Area (million m2)
Weighted Average Ratio of Usable
Area
Usable Area (million m2)
Residential 8,230 1,269 47% 596
Commercial 604 432 57% 247
Industrial 345 442 57% 252
Public 69 93 45% 42
Total 9,248 2,237 - 1,137
The overall calculation of the total usable area is set at roughly 1.1 billion m2. ÇATIDER (association of roofing industrialist and businessmen in Turkey) has estimated one billion square meter of roof space in Turkey which corresponds with the estimated value.
3.1.1 Realizable Solar Installation Ratio After obtaining a measure of the total roof area, certain physical limitations make it necessary to reduce this area for an accurate determination of the technical potential of RSPV. Those limitations are as follows: 1. Shading from other parts of the roof or from neighboring buildings and trees. 2. The use of roof space for other applications, such as ventilation, heating/air conditioning,
dormers or chimneys. 3. The orientation of the sun versus the roof and the type of roof (pitched, flat or other). 4. The installation and racking of the PV panels. The access factors accounting for shading from trees and other sources are estimated based on a 2008 NREL study37. The Table 3-5 shows the access factors in the different sectors. Table 3-5: Access factors for building categories
Sector Access Factor Residential 68% Commercial 65% Industrial 65%
Public 68%
Not all buildings in Turkey are structurally capable to support an RSPV installation. To account for this difference in structural quality, limitations were set on the percentage of buildings that are able to support RSPV installation in Turkey. 10%, 20% and 30% RSPV usability rates were assumed in residential, commercial and industrial, and public-sector buildings respectively (as indicated by TERI in 2014)38.
37 NREL (2008): Rooftop Photovoltaics Market Penetration Scenarios. Source: https://www.nrel.gov/docs/fy08osti/42306.pdf. 38 Reaching the Sun with Rooftop Solar, 2014. TERI. Available from: http://mnre.gov.in/file-manager/UserFiles/Rooftop-SPV-White-Paper-low.pdf
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Table 3-6: Estimation of actual realizable solar area and technical potential of RSPV Building Type Penetration
Factor Usable Area (million m2)
Realizable Area (million m2)
Solar Potential (GW)
Residential 0.39 596 232.4 23.3 Commercial and Industrial 0.43 499 214.6 21.46 Public 0.49 42 20.6 2.06 Total
1137 467.6 46.76
After all considerations, the total technical potential for rooftop solar Turkey is estimated at 46.8 GW.
3.1.2 Estimation of the Market Potential In estimating the market potential for RSPV in Turkey, four key elements are considered:
1. Grid capacity 2. Growth in RSPV sales 3. Income level 4. Creditworthiness
3.1.3 Grid capacity In order to develop an estimate of the available grid capacity for RSPV, the following approach was used:
• The 2017-2026 energy demand forecast (in GWh) published by TEIAS was used for 21 DISCOMS39.
• Distribution losses were deducted from the energy demand.
• A 25% of the total energy demand, after accounting for distribution losses, can be assumed as a safe limit of grid absorption capacity for intermittent RE.
• To account for the grid capacity exhausted from the existing grid connected-intermittent RE, the energy from wind and solar by the end of 2017 was used as 6,500 MW wind and 2,000 MW solar PV. Considering the plant load factors (PLF) of 29.7% and 19% respectively for wind and solar plants, this leads to 20.2 TWh energy injection to the grid from existing wind and solar sources. This value of energy injection is deducted from the grid absorption capability.40
• In Japan, wind and solar installed capacity was 3 GW and 41.6 GW respectively by 2016 (as sourced from the IRENA database). Of the solar installed capacity, 70% is from RSPV (TERI, 2014). Therefore, RSPV contribution is 65% of the total solar and wind installed capacity. Similarly, in Germany the RSPV contribution is 26% of the total solar and wind installed capacity. Therefore, 30% of the total available grid capacity for wind and solar was assumed to be suitable for RSPV.
• Finally, the amount of GWh is estimated back into the MW grid limit by using a PLF of 19% for RSPV. This leads to an estimate of a technical grid absorption constraint. This can then be used as a consideration in estimating the overall market potential of RSPV in Turkey.
The analysis shows that the grid could accommodate around 6.5 GW of absorption in 10 years or 6,585 MW until 2026. The Table 3-7 summarizes the steps used in estimating the technical grid absorption capacity.
39 Source: https://www.teias.gov.tr/sites/defawult/files/2017-06/10Y%C4%B1ll%C4%B1kTalepTahminleriRaporu2016%282%29.pdf 40 Note that 1GW of wind and 1GW of solar energy auctioned in Turkey is not considered in the existing RE connected to the grid since it is understood that this capacity will be implemented in the next several years.
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Table 3-7: Grid capacity limit for RSPV Year Total Energy
Demand in Turkey* (GWh)
25% RE Grid Absorption
Capacity (GWh)
Grid Capacity for RE After Existing
Solar & Wind (GWh)
Grid Capacity for RSPV (30%)
(GWh)
RSPV Capacity by Grid Limit
(MW)
2017 176,052 44,013 23,788 7,136 4,288
2018 181,562 45,391 25,165 7,550 4,536
2019 187,364 46,841 26,616 7,985 4,797
2020 193,051 48,263 28,037 8,411 5,054
2021 198,866 49,716 29,491 8,847 5,316
2022 204,653 51,163 30,938 9,281 5,576
2023 210,355 52,589 32,363 9,709 5,833
2024 215,981 53,995 33,770 10,131 6,087
2025 221,514 55,378 35,153 10,546 6,336
2026 227,042 56,761 36,535 10,961 6,585 *This is the demand at the distribution level. It excludes transmission-connected demand, transmission losses, internal consumption,
imports and exports. Distribution losses are deducted.
3.1.4 Growth in Sales of RSPV The data on growth of RSPV sales in Turkey is limited and not well documented. Players operating in the Turkish solar sector estimated that RSPV capacity have reached around 200 MW by the end of 201741’42.
3.1.5 Income Level Income level in gross domestic product (GDP) per capita can be used as an indicator of the affordability of solar rooftop investment. In 2016, the GDP per capita in Turkey was US$10,191 (using the 2018 dollar exchange rate)43. Standing considerably higher, the GDP per capita in the United States and Germany was US$57,638 and US$42,069 respectively for the same year. In terms of the purchasing power parity (PPP), the income level in 2016 in Turkey, the Unites States and Germany was US$24,412, US$57,638 and US$48,884 respectively (using the 2018 dollar exchange rate)44. Considering the higher GDP per capita and PPP, people in the United States and Germany are roughly twice as able to afford RSPV investment as they are in Turkey. In the residential sector, affordability constitutes a key barrier to adoption of RSPV systems. A value of 0.5 for affordability (for the entire residential sector market) has therefore been assigned, given the difference in income levels between Turkey, Germany and the United States. Those residing in MABs face an added barrier in the form of higher transaction costs due to the collective decision-making needed and borrowing of funds. Considering these added limitations, a value of 0.3 has been assigned for this market segment. The market potential for RSPV capacity in these two sub-sectors (single-family and MABs, Table 3-8) has also been adjusted based on the grid limitations45.
41 In 2002, the RSPV market in Germany (standing at 65% of the total PV market) reached 192 MW capacity, which is close to the installed capacity in Turkey today. By 2011, the German market grew to a RSPV capacity of 15,257 MW. This is an estimated 86-fold market expansion in less than ten years 42By 2011, the German market grew to a RSPV capacity of 15,257 MW. This is an estimated 86-fold market expansion in less than ten years. If the same analogy is applied to expansion of the Turkish market, its RSPV market capacity could grow to 17,182 MW by 2026. This analogy, however, may not be feasible. Since the capacity of the grid to absorb RSPV is limited to 6.6 GW, the market potential of RSPV in Turkey cannot be compared to that of Germany. 43 World Bank. Available from: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD 44 World Bank. Available from: https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD 45RSPV capacity based on the grid limit for each sub sector, such as residential – single and multi-family, commercial & industrial and public, is obtained by multiplying the ratio of contribution to the technical potential in each sub sector. To
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Income level is unlikely to influence RSPV uptake in the commercial and industrial sectors. In the public sector, not all provisional government departments may be able to afford RSPV investments or have access to financing. Therefore a 0.7 multiplier was assigned for the public sector as shown below in Table 3-8. Table 3-8: RSPV market potential based on income level and creditworthiness
Grid Capacity Income Level Creditworthiness
RSPV Sectors RSPV (MW) Impact Factor Impact Factor RSPV (MW)
Residential: Single-family 764 0.5 0.8 306
Residential: Multi-family 2,519 0.3 0.5 378
Residential: Total 3,283
683
Commercial 1,488 1.0 1.0 1,488
Industrial 1,523 1.0 1.0 1,523
Commercial & Industrial: Total 3,011 3,011
Public 291 0.7 0.8 163
Total (MW) 6,585
3,858
3.1.6 Creditworthiness According to players in the Turkish solar market, there are more than 80 solar installers or EPC firms. Only a limited number of them have strong balance sheets and reasonable creditworthiness. Aside from that, the ability (or lack of) of end-users to offer collateral in securing loans for RSPV is an important factor in the uptake of the RSPV sector. An additional creditworthiness parameter has been introduced to further adjust and determine RSPV capacity based on affordability and income level in each sub-sector. A multiplier of 0.8 was assigned for the residential single-family category. MABs are likely to face challenges in securing financing for RSPV, since there are multiple borrowers in the investment process. Therefore, a lower multiplier of 0.5 has been assigned for creditworthiness in this sub-sector. There is no foreseen barrier to creditworthiness in the commercial and industrial sectors. This is because firms are generally able to obtain loans for various aspects of their business and the government has a number of credit programs for businesses in Turkey. Creditworthiness is considered somewhat more difficult for certain municipalities in the public sector due to borrowing restrictions and a lack of access to commercial credit; thus a factor of 0.8 was applied. Thus, the final estimated market potential for RSPV in Turkey is 3.9 GW (or 3,858 MW). According to studies by the DGRE, the estimate of RSPV market potential for residential buildings (<=10kW) is 1.8 GW (Basic Scenario), 4.0 GW (Medium-advanced Scenario), and 7.5 GW (Advanced Scenario). The annual penetration in RSPV is estimated through the use of an S-curve trajectory and the following considerations:
• Installed capacity of RSPV in 2017 is 200 MW
• The market potential for RSPV by 2026 is 3,858 MW
• With use of the S-curve formula, its coefficients are calculated and annual RSPV penetration levels are estimated over ten years, as shown in Figure 3-5
illustrate, of the 46.6 GW technical potential, 11.6% is contributed by residential single family homes, 38.3% by residential multi-family homes, 45.7% by the commercial and industrial sectors and 4.4% by public buildings in the public sector.
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Figure 3-5: Estimated annual RSPV penetration
200431
866
1,543
2,335
3,006
3,435 3,662 3,770 3,819
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
An
nu
al R
SPV
Pen
etra
tio
n -
MW
Year
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4. Applications of RSPV: Pre-feasibility Assessments of Buildings The objective of the pre-feasibility studies was to gather information on applicable buildings in the residential, commercial, industrial, and public sectors and assess the cost-effectiveness of the systems. This was done through field visits to several buildings in each of the concerned sectors. Key considerations in conducting the pre-feasibility assessments included:
1. Solar PV system size, including roof structure stability. 2. The extent of solar energy generation. 3. Accessibility and grid interconnections. 4. Financing requirements. 5. Financial and economic assessments.
Figure 4-1 below provides examples of the different roof types of the surveyed buildings commonly found in Turkey.
Visits to 18 sites were conducted. They included visits to five residential buildings, five public buildings and eight commercial/industrial buildings. Buildings were chosen to offer a diverse set of building occupants and roof types. These ranged from single and multi-family dwellings to shopping malls, industrial facilities, schools and government office buildings. Buildings and houses surveyed in field visits were chosen to exemplify the most common building types of Turkey. According to the market survey of potential end users, around 75% of the total respondents were from Istanbul and Ankara. To reflect the demand, the majority of the selected buildings were in these two cities. Two facilities in Aydin were also included to assess the impact of high levels of solar radiation on solar output and financial performance metrics (Table 4-1). To sum up, the surveyed buildings were chosen to represent the most common types of buildings in Turkey and to ensure ease of access. However, as the sample size was small, they are not intended to be representative of the broader Turkish market.
Figure 4-1: Examples of typical roof types in Turkey
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Table 4-1: Building characteristics included in pre-feasibility studies
Building Name Short
Name* Location Type of Building
Year of Construction
Angora Evleri – A2 Block
AE1_R Ankara Residential – multi family home with six duplex homes and four floors
2002
Angora Evleri - Villa AE2_R Ankara Residential – single family villa 2002
Atlantis City Batikent_R Ankara Residential – multi family home with 98 flats and 24 floors
2011
Nezih Towers Nezih_R Istanbul Residential – multi family home 2013
Doga Apartment Doga_R Istanbul Residential – multi family home with eight individual flats and five floors.
2005
IBC solar IBC_C Istanbul Commercial building – single villa 1960
Muyar Plaza Muyar_C Istanbul Multi-office high rise building with 85 offices and 14 floors
2005
Atlantis AVM Batikent_C Ankara Large shopping mall with three floors 2011
Ulusoy Plaza Ulusoy_C Ankara Multi-office high rise building with 13 floors and 42 offices
2012
Ikizler Building Teknokent
Ikizler_C Ankara R&D Centre - four floors and six connected buildings
1999
DGRE building DGRE _P Ankara Ministry of Energy - ten floors housing three departments
1981
Angora Evleri Güzel Sanatlar
Guzel_P Ankara High school with three floors 2008
METU EEE EEE_P Ankara University consisting of five blocks up to three floors
1958
Ministry of Health MOH_P Aydin Public – Ministry of Health Administration, three floors
1980
Adnan Menderes High School
Mederes_P Aydin Public – high school, five floors 1993
Aydinlar Makine Metal
Aydinlar_I Ankara Industrial building and production center
1980
Turanlar Chicken Farm
Turanlar_I Yozgat Agri-industry – Chicken processing plant
2002
TEMSA İş Makinalari Temsa_I Ankara Industry building with five floors and atelier
2017
*R - Residential, C - Commercial and P - Public The surveyed buildings differ considerably in age. The residential and commercial buildings are relatively new. One exception is the IBC solar villa building as it was constructed in 1960. The building occupant indicated that the roof of the main building is not suitable for RSPV installation. The public buildings in the feasibility survey are generally much older, varying from 25 to 60 years of age. There is a considerable earthquake risk in Turkey. After a devastating earthquake in 1999 new regulation (Law No 4452, Empowering Act on Precautions for Natural Disaster and Regulations to Recover Damages Resulting from Natural Disasters 46) was introduced in the same year shortly after the disaster, with a subsequent amendment in the following year. The main changes to the legislation concerned the building inspection system and compulsory earthquake insurance. With respect to the existing legislation, RSPV installations must not weaken the structural strength of the building and must not inflict damage to the building in the event of an earthquake. Going forward,
46 Demirkaya, Y. (2016). New Public Management in Turkey. Abingdon: Taylor and Francis.
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any RSPV policy for Turkey must specify structural stability requirements aligned to the codes and practices used in places like California and Japan. In addition, it is suggested that buildings constructed in or prior to 1999 not be considered for RSPV. Exceptions could be made for buildings that are thoroughly investigated for structural soundness or have undergone comprehensive renovations to withstand loads from RSPV and ensuring seismic integrity. During field visits, different roof slants were observed depending on the use of the building. Single-family homes often have pitched roofs with a pitch angle of 20 to 25 degrees. For larger buildings, the roof slant varies between 5 to 10 degrees. This was observed in school, government and industrial buildings. Shopping malls and high-rise residential and commercial buildings have flat roofs made of cement. Table 4-2: Building roof type and proximity to electric distribution network
Building Name
Roof Pitch Angle (Deg)
Roof Material
Location of Electric Control Panel
Building Distance from Distribution Transformer (m)
AE1_R 20 Tile Basement 15
AE2_R 25 Tile Ground floor 20
Batikent_R 0 Cement Ground floor 75
Nezih_R 0 Cement Ground floor 50
Doga_R 10 Tile Ground floor 25
IBC_C 10 Tile Ground floor 20
Muyar_C 0 Cement Basement 75
Batikent_C 0 Cement Ground floor 130
Ulusoy_C 5 Tile Ground floor 50
Ikizler_C 10/0 Metal Basement 50
DGRE _P 5 Metal Top floor 200
Guzel_P 10 Tile Basement 200
EEE_P 0 Cement Ground floor 100
MOH_P 10 Tile Outside building 200
Mederes_P 10 Tile Outside building 150
Aydinlar_I 0 Cement Basement 50
Turanlar_I 10 Metal Outside building 50
Temsa_I 5 Metal Ground floor 250
Table 4-2 shows the location of the electric control panel within the building. It further shows the distance of the building to a utility distribution transformer. Regarding the surveyed buildings, no issues were reported concerning connectivity of the RSPV system to the electric control panel. For all but three of the buildings, the panels are housed within the building and are easily accessed by the DISCOM. The distance from the building to the utility distribution transformer is generally lowest for residential buildings, followed by commercial buildings. It is longest for public buildings. Current legislation dictates that the owner of a solar PV system is responsible for the grid interconnection costs. There may, however, be no additional cost for RSPV system installation in the surveyed buildings as they are already connected to the grid through a utility distribution transformer.
4.1 RSPV System Size and Building Self-Consumption Ratio
Annual electricity consumption data for each surveyed building was obtained from the building facility managers. In addition, the surveyed building sites were assessed for potential shading and orientation issues. For buildings with pitch roofs, only the south, south-west and south-east facing sections of the roofs are considered optimal for PV module placement. The few buildings with flat, cemented or tiled, roofs pose the least amount of obstruction to RSPV installation. In these cases,
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80% of the total usable roof space was considered to allow for space around the edges of the roof. Table 4-3 shows the estimated roof size of the surveyed buildings and the area suitable for RSPV installation. A 10 m2 of roof surface area was assumed to obtain 1 kW of RSPV installed capacity. To estimate the potential electricity generation from RSPV systems at the surveyed locations, the NASA Surface Meteorology and Solar Energy database was used for solar radiation (Table 4-3). Depending on the type of roof, the following rationale was applied to calculate the amount of solar radiation the RSPV module will receive, otherwise known as the solar radiation value: 1. Near flat roof of tile and metal (0 to 10 degrees roof pitch): here the usual practice is to lay the
solar panels flat. 2. Steeper tile and metal roof pitch: the solar radiation value for these types of roofs is calculated
at a latitude of -15 degrees plane. 3. Flat cement roof: these types of roofs are considered to maximize solar energy output due to
the PV modules being oriented at the latitude angle. Table 4-3: RSPV size and self-consumption ratio
Building Name
Total Roof Area (m2)
Solar Roof Area (m2)
RSPV Size (kW)
Annual Electricity
Consumption (MWh)
Solar Resource (kWh/m2/day)
Annual RSPV
Generation (MWh)
Self-Consumption
(% from RSPV)
AE1_R 450 150 15 28 4.88 20 71%
AE2_R 450 150 15 9.6 4.88 20 207%
Batikent_R 700 560 56 410 4.87 74 18%
Nezih_R 450 300 30 520 4.21 34 7%
Doga_R 255 65 6.5 28 3.94 7 25%
IBC_C 100 40 4 32.5 3.94 4 13%
Muyar_C 460 320 32 528 4.21 37 7%
Batikent_C 12,000 6,000 600 6,000 4.87 795 13%
Ulusoy_C 900 720 72 270 4.39 86 32%
Ikizler_C 3,450 2,800 280 1,000 4.39 335 33%
DGRE _P 2,400 1,920 192 1,250 4.39 230 18%
Guzel_P 4,000 1,600 160 225 4.39 191 85%
EEE_P 2,000 1,600 160 288 4.87 265 92%
MOH_P 1,000 400 40 120 4.91 53 45%
Mederes_P 2,000 750 75 150 4.91 100 67%
Aydinlar_I 600 480 48 144 4.87 64 44%
Turanlar_I 1,200 600 60 120 4.45 73 61%
Temsa_I 1,250 1,000 100 300 4.39 120 40%
Of the buildings surveyed, eight RSPV systems would have a capacity below 50 kW. Twelve out of 18 RSPV systems would have a size of up to 100 kW. Only 30% of the RSPV systems would be above 100 kW. The shopping mall has sufficient roof space to accommodate a large 600 kW rooftop solar system. In two-thirds of the 18 surveyed buildings, RSPV can potentially meet up to 50% of a given building’s total annual electricity consumption. Based on global experience, it is estimated that the difference between RSPV size and building total connected load is on average around 14 to 17%. This is particularly evident in India, where one of the largest RSPV programs is being implemented and simulation studies using HOMER have been conducted to assess the connected load of the surveyed buildings. A RSPV system with capacity of 80% of the building connected load causes negligible losses (concerning RSPV energy not self-consumed) of around 1%. For a RSPV size at 100% of the connected load, losses increase to 6.4% (RETA, 2016). In the interest of maximizing self-consumption, it is recommended that the RSPV system size not exceed 80% of the building’s connected load.
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4.2 Financing RSPV Following are key conclusions from the physical visits of the 18 buildings:
• There was consensus amongst managers of the surveyed buildings that offsetting self-consumption should be prioritized, i.e., use of NM.
• A few residential and commercial building owners indicated a willingness to engage with experienced installers who can provide a ‘one-stop-shop’ solution from compiling a RSPV application to high-quality, safe installation.
• For MABs, benefit sharing is an important factor. Benefit sharing can be achieved using the monthly RSPV generation apportioned as a percentage of the average monthly electricity consumption per apartment.
• All residential buildings, as well as three of the commercial buildings, indicated having access to equity to realize an RSPV investment. Only three buildings indicated their ability to access debt financing for an RSPV investment. Homeowners in the residential sector face a greater challenge. Currently, the only available finance option to homeowners is a personal loan with a short tenor (of up to 48 months). The Ekokredi47 has a personal loan with a slightly longer tenor (of up to 60 months for house owners). Interest rates for these loans are generally high (at roughly 1.79% per month for ‘Term Loan’-based loans). In the commercial sector, loan availability is better. Commercial firms can obtain more favourable loan terms to finance a RSPV investment. These loans generally have longer tenors (up to 120 months) and lower interest rates (i.e. EUR libor + 3.75%). For the public sector, there are currently loans available through the Ilbank.
47 The Sekerbank provides loans to the residential buildings for financing energy saving investments. It has a product called “Ekokredi”, which extends affordable financing for residential RE projects
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5. Financial Viability of RSPV in Turkey In this section, an assessment of the financial viability of RSPV system investments in the residential, commercial and public sectors has been made. The model follows a standard cash flow based methodology. Financial performance indicators used in the model include: levelized cost of electricity (LCOE), internal rate of return (IRR), net present value (NPV), and payback period. A further economic analysis was made to estimate the economic internal rate of return (EIRR) in order to compare with the financial IRR. The chosen methodology makes use of a set of assumptions, based on currently available market data and research. The parameters used in the financial framework are briefly described in Table 5-1. Their respective values are given in Appendix-1. Table 5-1: Parameters for estimation of the financial and economic viability of RSPV
Financial Framework Parameters
Description
Solar Electricity Generation
For estimation, the effective sunshine hours of the provinces in which the buildings are located were used. 48 For roof pitch angles of less than 10 degrees, the roof was considered flat. For flat cement roofs, the sunshine hours were estimated on the basis of a tilt equal to the latitude angle of the roof. For roofs with a steeper pitch, a pitch angle of latitude minus 15 degrees was used to estimate the effective sunshine hours. The analysis assumes a 25% loss49 in PV system energy generation. This is due to losses in the conversion process of DC to AC. A further consideration is the annual PV power loss 0.64%, attributed to gradual reduction in PV module efficiency over a period of 25 years.
Electricity Tariff Future rises in the tariff rate have been estimated by calculating the compounded annual growth rate (CAGR) for each sector (residential, industrial and commercial)50. CAGR calculations for the different sectors are based on tariff rates over the last seven years (2009 to 2016). The CAGR for residential, commercial and industrial sectors were determined to be 7.33%, 5.10% and 6.37% respectively (see Appendix 1 on tariff analysis. However, a more detailed grid tariff study will be useful for better decision-making). The electricity tariff remained the same from 2016 to 2017. On January 2, 2018, a new directive increased the tariffs by 8.8% across all sectors. Converting the electricity tariff rates of 2016, 2017 and 2018 from Turkish Lira to US Dollars was done using the respective currency exchange rate at the time. The CAGR is applied to the electricity tariff of 2018 to estimate a value in US Dollars. It is further used to estimate next year’s tariff and any future tariff calculations. There is no tariff listed for the public sector. In this case, the tariff for the commercial sector is used. For the financial analysis, following two tariff scenarios were considered:
1. NM: The grid tariff is used to estimate both the financial and economic internal rates of return.
2. FiT-10y: The Feed-in-Tariff stands at 13.3 cents/kWh over the first ten years. Considering the 25 year lifespan of a PV system, the retail tariff is used for the remaining 15 years of activity (see Appendix 1 for the method used in projecting electricity tariffs).
Financial Parameters • Debt to Equity ratio (80:20) • O&M cost (1.5% of Capex) • Loan tenor (10 years)
48 Effective sunshine hours are the same as the daily averaged solar intensity in kWh/m2/day. For example, 5 kWh/m2/day can also be termed as five effective sunshine hours. 49 The system loss value considers the default value at 14% from the EU solar tool (http://re.jrc.ec.europa.eu/pvg_tools/en/tools.html#PVP) and an additional 8.9% temperature correction loss. Therefore, the overall system loss is around 25%. 50 A Stable Tariff Growth (SGT) scenario was developed based on the oil price indexed tariff projection. A brief approach is given in Appendix-1. This is, however, not considered in the financial estimations.
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Financial Framework Parameters
Description
• Interest rate (10%) • Corporate tax rate (20%) • Return on equity (20%) • Average annual inflation (7.75%) • Discount rate (7%)
• Inverter replacement cost (13% of Capex) • Working capital • RSPV system sizes: 0 to 5kW, 5kW to 25 kW, 25kW to 100kW, and 100kW to
250kW. • RSPV system cost: 900 to 1,500 $/kW
Economic Parameters • Import duty (VAT – 18%) • Domestic VAT (18%) • Tax on grid tariff (5%) • Consumption tax (5%) • Carbon intensity of the Turkish grid (0.552 tCO2/MWh) • System registry cost (50% of Carbon price) • Carbon price (US$30/tonne)
Considerations of loan repayment over ten years, depreciation (straight line method for 25 years) and return on equity are included in the model. The following cost elements for the residential sector are taken into consideration: 1. Interest on loan repayment 2. Principal loan repayment 3. O&M charges 4. Return on equity 5. Inverter replacement
For the commercial and public sectors, interest on working capital has been included and “Principal loan repayment” has been replaced with “depreciation”. A standard financial analysis was used to determine the IRR, Payback period, LCOE and NPV. Values of the mentioned financial indicators were then used to evaluate and compare the viability of RSPV installations of surveyed buildings in each sector.
5.1 Residential Sector In the residential sector, both the EIRR and FIRR are attractive indicating that RSPV is viable in this sector. The EIRR is considerably higher than the FIRR (Table 5-2) due to: 1) lower costs due to the removal of taxes from the cost of RSPV installation, and 2) the addition of carbon price to the RSPV revenue. The FIRR is comparable for both the self-consumption and FiT-10 year cases. The NPV is positive for all buildings with payback periods of between 6.5 and 10 years. The NPV is highest for Batikent_R, followed by Nezih_R.
Table 5-2: Residential sector – RSPV financial viability Building RSPV
Capacity EIRR FIRR NPV Payback
Period LCOE
(kW)
NM FiT-10 y ($) (Years) ($/kWh)
AE1_R 15 21% 16% 15% 14,355 7.9 0.15
AE2_R 15 22% 16% 15% 14,355 7.9 0.15
Batikent_R 56 40% 29% 28% 81,527 6.5 0.12
Nezih_R 30 25% 19% 18% 29,279 7.4 0.14
Doga_R 6.5 14% 8% 8% 1,058 9.8 0.20
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Considerable differences are observed between the Batikent_R and Doga_R buildings, due to their respective RSPV size, location and roof type. Batikent_R is located in Ankara while Doga_R is located in Istanbul. Ankara receives a higher number of effective sunshine hours (4.87) as compared to Istanbul (3.94). Batikent_R has a flat cement roof while Doga_R has a flat, tile roof. In the case of Batikent_R, the solar panels can be oriented at an equator pointed angle to receive a higher amount of solar radiation. On a flat tile roof, the solar panel can only be installed horizontally and consequently does not receive the maximum possible hours of effective sunshine. Therefore, future programs targeting the residential sector should consider these aspects.
5.2 Industrial Sector The financial and economic results for buildings in the industrial sector are given below in Table 5-3. Table 5-3: Industrial sector - RSPV financial viability
Building RSPV Capacity
EIRR FIRR NPV Payback Period
LCOE
(kW) NM FiT-10 y ($) (Years) ($/kWh)
Aydinlar_I 48 17% 5% 24% -5,114 9.4 0.13
Turanlar_I 60 12% 2% 11% -16,192 10.1 0.15
Temsa_I 100 12% 2% 11% -26,284 10.1 0.15
In the industrial sector, the FIRRs are low for all facilities. This is due to the low industrial grid tariff. Aydinlar_I has the highest EIRR, FIRR as well as NPV, because it has a flat, cement roof that can have solar panels oriented to receive the maximum possible solar radiation. For the industrial sector, the main considerations are the type of roof and location since system sizes are expected to be large in all cases.
5.3 Commercial and Public Sectors The Table 5-4 shows the financial and economic results for buildings in the public and commercial sectors. Three of the ten buildings have FIRRs below 10% for NM and only two under an FiT scheme. Table 5-4: Commercial and public sectors - RSPV financial viability
Building
RSPV Capacity
EIRR FIRR NPV Payback Period
LCOE
(kW) NM FiT-10y ($) (Years) ($/kWh)
IBC_C 4 1% Very Low Very Low -5,547 13.2 0.26
Muyar_C 32 24% 5% 9% -2,967 8.8 0.16
Batikent_C 600 Very High 42% Very High 394,664 6.3 0.11
Ulusoy_C 72 29% 8% 13% 2,081 8.3 0.15
Ikizler_C 280 Very High 23% 953% 118,803 6.9 0.12
DGRE_P 192 58% 14% 26% 44,779 7.6 0.13
Guzel_P 160 58% 14% 29% 37,002 7.6 0.13
EEE_P 160 Very High 22% 404% 73,785 7.0 0.12
MOH_P 40 70% 14% 29% 10,225 7.6 0.13
Menderes_P 75 70% 14% 32% 20,817 7.6 0.13
The reason IBC_C is showing ‘’Very Low’ IRR is that the size of the system is too small. This leads to high costs that cannot be recovered through the commercial tariffs and consequently leads to a cash flow that remains negative over the lifetime of the project. The case is opposite for Batikent_C. Here, the system size is large enough to benefit from economies of scale and lower the cost per kW. It also has the added benefit of having the highest effective sunshine hours. Guzel_P and EEE_P are
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commercial buildings with an equal PV capacity of 160 kW. They are in the same province but have a highly different IRR. This is because they have different roof types, which impacts the amount of effective sunshine hours they receive. Guzel_P has a flat tiled roof, for which solar insolation is taken at a horizontal surface and is calculated to receive 4.39 hours of effective sunshine. EEE_P has a flat cement roof and can therefore have panels installed at a latitude angle, able to receive 4.87 hours of effective sunshine. The difference in effective sunshine hours is almost 11% and demonstrates the differing IRR between the two equal system sizes. There is a demonstrable difference between the solar radiations received by different roof types in various provinces. Solar panel orientation, according to the limitations of the roof type, has an added influence on the amount of solar radiation that can be received. For example, a solar panel installed horizontally in Istanbul receives 3.94 kWh/m2/day of solar radiation while a panel installed at a latitude angle in Aydin receives 5.39 kWh/m2/day of solar radiation. This results in a 37% difference in solar generation.
5.4 Sensitivity Analysis The Table 5-5 shows the outcome of a capital cost sensitivity analysis. For this analysis, the capital cost of a 25 kW RSPV system in Ankara across all sectors was reduced in increments of 5%, starting with a 10% cost reduction. A cost reduction of 15% results in an increase in the average IRRs by 6-9% for residential, industrial and commercial consumers. In the industrial sector, a cost reduction of 25% is required to achieve an IRR of over 10.7%. This clearly demonstrates that in order to make RSPV system adoption financially attractive for industry, efforts are needed to reduce the capital cost of the RSPV systems, either through reductions in import taxes, etc. or government incentives. Table 5-5: RSPV capital cost sensitivity analysis
Cost Reduction Residential IRR Industrial IRR Commercial IRR
Base case 14.4% -0.8% 5.2%
10% 18.2% 3.4% 10.7%
15% 20.7% 5.6% 14.3%
20% 24.0% 8.0% 18.8%
25% 28.6% 10.7% 25.3%
30% 35.9% 14.0% 37.0%
Solar resource variation also had significant impact on returns. For the residential sector, with 1 kWh/m2/day difference in solar resource, the FIRR changes by approximately 6% while for the industrial sector it changes by around 10%. In the pubic and commercial sectors, the FIRR changes by around 19%.
An analysis of RESCO and self-owned business models for four system sizes is presented below in Table 5-6. As shown, the RESCO model offered better returns in all cases. In the case of self-owned business models, the cost was taken to be 100% of the capital cost. In the case of RESCO models, the cost was taken to be 90% of the prevailing capital cost. This assumption is based on the fact that a RESCO would be able to purchase many systems and thus benefit from economies of scale.
Table 5-6: Business models for the residential sector PV System Size Self-Owned
RESCO
kW FiT IRR NM IRR FiT IRR NM IRR
4 8% 9% 12% 14%
20 12% 14% 17% 19%
50 24% 26% Very High 40%
150 26% 38% Very High 104%
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The same analysis, using the same assumptions, was performed for the public and commercial sectors. Again, the RESCO model showed improved rates of return in all cases (Table 5-7). Table 5-7: Business models for commercial sector results
PV System Size Self-Owned
RESCO
kW FiT IRR NM IRR FiT IRR NM IRR
4 -8% -9% 0% -2%
20 0% -2% 6% 3%
50 15% 8% 34% 15%
150 31% 14% Very High 48%
RESCO offers higher returns due to lower costs. Furthermore, FiT schemes yield higher IRRs than NM. This is because the FiT that is applicable in the first 10 years of the project is generally higher than the grid tariff, leading to higher revenues. Table 5-8 summarizes the key findings of the financial and economic assessment of RSPV. Table 5-8: Summary of key findings
Parameter Impact on financial viability of RSPV Solar Resource
Solar resource has significant impact on financial viability. For example, a horizontally installed RSPV system on a residential building in Ankara will receive 10% more solar radiation as compared to a similar RSPV system in Istanbul. This result in greater solar generation in Ankara and thus higher financial returns.
System Size RSPV system size has a direct impact on the cost of installation. There is a cost difference of 40% between a small residential RSPV of 4 kW and a large industrial system of over 250 kW. Therefore, larger sized RSPV especially in the commercial, public and industrial sectors must be encouraged.
Roof type and material
Roof type is another determining factor. An equator oriented RSPV installed on a flat cement roof in Aydin receives 37% more solar radiation over a same system mounted on a horizontal metal roof in Istanbul. This results in significant difference in financial viability of RSPV.
Capital Cost A reduction in cost of installation directly increases the IRR resulting in improvement in financial viability of the project. In industrial sector, a cost reduction of 25% for a 25 kW system can raise the IRR from -0.8% to 10.7% making the project financially attractive.
Business Models
Self-ownership business model has lower financial viability as compared to the RESCO model. This is due to the fact that a RESCO will be able to procure RSPV equipment in bulk at reduced cost due to economy of scale, thereby reducing its cost of installation. For example, in residential sector, for a 50 kW system with net-metering the IRR is 26% in case of Self-ownership while it is 40% in case of RESCO model.
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6. Recommendations and Roadmap for RSPV Development in
Turkey This section makes recommendations to address the barriers to RSPV deployment and proposes a roadmap for their implementation.
Figure 6-1: RSPV penetration by sector
6.1 Recommendation 1 – Set Annual Target for RSPV To mobilize stakeholders and create common goals and accountability, MENR should set a time bound target based on the 3.9 GW market potential for RSPV and communicate this to the market.51 It should also set annual targets (Table 6-1) for each market segment and monitor them regularly. If a particular segment’s milestones are not achieved, a detailed analysis should be conducted to determine why, and corrective measures developed and implemented. Table 6-1: Annual targets for RSPV
Year RSPV targets (MW) for different sectors Residential - Single
Family Residential - MAB Commercial Industrial Public
2017 16 20 77 79 8
2018 18 23 89 91 10
2019 34 43 168 172 18
2020 54 66 261 267 29
2021 63 78 306 313 33
2022 53 66 259 265 28
2023 34 42 165 169 18
2024 18 22 88 90 10
2025 9 11 42 43 5
2026 4 5 19 19 2
Total 303 374 1,473 1,508 161
51 The targets were determined based on the S-curve methodology; the S-curve is widely used to determine the rate of adoption of new technologies.
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Key performance indicators (KPIs) should be established to monitor the progress made in each market segment. Section 7 provides details on a monitoring program employing KPIs; additional measures to ensure targets are met are discussed in the remainder of this section.
6.2 Recommendation 2 – Establish dedicated, low-interest lending facility with
banks for RSPV systems MENR should work with local financial institutions to develop dedicated loan products for RSPV systems in each market segment, and with the government and international financial institutions to offer longer-term, low-interest financing. Such a measure would help incentivize the market and accelerate early adoptions, perhaps for the initial 500 MW. This would be consistent with the experience in other countries as well as market survey results, where 25% of the respondents indicated a preference for low-cost finance as an incentive for RSPV investments. Given that many EPC firms are new or start-up companies with weak balance sheets, some credit enhancement, risk sharing payment security mechanisms may also be needed to help them access financing, particularly under the RESCO model.
6.3 Recommendation 3 – Transition from FiT to net metering Since Turkey will phase out its RE FiT scheme in 2020, MENR should further develop and institutionalize a NM scheme for RSPV systems by then. This study’s financial analyses show if the retail tariff increases based on the CAGR of the last seven years, NM will become cost-effective to residential, industrial and commercial customers in 2020, 2027 and 2024, respectively. Figure 6-2 supports this notion; it shows that the benefits to the consumers will be more under NM than under a continued FiT. Net metering can also be used for MABs. Under a net-billing model, a grid-connected RSPV system can allow the benefits (i.e., the RPSV power sold to the grid) to be credited among the residents based on their past average consumption and deducted from their monthly DISCOM bill. This practice is widely used in the United States.
Figure 6-2: Comparison of RSPV cost at FiT and NM
4495
192
342
517
665
760 811835
897
3069
146
276
443
604
732
828904
971
0
200
400
600
800
1,000
1,200
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Mill
ion
$
Year
Total cost of RSPV at FiT Total cost of RSPV at NM
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6.4 Recommendation 4 – Incentivize the industrial sector to adopt RSPVs Consider the development and implementation of additional incentive schemes for the industrial sector, since rates of return are low. As shown in Section 5, the profitability on RSPV investment is lowest in the industrial sector, with expected FIRRs of only 2 to 5% in the case of NM. However, the potential of RSPV in the industrial sector is around 40% of the total RSPV potential and this sector is more able to access financing and implement such projects. Therefore, it is recommended that additional incentives be offered to the industrial sector, which may include tax rebates for using electricity generated from RSPV, upfront cash incentives, tax exemptions for imported components, a higher tariff for supplying excess electricity to the grid, and waivers in the electricity duty. Table 6-2: Financial returns for industrial RSPV
Building RSPV Capacity
EIRR FIRR NPV Payback Period
LCOE
(kW)
Grid-Tariff FiT-10y ($) (Years) ($/kWh)
Aydinlar_I 48 17% 5% 24% -5,114 9.4 0.13
Turanlar_I 60 12% 2% 11% -16,192 10.1 0.15
Temsa_I 100 12% 2% 11% -26,284 10.1 0.15
In Turkey, FiT is the main incentive offered by the government to support solar PV today. However, the government has indicated the FiT will end in 2020. As solar prices have come down dramatically in recent years, a more sustainable and targeted set of incentives are needed. For example, the United States has more than 960 incentive programs offered at the federal, state, city, county and utility levels. These incentive programs include accelerated depreciation and corporate and personal income tax credits. Further incentives include property tax exemptions and capital subsidies on the solar system costs. Regulatory incentives include an RE portfolio standard, NM and public benefit funds.
6.5 Recommendation 5 – Waive the Surveillance certificate and other transaction
costs Surveillance Certificate: A surveillance certificate of US$300/m2 is assessed on imported PV modules, which can increase the PV module’s cost by around 70%. Without the surveillance certificate, a solar panel is charged an import duty of US$300/m2 as per the latest Communiqué.52 As an example, under the current regulation, a 300 W PV module with a border price of US$0.4/W costs US$120. Given that the surface area is around 1.6 m2 for a 300 W module, the surveillance tax on this module is calculated as US$300*1.6*18% = US$86.4. This represents a 72% increase in the border price of solar modules. It is more efficient to simply remove the import tax on solar PV modules than to provide additional incentive schemes to promote their use. Obtaining a surveillance certificate is also a long and difficult process; generally, only large and established companies are able to obtain it. This introduces barriers to small companies and new entrants to the market. Transaction Costs: There are two main transaction costs: an initial application cost of $1,000 and a project preparation and design cost of about $3,000. For small consumers (up to 150 kW), these costs become a significant financial barrier. For example, they represent about 6% for 50 kW and 2% for 150 kW consumers. MENR is considering waiving the application cost for consumers up to 10 kW. It is recommended to expand the waiver for systems up to 150 kW.
52 Source: http://www.resmigazete.gov.tr/eskiler/2017/05/20170512-24.htm
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To reduce the project preparation and design cost, it is recommended that the design for low-capacity RSPV systems be standardized. The standard design and financial analysis should be made available on the websites of the government, regulators and DISCOMs for low-capacity systems, up to 150 kW in blocks of 25 kW. This design and financial analysis should be accepted by banks, DISCOMs and other certifying/permitting institutions. This would not only reduce design costs but also ensure more consistent technical quality and facilitate the construction and environmental permitting.
6.6 Recommendation 6 – Establish single window/online DISCOM approval for
RSPV systems up to 150 kW There is currently no difference between applications for small and large RSPV systems, and it takes roughly 17 months to complete the approval process. DISCOM requires two months to authorize a project’s acceptance, after which it takes three months for TEDAS to process the connection agreement. The final 12 months are spent completing the investment. The longer the application procedure takes, the higher the total costs. Also, uncertainties created by the long permitting process create a disincentive to potential RSPV investors. An online application process should be developed to allow for a “single-window” permitting and licensing platform. This system, preferably managed by one centralized organization, can help ensure a quick and safe permitting process. The application should be managed through the DISCOMs. They would be entitled to provide all required permits and undertake the safety and approval procedures. DISCOMs would be given this authority on behalf of all the public institutions now involved in granting permits (e.g., TEIAS, the municipality, fire brigade, DGRE, TEDAS). Under such a system, upon receipt of the installation certificate from an EPC, the DISCOM should visit the RSPV installation, ensure installation complies with defined protocols and specifications, and connect the installation with the grid within a specified time. Only DISCOM staff should be authorized to connect the RSPV system to the grid. The recommended flow diagram for application and permitting is shown in Figure 2-1. The suggested process should be implemented for systems with capacities up to 150 kW initially. This would be consistent with established systems in the United States and Germany.
6.7 Recommendation 7 – Create capacity building programs Because an RSPV program would be new in Turkey, capacity building will be vital at all levels. Several stakeholders will play a critical role in the implementation of the RSPV program. They include government policy makers and officials, regulators, prospective/targeted consumers, EPCs, banks and manufacturers/suppliers. The diverse set of stakeholders makes it important to design capacity building measures for each stakeholder group based on their role in the RSPV program. The recommended capacity building program elements are presented in Table 6-3. Table 6-3: Recommendations for capacity building program
Stakeholders Objectives for Capacity Building
Approach for Capacity Building Training Program Frequency
Government • Creating awareness
• Policy making
• Energy security
• Design of incentive programs
• International training program
• Customized workshops by external institutes/ consultants
• Study tours
• Participation in international conferences/workshops
Years 1-3:
Quarterly Years 4-6:
Quarterly Years 7-10: Bi-
annually
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Regulator • Transition from FiT to NM
• Licensing procedure
• Regulations for metering
• Regulations for grid connection
• M&E
• International training program
• Customized workshops by external institutes/ consultants
• Study tours
• Participation in international conferences/workshops
Years 1-3:
Quarterly Years 4-6:
Quarterly Years 7-10: Bi-
annually
Targeted Consumers
• Information about RSPV policy and incentive schemes
• RSPV application process
• Overview of technical and economic viability of RSPV
• Workshops through appointed partners
• Creation of a helpline
• Availability of FAQs and solar PV calculator on a website
• Electronic media, flyers and brochures, exhibitions and road shows
Workshops: Min.
6 per year in each
targeted district Electronic media,
flyers and
brochures,
exhibition and
road shows:
Continuous EPC and Manufacturers
• RSPV programs and policies- focused on benefits, incentives and accreditation.
• Licensing and regulatory requirements (grid interconnection, grid code compliance, import of systems, etc.)
• Financing options from banks/other FIs
• International best practices in installation and procurement
• Quality assurance
• Workshops
• Specific materials on the website such as guidelines for system design and installation, expected business, expected profit, etc.
• Mega solar event to bring all
stakeholders together
Workshops:
Quarterly Mega Solar Event:
Annually
Consumers/ General Public
• Knowledge of rooftop solar and its value proposition
• Incentives offered by the government
• Sensitization to energy conservation and climate change
• Ease of installation
• Financing options
• Specific materials on the website such as sources of information on policies, financing, quality installers, cost-benefit aspects, etc.
Continuous
Banks/ Financial Institutions
• Sensitization to the RSPV market
• Cost of financing and cost of PV
• Business models & financing instruments
• Workshops
• Tools for quick appraisal of financing reports related to the RSPV program
Years 1-3:
Quarterly Years 4-6: Bi-
annually Years 7-10: Bi-annually
Utilities • Grid integration and interconnection
• Metering, billing and settlement
• Monitoring and evaluation
• Change of management
• Attendance at international training programs
• Customized workshops by external institutes/consultants
• Study tours
Years 1-3:
Quarterly Years 4-6:
Quarterly
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• Procedure for approval/licensing
• Participation in international conferences/workshops
Years 7-10: Bi-
annually
6.8 Recommendation 8 – Create outreach programs Outreach plays an important role in overcoming challenges on a national level and involving stakeholders and citizens with government priorities and programs. RSPV programs are no different. To ensure the most effective outreach that results in positive impacts, stakeholders should be addressed through an outreach channel specifically catered to their needs (Table 6-4: Expected impacts of outreach programs). As needs differ widely, so would the proposed outreach channel. It is recommended that following primary channels be employed for RSPV stakeholders:
• Workshops: government
• Electronic media (TV, radio, advertisements): citizens at large
• Website/mobile app-focused: consumers
• Exhibitions and road shows: citizens at large
• Flyers, brochures and print media: specific to specific stakeholders.
Table 6-4: Expected impacts of outreach programs
Stakeholders Expected Impacts
Targeted Consumer
• Increased consumer base, leading to a higher growth in RSPV installed capacity • Awareness of the RSPV policies, incentives and government support • Data and information
• Enhanced motivation
Consumers/ Public in General
• Creating a positive environment for RSPV in the country • Increased consumer base, leading to a higher growth in RSPV installed capacity
• Awareness of the RSPV policies, incentives and government support
EPC and Manufacturers
• Increased number of accredited EPC contractors • Increase in indigenous manufacturing and market for RSPV
Banks/ Financial Institutions
• Awareness of new business opportunities • Increased financing for RSPV • Reduction in financing cycle time
6.9 Recommendation 9 – Develop technical standards Technical standards help ensure the quality at all levels and maintaining the uniformity and the government should develop RSPV standards for (a) solar panel and modules, (b) solar invertors, (c) installations, (d) grid interconnection, and (e) testing of structural stability of roof for installation of RSPV. As noted under Recommendation 5, standard designs would also help lower project development costs while helping to ensure consistent technical quality, safety, reduce perceived technical risks, and facilitate the approvals and further streamlining of construction and environmental permits.
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7. Implementation Plan The objective of this implementation plan is to guide the Government of Turkey in achieving the estimated RSPV market potential of 3.9 GW by 2026. The plan consists of following: 1. Well Defined Targets for RSPV 2. Monitoring and Evaluation Framework 3. Capacity Development of Stakeholders and Outreach Program (discussed in previous section) 4. Schedule of Activities 5. Budget and Resources
With 200 MW of RSPV installed to date, it is believed that business readiness is in place. Operational readiness mainly includes the availability of RSPV materials, skilled labor, and government support. Such availability will be scarce initially, but should be developed. It is understood that there is flexibility in allocating budgets and resources to a RSPV program, albeit with certain limitations that will depend on the annual priorities of MENR. Having said that, it is recommended that a fixed budget be allocated in support of RSPV programs. The implementation plan was prepared in response to the findings derived from analyzing the following information:
• International experience and market assessment reports
• Key barriers to the development of the RSPV market in Turkey
• Stakeholder consultations with EPC firms, DISCOMs, RETCOMs, potential end-users, policy makers and civil society. Additional consultations were conducted during the workshop in Turkey on December 14, 2017.
Other factors analyzed prior to the preparation of the implementation plan are listed in Figure 7-1.
7.1 Targets, and monitoring and evaluation framework Targets are a fundamental part of any implementation plan as they provide a long-term vision and help organize resources. Targets are also needed for the monitoring and evaluation (M&E) of a program. In turn, M&E serves as a guide for program implementation and management, as it shows the progress made towards the achievement of objectives and results. The M&E framework allows the government to:
Figure 7-1: Key factors analysed in preparing the implementation plan
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• Monitor interventions to determine whether they are being effective in achieving the program’s intended results.
• Evaluate the program repeatedly to measure its larger impacts over time. • Alert implementers and stakeholders of any problems in program implementation and have
the data to assess the root causes. • Identify the impacts the program is expected to have on economic, social and gender
aspects, and how these impacts will be achieved. The main components of an M&E plan are the KPIs. KPIs help in measuring the program’s progress towards the attainment of its stipulated targets. KPIs should be reliable, measurable and repeatable. Based on global practices and experience, five KPIs RSPV are suggested for Turkey:
• RSPV capacity installed (MW): This KPI helps in monitoring the progress of RSPV program vis-à-vis targets. The target for the RSPV program is 3.9 GW, the estimated market potential.
• Electricity generated from RSPV (MWh): This KPI will help in monitoring the capacity utilization of the RSPV systems. The target for this KPI can be determined using a capacity utilization factor (CUF) of 19%.
• RSPV systems installed (number): The number of projects signifies the progress towards meeting annual targets and allows the monitoring of the growth of RSPV across all consumer categories. The number of projects is calculated by taking the following system sizes: residential: single-family – 5 kW; residential multi-family – 20 kW; commercial – 50 kW; industrial – 100 kW; and public – 50 kW.
• RSPV systems financed from banks (number): System financing is an indicator of market maturity and the acceptability of RSPV program/technology.
• Capacity building (number): Capacity building events should be monitored in terms of programs conducted vs the targets for each stakeholder category. The impacts of a capacity building program should be evaluated every three years using a stakeholder survey.
The proposed targets for each of the KPIs are based on their application in the residential, commercial and industrial, and public sectors, with the targets divided into three 3 phases:
• Phase 1 (2018- 2020): This is the inception phase in which the RSPV program is launched and tested. Significant efforts in internal capacity building are required in this phase.
• Phase 2 (2021 - 2023): This is the acceleration phase in which RSPV starts to become mainstream and a large number of stakeholders adopt RSPV.
• Phase 3 (2024 – 2027): This is the completion and evaluation phase in which the government will consolidate the program and evaluate its outcomes.
The KPIs are presented in Table 7-1 along with a brief methodology for their measurement and indication of their importance. For thorough monitoring and transparency, it is recommended that the KPIs be published through the following channels: 1. Website of DGRE, DISCOMs and other relevant government institutions. 2. Periodically in newsletters and reports from DGRE and DISCOMs.
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Table 7-1: Key performance indicators (KPIs) to monitor RSPV targets Performance
Indicator Measurement
Mechanism Sector Target
Phase 1 Cumulative
Phase 1 Installed capacity
Target Phase 2
Cumulative Phase 2 Installed capacity
Target Phase 3
Cumulative Phase 3 Installed capacity
RSPV capacity installed (MW)
Facilitated by DISCOMs based on grid
interconnection of RSPV.
Residential 155 155 383 538 146 684
Commercial & Industrial
683 683 1687 2370 641 3011
Public 37 37 91 129 34 163
Electricity generated by RSPV (GWh)
To be collected from the consumer bills
issued for each individual project from each utility. Similar to RSPV capacity, these data can be recorded
in the utility’s permitting and
licensing software server and can be
retrieved through a web-based application that can be accessed by DGRE and other
relevant stakeholders.
Residential 258 258 638 896 243 1138
Commercial & Industrial
1136 1136 2808 3944 1068 5012
Public 62 62 152 214 57 271
RSPV projects Installed
Same as for KPI No 1 Residential 18,112 18,112 44,865 62,977 17,046 80,023
Commercial & Industrial
10,202 10,202 25,203 35,405 9,583 44,988
Public 749 749 1,822 2571 688 3,259
Percentage of RSPV projects financed
Data will be collected from each of the
consumers at the time of grid connection by
the DGRE/other designated entity. It should be verified by
FIs/banks on a periodic basis.
Residential 60% - 75% - 90% -
Commercial & Industrial
80% - 90% - 95% -
Public 90% - 95% - 95% -
Capacity building program (number of workshops/ training sessions)
No. of capacity building
programs conducted
vs. targets
Government and regulators
12 12 12 24 8 32
Prospective/ Targeted
consumers
126 126 84 210 84 294
EPC and manufacturers
12 12 12 24 8 32
Banks/ FIs 12 12 12 24 8 32
Utilities 12 12 12 24 8 32
7.2 Schedule In order to follow the progress and targets of the three phases of the implementation plan, it is vital to have an established and concrete schedule in place. The schedule will serve to highlight major milestones in which the full Turkish RSPV market potential can be realized. Figure 7-2 provides a preliminary schedule.
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Figure 7-2: Preliminary schedule for implementation plan
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Tasks 01 02 03 04 05 06 07 08 09 10
Recommendation 1- Set Annual Target for RSPV (MW)
Annual Targets for RSPV (MW)
Market potential of RSPV is 3.9 GW by 2026. Target setting will enable monitoring
actual versus planned deployments
Recommendation 2 - Dedicated Credit Line for an Initial 500 MW (Low interest
lending for RSPV) (No. of projects f inanced)
Dedicated line of credit
Financial Support
Recommendation 3 - Transition Towards Net Metering
NM for Residential
NM for Commercial
NM for Industrial
Recommendation 4- Provide greater incentive to Industrial RSPV
Provide greater incentive to Industrial RSPV
Recommendation 5- Re-evaluate the Surveillance Certif icate and Transaction Costs
Re-evaluate the Surveillance Certificate and Transaction Costs
Recommendation 6- Single Window/On Line Approval for RSPV upto 150 kW
introducing line application submission and single window approval for RSPV up to 10 kW
introducing line application submission and single window approval for RSPV up to 150 kW
Recommendation 7- Create Capacity Building Programs (no. of programs)
Number of Capacity Building Programs (#)
Develop training programs at all levels – Provincial policy makers, Financial
Institutions, EPC firms and installersCollaborate with SETNET program of the Indian Govt. and Florida Solar Energy
Center
Recommendation 8- Create Outreach Programs
Running Outreach Programs
Recommendation 9- Prepare Technical Standards for RSPV
Technical standard with standardized procedures are needed to streamline the application process,
especially for systems up to 100 kW
866 2140 813
12 306 422
Year
Phase 1 Phase 2 Phase 3
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Appendix-1 Table A-1 CAGR tariff projections and FiT for different sectors
Year Residential Sector Industrial Sector Commercial & Public Sector
Grid Tariff ($/kW) FiT-10y ($/kW) Grid Tariff ($/kW)
FiT-10y ($/kW)
Grid Tariff ($/kW)
FiT-10y ($/kW)
2016 0.136 0.133 0.089 0.133 0.117 0.133
2017 0.113 0.133 0.074 0.133 0.097 0.133
2018 0.120 0.133 0.078 0.133 0.102 0.133
2019 0.128 0.133 0.083 0.133 0.107 0.133
2020 0.138 0.133 0.088 0.133 0.113 0.133
2021 0.148 0.133 0.094 0.133 0.119 0.133
2022 0.159 0.133 0.100 0.133 0.125 0.133
2023 0.170 0.133 0.106 0.133 0.131 0.133
2024 0.183 0.133 0.113 0.133 0.138 0.133
2025 0.196 0.133 0.120 0.133 0.145 0.133
2026 0.211 0.211 0.128 0.128 0.152 0.152
2027 0.226 0.226 0.136 0.136 0.160 0.160
2028 0.243 0.243 0.144 0.144 0.168 0.168
2029 0.260 0.260 0.154 0.154 0.176 0.176
2030 0.279 0.279 0.163 0.163 0.185 0.185
2031 0.300 0.300 0.174 0.174 0.195 0.195
2032 0.322 0.322 0.185 0.185 0.205 0.205
2033 0.345 0.345 0.197 0.197 0.215 0.215
2034 0.371 0.371 0.209 0.209 0.226 0.226
2035 0.398 0.398 0.223 0.223 0.238 0.238
2036 0.427 0.427 0.237 0.237 0.250 0.250
2037 0.458 0.458 0.252 0.252 0.263 0.263
2038 0.492 0.492 0.268 0.268 0.276 0.276
2039 0.528 0.528 0.285 0.285 0.290 0.290
2040 0.567 0.567 0.303 0.303 0.305 0.305
Stable Tariff Growth (SGT): Industrial, residential and public grid tariffs have been considered in the analysis. Tariff projections were estimated using the following steps:
• Established the real cost to the residential, commercial & public, and industrial consumers for 2016 in TLY/kWh, by using the tariffs published by EMRA.
• Converted the real cost to the residential, commercial & public, and industrial consumers for 2016 to USD per kWh. This was done using the average daily buying exchange rate between TLY and USD as published by the Central Bank of Turkey.
• Included the funds costs (at 8%) of the residential tariff and the value added tax (VAT) at 18% for 2016.
• Included the funds cost (8%) of the commercial and public sector tariff for 2016 but excluded the VAT.
• Included the funds cost (4%) of the industrial sector tariff for 2016. Although the VAT is excluded, the industry middle voltage tariff is used in the estimation.
• The 2017 tariff in TLY was converted to USD by applying the exchange rate between TLY and USD for 2017.
• On January 02, 2018 the electricity tariff in Turkey was increased by 8.8% over the 2017 tariff level. The 2018 tariff in TLY was converted to USD by applying the exchange rate.
The grid tariff and tariff projections for 25 years (the lifespan of an RSPV system) for the three sectors are provided in the table below.
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Table A-2: SGT – Grid tariff and FiT for different sectors
Year
Residential Sector Industrial Sector Commercial & Public
Sector
Oil price
($/bbl)
Oil price growth
(%)
Grid Tariff ($/kWh)
FiT-10y ($/kWh)
Grid Tariff ($/kWh)
FiT-10y ($/kWh)
Grid Tariff
($/kWh)
FiT-10y ($/kWh)
2016 44.05
0.136 0.13 0.089 0.133 0.117 0.133
2017 54.25
0.113 0.13 0.074 0.133 0.097 0.133
2018 56.00
0.120 0.13 0.078 0.133 0.102 0.133
2019 59.00 5.36% 0.126 0.13 0.082 0.133 0.108 0.133
2020 60.00 1.69% 0.128 0.13 0.083 0.133 0.109 0.133
2021 60.96 1.60% 0.130 0.13 0.085 0.133 0.111 0.133
2022 61.92 1.57% 0.132 0.13 0.086 0.133 0.113 0.133
2023 62.88 1.55% 0.134 0.13 0.087 0.133 0.115 0.133
2024 63.84 1.53% 0.136 0.13 0.089 0.133 0.116 0.133
2025 64.80 1.50% 0.138 0.13 0.090 0.133 0.118 0.133
2026 65.84 1.60% 0.141 0.14 0.092 0.092 0.120 0.120
2027 66.88 1.58% 0.143 0.14 0.093 0.093 0.122 0.122
2028 67.92 1.56% 0.145 0.14 0.094 0.094 0.124 0.124
2029 68.96 1.53% 0.147 0.15 0.096 0.096 0.126 0.126
2030 70.00 1.51% 0.149 0.15 0.097 0.097 0.128 0.128
2031 71.09 1.55% 0.152 0.15 0.099 0.099 0.130 0.130
2032 72.19 1.55% 0.154 0.15 0.100 0.100 0.132 0.132
2033 73.31 1.55% 0.156 0.16 0.102 0.102 0.134 0.134
2034 74.44 1.55% 0.159 0.16 0.103 0.103 0.136 0.136
2035 75.60 1.55% 0.161 0.16 0.105 0.105 0.138 0.138
2036 76.77 1.55% 0.164 0.16 0.107 0.107 0.140 0.140
2037 77.96 1.55% 0.166 0.17 0.108 0.108 0.142 0.142
2038 79.17 1.55% 0.169 0.17 0.110 0.110 0.144 0.144
2039 80.39 1.55% 0.172 0.17 0.112 0.112 0.147 0.147
2040 81.64 1.55% 0.174 0.17 0.113 0.113 0.149 0.149
The O&M cost has been derived from the currently operational TurSEFF projects and their O&M costs relative to their CAPEX. The cost analysis for five different projects is shown in the table below: Table A-3: OPEX for TurSEFF projects
Cost Parameter Units Alkor Aluminium
ASP Ciftligi
Soke Yag Kurteks Nazar
CAPEX (Year 2016) k€ 570.95 330.00 750.24 1550.83 1792.57 OPEX k€ 8 4 12 25 29 OPEX as share of CAPEX
1.4% 1.2% 1.6% 1.6% 1.6%
Source: TurSEFF Projects
The O&M charges are considered to increase each year, with an escalation rate of 7.75%. The discount rate of 7% in the TurSEFF project is based on the rate used in the EBRD funded solar projects.
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A debt-equity ratio of 80:20 was established after studying the investment structure of a number of TurSEFF solar projects. 301 solar PV projects had 217 m€ in loans with a 275 m€ of total investments, generating a ratio of 79:21 debt to equity. 40 RSPV projects, had 14.5 m€ in loans with a 17.8 m€ total investment, giving a debt-equity ratio of 81:19. Table A-4: Model inputs for financial assumptions
Assumptions for Financial and Economic Assessment
Financial Assumption Units Value Data Source
Debt % 80% TurSEFF
Equity % 20% TurSEFF assumed
Loan tenure Years 10 TurSEFF
Interest rate % 10% Typical for Turkey
Corporate Tax Rate % 20% Typical for Turkey
Return on Equity
Return on Equity- Res % 10% Interest rate in Turkey
Return on Equity- Comm. & Muni % 20% Assumed
Annual Average Inflation rate % 7.75% Average Inflation in Turkey from 2009 to 2016
Discount Rate % 7% Estimated as WACC
O&M Units Value
O&M Expenses (% of Capital Cost) % 1.5% TurSEFF
Escalation in O&M Prices % 7.75% Inflation rate for Turkey
Component Replacement Cost
Inverter Replacement Cost % 13% RETA 2016
Working Capital
Residential 0% Not Applicable
Commercial and Public
a O&M Charges Month 1 CERC SO 243 2015
b. Maintenance Spares (% of O&M) % 15% CERC SO 243 2015
c. Receivables for Debtors Months 2 CERC SO 243 2015
d. Interest on Working Capital % 10% Interest rate in Turkey
Feed in Tariff (FiT)
FiT 10y $/kWh 0.133 Current regulation
Duration of FiT Years 10 Current regulation
RSPV System size: The cost of the system (CAPEX) includes the capital, system design, and labor and installation costs. System costs are anticipated to reduce with increasing system sizes, taking into account the improved economies of scale and bulk procurement associated with larger systems. The PV system cost for different configurations has been taken from the representative cost of solar systems in 2016 under the EBRD funded TurSEEF II project, currently undergoing in Turkey. RSPV system cost assumptions, according to different system sizes, can be seen in the table below.
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Table A-5: RSPV system cost assumptions System Size System Cost ($/kW) Data Source <=5kW 1500 TurSEFF Project >5 to <=25kW 1350 TurSEFF Project >25 to <=100kW 1100 TurSEFF Project >100 to <=250kW 1000 TurSEFF Project >250kW 900 TurSEFF Project System Cost Build-up Value Data Source PV Module 54% RETA, 2016 Inverter 13% RETA, 2016 Balance of System 33% RETA, 2016
For the economic analysis the input prices of RSPV components are brought to border price. The applicable import duties (or VAT) and the domestic duties are deducted from the cost of RSPV components. The total assumptions for economic analysis are presented in the table below Table A-6: Input assumption for economic analysis
Economic Analysis Assumptions Unit Value
Import Duty (VAT)
PV Module from China % 43%
PV Module from other countries % 18%
Inverter % 18%
Balance of System % 0%
Domestic VAT
PV Module, investment cost > 1 million TLY % 0%
PV Module, smaller investments % 0%
Inverter % 0%
Balance of System % 18%
Electricity Tariff
Tax on Grid Tariff
Residential % 18%
Commercial % 0%
Public % 0%%
Consumption tax (residential, commercial and industrial) % 5%, 5%, 1%
Carbon Benefits
Carbon Intensity of the Turkish Grid tCO2/MWh 0.552
Carbon Price $/ton 30
Cost for system registry $/ton 15
Effective Carbon Price $/ton 15
Escalation Rate % 7.75%
To account for social benefits, the taxes on grid tariff are deducted as proxy for the long-run marginal cost (LRMC). In addition, avoided carbon benefits are accounted for based on the carbon intensity of Turkey’s grid, carbon cost and annual escalation in carbon price.
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