TURKEY PHOTOVOLTAIC MARKET

Outlook 2013 ÷ 2018

Inea Consulting is well established renewable energy advisory firm focused to emerging markets of Eastern Europe, CIS countries and MENA countries. Through its analytical arm Inea Research, the company provides independent renewable sectors watch, customized analysis, market outlooks and sector studies. What makes us different is the quality and accuracy of information, which is interpreted in the best way to take your investment decisions.

www.ineaconsulting.eu

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2013 ÷ 2018

INEA CONSULTING LTD. | 3

This market report offers an incisive and reliable overview of the photovoltaic sector of the

country for the next 5 years period 2013 ÷ 2018. Turkey has the sixth-largest electricity

market in Europe and one of the fastest growing in the world. In view of recent cuts in FIT’s

announced in Germany, Spain, France, UK, Czech Republic, Slovakia, Bulgaria and Italy,

Turkey represents a stable investment environment in South-East Europe with clear rules

and fair FIT rates. Current cumulative installed PV capacity in the country is insignificant,

but a number of fully permitted and ready to build project will promptly increase in 2013.

Turkish market has good chances to reach more than 450 MWp in the next 2 years. The

report provides a complete picture of the market situation, dynamics, current issues and

future prospects. You will find more than 60 pages of valuable information in this unique in-

depth analysis of the Turkish photovoltaic market. With comprehensive market data this

report brings clear and concise insights, to help investors in their decision making process.

As 2012 was challenging year for photovoltaic industry, the time for taking right decisions

during 2013 and the next years is limited. Fast changing market environment with falling

module prices, requires relevant and accurate information. For your convenience we offer

opportunity for orders with customized report content. Reasons to buy this market report

include:

Brief overview of the Turkish political and economic environment

Solar resource potential in Turkey

Overview of Turkish photovoltaic market development 2000 ÷ 2018

Grid connected photovoltaic installations for 2012/2013

Future market trends and planned photovoltaic projects for 2013 ÷ 2018

Current market prices of fully permitted and operational photovoltaic projects

Turkish legal and energy regulatory framework for renewable projects

Key companies and competitive landscape in photovoltaic sector

Review of most relevant financing and supporting incentives

SWOT Analysis

At next pages you will see the full table of content of this report. To order the report just fill in and send us the enclosed at the last page order form. If you have any other questions please do not hesitate to call us on ++359 887 342 475 or write an e-mail to orders@ineaconsulting.eu

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2013 ÷ 2018

4 | INEA CONSULTING LTD.

TABLE OF CONTENTS

TABLE OF CONTENTS ......................................................................................................... 3

FOREWORD ...................................................................................................................... 7

1 METHODOLOGY and limitations .............................................................................. 9

Methodology ............................................................................................................... 9 1.1 Limitations ................................................................................................................. 10 1.2

2 EXECUTIVE SUMMARY ........................................................................................... 11

3 TURKEY POLITICAL AND ECONOMIC ENVIRONMENT .............................................. 14

Basic country data ..................................................................................................... 14 3.1 Political Climate and Ruling Party .............................................................................. 17 3.2 GDP and Economic Growth ....................................................................................... 18 3.3 Electricity Imports and Exports. Electricity prices for business and households ...... 20 3.4 Taxes .......................................................................................................................... 22 3.5

3.5.1 VAT ......................................................................................................................... 22 3.5.2 Income and Corporate Taxes ................................................................................. 22

4 TURKEY PHOTOVOLTAIC ENERGY MARKET ............................................................. 23

General electricity market information ..................................................................... 23 4.14.1.1 Electricity Consumption and Production ............................................................... 25 4.1.2 RES targets ............................................................................................................. 26 PHOTOVOLTAIC market ............................................................................................. 27 4.2

4.2.1 Why invest in photovoltaic energy in Turkey? ...................................................... 28 4.2.2 Turkey solar resource potential ............................................................................. 29 4.2.3 Overview of Turkey photovoltaic market .............................................................. 31 4.2.4 Market prices for photovoltaic energy projects in Turkey .................................... 33 4.2.5 Key development photovoltaic projects in Turkey ................................................ 34

5 EUROPEAN RENEWABLE ENERGY POLICY LANDSCAPE ............................................ 38

RES Regulations and EU Directives ............................................................................ 38 5.15.1.1 Precedent EU regulations ...................................................................................... 38 5.1.2 Most recent EU renewable energy policy developments...................................... 39

6 TURKEY RES LEGAL AND REGULATORY FRAMEWORK ............................................. 40

Main laws and regulations ......................................................................................... 40 6.1 Support schemes ....................................................................................................... 41 6.2 Mandatory photovoltaic measurements .................................................................. 42 6.3 Competition regulation (tender procedure) ............................................................. 43 6.4 Zoning, planning and construction related authorizations ....................................... 44 6.5

6.5.1 Zoning plans procedure ......................................................................................... 45

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2013 ÷ 2018

INEA CONSULTING LTD. |TABLE OF CONTENTS 5

6.5.2 Building permit (construction license) procedure .................................................. 45 6.5.3 Operation License Procedure ................................................................................. 46 Environmental related authorizations ....................................................................... 46 6.6

6.6.1 Natura 2000 Network ............................................................................................. 47 6.6.2 Clean Development Mechanism (CDM) and Joint Implementation (JI) ................. 47 Energy law authorizations .......................................................................................... 48 6.7

6.7.1 Power Generation Licensing ................................................................................... 48 6.7.2 Grid Interconnection .............................................................................................. 50 6.7.3 Power Off-Take ....................................................................................................... 50 6.7.4 Feed-in tariff (FIT) ................................................................................................... 50 6.7.5 RES Certificates ....................................................................................................... 52 Financial Incentives and Support for RES electricity .................................................. 52 6.8 Future market pricing mechanisms............................................................................ 53 6.9

Key Co-financing opportunities .................................................................................. 53 6.106.10.1 Turkey Sustainable Energy Financing Facility (TURSEFF) ....................................... 53 6.10.2 Green for Growth Fund .......................................................................................... 57

7 KEY ORGANIZATIONS AND INSTITUTIONS ..............................................................59

Government ............................................................................................................... 59 7.17.1.1 The Ministry of Energy and Natural Resources (MENR)......................................... 59 7.1.2 Energy Market Regulatory Authority (EMRA) ........................................................ 59 7.1.3 General Directorate of Electrical Power Resources Survey and Development Administration (EIE) ........................................................................................................... 59 7.1.4 Ministry of Environment and Forestry (MoEF) ....................................................... 60 7.1.5 Energy Efficiency Co-ordination Board (EECB) ....................................................... 60 7.1.6 State Planning Organization (SPO) ......................................................................... 61 Electricity GENERATION AND ELECTRICITY Distribution Companies ......................... 61 7.2

7.2.1 TEIAS ....................................................................................................................... 62 7.2.2 EUAS and PP’s ......................................................................................................... 63 7.2.3 TETAS ...................................................................................................................... 65 7.2.4 TEDAS and Private DisCos ....................................................................................... 65 Key photovoltaic companies operating on TURKEY market ...................................... 66 7.3

8 SWOT ANALYSIS ....................................................................................................68

9 CONCLUSIONS .......................................................................................................71

10 LIST OF ABBREVIATIONS ........................................................................................74

11 REFERENCES ..........................................................................................................76

12 DISCLAIMER ...........................................................................................................78

APPENDIX I. SOLAR MAPS OF EUROPE AND TURKEY .........................................................79

TURKEY PHOTOVOLTAIC MARKET: OUTLOOK 2013 ÷ 2018

6 TABLE OF CONTENTS | INEA CONSULTING LTD.

LIST OF MAPS, CHARTS AND TABLES

Map 1: Where is Turkey on the world map ............................................................................. 14 Map 2: Major transport corridors passing through Turkey ..................................................... 15 Map 3: Turkey regions .............................................................................................................. 16 Map 4: Solar resource map of Turkey ...................................................................................... 29 Map 5: Solar irradiation and solar electricity potential for optimally inclined photovoltaic modules in Turkey, JRC PVGIS 2008 ......................................................................................... 31 Map 6: Electricity grids network of TEIAS ................................................................................ 62 Map 7: Hydro Power Plants of EUAS ........................................................................................ 64 Map 8: Thermal Power Plants of EUAS .................................................................................... 64 Map 9: Districts covered by TEDAS and DisCos ....................................................................... 65 Map 10: Solar irradiation and solar electricity potential for horizontally mounted photovoltaic modules in Turkey, JRC PVGIS 2008 .................................................................... 79 Map 11: Solar irradiation and solar electricity potential for horizontally mounted photovoltaic modules in Turkey, GeoModel Solar s.r.o. 2011................................................. 79 Map 12: Solar irradiation and solar electricity potential for optimally inclined photovoltaic modules in Europe, JRC PVGIS 2008 ................................................................... 80

Chart 1: Real GDP growth for the period 2000-2018 (including estimates) ............................ 19 Chart 2: Turkish GDP growth compared to EU-27 for the period 2002-2018 ......................... 20 Chart 3: Electricity imports and exports for the period 2000-2018 (in million MWh) including estimations ............................................................................................................... 21 Chart 4: Corporate tax income in selected CEE and SEE countries ......................................... 22 Chart 5: Historical Structure of Turkish electricity market from 1983 to 2012 ....................... 24 Chart 6: Share of RES electricity in gross energy consumption 2012 ...................................... 25 Chart 7: Turkish RES targets for 2023 in % set by the State Planning Organization ................ 26 Chart 8: Cumulative developments of photovoltaic power plants in Turkey in MWp from 2000 to 2018, including estimates .......................................................................................... 36 Chart 9: TURSEFF Structure ...................................................................................................... 55 Chart 10: Market Shares by Sales of the Major Electricity Distribution Companies in Turkey in 2012 .......................................................................................................................... 61 Chart 11: Breakdown of power producers in Turkey by installed capacity ............................. 63

Table 1: Electricity prices for business and households ........................................................... 21 Table 2: Support schemes for RES generation in the EU countries and Turkey ...................... 27 Table 3: Regional Distribution of Solar Energy Potential of Turkey ......................................... 30 Table 4: Market prices for photovoltaic projects in Turkey for 2012 ...................................... 33 Table 5: Selected operational, under construction and planned photovoltaic projects in Turkey ....................................................................................................................................... 35 Table 6: Feed-in-tariffs for electricity from renewable sources in Turkey .............................. 51 Table 7: Additional incentives to Feed-in-tariffs for electricity from solar PV sources in Turkey for domestic procurement ........................................................................................... 53

©2012. All rights reserved. Inea Consulting Ltd., Manufactured in Bulgaria.