Uncertaint­y in turkey’s solar industry

Dünya Executive - - BUSINESS - MEHMET KARA

Solar power companies in Turkey have overcome numerous obstacles over the past five year to reach their current output of 4,500 MW. But on May 2, a new obstacle was thrown in their path. A circular aimed at preventing foreign exchange waste, made it difficult for new solar energy projects to be adopted.

The circular prohibits the use of foreign currency-denominate­d borrowing from foreign or domestic companies for businesses without foreign exchange income. Although energy investment­s under the renewable energy sources (YEKDEM) incentives are exempted, most solar energy investment­s have still been negatively affected. According to the Internatio­nal Solar Energy Society Turkey Section (GUNDER) Chairman, Kutay Kaleli, the exemption only applied to licensed solar power plant (GES) investment­s and did not afford the same right to unlicensed GES projects – which make up the vast share of completed and pending solar power plants.

“Unlicensed GES projects cannot use foreign currency loans,” Kaleli said. “When they use loans in Turkish lira, they face interest rates of 27-28 percent over 10 years. However, the internal profitabil­ity ratios of these projects are 12-14 percent. If you give a loan at 28 percent interest to a business with this income, it is impossible to repay. Thus there is no interest in investing in these projects. Unlicensed projects need to be included in the scope of exception.”

The banks are also confused

Kaleli said that some banks have considered giving credits to unlicensed GES projects if they have the investment incentive certificat­es but change their minds when they discover it is unlicensed. “Some banks think credits cannot be used at all,” Kaleli added. “Different projects based on the same energy source should be treated in the same way. In this way, the uncertaint­y in the market will be gone.”

1800 MW of projects suspended

Kaleli said that 6,500 MW of unlicensed GES projects have been given network connection rights. Turkey’s 4,500 MW of installed solar power is made up of those projects that have started production. “Of the 2,000 MW of remaining investment, we guess that the constructi­on of 200 MW was started before May 2, 2018, when the regulation on the foreign exchange credit became operationa­l. The remaining 1,800 MW of projects have loan problems. This means that a $ 2 billion investment is pending.”

Newspapers in English

Newspapers from Turkey

© PressReader. All rights reserved.