From the editor's desk

Turkey’s solar energy sector has undergone a vast transformation over the past decade, which has witnessed installed capacity increase from nearly zero to 6,000MW—the fifth highest in Europe. This expansion holds true across Turkey’s renewable energy sector, which now accounts for almost half of total installed capacity.

In recent years however, Turkey’s overheated renewables sector has been put to the test. Burdened with high levels of foreign currency debt and with future regulatory support uncertain, renewable producers have reason to worry. Add to their worries a sharp reduction in electricity demand from the COVID-19 pandemic, and an honest reflection on the sector’s future is necessary.

Through interviews with investors, manufacturers, and EPC companies from the Turkish solar, The Business Year has set out to reflect on the troubled moment and the future of solar energy in Turkey.

We asked the sector’s leaders about their challenges with supply chain disruptions and social distancing orders, and about how a postCOVID-19 world may alter demand for solar energy. We also dive into some of the vexing regulatory challenges that investors will have to navigate over the coming years.

A few trends emerged from our research. While the COVID-19 pandemic has been troublesome in the short-term for solar companies in the middle of construction, it had little direct impact on producers actively generating electricity. Those companies with stalled projects are soon resuming construction, and those with projects in the planning stage also expressed positivity towards the continuation of their plans. That said, the sharp reduction in electricity consumption as a result of decreased industrial activity and a slow return to normal consumption levels may dampen investor confidence.

Another trend is toward smaller-scale projects. The financial troubles faced by Turkey’s largest energy players—conglomerates with a hand in many baskets of the economy—will discourage investment in large-scale solar projects in the near future. Indeed, the newest solar tender coming from the YEKA project is for dozens of 10MW projects for multiple investors, ditching the project’s early large-scale targets. This trend will also manifest in industrial rooftop solar systems, which were cited as future investment opportunities as investors shy away from utility-scale projects.

The COVID-19 pandemic has been the biggest disruption to the world in modern history, and its impact will be felt for years to come. Solar energy and the broader renewable energy sector were also disruptors, albeit in a different light. While the impact of renewable energy will outlast the impact of the pandemic, the immediate future is uncertain.