Turkey Creates Favorable Conditions to Attract Investment in Renewables

The energy transition and increasing the capacities of renewable energy sources are one of the characteristics of the Turkish economy. The country has an important geostrategic position, which makes it attractive for investments in renewable energy sources, and the natural conditions are an additional asset for the development of this sector. In order to use its potential and attract more investments in renewable energy sources, Turkey creates policies and specific mechanisms that offer solid conditions for investors, quick revenues, and profits.

Through the YEKDEM mechanism, companies that invest in the development of capacities for renewable energy sources receive preferential tariffs and local support for the use of domestic equipment.

The purpose of this mechanism is to create favorable conditions for investment, but also to connect investors with the local economy, which results in a double effect. Through this mechanism, new projects were successfully implemented in Turkey and the capacities of renewals increased, of which the largest estimate corresponds to solar energy. The policy of creating investment conditions continues. Namely, the YEKDEM mechanism is valid only for facilities that are put into use by the end of 2020.

The new YEKA model is practically an upgrade of the previous one and offers even more solid conditions for investors as well as centralized development of renewable energy sources. According to this model, the bidder who offers the lowest price for the development of the project receives a 15-year arrangement for the purchase of electricity and preferential tariffs.

The purpose of this model is to motivate the investor to finish the project as soon as possible and to sell the produced green energy according to the conditions concluded before the start of the project. The arrangement of 15 years for the purchase of energy, which means an insured placement, is favorable for investors and for banks that show more interest in financing this type of project.

Creating a good business climate is a continuous process, but it is necessary to attract fresh capital to renewable energy sources. Especially in conditions of energy crisis and uncertainty. According to the plan of the Government of Turkey in 2023, the total installed capacity of the country should increase by 125,000 MW, with which the percentage of renewable energy will be about 30%.

As a result of the new mechanism, one of the largest holdings from Abu Dhabi International Holding Co. (IHC) with a market capitalization of $167 billion, has acquired 50% of Kalyon Energy and will participate in new solar and wind projects. The takeover cost nearly half a billion dollars. Kalyon Energy is in the final phase of the construction of the Konya Karapınar solar power plant whose installed capacity is 1.35 GW. According to the announcements of the new owner IHC this capacity will be completed by the end of the year.

In addition, IHC is increasing its portfolio of investments in renewable energy projects with a wind farm with an installed capacity of 1 GW. This power plant will be developed through the terms of the YEKA mechanism. In addition, the development of the 100 MW solar power plant in Nigde, and the 50 MW photovoltaic units in Gaziantep is also envisaged. Government policies through the YEKA mechanism, which was preceded by YEKDEM, are yielding results in the real sector.

This is one aspect that contributes to increasing the volume of investments in renewable energy sources, and investors recognize the opportunities for the development of a good project. Additional positive signals for investment is the financial support from international financial institutions, whose presence on the market for renewable energy sources in Turkey increases reliability and potential for development.