Saturday, December 09, 2017

Turkey: Future of Solar Energy

Total installed power in our country is 82GWe by the end of 2017. We expected that the share of renewable energy plants in total production would increase over time. The share of imported and fossil fuels would decrease, and the import and fossil fuel dependency would decrease. That was not so.
It is estimated that the total installed capacity of solar power generating power plants will reach 2400 MWe by the end of 2017. Total licensed Solar projects during the year was 52 MW.
This amount could be taken into operation as 13 MW, the remaining are on hold. Non-Licensed projects are too many in numbers, whereas the licensed projects are very few. We have made the license procedures so hard that nobody wants licensed business. The investors prefer that it is better to form dozens or even hundreds of companies each with 1-MWe capacities and connect them.
Solar investment costs are now very low. In 2005, incentives were introduced by Law No. 5346. Guaranteed sale prices then were at 5.00-5.50 EuroCent per KWhour in 2005, while it is at $Cent 13.30 per KWhour in 2010. Solar maps were released. Transmission capacities were determined. In 2014-2015, 6 different tenders were released and 600 MW new solar capacity was created. In year 2017, a new Solar capacity of 1000 MWe was created through the competitive renewables tender.
Solar cells and panel prices have been excessive cheaper. in time. By the end of 2017, 24-25 $ Cent per Wp prices were received. Import incentives given by the Ministry of Economy to Solar panel imports in 2012 were deleted in 2016. In 2016, domestic production could be replied in the amount demanded by the internal market. With Anti Dumping and additional VAT application, foreign panel import prices have reached to 60 $ Cent per Wp level. Then Domestic producers have increased their prices to 50 $ Cent per Wp to take advantage of the market prices.
In 2014-2015, transmission authority opened 6 tenders and allocated Solar projects to 49 companies with a total capacity of 600MW. Companies have committed to pay TL 1.23 billion of contribution to the allocation. The two companies have completed their operations and have been operating the Solar investments at a capacity of 13 MW. The other companies received the incentive certificates at a capacity of 120 MW, but due to cost increases, the remaining 480 MW capacity projects were locked and are on hold. Because the conditions before the tender were changed after the tender. Initially there was incentives, then incentives were unfairly removed.
In 2010, the new renewables law set the electricity purchase price for Solar investments as 13.30 $Cents per KWh for 10 years.
The winner of the 1000 MWe renewable Solar bid in 2017 reduced this price to 6.99 $Cent per KWh.
The winning group accepted local investment for 500 MWe per yr production capacity and 500 million US$ investment- budgeted production facility in the country.
On the other hand, in 2017 we observed similar tenders abroad.
In Saudi Arabia, the price is 1.79 $cents per KWh, in Germany 4.30 EuroCent, 2.10 $Cents in Chile and 1.77 $cents in Mexico. We are observing big discounts on Solar tenders. However, the Ministry of Economy tax collection efforts deter our investors.
On the other hand, we have gone so difficult as to license the work, that everyone is trying to invest under unlicensed 1-MW projects. In 2005, unit MW cost Solar investment was 4,000 US Dollars, while in 2017 Solar investment cost per unit KW decreased to 700-800 US Dollars. In 2017, market observes only 13 MW licensed Solar, whereas unlicensed Solar at 2400 MW. Public regulatory authorities were a bit indifferent at the beginning. But when they enter the system, the investor feels to regret their applications.
For example, they may ask to use 50% of the electricity produced in investors auto consumption. Continuous storage may be required. They may limit the possession of company shares.
Solar sector currently employs around 20-thousand workers. Currently, 26 different enterprises assemble with Solar PV panels. The majority of fabricators are undergoing simple construction, cabling, framing work, whereas 75-80% of total investment is still imported. The actual production renewable coverage will be made at the last 1000 MW renewable facilities. Others will finish their work in their hands and close their businesses. Then 20-thousand people could be unemployed.
On the other hand, in the recent Solar facilities in operation, installed power loss is observed to be 20-25% within a few months.
At home scale Roof-top Solar installation should be well examined. House sizes are limited to 10kW capacity, that is not feasible. On top roof of existing structures, an additional load of 25 kg per square meter is to be added. The current roof structures are not enough to carry this additional load. The duration of use of summer houses are 3-4 months, and the roof Solar investment return is not enough for this period. Billing is difficult to deduct. There is a high risk of fire, so insurance coverage is difficult.
There are those who bring the fertile agricultural land to the barren land by saying that they will build a solar energy plant. Let them God to show them the right way.
There are three different associations in the local Solar market, GÜNDER, GENSED, GÜYAD. Why are there three separate associations? Why is not there one single association to cover all interest groups? This is another important question.
We started with good intentions, but we have a lot of work to do.
Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.
This article is written for the "EurasiaReview" news web site.

Ankara, 10 December 2017

Monday, December 04, 2017

TURKEY: Energy & Infrastructure Forecast 2018

Risks and Opportunities

Economies and businesses are always shaped by expectations, just as market expectations are important in economic forecasts themselves. Within our professional capacity, we have tried to outline a draft forecast for the upcoming days. While it may not necessarily foresee the future in all its detail, it is better to have one, rather than none. Here are our short term new year predictions:

Energy supply security is within our prime concerns. Our installed capacity has reached to 82 GWe, and peak demand at 45 GWe in August 2017. Our local lignite production was about 50+ million metric tons in 2017. Hard coal production was 2 million metric tons. Imported hard coal was 30 million metric tons.
Earlier, S&P and then Moody's rating agencies have lowered our financial credibility to junk level, the other international rating agency (Fitch) is clever to postpone their Turkish ratings, however we all know that their late declaration is also meaning low rating for our investment environment. Rating agencies ask for transparency, rule of law, fair competition in our local market.
European Union has frozen accession meetings completely for participation since all remedy requests are returned with futile responses. Luxemburg, Germany, Austria, Sweden, Denmark have already voiced necessary applicable counter measures. Death penalty, unavoidable bribery and public corruption, sexual abuse under 15 are unacceptable for Europeans.
The recent tax as imposed on imported coal was a deterrent figure for future investments for imported coal firing thermal power plants. Anyhow the latest thermal power plants are exclusively built by Chinese companies due to their ultra low lump sum turnkey prices, covered by cheap PBoC project financing. However these plants have poor design, they have low spares, short life span. If you desperately need electricity generation, then price is not so important. The tax will be collected by our Treasury, and end price is also taxed so our Treasury will get all money from both ends, all other parties are intermediaries in the long run.
On the other hand, 5-6 US cents per kwh electricity purchase guarantee by public enterprises for local coal firing energy generation is a good booster for newcomer investors. However it is not so pleasing to place power plant construction orders to Chinese contractors just because of their ultra cheap turnkey prices for new local coal firing thermal power plant investments. These plants do not meet national standard, norms, rules, regulations, laws. They have poor design which are not applicable for local coal, they have limited or almost no spares and high breakdown, low availability and low life span during operation.
New tenders for local coal firing thermal power plants are in Cayirhan-2, Eskişehir Alpu, Konya Karaman, Trakya Saray. Soma and Çan thermal power plant investment projects are ongoing. Local people are not so comfortable with new local coal investments. There will be growing public reactions expected to stop these investments.
There are still imported coal firing investment projects in Çanakkale, Aliağa, Amasra, Iskenderun bay although imported coal is not encouraged any more..
On the other hand, 1000 MWe each wind and solar tenders were completed. We expect to have more of these investments in future.
Common consensus as created by independent foreign military commentators openly and frankly say that USA (and Nato forces) should leave Incirlik air base for the long term and they should move to relatively more secure or tranquil place such as Southern Cyprus, Northern Iraq, wherever they would feel more comfortable, more independent, more free to maneuver in the Middle East. USA will follow their indifference policy towards international events due to transfer of power after US Presidential elections.
On negotiation table behind closed doors in Moscow and Ankara (and Sochi), there were negotiations for new prices on natural gas sales, more concessions on 63 bcm capacity Turkish Stream underwater pipeline construction project and better terms for 4800 MWe nuclear contract etc. We should note that in the long term Mersin Akkuyu nuclear project may also serve as a new Russian military seaport on Mediterranean coast to reinforce Russian presence on hot seas.
Arab countries are completely ignorant of the events which took place at our environment since they have worse incidents they face every day. We have good deals with Iran due to our favorable gas purchase agreements. However due to their increased internal gas demand, they stopped sending gas to our system as of December. We have gas supply and energy generation drop in our energy markets.
National Security is to be reinforced since SouthEast insurgency may get worse. As seen everywhere in the world, such as in Ireland, Scotland, Bask in Spain, if minorities are not fairly represented in the national parliament, then they may look for their alternative solutions.
Bankruptcy postponement epidemic in the local markets spreads to low capital- small companies. that will be a high impact on our economy despite of unrealistic pictures as pronounced by public officials. People has lost confidence to public declarations. Foreign exchange rates may dive low in time.
There is a wide range consensus for low profile public appearance. People deactivate their accounts in social media. They are not interested in any public expression. Newspaper columns are repetition of earlier articles. People are indifferent to every event since so many nasty things have happened in the near past with no reasoning no meaning we can name. Immigration applications among academics and young professionals are on high rise. Similarly capital move from local to international markets are getting increased.
We believe that these are a few warning indicators, of which you will seldom read such candid forecast from a local source for our home environment anywhere else. We would be pleased to receive your comments and feedback over the course of the upcoming year.
Happy New Year and Merry Christmas to you all !!

Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

This article is written for the "EurasiaReview" news web site.

Ankara, 04 December, 2017

Thursday, November 16, 2017

How to Survive in the Middle East

Each country has its own cultural sensitivities. International travelers are to be very careful about them. Let's say, they do not want unauthorized photography in their environment, so you will not take pictures. Let's say they do not want you to spend more than length of stay they allow in their country, so you will not be late. Let's say you're expected to dress closed - you will dress accordingly. You will not consume alcoholic beverages, if it is strictly forbidden.
The rules of one country - its applications may be opposite of the rules of the citizens of another country. Hence it is useless, and meaningless to object to the local rules. If you are in that country, you will do what they say, you will do, and follow their rules.
Imagine the freedom of expression in Germany and France or in United Kingdom in a broad sense, and the tolerance shown for CharlieHebdo cartoons. It is impossible to expect the same in the Middle East countries. In the United States, the police have a wide margin of authority. You have no right to object but obey the rules.
Robert Alan Black, then 70-year-old US architect, who had three masters and a PhD degree, was invited to a Gulf country in October 2014 as a speaker for "Creative Thinkers" Conference, in Abu Dhabi. His expenses for plane, hotel, meals were met, the organizers made a lump sum daily allowance for him as a major keynote speaker.
The next morning after the conference, he goes out of the hotel for site seeing the nearby environment. He was walking outdoors in the early morning hours, in the morning coolness. He wants to see the surrounding area outdoors. He had a simple a digital camera with him to take simple pictures. If you are a tourist in Istanbul, you are free to photograph everywhere. Nobody tells you anything. In Africa, Masai people in Savannah, they ask you to pay if you take their pictures. Similarly you can not India without pay money for your pictures.
Our senior architect walks randomly on the street in the morning. He passes by a few mosques, a big commercial building, a residential area. He takes pictures of some interesting architecture. But that was not normal in Abu Dhabi. You should take official permission if you wish to take pictures of anything outdoors. Everything is unauthorized. A police-military car stops nearby and takes him to the nearest police station to question him. They release him after 3-5 hours of interrogation, with the strict recommendation not to take pictures of any building.
On his way back to his hotel, he sees a warning sign on the road. It says, "It is forbidden to take pictures here", in many languages. His unstoppable impulse inside activates again, he takes the picture of that road sign. A few minutes later, another military car stops nearby.
This time the situation is serious, despite the fact that there is a duplicate situation. They take our curious architect into prison and forget him there for a while without informing anyone.

After one month, a recently released inmate informs the US consulate in the country, somehow the consulate finds a reputable lawyer with close relations to the jurisdiction, our architect is released and deported immediately.
Upon return home, he speaks to CNN TV about what have happened. The foreign mind has never understood local sensitivity. There are many strangers who have interpreted the incident differently from their own point of view. They have also described other things. Most of inmates have not been in the court for one year without court hearing. The most of them are guilty of simple passport period violations. So you will not take photos without permission, you will not be expire your stay.
When I go to Saudi Arabia, I would not take photo camera. I do not take any foreign magazine or newspaper with me. I just take the company promotion catalogs. I read whatever available at the local magazine store or bookshop. Foreign magazines, newspapers, are sold all censored in black ink.
When I was working in Pakistan in the 1990s, we were not able to get a permanent or long term residence permit for our employees in the construction site. Once we were so occupied with daily work, our site supervisor had to spend one more week without permission. He was arrested and kept in the prison for one month until we cleared the legal procedures and pay the penalties.
While returning from Azerbaijan, at the Baku airport, I checked my passport. I showed passport maybe ten times. Lastly, a soldier in a secluded place took my passport, pretending to check it out, he practically scrapped my passport. I returned to Istanbul with a shattered passport. Our passport police was very understanding, "That happens always out of Azerbaijan." I had to renew my lousy passport immediately spending unnecessary time and money. It has nothing to do with the politics of the country, it was the nasty practice of an individual unresponsive soldier.
When we were in Syria in the 1990s for a tender, a foreigner staying in our hotel in Damascus was jogging early in the morning around the hotel. A military car stopped by, asked for a passport. Do you take your passport while jogging? You should in Syria. You are already running around the hotel. They arrest him and took in jail for a month until the foreign consulate interferes for his release. So in any case you'll have your passport with you at all times. This is the practice in the Middle East. After the CharlieHebdo incident, primarily Europe and the Middle East, countries put extra measures on visa conditions, put longer visa requirements. You need to apply long before. Donald Trump put visa restrictions to various Muslim counties. Moreover USA stopped visa for Turkish citizens, although they continued releasing visas for ongoing visa applications. In order to be able to do business in difficult geographies, "we have to pay attention to all local sensitivities". But there are times when these sensitivities are not taken into consideration. President George W. Bush's wife Laura Bush, former Foreign Secretary Hillary Clinton, President Barack Obama's wife Michelle Obama, German chancellor Angela Merkel, these ladies visited Saudi Arabia, with their heads uncovered. The Saudi authorities did not make any objection. Saudis could not make it for diplomacy and cooperation.

This is the practice in the Middle East. You should be careful in local sensitivities and concur at all times if you wish to make business with locals.

Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

Ankara, 16th November 2017

Monday, November 13, 2017

Trabzon Opera House, 1912-1958

TURKEY- Trabzon Opera House, 1912-1958

Trabzon Opera Days were held on 18-21-23 April 2017 in the Hasan Saka Hall of the Black Sea Technical University Cultural Congress Center. The program covered "Lend me a Tenor" musical by Ken Ludwig, Harem Ballet, and Nasrettin Hodja Children's Opera. We all know that Trabzon has a limited number of opera performances during the year.

One of the first opera houses of Anatolia was built in 1912 by French contractors in Trabzon. Opera house architecture was designed by an Italian architect in accordance with the European art-Noveau art movement of that period. It was built near the Meydan park at the city center of Trabzon. The local Greek Pontus population had organized the construction financing. The opera building could house 1000 audience and operated as opera theater. The Greek families migrated to Greece in year 1922 in accordance with Turkish Greece population exchange agreement. Now we have no documentation about Opera. We have only verbal pale memoirs with old peoples.

Between 1922 and 1935, this beautiful stone building was used as a venue for public performance events. In 1937, a local businessman initiated the commercial activity as "Sumer" Cinema. In 1958, the municipal authorities demolished in the magnificent stone building within two weeks with the intention to open a greater road from the square to seaside Tangent road. That place was left empty until today.

Administrators who are even quite distant to the art of opera, still want to have an opera house in their city. Because, like the winners of the hotel stars, the opera house earns more credibility in the marketing fair-conference evaluation for the city. Opera house is an additional criterion in selecting site for Olympic, fair, conference place. Istanbul has Kadikoy Süreyya, Beşiktaş Fulya, Bakırköy Leyla Gencer Opera locations. The new Atatürk Cultural Center (AKM) will be reconstructed by 2019 elections. There are State Opera House and the Ostim Leyla Gencer Opera House in Ankara. There are six different opera houses in Izmir, including Alhambra.

Trabzon Opera building is no longer available. The magnificent image stands just in black and white sepia photos. The front facade resembles Izmir's Alhambra opera. From time to time, in the printed media, as well as on the internet pages, Trabzon opera house is mentioned. The Opera building was used as cinema hall until 1958. Then there was an instant demolition. Elderly immigrant people who migrated from Trabzon to North America have it in their memories as a distant dream. Pontus Heritage Libraries in Greece may have some logbook documentations.

Can this gorgeous stone building be rebuilt? What happened here between 1912-1922? Who played? What opera groups came, what was staged? Which artists were there? What did they do? We do not know anything.


Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

Ankara, 13th November 2017

Sunday, October 08, 2017

Coal Curse in Eskişehir Alpu

TURKEY- Eskişehir Alpu Coal Fields and 
1080 MWe New Thermal Power Plant, OpEd Analysis

According to the MTA 2011 report (by İlker Şengüler) and Eskişehir Anadolu University 2014 Academic Article (by Korhan Usta, Hatice Kutluk), there are two horizontal local lignite coal layers extending underground at depth from 250 to 450 meters in the Eskişehir-Alpu coal basin in the southwest-northeast direction with layer thicknesses range from 0.55 to 31.60 meters.
The amount of proven reserves is about 1.5 billion metric tons. The upper layer had an average ash content of 36%, sulfur content of 1.87%, moisture content of 36% and an average lower calorific value of 1950 kcal / kg.
In the lower horizontal layer, average ash content is 28%, sulfur content is 1.13%, humidity is 32% and average lower calorific value is 2150 kcal / kg.
It is apparent that Eskisehir-Alpu lignite which is the third biggest lignite basin of Turkey has very important economic value.
Eskişehir Alpu coal fields, currently belonging to Electricity Generation Inc. (EUAS) were covered in the scope of new privatization. With the provision of a 1080 MW power plant, the project will be handed over to the private group which will give the lowest electricity sales price in terms of UD cents per unit kw-hour.
According to the news of the local Dünya (World) newspaper on 28 September 2017 (by reporter Mehmet Kara), the tenderers who will participate in the tender by means of negotiations will compete with the commitment to sell electricity to the EUAŞ at the lowest price. The negotiation procedure shall be implemented by subtracting from the initial sale price and shall be concluded by an open auction to be made by the participation of the prequalified bidders whose bidding negotiation is continued, if deemed necessary by the tender commission.
The deadline for qualification for the privatization of the Eskişehir Alpu coalfields, with the condition of establishing a new 1080 MWe thermal power plant and the transfer of operating rights, was set as January 26, 2018.
Underground coal deposits will be mined, 1080 MWe capacity thermal power plant will be constructed nearby at mine mouth, coal will be enriched here, then  electricity will be produced, then will be sold to national grid, and treasury will give a purchase guarantee. At the privatization administration, the minimum sale price is expected to be around 5-6 US cents / kWh.
Eskişehir Alpu Coal fields privatization tender required TL 25 million in temporary bid bold for the interested parties for the transfer of operating rights.
According to the pre-investment project as developed by EÜAŞ earlier, approximately 116.8 hectares of 1,125 hectares of coal production area are planned, and about 30 hectares of coal stock areas are to be allocated. The thermal power plant will be constructed within the scope of the project with estimated value of US $ 1.8 billion. The total installed capacity is 3 X 360 MWe and the thermal power is 900 X 3 MWt. As the main fuel is the local coal of Eskişehir Alpu underground coal fields for the 1080 MWe Alpu Thermal Power Plant. Approximately 6.3 million tons of domestic coal (lignite) will be burned in the plant annually. When the plant goes into operation, a total of 1 million 950 thousand tons of coal waste will be generated, including 1.6 million tons of base ash and 350,000 tons of gypsum per year. The new plant will be supplied with coal from sector B, covering 1,787 hectares.
In Turkey, with low calorific value of domestic coal, there are thermal power plants with proven designs in long term operation, let us name them. Soma-B # 5-6, Seyitömer # 4, Kangal # 3, Afşin-B.
They are all very good at burning domestic coal, they all proved themselves in 20-30 years long operation. They solved the problem of domestic coal burning, but there may still be in need of new dust filters, and new FGD desulfurization.
Our investors investing in domestic coal have not told us about the results of their investments in China- Korea- Far East designs, plants where most of them bought from Far Eastern companies. We do not have details of their operations as explained in exhibitions in panels at conferences. There are no success stories told. There are no high efficiency, no high availability information. The leaked news are not good. Once a project is realized, the project operation results are generally shared with everyone in public.
There is nothing publicly disclosed about CFB (circulating fluidized bed) domestic coal investments in the last 10 years. There is a deep silence in new plants with most of the domestic coal-burning CFB technology. Nobody explains anything, on thermal power plant operations where billions of dollars are invested. There is no news made public, no information made available. Operation results are not explained, information is not given.
Our explanation is as follows, we have very wet, almost 50-55% water content- domestic coal containing moisture which can not be burned properly without preheating, dehumidification, dewatering systems. In extreme amounts, available wet lignite fuel can not be operated without using high amount of supplementary fuel oil, which means there is a hidden non-operation or failure problem.
New plants have continuous failure in coal feed and ash/ slug removal systems. Continuous rehabilitation is being done. The systems are completely renewed. ESP Dust filters, FGD flue gas desulfurization systems are not working properly, they are often shut down. However, the plants still continue to work, and hence they pollute the environment.
Far Eastern companies are proposing ready-made (off the shelf) CFB designs, all-in-one solutions, with the cheapest financial packages of their exim banks. Domestic investors, who are influenced by very cheap prices, are convinced. China-Korea-Far East design CFB technology are not suitable for our indigenous coal reserves. Senior management decision makers who make this investment decision are aware of the situation. They keep silent until they retire, they do not make a sound.
The thermal power plant, which will be located at a distance of 40 km from the city center of Eskişehir, may become a real disaster for the Eskisehir city if the environmental equipment would be inadequate, if the project is not carried out under proper international strict tender conditions, if the contractor firm is not strictly regulated by international norms, standards, rules and regulations. An uncontrolled project that has left at the mercy of a Far Eastern contractor who will leave after 2-3 years from the installation of the plant is wrong. The main contractor of this project must be a competent local company that has been tested in the past with proven past references at the same or higher output capacities.

Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

Prinkipo, 10 October 2017

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