Monday, January 20, 2014

Renewable Energy in Turkey, Today & Tomorrow

Dear readers,

Last year (2013), we consumed total 245 billion kw-hours of electricity in Turkey. Turkish electricity generation annual growth was around 6% compared to the previous year. Foreign dependence on imported fossil fuel was around 71-72%. Our total expenditure on fossil fuel imported in the current account deficient was around 60 billion U.S. Dollars in 2013.

By the end of 2013, our installed capacity has reached to 64.044 MW. Peak (maximum) demand was 39,000 MW in last August. This peak (maximum) demand was our prime concern in order to satisfy the local market without interruption. Increasing the installed capacity is not enough. Because we have different availability hours, different capacity factors on each power generation plants depending on sources of water, wind, solar and fuel supply.

In 2013 a total of 157 new private sector power plants put into operation, a total of 4,329 MW of additional capacity increase was achieved. Total installed power output of 66% share is generated by the private sector. Our rate of 50% dependence on natural gas from the former fell to 44% last year.

Renewable energy sources covers channel or river type hydro power plants, wind farms, solar plants and biomass power plants. Hydro power plants with man-made lakes larger than 15 km2 reservoir are not in renewable scope.

This year (2014) we are in a severe drought. Snow-rain precipitation is not received yet. We consume clean reservoir waters very wasteful. Agricultural lands have unnecessary irrigation applications. Wetlands are decreased.

We operate fossil fuel firing thermal power plants covering almost 85% of our total electricity generation capacity, ever increasing CO2 stack gas emissions. Due to our rapid growing energy needs for our industry as well as household consumption, we have difficulties to put restrictions to reduce fossil fuel operations. We have to consume our local lignite at reasonable rate to reduce our imported fossil fuel dependence. 

On the other hand, our total CO2 emissions as well as dust dissipations are increased due to fossil fuel firing in existing thermal power plants. That is also due to old technologies employed without CO2 reductions and low capacities of dust collecting precipitators. Due to our rapid and continuous need for more energy needs, we have difficulties to put restrictions on thermal power plant operations. We can not stop operating, we can not stop investments of thermal power plants but we can only try to reduce the rate of increase in fossil fuel dependence.

All in all, we must give more importance to our renewable energy resources. We have running spring water in our rivers for hydro power plants, we have sunshine much powerful than European rivals so that we can generate more electricity in our solar panels, we have strong winds on 3 sides of our seashores to generate electricity from wind farms all free of charges, for the price of first installment and negligible operating and maintenance expenses.

For each 1-Mwe electricity generation from fossil fuel firing thermal power plant, we have CO2 stack emissions which could be turned into O2 by almost 120 thousand trees.

This year we have ongoing drought, less and less rain, so the water in our reservoirs can generate 30% of installed capacity in our hydro power plants. Water storage artificial lakes, reservoirs are not response to immediate water requirements. Storage is not a cheap solution. They are costly to built, and not so efficient in electricity generation. Our interconnection power-line network is not powerful for the electricity generation. Powerful better new interconnecting power lines are needed. Peak electricity generation is diverse in different power plants. Renewable energies are scattered, cost is high.

Your author is totally opposed to investment incentives since they are always abused in practice. Enhancing the incentives are unnecessary cost to the electricity price and to the end-user. Incentives are requested and the most of the time it is secured although misused at all times. Bureaucratic procedures for investment incentives are tiresome, complicated, long, insufficient. They require lots of paperwork which are not necessary. When you submit the necessary paperwork, you get incentive in time, there is no screening, turn down ratio is so low.

For implementation of renewables energy investments, our public administrators prepared to have some delay in realization. They expected the prevailing first installment cost to lower levels in the market. Prices were high due to R&D costs. The prices would go to R&D expenses of foreign suppliers. Now we feel that prevailing market prices are down to reasonable levels at international markets. Local fabrications are also possible. We still need more investments on interconnecting high voltage transmission lines, to make them available for scattered power plants in remote regions.

Now, renewable power plant first installment prices are dropped. Unit prices of renewable energy from wind and solar are coming close to electricity prices generated from conventional fossil fuel firing thermal power plants. Domestic manufacturing facilities for wind and solar are getting increased in number.

Wind turbine towers, propellers are manufactured locally. Domestic manufacturing of PV panels for solar energy can be produced in 17 plants.

Previously, there was no funding, almost no incentives for renewable energy investments, since public administrators feel that the prices were too high, it was not good timing to initiate renewable energy investments. Now, we foresee that we are ready to manufacture hydraulic equipment to cover all our hydraulic potential in 5-10 years with high share of domestic production.

Government share which is paid on electricity prices are too high. That is also extra cost to the end user. That figure is fixed via competitive tendering, but that high prices make the projects not so feasible in the long term. Rate of return of the investments, repayments are difficult.

We have a general feeling that "Private sector always makes the best calculations in investments. They have right thinking at all times for making new investment." That is not always true. Private sector investors also makes mistakes in their calculations. They take random spending decisions in herd instinct, in line with others, as in latest fashion trends. Projects may not pay themselves within reasonable time periods. Tough competition can make final projects at unreasonable costs, not feasible, all due to miscalculations.

For wind energy investments, public authorities require 2-years of field measurements. That is reasonable. The same is required for the solar energy investments, which is totally unreasonable, since for solar energy you can calculate the expected energy generation with latitude- longitude coordinates of the location. That 2-year long field measurements for solar energy is unnecessary. That is unnecessary burden on solar energy investments. We presume that public administrations require the serious investor to pay a certain serious lump-sum money upfront. Serious companies pay that cost, and others are eliminated. Required documentations, lots of paper work are also unnecessary. Who will read them?

We have also another application of cheap local fabrication, license-free, inefficient hot water collector solar panels. With some more investments, we can fabricate better quality PV panels to generate electricity. Hot water generators are also good for local hot water household demand, to reduce fossil fuel expenditures.

Earlier renewable investments were expensive, their electricity generation unit price were high. Most of them were installed in remote regions, on mountains, far from main high voltage transmission lines. These are updated. Prices are reduced to affordable levels, local fabrication facilities are formed. Instead of direct incentives for first installment, public authority put a reasonable investment on electricity generation. There is now guaranteed purchase price 5.50 US cents per kWh renewable electricity which could be escalated to 22 US cents per kWh if local contents is high.

Renewable energy investments have hurdles to overcome in selection of site, predetermined energy resource whether it is wind or solar, legal rules and regulations, guaranteed sales prices which should always be taken into consideration prior to investment decision. In business environment, we focus ourselves to solve problems, not to create new problems.

We need to reduce our current account deficit. We need to reduce the intake of imported fossil fuels. We should make more long-term investments in renewable energy and we need to increase domestic manufacturing.

Comments are always welcome. Oberstdorf, Germany, 20 January 2014

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.

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