David O'Byrne in Istanbul -

Turkey has finally enacted long-awaited renewable energy legislation, almost two years after it was first sent to parliament. But even though the long wait is finally over, developers have given the new law a mixed reception.

The new legislation that became effective on January 8 replaces a flat rate tariff of between 5.0-5.5 euro cents per kilowatt hour (KWh) for all types of renewable energy plant with individual rates of 7.3 dollar cents per KWh for hydro, 7.3c/KWh for wind, 10.5c/KWh for geothermal, $ 13.3c/KWh for biomass and biogas and 13.3c/KWh for solar.

Additional tariff increases are available according to a complex scale of increments, based on the amount of locally manufactured equipment used. These offer potential top-ups of up to 2.3c for hydro, 2.7c for geothermal, 3.7c for Wind, 5.1c for biomass and biogas, 6.7c for photovoltaic solar and 9.2c for concentrated solar.

Cool wind

The new law is especially good news for developers of biomass and biogas plant who stand to receive higher than expected feed in tariffs. "The tariffs are good for companies like poultry manufacturers, which can provide their own fuel," says Altan Denizel, head of Turkey's biogas developers association, BiyogazDer. "Plenty of companies have been doing feasibility studies; now we'll find out which ones really are feasible."

But the law has received a lukewarm response from wind plant developers, who point out that it will be some years before much of the equipment required can be manufactured in Turkey. "We can buy Turkish made wind towers and blades, but we have to wait and see if the big turbine manufacturers will invest in manufacturing here," says Erol Demirer, chairman of Turkeys biggest wind plant operator Demirer Holding.

Demirer concedes that the additional tariff increases will help some developers to attract commercial finance for their projects, but points out that with Turkey's power demand set to continue growing faster than development of new plants, prices on Turkey's open power market are set to stay at or above the current rates of around 6.5 euro cents per KWh (8.9 dollar cents), meaning that developers will see no additional benefit unless and until Turkish manufactured wind turbines become available. "That will take at least two years," explains Demirer.

And with developers of new plant now likely to wait until local made turbines are available, Demirer warns that Turkey is in danger of not meetings its target of 10,000 megawatts (MW) of wind capacity by 2020 - up from the current 1,200 MW.

Further criticism has come from Turkish banks which have to date provided the bulk of the finance for renewable energy projects in Turkey. "There are some positives, but the change of currency will cause problems because up to now renewable projects have all been developed on a euro basis," says Emre Hatem, project finance manager at Turkey's Garanti Bank, which has financed a large number of wind and hydro projects in Turkey.

He explains that projects under development will either need to be changed or subject to hedging, a process which will both take time and increase risk.

Similarly, there is disappointment from companies interested in Turkey's enormous potential for solar energy, not least because the new law places a limit of 600 MW on the volume of solar plants that can be licensed in the next two years. That limit has been introduced to prevent generating more applications than can be processed, as happened recently in Germany, suggests Bungo Ezawa, local representative for German renewable energy consultancy Lahmeyer.

Ezawa also questions the extent to which Turkish firms can develop the capacity to manufacture the equipment necessary to establish photo-voltaic generating plants, pointing out that the tariffs may not be sufficient to attract international manufacturers. "If the choice was between investing in Greece, Bulgaria or Turkey, why come to Turkey when the tariffs are lower?" he asks.

But not all potential solar power investors are despondent. According to Hakan Kazanc of Turkey's BM Muhendislik, the new law offers his company the opportunity to push ahead with a range of new investments, the first of which will be a 15-MW geothermal power plant expected to begin operations by the end of this year.

More importantly, though, Kazanc explains that the new law gives BM the chance to move ahead with developing a world first - a hybrid geothermal and concentrated solar power plant. The planned plant will take water at 70-80° Celsius from geothermal wells, heat it to 120°C using solar mirrors and use the resulting steam to generate power. "We're working very intensely on this, and we're hopeful we can source most of the equipment locally," he says, explaining that they are trying to find a Turkish manufacturer who can produce the special mirrors required. "In about a month, we'll know if the project is viable or not."