Turkey is rapidly becoming a very important market player in its own territory with an ambitious targets in energy sector. As it is seen from 2023 projection of Turkish government, renewable energy resources will come into prominence with highly concentration on increasing productivity of hydroelectricity power plants. The main target for 2023 is providing 30% of total electricity demand from renewable energy sources. Currently 25% of total energy generation is met by hydropower. According to latest forecasts, between 22% and 27% of Turkish total energy demand is expected to be supplied by hydropower plants.
What are the pros and cons of hydropower ?
- From the economic perspective, hydroelectricity power plants requires lower operating and maintenance cost with long run life in comparison with other types of power generators.
- Energy efficiency rate is higher than other renewable sources.
- Hydropower is considerably beneficial for sustainable development. To illustrate, hydroelectricity power plants help to enhance air quality and fight with climate change.
- Improve living conditions by providing employment opportunities in territory.
- Brings technological development mostly by foreign contractors that also provides fundraising for small or large scale hydropower plants projects.
- The storage capacity of reservoirs may be amendable in terms of water sedimentation.
- Hydropower plants are long run investments that requires long term planning agreements with third parties.
- Governmental process may take a long time for obtaining relevant permissions and licenses.
- Water quality must be observed frequently for the purpose of energy manufacturing forecasts.
Regulations and Opportunities
In accordance with article 6/A of Renewable Energy Sources Law Code 5346, hydroelectricity power plants are subject to permission of General Directorate of State Hydraulic Works (“DSI”) for the purpose of granting water usage authorization. Additionally, provincial state administrations are authorized bodies for permitting construction of hydroelectricity power plant provided that they receive opinion of regional distribution company.
Besides, Enacted Environmental Effect Assessment bylaw, hydroelectricity power plants shall be implemented environmental effect assessment by Ministry of Environment and Urban Planning on condition that their installed capacity exceeds 25 MW. Provided that installed capacity is between 1-25 MW, selection and elimination process shall be applied.
Turkish government also supports hydropower investments with feed-in tariffs (FITs). Enacted Law Code 6094 indicated that 7.3 dollar cent/kWh guaranteed repurchase will be ensured. Moreover, provided that local equipment is applied such as turbine or generator for hydropower plant establishment, additional 2.3 dollar cent/kWh will be guaranteed. These feed in tariffs have been extended until 2020 if a licensed operator is willing to benefit between 2016 and 2020 under the incentive of Renewable Energy Resources Support Mechanism.
Attractive benefits for foreign investors are not limited with feed in tariffs. Furthermore, hydroelectricity power plant projects are subject to General Incentives Scheme which provides VAT and customs duty exemption. Particularly, it is expected to see a great number of foreign investment funds with the intent of benefit from incentives and this emerging renewable market in an emerging economy.