It is imperative to implement a mechanism from 2017 onwards to ensure that gas plants in Turkey are fully operational, are able to recoup their set up costs and be financially viable, CEO of Akenerji said.
Ahmet Umit Danisman, CEO of Akenerji, a joint venture between Turkey’s Akkök Holding and the Czech power company ČEZ, told Anadolu Agency that in Turkey renewable and build-operate-transfer projects currently enjoy purchase guarantees and support systems. Additionally, nuclear and coal plants are also on the agenda as part of a drive to support the usage of local sources.
“But support mechanisms for natural gas plants should also be looked at,” Danisman argued. “Gas plants form the backbone of the energy sector as they can work on a base-load system. It’s not possible to keep the electricity system functioning without them,” he added.
He said existing efforts to install capacity payment systems to support gas power plants in Turkey should be accelerated and concluded.
“There are already certain countries where these are in place. They could be taken as an example,” he said.
The Capacity Payments Mechanism, implemented in countries such as the U.K., is a fixed revenue system of payment for participants offering generation capacity in the electricity market.
“It is good the government aims to support local energy sources such as coal,” Danisman said. “But we should not forget that wind, water and the sun are also ‘local’. We believe that all sources should be supported without differentiation,” he added.
- Prolong feed-in tariffs
It would be beneficial to prolong the deadlines on feed-in tariffs for renewable investments for projects in this area to continue, Danisman also said.
“If Turkey wants to increase investments in renewable energy or on local sources, it is important to keep such a support mechanism in place,” he said, adding that “the subsidies now have a deadline of 2020. It would be good to prolong this deadline for the continuation of future investments.”
The Supporting Mechanism of Renewable Energy or YEKDEM offers a feed-in tariff of 7.3 cents per kilowatt hours (kWh) for wind and hydropower projects, 10.5 cents for geothermal facilities and 13.3 cents for solar energy and biomass geothermal plants.
The tariffs are currently available for renewable energy projects which will be operational at the latest by year-end 2020.
- Demand will catch up with supply
Danisman said the current situation with an excess of electricity supply in Turkey’s energy market was temporary.
“This will change soon due to Turkey’s demographic structure and young population and demand will catch up with supply,” he said.
But Akenerji predicts the present situation with low electricity prices and excess supply will continue in 2017 and 2018 and investments will be made accordingly, Danisman said.
“Investments in projects with purchase guarantees and feed-in tariffs will be more on the agenda during this period. As such, renewable projects are more attractive for us,” he asserted.
He shared that the company would continue investing in capacity increase of its Ayyildiz wind plant in Bandirma in western Turkey which is targeted to become operational by the end of the year.
Engineering works for the company’s Erzincan Kemah Hydraulic Power Plant are also ongoing, he said.
- First online tender for gas plant capacity
Akenerji was successful as the first Turkish company to hold an online tender for combined natural gas cycle plant capacity at the end of October, Danisman said.
The company through the tender process allocated 20 megawatts (MW) of installed capacity from its Erzin Combined Natural Gas Cyle Power Plant to Sepaş Energy for the first quarter of 2017 and 40 MW to Vitus Energy for the third quarter.
In the previous two auctions, Akenerji allotted 40 MW of the plant to Istanbul-based Vitus Commodities in the third quarter of 2016 and 20 MW to Turkey’s Enerjisa for the fourth quarter of 2016.
“The first two auctions were carried out physically and the third one was online,” Danisman said. “The companies were able to bid electronically from where they were located.”
The system, also known as virtual power plant auctions, aims to facilitate entry into the electricity market.
“This is good for companies who want to enter the energy industry but cannot undertake the investment costs,” Danisman said. “The company winning the auction can buy or sell as much energy as it wants in the set quarter. It’s like owning a power plant, without having to make the actual investment.”
By Sibel Akbay
Anadolu Agency
sibel.akbay@aa.com.tr