The European Bank for Reconstruction and Development (EBRD) to support Turkey in preparing a new renewable energy support mechanism to back investments after 2020, which is planned to be finalized towards the end of the year, senior banker at European Bank for Reconstruction and Development (EBRD) said Monday.
Andi Aranitasi, a senior banker at EBRD, told Anadolu Agency that currently, not having a guarantee purchase price makes the renewable energy projects more challenging to finance because it requires the lenders to make long-term price forecasts and to bear market risk.
It will still be possible to finance good renewable projects but the financing structures would be more conservative, he said adding that the government would like to go with a different system than YEKDEM.Turkey has feed-in-tariffs for renewable energy power plants under Renewable Energy Support Scheme (YEKDEM). The feed-in-tariffs is $0.133 for solar and biomass, $0.105 for geothermal, $0.073 for wind and hydro plants and it is valid for 10 years.
Turkey's Energy and Natural Resources Ministry plans to end YEKDEM by 2020 and it is yet uncertain what will happen after the termination of the scheme.
"They are intending to come up with a new mechanism on how to support the renewables. As EBRD, we are working with the ministry to see whether we can come up with a new scheme which hopefully they will announce towards the end of this year that will support the renewables after 2020," Aranitasi said.
"Still the idea is to offer minimum guarantee for revenues. I think if we manage to achieve [this], it will allow renewables to continue to grow - even the guarantee is minimum, it will be enough to support. Renewables are big cornerstones of Turkish energy strategy," he said.
Aranitasi gave the examples of North Africa, Latin America and Gulf States where purchase agreement prices for solar have come down to $0.02-2,5 and is valid for 20 years.
"The new scheme will be a different form of support but it will be enough to allow the renewables to grow," he underlined.
He also said that renewable resources are very significant in terms of the EBRD's investment in Turkey which has invested €1.8 billion ever since they have started working in Turkey 10 years ago.
- No request for restructuring of an EBRD loan
Aranitasi explained that about €1.6 billion of the total amount has been channeled to power sector in Turkey.
"€850 million is actually for renewables and €550 million for distribution of both electricity and gas. We have invested around €175 million for gas fired power plants. Our energy portfolio is performing well and renewable energy projects are doing somewhat better than other projects," he noted.
Aranitasi indicated that the EBRD offers Turkish companies tailored multi-currency loans to meet their financing needs.
He reminded that earlier this year the bank has supported a major milestone in the privatization of state-owned power plants in Turkey with a $55 million dual currency loan where $35 million in dollars and the equivalent of $20 million in Turkish lira to Entek Elektrik Uretimi AŞ, a subsidiary of Koç Holding.
"There are companies borrowing in dollars but usually when their revenues are dollar indexed, like in the case of YEKDEM renewables. Where our borrowers have revenues mostly in Turkish lira, we also try to lend in lira to match the revenue stream to their debt obligations," he explained.
In Turkey, some companies -- and among them energy companies -- asked for restructuring of their debts to banks due to floating exchange rates as they borrowed in dollars.
Turkish private sector have invested $95 billion in the last 10 years in electricity generation and around $60 billion of this amount have been borrowed from banks, of which are mostly Turkish banks, a Turkish Industry & Business Association (TUSIAD) report indicates.
The current debt stands at $43 billion while $37 billion of this amount belong to Turkish banks. Of the $37 billion current debt figure, YEKDEM projects have a share of around $22 billion while $15 billion is for other gas, domestic and imported coal power plants.
"Our financing structures are robust and so far no energy company has requested restructuring of an EBRD loan," Aranitasi pointed out.
- Investments to continue
Aranitasi also said that the EBRD traditionally invests annually around €200-300 million in power sector in Turkey and aims at maintaining the same level next year.
He also reminded the EBRD supported Turkey's Akfen Renewable Energy with $102 million for 13 renewable power plants last week.
"We may announce one more project in the last quarter," he said, however refrained from sharing further details.
By Nuran Erkul Kaya