Turkey invites bids for 1,200 MW of wind plants

Turkey’s energy ministry will by January 21 collect initial bids for the building and operating of five wind plants with a combined capacity of 1,200 MW under  the YEKA RES-2024 (Renewable Energy Source Areas, Wind Power Plants-2024) round, the Official Gazette showed on October 28.

The auction will be held on January 28.

The winners will be awarded grid connections for 49 years, with a minimum price set at $0.0495/kWh during the first six years long open market sale period and a guaranteed price that will be set in line with the winning bids in the auctions for another 20 years.

The sixth year open market phase will begin when the final contracts are signed. The plants are supposed to come online within the next three years.

In the last 23 years of the specified period, the operators of the plants will sell their output on the market.

Chart: Contracts.

The bids at the auctions will be placed in the $0.035/kWh and $0.055/kWh range.

The energy ministry will also soon launch a 800-MW solar tender. It is planning to hold the auction on February 4.

Turkey plans to hold 2-GW YEKA tenders every year.

YEKA tenders in Turkey

The first YEKA tender, namely YEKA GES-1 (solar), was held in 2017. In May 2023, the 1.35-GW Karapinar solar plant came online.

So far, 3.3 GW of solar capacity has been extended via a total of four YEKA GES tenders. In May 2022, the 1.3-GW YEKA GES-5 tender was delayed.

Meanwhile, 2.85 GW of wind capacity has been extended via three YEKA RES tenders. In June 2022, 850 MW of capacity was extended via the YEKA RES-3 tender.

Offshore wind

In 2018, the government launched a YEKA DRES-1 (Renewable Energy Source Areas, Offshore Wind Power Plants-1) tender for construction of the country’s first offshore wind plants.

A 1.2-GW capacity and $0.8 per kWh purchase guarantee for 50 TWh of electricity was offered for plants to be built in Gelibolu, Saros and Kiyikoy districts located in the Dardanelles region.

However, the tender was later cancelled.

According to the World Bank, the country has a 12-GW fixed offshore wind potential in addition to 57 GW of floating potential, 69 GW in total.

By 2035, the government intends to launch 5 GW of offshore capacity.

In June 2023, the energy ministry launched a tender for the delivery of site investigations as well as consultancy services for a trio of development zones in the Sea of Marmara.

In August 2023, the energy ministry said that studies were taking place off the coasts at Bandirma, Gelibolu (Gallipoli) and Karabiga in the Sea of Marmara and next to the island of Bozcaada in the Aegean Sea. The plan is to place them in the YEKA scheme.

The ministry has also identified six possible locations for onshore wind farms in Konya province, as well as three sites in Sivas and two in Corum and Sanliurfa for solar parks.

In October 2023, Turkey obtained an €8mn grant from the EU under the Pre-Accession Assistance (IPA) Energy Sector Program Phase IV Project - Offshore Wind Support scheme.

The International Bank for Reconstruction and Development (IBRD), a unit of the World Bank Group, is the project administrator. Turkey is to use the funding to determine eligible offshore wind plant sites and to launch tenders for investors.

On October 14, 2024, Turkey’s energy ministry awarded a €3mn contract to a consortium set by International Marine and Dredging Consultants (IMDC), Engie Impact Belgium, U-Sens and Akrocean for meteorological and oceanographic measurement studies for the development of offshore wind sites.

YEKDEM prices

Under a feed-in-tariff (FiT) programme, known as the Renewable Energy Support Mechanism (YEKDEM), introduced in 2011, wind, hydropower, geothermal, biomass and solar plants successfully brought online by end-June 2021 were provided with feed-in tariffs for a 10-year period. The support for wind plants was fixed at $0.073 per kWh.

In 2021, Turkey’s president, Recep Tayyip Erdogan, introduced a new scheme with Turkish lira-denominated tariffs (to be updated four times a year based on a formula, which included the official inflation figures as well as the USD/TRY and EUR/TRY pairs) for renewable power plants due to come online from July 1, 2021 to end-2025. The ceiling for wind plants was set at $0.051 per kWh.

In May 2023, Erdogan amended the scheme again for plants that would come online from July 1, 2023 to end-2030. He introduced USD-denominated minimum and maximum prices for the lira denominated tariffs. For offshore wind plants, the YEKDEM price was to be set between $0.0675 per kWh and $0.0825 versus $0.0495-0.0605 for onshore wind facilities.

The Energy Exchange Istanbul (EPIAS) releases updated YEKDEM prices each month. On November 1, the latest YEKDEM prices were released.

Market prices

In June, Turkey’s energy watchdog EPDK hiked the price ceiling on the Day Ahead Market at the EPIAS to TRY 3,000/MWh from TRY 2,700/MWh in July 2023.

Between September 2022 and December 2022, the ceiling remained at its peak level of TRY 4,800 MWh. The hourly prices hit the ceiling across the period.

On September 2, 2023, the daily average price on the market saw a new record of TRY4,419 ($243). The dollar-denominated record was registered on February 13, 2012 at $392.

As of January 1, 2023, the EPDK had dropped the ceiling by 13% to TRY4,200 from TRY4,800, the peak level, set in September. As of April 1, 2023, the ceiling, which stood at TRY 2,600, was lower by 46% compared with the TRY4,800 at end-2022.

Between April 2022 and September 2023, there have been multiple price ceilings seen on the market under the so-called maximum price reconciliation mechanism (AUM).

The government transferred funds from renewables to other plants. As of April 2023, the price ceiling for coal plants was set at TRY1,800/MWh, while TRY1,700 was to be applied for renewables and TRY2,550 for natural gas, fuel oil, naphtha and diesel plants.

At end-September, the AUM, which was in March extended by six months, expired.

Installed capacity

At end-August, there were 301 active wind plants in Turkey with a combined capacity of 15 GW, while 295 wind plants with a capacity of 20 GW were pre-licensed.

Meanwhile, there were 49 active solar plants with a combined capacity of 2 GW in addition to 433 plants that were pre-licensed for a combined capacity of 15 GW.

Turkey had a combined licensed capacity of 109 GW while pre-licences have been issued for an additional 38 GW of capacity.

Together with unlicensed plants, Turkey’s combined capacity stood at 114 GW, including 18 GW solar (a 16% share in total) and 12 GW wind (11% share) capacities.

A total of 784 plants with a combined capacity of 18 GW, including 170 wind plants with a combined capacity of 7 GW and 36 solar plants with a combined capacity of 469 MW, were granted permission to benefit from the YEKDEM scheme in 2024, down from 887 plants with a combined capacity of 20 GW, including 196 wind plants with a combined capacity of 8 GW, in 2023.

In January-August 2024, the YEKDEM plants produced 53 GWh, or 22% of combined gross electricity production of 242 GWh in Turkey, while the government paid TRY 165bn in feed-in-tariffs.

In August, the average YEKDEM price stood at TRY 4.00 per kWh versus a weighted average market price of TRY 2.60.
 

Table: Full list of Turkey’s YEKA tenders.