Turkey’s renewable resources are vast and ripe for development, and demand is high for local, sustainable energy production. Considering Turkey’s increasing need for energy as one of the fastest growing economies in the world and the rapidly rising cost of imported energy, it’s easy to understand the country’s enthusiasm for a more developed renewable industry—especially when adding in Turkey’s ample hours of sunlight and well-educated workforce.

Indeed, analysts are predicting significant growth for solar power development in Turkey, which means it could become a potentially attractive market for interested United States’ photovoltaics (PV) companies.

Foreign investment
The outlook for the Turkish energy market appears to be strong. Manufacturers are investing in local production capabilities, so that their equipment qualifies for the bonus, feed-in-tariff (FIT) payments. And, because the Turkish government has structured PV incentives directed toward utility-scale systems, global players are also entering the market, further accelerating the growth of the solar industry.

As the Turkish government encourages foreign investment and strategic partnerships in solar power, North American players should be aware of several facts and potential challenges of this overseas market…

• Tariff years. The FIT payments in Turkey are currently 10 years. From a return-on-investment (ROI) perspective, the 10-year FIT is certainly attractive. However, many investors prefer to have a lower-risk profile and the more flexible financing models that a 20-year FIT provides. It is possible though, that the government might consider extending the FIT payments to 20 years, rather than the current 10-year guarantee.

• Cost pressures. The Turkish market will likely face all of the same pressures as the North American market and others have to drive down system costs, as government incentives diminish over time. For example, over the last several years, PV module prices have fallen dramatically. Attention has now turned to the prices of balance-of system (BoS) components, including, inverters, combiners and cabling. Reducing the cost of these components is not easy, but for different reasons.
  
  In the case of combiners and cabling, these components are already largely commoditized and cost is dictated by the underlying raw material. In contrast, inverters contain sophisticated technology for mission-critical grid interactions. Herein, reducing costs requires investment in both operational efficiencies and technology innovation.

• New technologies. Meeting lower overall system costs is a challenge for PV plant developers everywhere, and Turkey will also need to find ways to mitigate high prices. Many solar system providers are turning to distributed power optimization (DPO) system designs, which reduce the capital cost of solar energy systems while increasing performance. DPO systems use DC optimizers to perform maximum power point tracking (MPPT) at a more granular level, to increase energy production, rather than doing so at the inverter level.
  
  Some DC optimizers also have voltage and current output limits that allow systems to double the number of modules in each string. This eliminates half of the combiner boxes, reduces cabling, as well as the associated labor to substantially cut costs. The use of distributed DC optimizers further enable the central inverter to deliver up to twice the rated output power, compared to those used in traditional system designs. That corresponds to a 50% lower cost per-watt inverter in a DPO system.

Collaboration
Beyond looking at new architectures, suppliers are also looking for new ways to collaborate. To fully realize the system-level benefits of DPO, for instance, collaboration between manufacturers and system developers has proven to be one way. As an example, the High Definition PV (HDPV) Alliance was established to define and maintain an open set of standards for inverters that are optimized for use in DPO systems.

In Turkey, collaboration is also important. HDPV Alliance members there worked together to create standardized 2.5- and 5-megawatt (MW) block designs, tailored to the market’s local requirements. These DPO systems are much lower in price compared to those using string inverters (which are often favored in markets where the value of energy is so high under the FIT payments). The DPO solutions tend to perform better than string inverters because they have MPPT at a higher resolution.

When calculations were performed for PV systems using DPO in Turkey, it was determined that these attractive project economics are self-sustaining. In other words, the internal rate-of-return (IRR) for a system using DPO is compelling—even without relying on existing FITs.

This is important in Turkey, since the government has no caps on the amount of PV that businesses can install for self-consumption. In fact, despite the highly publicized licensed and unlicensed applications that can take advantage of the FIT, it’s expected that the self-consumption segment will grow the fastest in the short term.

These promising economics open the possibility for very rapid adoption of DPO in the Turkish market.

Market development
As in many new PV markets, Turkey will go through a learning curve. It’s likely, however, that the Turkish renewable market will go through this relatively quickly, thanks to outside system integrators bringing their experience to the country.

The payback time for initial investments could be as low as five to seven years, considering that the kilowatt-hours generated per kilowatt of PV installed in most of Turkey is as much as twice that of Germany or the United Kingdom. And, Turkey is larger in size than both of these countries combined, so the potential for solar power is compelling.

As a North American supplier trying to enter the Turkish market, these considerations will certainly aid in a smooth market entrance.

Levent Gun is the CEO of Ampt, a provider of power conversion technology that’s designed to reduce the cost and increase the efficiency of solar energy generation.

Ampt is a founding member of the HDPV Alliance, a solar industry consortium of companies devoted to the development and adoption of distributed power optimization solutions that lower the cost of solar energy.

Ampt
www.ampt.com