By Climate Scorecard Turkey Country Manager Barış Can Sever
One of Turkey’s best practices in renewable energy production is the feed-in tariff system of the Renewable Energy Sources Support Mechanism (YEKDEM). However, while the mechanism aims to accelerate investments in renewable energy production, it contains several controversial aspects in its approach and implementation. Before revealing its controversial elements, some basic information will be given first.
The mechanism entered into force in 2005 and started to support electricity production from renewable energy resources in 2011 with the guarantee of a high purchase price. The power stations which benefitted from the YEKDEM produced 5,424 MW of electricity in 2015. This amount increased to 21,877 MW under the framework of the YEKDEM in 2020. While almost half of the installed capacity in Turkey’s renewable energy production has been supported by this mechanism, 29% of Turkey’s total energy production capacity has benefitted from the same instrument.
On the one hand, the feed-in tariff system could be perceived as one of the best practices for accelerating the production of renewable energy in Turkey. On the other, its costs related to high purchase prices as a part of the feed-in tariff system are reflected in the invoices that people regularly pay. New regulations mandating the use of local currency may not encourage the actors in the market to keep investing in the feed-in tariff framework. Limited sources and devaluating Turkish Lira against the USD will be a part of the main reasons for the clash of interests among the renewable energy investors, the state, the people, and other relevant actors.
According to new government regulations, the currency of the Turkish Lira will provide the renewable energy investment incentives under the framework of YEKDEM while the investment incentives for the fossil fuel power plants actuated by the imported sources will be delivered via foreign currency. This will create unfair conditions for investing in renewables energy facilities in the transition period.
The new proposed new regulations will start to be implemented on the 1st of July, 2021. In 2021, 927 renewable energy systems will benefit from YEKDEM.