Istanbul 20 September2011
BORUSAN EnBW Enerji
Wind Power Turkey - 2011
APR 09
Partnership Agreement
JUL 09
Closing
BORUSAN AND ENBW PARTNERSHIP FIRST CONTACT DURING 2008 DAVOS SUMMIT – PARTNERSHIP WAS FOUNDED IN 2009
1
50% 50%
Borusan Holding A.S. EnBW Holding A.S.
Borusan Enerji was established in 2007 as the energy arm of Borusan Holding, one of the leading business conglomerates in Turkey active mainly in steel, logistics distributorship sectors.
EnBW Holding A.S was founded in 2009 in Ankara as a 100% subsidiary of EnBW AG which is the third-largest energy company in Germany active in electricity generation, trading, grid, gas & environmental services.
STRATEGIC FOCUS AND TARGETS JV HAS A PREDEFINED TARGET: 2000 MW INSTALLED CAPACITY BY 2020 WITH A RENEWABLE FOCUS
Critical Year to lay the
foundations of the
company
2009 1000 MW licensed projects
2014 1000 MW installed capacity
2016 2000 MW installed capacity
2020
Target activity area includes all energy sources particularly renewable energy
43% 57%
50%
25%
25%
Hydro Wind Others
Current Portfolio (611 MW)
Target Portfolio (2.000 MW)
2
GW
TURKEY – WIND INSTALLED CAPACITY CURRENT SITUATION
4
0
10
20
30
40
50
60
2008
41,8
2007
40,8
2006
40,6
2005
38,8
2004
36,8
2003
35,6
2002
31,8
2001
28,3
2000
27,3
2011
51,0
2010
49,9
2009
44,8
Other Thermal
Lignite
Coal
Natural Gas
Hydro
Geothermal
Wind
217
428
537
1919191919
235
0
500
1.000
1.500
2.000
2001 2000 2011
1.564
2010
1.329
2009
792
2008
364
2007
146 87
2006
59 39
2005
20 1
2004 2003 2002
MW
Wind installed capacity has been increasing slowly over the years accounting for 3 % of the total installed capacity by Sept 2011. Yet, with the finalization of tendering process a visible increase is likely to be observed in 3 - 4 years period.
• TEIAS statistics as of September 2011 Multiple fuels (solid & liquid) included in the thermal heading except liquid natural gas which is placed under natural gas heading
36,70%
33,08%
0,18% 3,07%
7,09%
3,91% 15,96%
INSTALLED CAPACITY DEVELOPMENT BY RESOURCES CAPACITY – 2011 (50.985 MW)*
INSTALLED CAPACITY DEVELOPMENT - WIND
Added Wind
TURKEY – WIND INSTALLED CAPACITY REACHING THE TARGET OF 20 GW SEEMS AS AN AMBITIOUS OBJECTIVE
Energy Market and Supply Security Document stipulated 2023 targets in the Turkish energy sector including the target of wind installed capacity - 20 GW
2010 - 2011 has been an important year for the wind energy investors (adoption of FIT & completion of evaluation of long-awaited 1st of November applications)
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Existing WEPP Capacity 1.564 MW
Single WEPP applications1: 1.876 MW
Multiple WEPP applications2: 5.587 MW
TOTAL (~) 9.000 MW
Still half of the way to go…
1) already licensed by EMRA 2) total capacity to be allocated in 13 packages
Source: EWEA Wind in Power 2010 European Statistics
Spain 20.676 Portugal
3.898
France 5.660
UK 5.204
Ireland 1.428
Germany 27.214
Poland 1.107
Norway 441
Sweden 2.163
Finland 197
Russia 9
Ukraine 87
Romania 462
Bulgaria 375
Switzerland 42
Austria 1.011
NL 2.245
Belgium 911
Czech Rep 215 Slovakia
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Lithuania 154
Latvia 31
Estonia 149
Crotia 89
WIND INSTALLED CAPACITY (MW)
Turkey 1.329
European Union 84.278
Candidate Countries 1.418
Total Europe 86.279
TR 1.329
EUROPE - WIND INSTALLED CAPACITY BY THE END OF 2010
GR 1.208
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Renewable Energy Directive
EU has target to reach:
a 20% share of energy from renewable sources by 2020
a 10% share of renewable energy specifically in the transport sector
Envisages national support mechanisms:
investment aid,
tax incentives
green certificates
direct price support schemes including feed-in tariffs and premium payments
FEED-IN TARIFF FOR WIND ENERGY IN EUROPE - I GERMANY WILL APPLY EEG 2012 AS OF JANUARY 2012
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GERMANY
Scheme Description
EEG – 2012
FIT – based on specific electricity generation costs -plant operator receives FIT from the grid operator
Bonuses
Low-cost loans
Legal Basis: Renewable Energy Sources Act – EEG (adopted 19.03.2000 – revised on 01.08.2004 & 01.01.2009 – to be revised in 01.01.2012)
Duration: 20 years (15 years for large hydro plants) plus start-up year
Caps: No caps as to the amount generated or installed capacity
On–Shore Scheme:
8,93 € cent/kWh – initial compensation (first 5 years of commissioning)
4,87 € cent/kWh – basic compensation applicable after 5 years
System service bonus (0,48 € cent/kWh)
Off-Shore Scheme:
15.00 € cent/kWh – initial compensation (12 years) prolonged
0.5 months for each mile > 12 nautical miles
1.7 months for each meter water depth (ground) > 20 meters
19 € cent/kWh – optional shrinking model: Initial FIT increases but for a duration of 8 years
3.50 € cent/kWh – basic compensation > 12years (20 years) Begin of commissioning before January 1st, 2018)
FEED-IN TARIFF FOR WIND ENERGY IN EUROPE - II SPAIN OFFERS TWO ALTERNATIVES FOR THE WIND INVESTORS
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SPAIN
Scheme Description
FIT or
Premium on the Wholesale Market Price floor and ceiling prices
Legal Basis: Royal Decree 667/2007
Duration: Whole project life time
Caps: No caps as to the amount generated
On–Shore Scheme:
≤ 25 years - 7,7471 € cent/kWh OR reference premium floor – 7,5405; ceiling 8,9866 € cent/kWh
> 25 years - 6,4746 € cent/kWh
Off-Shore Scheme:
ONLY Reference premium - 8,918 € cent/kWh ceiling 17,3502 € cent/kWh
FEED-IN TARIFF FOR WIND ENERGY IN TURKEY FIT FOR WIND ENERGY INCENTIVE REVITALISED THE SECTOR COUPLED WITH THE DOMESTIC MANUFACTURING ADDITION
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FIT was introduced in 2005 as a unique tariff btw 5 – 5,5 €cents, applicable for defined renewable energy sources
Implementation Regulation of FIT was not adopted at that time.
New RES Law was adopted in Dec 2010
It proposes below mentioned FIT at differentiated rates (7,3 10,5 – 13,3 $ cents) for different renewable energy sources.
Implementation Reg. is adopted & Domestic Manufacturing incentive introduced.
50
60
70
80
90
100
110
120
Jan Feb March April May June July Aug
$/MWhPrice Development
2011 Day Ahead Price , FIT & 2010 Day Ahead Price
FIT Tariff Price Day Ahead System Price 2011 Day Ahead System Price 2010
EVALUATION OF FIT SCHEME IN TURKEY
Currency Difference:
New FIT stipulates incentives over dollar cent
Main turbine manufacturers are European-based companies
Investors are exposed to the euro/dollar parity risks
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Domestic Manufacture Incentive:
Positive development – additional incentives for 5 years
Tower and blades can be locally manufactured (thus max. 8.7$cent/kWh.
Even if there was an investment for locally produced wind turbines by today, the time frame is too tight for the generation companies to get benefit from domestic production incentive.
Unfair competition for projects and plants already in operation or developed
Feed-in Tariff:
Approximately at the same rate with previous incentive
Investors’ expectations are closer to European levels (i.e. Greece, Germany, Spain)
Compared to the average system price in 2010 & 2011 it seems that there is no visible attractiveness for FIT
RECOMMENDATIONS FOR FURTHER INVESTMENTS SEVERAL HINDERANCES EXIST AGAINST WIND ENERGY INVESTORS
Incentive System
FIT still not a real incentive, should be reconsidered in relation to system prices and be above this reference price to be regarded as an “incentive”
Alternatively an incentive scheme should be considered also by defining system prices
Legislative
Indexation of Wind Pennies with inflation by stagnating, even decreasing electricity prices
Tenders held for substations, for which there is no investment budget. Proposal: effective reimbursement mechanism, when the WEPP investors need to build the substation
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RECOMMENDATIONS FOR FURTHER INVESTMENTS SEVERAL HINDERANCES EXIST AGAINST WIND ENERGY INVESTORS
Administrative
Coordination within MENR needed to solve overlapping of mining areas with WEPP’s
Project Financing, Purchasing & Social issues
Project design should be made to facilitate international financing which will be a major issue for the coming years.
Long term purchasing agreements with turbine suppliers is important to assure ROI.
Projects should be developed by taking into account environmental and social impacts
Non-investors
Entrance to the market should be more difficult for non-investors, protecting real investors.
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Thank you…
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