German clean-energy companies led by wind turbine maker Nordex SE (NDX1) are working to boost sales in Turkey, tapping support from the government in Berlin to benefit from the nation’s growing demand for electricity.
Nordex, which is based in Hamburg, may invest in a rotor blade manufacturing plant in Turkey that could start producing early 2014, said Ibrahim Ozarslan, managing director of Turkish unit Nordex Enerji A.S. Vexco GmbH, a clean-energy developer, broker and financial adviser based in Bonn, said it received “several inquiries” from mid-sized companies in Germany that want to invest in solar plants in Turkey.
“Turkey is an exciting market for renewable energy developers and financiers,” Vandana Gombar, senior policy analyst for Bloomberg New Energy Finance, said by e-mail. “Companies can benefit from high prices in the wholesale power market and healthy growth in demand for electricity on the back of strong economic growth.”
German Economy Minister Philipp Roesler today finishes a three-day trip to Ankara, where he was accompanied by representatives from more than 50 companies including Germany’s biggest utility, EON SE, along with Nordex, Vexco and financiers from Deutsche Bank AG and KFW Group.
Turkey, which depends on fossil-fuel imports mainly from Russian and Iran for much of its energy needs, has lured international investors including General Electric Co. (GE:US), EON and Siemens AG (SIE) to its power industry. The nation’s electricity regulator forecasts annual demand growth of 6.3 percent through 2023, creating a $130 billion market for investments in energy.
“We know it’s the goal of the Turkish government to reduce dependence on energy imports,” Roesler told a German-Turkish energy conference today in Ankara also attended by Turkish Energy Minister Taner Yildiz. “Renewable energies can play a special role in that.”
While Turkey has “strong” wind and solar resources, expansion has been held back by “complex licensing, transmission issues and perhaps more importantly a feed-in tariff that is not considered very attractive, especially for solar power,” Daniel Guttmann, head of renewable energy strategy at PWC in London, said by e-mail.
Turkey’s economy grew 9.2 percent in 2010 and 8.5 percent in 2011, the fastest pace on the European continent in both years, comparative data from the Organization of Economic Cooperation and Development show. Dented by weaker demand for exports, the economy grew 2.2 percent last year, still more than double the pace of expansion in Germany.
Turkey, which aims to generate 30 percent of its power from renewables by 2030, has about 2,300 megawatts of wind power installed. It plans to develop 600 megawatts in photovoltaic capacity by 2015.
German investors are turning to Turkey for fresh growth opportunities after the three-year euro crisis sapped demand and forced governments to cut clean-energy subsidies. EON swapped power generation assets in Germany for ones in Turkey in a 1.5 billion-euro ($2 billion) deal in December.
“The Turkish market is highly interesting for German utilities as well as plant manufacturers,” Hildegard Mueller, the head of the BDEW utility lobby, which represents companies including RWE AG (RWE) and Robert Bosch GmbH, said in an interview in Ankara. “Its strategic location between Europe and Asia is especially attractive. German companies can provide their expertise with gas- as well as coal plants, renewables, energy efficiency and supply security.”
Turkey offers a feed-in tariff for renewable energy, paying premium prices to wind and solar. That’s supplemented by an additional payment for equipment produced domestically.
Nordex is in talks with officials from the Turkish Energy Ministry over the need for wider local content incentives that would benefit consumers and help kick-start more local production, Ozarslan said. So far, none of the current investors has received the payment for locally manufactured components, said Ozarslan.
“The Turkish market has huge potential,” said Ozarslan. While the company hasn’t made a final decision whether to invest in the plant, it has already talked to potential partners, he said.
Vexco, the German developer, is evaluating about 100 megawatts of onshore wind projects in Turkey to see which it may develop and sell, Atilla Turk, the company’s managing director, said in an interview in Ankara. The company is getting an increasing number of inquiries from German investors who want to spend their money in solar plants in Turkey, he said.
“While solar has a good potential in Turkey, the PV sector is in its very early stages,” he said in an interview.
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