FERSA sets up a JV with Saran Energy Group for the development of renewable energy in Turkey

FERSA ENERGÍAS RENOVABLES signed an agreement for the development and exploitation of renewable energy projects in Turkey via a Joint Venture (JV) with Turkish company SARAN ENERGY GROUP.

Each company will have a 50% holding in the JV, to be known as FERSAR. Fersa will make contributions to the JV as the projects are developed based on their proportional participation.

The object of the JV is to develop renewable energy projects based on wind power, hydroelectric, biomass, solar photovoltaic and solar thermoelectric technology.

The JV currently has projects for a total of 252 MW, for which 52 MW possess all necessary licences and authorisations to begin construction.

SARAN ENERGY GROUP forms part of the Saran holding and manages the group’s energy policy investments. Saran Energy Group owns 85 MW of installed hydroelectric capacity, located at Bursa, Erzurum, Mersim and Tuncelli.

A signing ceremony for the partnership was attended by Foreign Trade Minister Zafer Çaðlayan, Minister of Energy and Natural Resources Taner Yýldýz, Energy Market Regulatory Agency (EPDK) President Hasan Köktaþ and Spanish Ambassador to Turkey Joan Klos, along with other politicians and businessmen.

The partnership between Saran Energy, which has investments in solar, hydroelectric, and wind power, and Fersa, a publicly traded Spanish renewable energy firm and one of the biggest forces in the European energy sector, will invest $1 billion in renewable energy in Turkey, with equal contributions by both parties.

Speaking at the ceremony, Yýldýz stressed the significance of this investment in attracting other investments in renewable energy in Turkey. Yýldýz also highlighted the importance of this partnership for doubling the 44,000 megawatts (MW) of electrical production capacity currently installed by 2023.

Revealing that the ministry had set a goal of 20,000 MW of electricity derived from wind energy by 2020, Yýldýz stated that “we’ve been moving at a slow pace in doling out wind farm licenses. We have to speed up this process.”

Minister Yýldýz also stressed that nuclear power plants and renewable energy sources are a source of energy security, underlining that these different renewable energy options complemented one another: “By 2023, energy from natural gas plants, nuclear power plants, coal from domestic sources, thermal power plants and renewable energy sources will together create a strong and stable energy framework.”

Fersa CEO Jose Maria Roger expressed his faith in the partnership by recommending that Sadettin Saran become CEO of the partnership company.

Fersa has released its Quarterly Report for the period January – September 2009 with a significant increase in Operating Income (+12.3%) and EBITDA (+20.5%).

Currently Fersa exploits an operating capacity of 137.8 MW diversified between Spain, France, Poland and India In accordance with the company’s strategic plan for the period 2009-2010, Fersa is making good progress on the construction of two wind farms in Tarragona (Mudéfer and Mudéfer II) with a total capacity of 57.6 MW.

The 7 wind turbines have now been installed at the 12.6 MW Mudéfer II farm, which should be connected to the grid by the end of the year. In addition, the civil and electrical work on the second phase of the Kisielice wind farm in Poland, with a planned capacity of 22 MW, is almost complete and the first aerogenerators are expected to be installed in the first quarter of 2010.

Fersa keeps on increasing its large pipeline, 1,065 MW authorised and/or under construction and is developing a further 1,620 MW, obtaining so far in Q3 of the final licence for an additional 105 MW of wind energy in Panama (97 MW attributable) and also has increased the Company’s holding in the Païte Vaivina farm in Estonia (attributable power 70 MW).



Wind farms in Turkey, a deliberately lost opportunity?
The wind potential of Turkey could mean producing all of its electricity from wind alone, a totally renewable source of energy.

Politics, business and a lack of direction have all led to what seems to be a delayed, or even a wasted, opportunity. Recently, the two-year anniversary of the Energy Market Regulatory Authority (EPDK) accepting applicants for wind farms came to pass. On Nov. 1, 2007, the EPDK issued a call for license applications for wind farms and quickly stopped accepting them less than 24 hours after the call was made. The EPDK received license applications totaling 78,000 megawatts (MW), twice the amount of the total electricity produced from all sources. None of these applications have been approved, in a two-year delay that has frustrated many but also given hope to new investors. At RENEX 2009, a renewable energy fair held in Ýstanbul on Nov. 5-8, many new domestic and international entrants to the Turkish wind energy sector were excited to start investing in Turkey.

“Turkey has 50,000 MW of wind potential, more than the total amount of electricity produced from all sources in Turkey,” said Zafer Hamamizade from Türkwind, a newcomer to the field looking to produce small-scale wind power projects for factories. Ýlknur Türkeli Civelek, a partner in the firm Ýhsan Türkeli, which is a partner of the Germany-based BBB Umwelttechnik, a wind energy consultancy firm, expressed her enthusiasm for the Turkish wind energy sector, noting that “Turkey is not rich in fossil fuels or other nonrenewable energy sources, but it is rich in renewable energy, especially wind.”

Speaking to Sunday’s Zaman, Tanay Sýdký Uyar, vice president of the World Wind Energy Association and professor of energy technologies at Marmara University, expressed his views about the current state of wind energy in Turkey and revealed that the delay has much deeper roots than just bureaucracy.

Law No. 5346, dealing with electricity production from renewable sources and enacted in 2005, is still in effect. This law guarantees electricity producers who produce from renewable sources that the government will buy the electricity generated at 5.5 euro cents per kilowatt-hour. This implies that if they cannot find buyers in the market, the government is willing to present itself as a buyer. However, this law “didn’t make practical sense, as you could sell electricity on the free market for 7.5 cents. Since wind producers were presented with guarantees under the free market price, banks found them to be risky investments without a strong government backing. So they had difficulty obtaining credit from banks,” noted Uyar. Even given this potential difficulty “the bill focused mainly on wind because of its inexpensiveness and efficiency. Wind farms run at 30 percent of capacity, which means they can sell electricity for less than 5.5 cents and still make a profit. This does not, however, solve the problem of obtaining credit.” Currently, an updated version of the bill with new guarantees is making the rounds in Parliament. The new regulation would guarantee 8 cents per kWh for electricity produced from wind, a guarantee comparable to electricity prices in the free market. However, the revisions have been floating around Parliament for months without any concrete steps toward their realization. This delay, on top of the two-year delay since the call for applications on Nov. 1, 2007, will continue “for at least another two years,” according to Ata Ceylan, head of the Ýstanbul Chamber of Commerce (ÝTO) Energy Committee. He notes that “the lack of a technological or methodological roadmap” along with “a need to define how this wind farm network will connect to the infrastructure” is delaying the process even further. According to Ceylan, although the current administration is working to put forth a roadmap that will sift through the more than 70,000 MW of applications and lay the foundations for future licensing requests, the relatively recent handing of the torch to Hasan Köktaþ in the beginning of 2008 meant a reorganizing of the EPDK that halted the already delayed process of distributing licenses.

Uyar points to deeper reasons for these delays, and one that is especially relevant to the recent energy policies in Turkey and in the region. Speaking on the reasons behind the government’s reluctance to support wind farms, Uyar pointed to the binding long-term natural gas, coal and petroleum contracts. Since contracts are based around the purchase-or-pay standard, which requires the resource-buying party to pay for the goods, regardless of whether or not they are consumed or even delivered, it makes it incredibly expensive to go outside of the contract limits. Recently, state-owned Turkish Pipeline Corporation (BOTAÞ) paid $704 million to Iran for undelivered natural gas, which went unused because of the plummeting demand due to price hikes reaching 75 percent in 2008. If consumption does not increase this year, BOTAÞ expects to pay an additional $2 billion. On the same note, due to a revision demanded by Azerbaijan to the natural gas agreement between the two countries, Turkey could be forced to pay even more for natural gas that has already been consumed. Even with these new cost hikes, BOTAÞ still managed to post TL 3 billion ($2 billion) in profits in the first 10 months of 2009, shattering its 2009 expectations twofold. According to Uyar, contracts like these lock the government into purchasing dirty fuels for long periods of time, sometimes more than 20 years. Moreover, Turkey’s business activities in nonrenewable resources like natural gas meant that various parties have vested interests in furthering the status quo.

Europe, on the other hand, has shut down many polluting energy plants. Germany has completely halted the construction of thermal power plants. Although this is great progress, it does have its disadvantages for Turkey. Uyar notes that countries which are abandoning such dirty technology are “dumping them” on countries like Turkey, which have credit and treasury guarantees in place for energy produced from such outdated dirty technologies. Uyar continued by stating that “these kinds of arrangements are actually in line with the privileged status that Turkey has with various European countries. And if we don’t buy and consume these pollutant fuels, then we will have to pay for them anyway due to the long-term purchase-or-pay contracts that we’ve signed. There is a Mobil power plant in Samsun that was shut down because it was causing great harm to its environment, causing death, in fact. Even though it’s closed, we still paid for electricity not consumed.”

Uyar said that as soon as we stop using the “trash technology” of other countries and realized that the future lies in using energy from 100 percent renewable sources, then wind energy will start to spread. Uyar concluded by saying: “The best part about renewable energy sources is that you can’t privatize the wind or the sun. They are distributed amongst us equitably.”