Turkey favors autogenerators

Turkey favors autogenerators

The government of Turkey issued Decree No. 96/8007 on April 17, defining a new tariff for excess energy sales and wheeling charges. The new regulations encourage increased self-generation of power or autogeneration, as well as movement of energy to primary end-users such as textile, paper, steel, petrochemical and ceramics manufacturers. Turkish industrialists continue to consider autogeneration as a viable power supply option, given expectations of a projected power shortage starting toward the end of next year.

Turkey`s Ministry of Energy & Natural Resources drafted the new regulation to motivate industrial investors to establish its own power generation facilities. The stimulus for self-generation stems from changes in Turkey`s excess electricity tariff regulations. Previously, the sale price of electric power was set at 60 percent of the Turkish Electricity Distribution Co.`s average price for hydropower plants and 65 percent for thermal facilities. Now, the price of excess capacity from autoproducers has been boosted to 70 percent on average after surcharges are deducted.

Changes in wheeling rates are another advantage of the new regulations–the old, fixed-percentage charge has been replaced with a distance-based scale starting at 6 percent for plants within the same region and ending at 17 percent for plants 600 km or more distant from their end-users. The government`s goal is fostering badly needed power projects, and it hopes that energy savings of 15 to 20 percent will tempt Turkey`s large private-sector holdings to singly or jointly establish large cogeneration plants serving several manufacturing facilities.

“Seventeen percent fixed was a fairly high rate to pay for wheeling charges. It certainly affected the financial credibility of projects,” said Charles E. Levey, Energy Services Inc. director of international development.

Autoproducers in Turkey commonly create joint ventures, Levey said. By working together, companies can increase generation profile requirements, while adding flexibility for equipment selection and cycle optimization.

“In general, it`s a well-planned project execution strategy that mitigates risk,” Levey said. “The revised regulations have made the economic viability of either wheeling or selling to the national power generation and transmission company a little more favorable to autoproducers. However, how it plays out for projects remains site-specific.” Also, for Turkey`s industrial groups, there still are uncertainties relative to fuel supply. The fuel cost-to-kilowatt ratio could play a later risk in some projects, he said.

To address this problem, the government of Turkey and Turkish firms have plans to invest more than (US)$800 million in various oil and gas projects in nearby Turkmenistan. Further, since 1994, the Algerian State Petroleum agency has been delivering liquefied natural gas and liquefied petroleum gas to Turkey.

Cogeneration in Turkey is set to continue its slow but steady growth during the next five years; during the second half of 1996, eight projects with 100 MW of installed capacity are moving forward. This type of infrastructure growth remains a driver in the country`s quest for low-cost power.

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