Carbon tax force companies to buy WPPs: ENSIA

Turkey, which has struggled with a dependency on foreign energy for years, is beginning to improve its prospects, albeit slowly. A natural gas discovery in the Western Black Sea has raised hopes that the country might reduce foreign dependency, while the amount of local and renewable resources has increased domestic electricity generation. •n the one hand, Turkey needs to reduce foreign dependency, but on the other, it has the obligation to consume clean energy whether it is produced domestically or not. •f course, Ankara isn’t alone in this issue. All countries suffer from the same dilemma, especially as a result of the Green Deal put into force by the European Union (EU) and the Carbon Border Adjustment Mechanism (CBAM). But, what should companies in Turkey do to keep pace in this the new period?

Compliance with the Green Deal will soon be an obligation, rather than a choice, for companies, according to Alper Kalayci, Chairman of the Energy Industrialists and Businesspeople Association (ENSIA). “There is serious information pollution on this issue in the market. But exporters unions in particular are putting serious effort into the Green Deal. They’ve created serious teams. These teams inform companies and lead them in their initiatives in this field. If these companies decide to make an investment in renewable resources, we will have them meet with ENSIA members,” he said. He stressed that ENSIA members need to take action to meet the needs of manufacturers willing to install renewable energy plants as well as those interested in buying wind turbine and solar panels.

Turkey already has many of the necessary regulations and legislations to encourage development of energy efficient technologies. “However, the hoped-for mobilization has not been seen yet, because investors are hesitant due to uncertainties,” said Kalayci. Although many state that they will invest in energy efficiency, no one wants to enter the field with limited resources.

However, the EU’s Green Deal forces companies to start innovating, according to the ENSIA Chairman. “Many sectors with high emissions, beginning with the iron and steel industry, will gradually be pressured by the EU. The clock is running out, especially for firms exporting to Europe,” Kalayci noted.

Companies exporting from Turkey will need to write the energy identity of products sent to Europe on their labels. It will be nearly impossible, and very price prohibitive, to sell products produced with high carbon emissions to EU countries. “We should be prepared for this process, particularly the CBAM implementation,” Kalayci added.

This is why companies should reach a point where they are using primarily clean energy, according to the ENSIA Chairman. “This should be proven. Many companies will need to make a direct renewable energy investment, while others have chosen to acquire renewable energy plants already in operation in lieu of making greenfield investment from scratch,” Alper Kalayci.

New greenfield investment is more difficult, given that electricity generation licenses have already been issued. New tenders need to be opened in order for companies to initiate greenfield investment. “You have to wait for the Renewable Energy Resource Area (YEKA)-3 to support you,” he noted. It is also possible to acquire projects that have licenses but are not in operation. “However, these will not be enough to keep pace with the Green Deal as bringing them back to operational capacity requires a long period of time. It won’t be a surprise if companies head towards to existing plants already in operation,” he highlighted.

Given that people do not have sufficient funds to invest, and that those that do are not necessarily interested in this issue, the investment environment should be improved, according to Kalayci. 2,000 megawatt (MW) YEKA tenders should be opened and licenses should be issued each year so that companies can annually operate 1,000-1,500 MW wind power plants (WPPs). “Since every license can’t transform into an investment, a tender or licensing process should be put into place to ensure that at least 1,500 MW plants based on renewable resources are put into use each year,” said Kalayci.

Leading manufacturers go for acquisition

Companies that haven’t yet invested in WPPs will likely enter this field via acquisition. Koc Holding has already acquired the Suloglu WPP via its electricity company Entek. Mobile phone operator Turkcell will soon complete its acquisition of the Karadag WPP. In fact, Turkcell has already acquired a WPP, though it doesn’t export output to the EU. This may be due to Turkcell’s previous commitment to reduce its carbon footprint in like with the global social responsibility agreement. However, critical manufacturing enterprises, such as Koc Holding’s Arcelik-Beko brands and Demirdokum, export substantial amount to the EU states. Given this, we will likely see increasing acquisitions of WPPs and renewables by other leading players in the manufacturing industry soon.

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