| “With a population of 72 million, Turkey is a very significant consumer market for our export-oriented economy,” said Steen Hommel, department head at The Trade Council attached to the Danish Foreign Affairs Ministry. “As our economy is heavily related to exporting Danish goods to generate income back at home and sustaining the social security system, we need to find new emerging markets. Turkey definitely fits that target profile,” he added. Denmark’s export-dependent economy has been hit hard by the world economic crisis, suffering its deepest recession in more than four decades with a 4.3 percent contraction in its gross domestic product (GDP) last year. Exports declined by 10.7 percent last year with a 16.7 percent drop in industrial products. Though the recession is officially over for Denmark today, the economy still lags behind the pace that global trade is picking up. It recovered half of the original decline in exports and stabilized, more or less, but the prospects are still not encouraging for the government. Looking for more trade “That is why it is so vital that we have to produce trade to generate income,” said Claus Hermansen, minister counselor at the Foreign Affairs Ministry for energy and environment. Hermansen, who is also team leader for energy and environment at The Trade Council, part of the Foreign Ministry with 380 specialists working in 86 missions abroad, is very keen to exploit newly developing opportunities in renewable energy in Turkey. “We will cooperate with the Turkish government and state institutions on sharing our expertise in cutting-edge renewable technologies,” he underlined. Denmark is well known for its leading role as a market player in renewable technologies especially in wind and biomass. It generates about one-fifth of its electricity production from harnessing wind power, built both on land and offshore, making Denmark the world leader in wind energy. “The Danish manufacturers have a market of 30 percent of the world market in wind power products,” said Maj Held Sallingboe, communication manager with the Danish Energy Industries Federation, Denmark's largest trade organization for energy technology companies. While Danish company Vestas is the world's biggest wind turbine manufacturer, state-owned DONG Energy operates a 209 megawatt (MW) offshore wind farm called Horns Rev 2 in the North Sea. DONG also plans to build larger wind farms, one with a 400 MW power capacity and another with a 630 MW capacity. Today there are close to a thousand companies actively working in clean-tech industries, offering employment to 60,000 people. “A large proportion of these companies are extremely reliant on export markets -- with export ratios at more than 90 percent,” said Hermansen. Though the largest market is the European Union, 20 percent of Danish products go to non-EU countries. The export of energy and environmental technologies was worth 8.6 billion euros in 2008 and is expected to be over or around the same ballpark figure for last year as well. “While the Danish clean energy sector receives a share of 11 percent in total exports, the wind industry share alone stands at 8.5 percent in the overall export portfolio,” Sallingboe points out, stressing that the Danish wind industry is a model of how to translate a green energy strategy into a more nature-friendly environment. The government is already committed to a goal for renewable energy constituting at least 30 percent of gross energy consumption in 2025. Eyes on Turkey “We are looking into more secure markets because of the economic crisis that took its toll on 24,000 people employed in the wind industry in the country,” said Jens Holst-Nielsen, senior advisor with the Confederation of Danish Industry, which represents 11,000 companies across the country. Turkey, with its great potential for wind energy and new legislation on the horizon offers great opportunities for Danish companies that want to sell equipment, technology and expertise. The Trade Council's liaison officer in the Danish Consulate General in İstanbul, Seda Kayrak, says many companies from Denmark are interested in the Turkish renewables market. Some of them will be participating in the Danish World Wind Energy Conference & Exhibition to be held in İstanbul from June 15 to 17. On Nov. 1, 2007, the Energy Market Regulatory Agency (EPDK) issued a new call for license applications for wind farms. In just one day, they received a record number of 756 wind power plant applications totaling 78,000 MW -- about twice the existing total energy supply in Turkey -- but since then none of these projects have been granted a license. Many foreign and domestic companies have shown quite an interest in the renewable energies market in Turkey, but they are holding off their investments until legislative changes are approved by the Turkish Parliament, making clear what government subsidies would be there in terms of price guarantees. Experts argue that Turkey, which relies heavily on imported energy resources, has a huge potential for wind power, putting estimates from 50,000 to as high as 150,000 MW in electricity generation. The European Wind Energy Association has estimated that Turkey could meet 20 percent of its electricity demand from wind power with a target capacity of 20,000 MW, even assuming an average 8 percent annual growth in power consumption. Today it has the 13th highest wind power capacity in Europe, and it could very well position itself as one of the top three biggest wind energy producers in Europe in the near future. So far only about 1,000 MW of capacity is generated by wind farms in operation in Turkey, accounting for 1 percent of the total electricity consumed. Turkey currently ranks 19th in terms of its global wind power capacity. Only around 30 percent of the total energy demand is met by domestic sources, mostly from hydro-power and coal-fired plants. The Ministry of Energy and Natural Resources has set a target of up to 20,000 MW of wind energy by 2023. A number of Turkish companies, acting alone or in joint ventures with foreign partners, have already started constructing wind farms, and many others have expressed a desire to invest in wind energy. Just last week Turkish renewable energy company Gama Enerji A.Ş. announced it would establish two new wind farms in Turkey before the end of 2011. The company received a 44 million euro loan from the Turkish Industry and Development Bank (TSKB) to finance the building of the two new farms, located in the western provinces of Çanakkale and İzmir. TSKB General Manager Halil Eroğlu said they have received loan applications for 200 renewable energy projects in Turkey thus far and that 83 of these projects have already been given financial support by the TSKB. “These 83 projects cost $4.1 billion in total, and we have provided $3.1 billion of this amount,” he stated. The European Investment Bank (EIB) also allocated a total of some 300 to 400 million euros to renewable energy projects in Turkey. Global players have also shown interest in the Turkish market. One current example is the US renewable energy developer Renewable Energy Systems (RES), which entered the Turkish wind power market last year with the acquisition of a 500 MW portfolio of power projects worth 750 million euros. The projects, which are at different stages of development, are due to be completed over the next three to four years and are supported by the Turkish Investment Support Promotion Agency. Hamburg-based company REpower Systems AG announced in April that it had agreed to contract out wind turbines to Turkey-based Al Yel Elektrik, a subsidiary of Akuo Energy SAS. This is to be the first time in which REpower will supply turbines to Turkey. The turbines will generate a total of 148.28 MW and will result in REpower's “biggest wind farm in Europe to date.” Danish company Vestas also announced in April that it had received an order from Turkey's Galata Wind Energy Ltd. for the Sahres wind project. Vestas will deliver 31 V90-3.0 MW wind turbines starting in the fourth quarter of 2010. The project is expected to be completed by mid-2011. Legal hurdles Industry advocacy groups argue that legislative complications put the brakes on tapping into renewable energy resources in Turkey. Lack of a clear regulatory framework would deter some investors from committing, while the delay in handing out licenses has put off large investment projects. Although the Energy Market Regulatory Agency (EPDK) claims regulations are not yet ready and that legislation is still pending at the Environment Commission in Parliament, industry observers claim the pricing controversy is hampering the passage of legislation. According to them, the problem centers around the uncertainty regarding pricing. The current law on electricity production from renewable sources guarantees that the government will buy this electricity at a price of 5 to 5.5 euro-cents per kilowatt-hour (kWh) for all types of renewable energy. This implies that if the producers cannot find buyers in the market, the government is willing to present itself as a buyer. Industry advocacy groups argue this guaranteed price is significantly lower than the free market price of 7 euro-cents per kWh, which makes it difficult for renewable energy projects to obtain credit. A new bill guarantees a price of 8 euro-cents per kWh for electricity produced from wind, but it was not advanced to the floor for a vote because of a disagreement amongst Cabinet ministers over subsidies. Legislators are working on an updated proposal that would reduce the guaranteed price by 1 or 2 euro-cents. Natural gas contracts hampering renewables’ chance Of course Turkey’s commitment to purchase a certain amount of natural gas from Russia and Iran also prevents renewable technologies from developing. The so-called “take or pay” agreements on natural gas that the state-owned Turkish Pipeline Corporation [BOTAŞ] has with these countries reduces the incentive for the government to move forward because according to the terms of the contract, Turkey has to pay for a particular amount even if it does not use it. In November 2008 BOTAŞ was forced to pay $704 million to Iran for unused natural gas, and it is predicted that the total cost of the “take or pay” condition will total $1.5 billion for the last two years. More electricity available from renewable energy sources would mean lower gas imports for the generation of electricity and even bigger losses for BOTAŞ. Turkey is currently renegotiating these contracts to make them more flexible and planning to move away from natural-gas-fired plants to renewable and nuclear power plants in the medium and long term. It is facing serious challenges in satisfying its growing energy demand as the country’s electricity consumption is increasing by an average of 8-9 percent every year. It is also a security issue for Turkey as it has very limited oil and gas reserves. Building plants on renewable energy resources means curbing dependence on imported gas from Russia and Iran, thereby making Turkey more independent. What is more, EU hopeful Turkey would also bring its standards in line with European norms and upgrade its environmental policy. Ankara also ratified the Kyoto Protocol as an Annex I country, putting pressure on policymakers to place more emphasis on the role of renewables in the country’s future energy mix. | 
