BORUSAN EnBW Enerji

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  • 1. BORUSAN EnBW Enerji Wind Power Turkey - 2011 Istanbul 20 September2011
  • 2. BORUSAN AND ENBW PARTNERSHIPFIRST CONTACT DURING 2008 DAVOS SUMMIT – PARTNERSHIP WAS FOUNDED IN 2009Borusan Enerji was established in 2007 as EnBW Holding A.S was founded in 2009the energy arm of Borusan Holding, one of in Ankara as a 100% subsidiary of EnBWthe leading business conglomerates in AG which is the third-largest energyTurkey active mainly in steel, logistics company in Germany active indistributorship sectors. electricity generation, trading, grid, gas & environmental services. JUL 09 APR 09 Closing Partnership Agreement Borusan Holding A.S. EnBW Holding A.S. 50% 50% 1
  • 3. STRATEGIC FOCUS AND TARGETSJV HAS A PREDEFINED TARGET: 2000 MW INSTALLED CAPACITY BY 2020 WITH A RENEWABLE FOCUS Critical Year to lay the 1000 MW 1000 MW 2000 MW 2009 foundations 2014 licensed 2016 installed 2020 installed of the projects capacity capacity company Current Portfolio Target Portfolio (611 MW) (2.000 MW) Target activity area 25% includes all energy 43% 50% sources particularly 57% 25% renewable energy Wind Hydro Others 2
  • 4. TURKEY – WIND INSTALLED CAPACITYCURRENT SITUATION INSTALLED CAPACITY DEVELOPMENT BY RESOURCES CAPACITY – 2011 (50.985 MW)* GW 60 3,07% 49,9 51,0 0,18% 50 44,8 15,96% 41,8 38,8 40,6 40,8 3,91% 40 35,6 36,8 33,08% 31,8 30 27,3 28,3 7,09% 20 10 0 36,70% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 INSTALLED CAPACITY DEVELOPMENT - WIND Wind installed capacity has beenMW increasing slowly over the years2.000 accounting for 3 % of the total Wind Natural Gas Other Thermal 1.564 installed capacity by Sept 2011.1.500 Geothermal Coal Added Wind 1.329 235 Hydro Lignite1.000 537 Yet, with the finalization of 792 tendering process a visible 428 500 364 increase is likely to be observed in 19 19 19 19 19 20 59 146 217 3 - 4 years period. 39 87 0 1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 • TEIAS statistics as of September 2011 4 Multiple fuels (solid & liquid) included in the thermal heading except liquid natural gas which is placed under natural gas heading
  • 5. TURKEY – WIND INSTALLED CAPACITYREACHING THE TARGET OF 20 GW SEEMS AS AN AMBITIOUS OBJECTIVE  Energy Market and Supply Security Document stipulated 2023 targets in the Turkish energy sector including the target of wind installed capacity - 20 GW  2010 - 2011 has been an important year for the wind energy investors (adoption of FIT & completion of evaluation of long-awaited 1st of November applications) Still half of the  Existing WEPP Capacity 1.564 MW way to go…  Single WEPP applications1: 1.876 MW  Multiple WEPP applications2: 5.587 MW TOTAL (~) 9.000 MW 1) already licensed by EMRA 2) total capacity to be allocated in 13 packages 5
  • 6. EUROPE - WIND INSTALLED CAPACITYBY THE END OF 2010WIND INSTALLED CAPACITY (MW)Turkey 1.329 Finland RussiaEuropean Union 84.278 197 9 NorwayCandidate Countries 1.418 441 Sweden Estonia 2.163 149Total Europe 86.279 Latvia 31 Lithuania IrelandRenewable Energy Directive 1.428 154 UKEU has target to reach: 5.204 Poland NL 1.107 a 20% share of energy from 2.245 Germany Ukraine 27.214 87 renewable sources by 2020 Belgium Czech Rep 911 215 Slovakia a 10% share of renewable energy 3 Austria specifically in the transport sector Switzerland 1.011 Romania 462 Envisages national support France 5.660 42 Crotia mechanisms: 89 Bulgaria 375  investment aid,  tax incentives Spain 20.676 GR TR Portugal 1.329  green certificates 3.898 1.208  direct price support schemes including feed-in tariffs and premium payments 6 Source: EWEA Wind in Power 2010 European Statistics
  • 7. FEED-IN TARIFF FOR WIND ENERGY IN EUROPE - IGERMANY WILL APPLY EEG 2012 AS OF JANUARY 2012GERMANYScheme Description EEG – 2012 Legal Basis: Renewable Energy Sources Act – EEG (adopted 19.03.2000 – revised on 01.08.2004 & 01.01.2009 – to be revised in 01.01.2012)FIT – based on Duration: 20 years (15 years for large hydro plants) plus start-up year specific electricity Caps: No caps as to the amount generated or installed capacity generation costs On–Shore Scheme: -plant operator receives FIT  8,93 € cent/kWh – initial compensation (first 5 years of commissioning) from the grid  4,87 € cent/kWh – basic compensation applicable after 5 years operator  System service bonus (0,48 € cent/kWh)Bonuses Off-Shore Scheme:  15.00 € cent/kWh – initial compensation (12 years) prolongedLow-cost loans  0.5 months for each mile > 12 nautical miles  1.7 months for each meter water depth (ground) > 20 meters  19 € cent/kWh – optional shrinking model: Initial FIT increases but for a duration of 8 years  3.50 € cent/kWh – basic compensation > 12years (20 years) Begin of commissioning before January 1st, 2018) 7
  • 8. FEED-IN TARIFF FOR WIND ENERGY IN EUROPE - IISPAIN OFFERS TWO ALTERNATIVES FOR THE WIND INVESTORSSPAINScheme DescriptionFIT or Legal Basis: Royal Decree 667/2007Premium on the Duration: Whole project life time Wholesale Market Price Caps: No caps as to the amount generated floor and ceiling prices On–Shore Scheme:  ≤ 25 years - 7,7471 € cent/kWh OR reference premium floor – 7,5405; ceiling 8,9866 € cent/kWh  > 25 years - 6,4746 € cent/kWh Off-Shore Scheme:  ONLY Reference premium - 8,918 € cent/kWh ceiling 17,3502 € cent/kWh 8
  • 9. FEED-IN TARIFF FOR WIND ENERGY IN TURKEYFIT FOR WIND ENERGY INCENTIVE REVITALISED THE SECTOR COUPLED WITH THE DOMESTICMANUFACTURING ADDITION FIT was introduced in 2005 as a unique tariff $/MWh Price Development 2011 Day Ahead Price , FIT & 2010 Day Ahead Price btw 5 – 5,5 €cents, applicable for defined 120 renewable energy sources 110 Implementation Regulation of FIT was not 100 adopted at that time. New RES Law was adopted in Dec 2010 90 It proposes below mentioned FIT at 80 differentiated rates (7,3 10,5 – 13,3 $ cents) 70 for different renewable energy sources. 60 Implementation Reg. is adopted & Domestic 50 Jan Feb March April May June July Aug Manufacturing incentive introduced. FIT Tariff Price Day Ahead System Price 2011 Day Ahead System Price 2010 9
  • 10. EVALUATION OF FIT SCHEME IN TURKEY Feed-in Tariff:  Approximately at the same rate with previous incentive  Investors’ expectations are closer to European levels (i.e. Greece, Germany, Spain)  Compared to the average system price in 2010 & 2011 it seems that there is no visible attractiveness for FIT Domestic Manufacture Incentive:  Positive development – additional incentives for 5 years  Tower and blades can be locally manufactured (thus max. 8.7$cent/kWh.  Even if there was an investment for locally produced wind turbines by today, the time frame is too tight for the generation companies to get benefit from domestic production incentive.  Unfair competition for projects and plants already in operation or developed Currency Difference:  New FIT stipulates incentives over dollar cent  Main turbine manufacturers are European-based companies  Investors are exposed to the euro/dollar parity risks 10
  • 11. RECOMMENDATIONS FOR FURTHER INVESTMENTSSEVERAL HINDERANCES EXIST AGAINST WIND ENERGY INVESTORS  Incentive System  FIT still not a real incentive, should be reconsidered in relation to system prices and be above this reference price to be regarded as an “incentive”  Alternatively an incentive scheme should be considered also by defining system prices  Legislative  Indexation of Wind Pennies with inflation by stagnating, even decreasing electricity prices  Tenders held for substations, for which there is no investment budget. Proposal: effective reimbursement mechanism, when the WEPP investors need to build the substation 11
  • 12. RECOMMENDATIONS FOR FURTHER INVESTMENTSSEVERAL HINDERANCES EXIST AGAINST WIND ENERGY INVESTORS  Administrative  Coordination within MENR needed to solve overlapping of mining areas with WEPP’s  Project Financing, Purchasing & Social issues  Project design should be made to facilitate international financing which will be a major issue for the coming years.  Long term purchasing agreements with turbine suppliers is important to assure ROI.  Projects should be developed by taking into account environmental and social impacts  Non-investors  Entrance to the market should be more difficult for non-investors, protecting real investors. 12
  • 13. Thank you…