Turkey sets ceiling price of US$0.08/KWh for offshore windfarm

Further details have been made available of Turkey’s first tender for offshore wind, a project for which a high level of local content has been stipulated.

Turkey’s ministry of energy and natural resources launched a competitive tender for a 1.2 GW offshore windfarm at the end of June. Apart from adding to its capacity to generate clean energy, Turkey wants to use offshore wind energy to create a pathway to local manufacturing of offshore wind components, reduce its dependence on imported fossil fuels and reduce its trade deficit.

Under the winner-takes-all renewable energy designated area auction system, known by its Turkish acronym Yeka, an award will be made by late 2018 or early 2019 for a 1.2 GW offshore windfarm in the Aegean or, possibly, the Black Sea.

The tender announcement was published in the Official Gazette in Turkey on 21 June 2018. Bids will be accepted until 12am on 23 October 2018. Saros (Edirne-Enez, Keşan), Kıyıköy (Kırklareli-Vize) and Gelibolu-Şarköy (Çanakkale-Tekirdağ) are among the nominee regions for the project.

Done Yalcin, a partner, Berk Tüzün, associate, and Levent Bilgi, counsel at law firm CMS said parties contracted for the project will establish an offshore windfarm, choosing two of the listed areas or two other areas it has selected itself, provided it carries out the necessary surveys. The tender stipulates that consortia developing the windfarm must first start work on an 840 MW facility and then continue with the remaining part to reach a total of 1.2 GW.

CMS said the tender stipulates the appointed companies can use the remaining capacity if they notify the Ministry of Energy and Natural Resources, General Directorate of Renewable Energy in writing within 42 months after signing the agreement; and complete the installation within 72 months. Entities or partnerships formed from multiple companies will be allowed to apply for the tender.

The Official Gazette indicates the ceiling price for electricity produced by the offshore windfarm will be set at US$0.08/KWh and that the tender will be carried out through a reverse auction. The consortia that submits the lowest bid will execute an agreement, including the first 50 TWh of electricity production.

CMS noted that if the 1.2 GW of capacity is to be developed in two phases, the investors will be required to apply for separate preliminary licenses for the mandatory 840 MW and the remaining capacity of 360 MW. The right to use the remaining capacity will be terminated if the investor does not make the necessary statement within 42 months or does not put the remaining capacity into use within 72 months. The licence period is 30 years.

The tender also states that around 60% of the wind turbines for the offshore power plant must be domestically manufactured in partnership with Turkish-organised industrial zones and that 80% of the engineers taking part in the project must be Turkish citizens. Each turbine must have a capacity at least 6 MW.

Training will also be organised to provide qualified staff for the project. Construction of the offshore windfarm is expected to contribute to the development of a number of sectors in Turkey, including logistics, cable production and other forms of manufacturing.