Industry Trend Analysis - Auctions To Replace Unlicensed Projects As Growth Driver - MAR 2018

BMI View: Higher than expected growth in unlicensed solar projects over 2017 has led us to upgrade our capacity forecast for the solar sector in Turkey. Subsidy reduction for unlicensed projects will slow growth in this segment in 2018, with the introduction of competitive capacity auctions transitioning the sector's growth model away from sub-1MW projects to mega-projects over the next decade.

The Turkish solar power sector outperformed our expectations over 2017, adding almost 1.8GW of capacity throughout the year. In fact, this was more than three times the capacity additions that were registered over 2016 - making Turkey the fastest expanding solar market in Europe. We had initially anticipated Turkey to add about 1GW over 2017.

This faster than anticipated boom was driven by unlicensed solar capacity; projects with 1MW or less installed. These projects have been attractive in Turkey due to the substantial bureaucratic bottlenecks registered for licensed projects (larger than 1MW) ( see 'Strong Investor Interest In Solar, Little Progress', October 6 2015 and 'Solar Expansion To Underperform Government Ambitions', March 17 2017). The 2017 surge was a result of the Turkish government's decision to reduce the feed-in-tariff for unlicensed projects by 25% effective January 2018. As such, we stress that the country added close to 1.2GW in December 2017 alone, as developers rushed to meet the deadline.

Auctions To Take Over For Unlicensed Solar
Turkey - Solar Capacity, MW (LHS) And Total Solar Capacity Additions, MW (RHS)
f = BMI forecast. Source: EIA, TEIAS, BMI

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