The Turkish government is thwarting its own offshore wind ambitions

In March, Turkey announced its first offshore wind tender, to give support for projects totalling 1.2GW. This process was set to close on 23rd October, just over a fortnight ago – but it didn’t. With no official explanation, the government postponed the tender.

The only explanation we can gain is from the Turkish media, which reported that the government had not received the expected level of interest from companies willing to bid in the tender. This sounds plausible. We haven’t heard of a rush of offshore wind players entering the Turkish market – utilities, manufacturers or financiers.

This failure to attract interest is in contrast with Turkey’s success in onshore wind, where it is one of the most exciting emerging markets. We heard of the country’s potential from many of our members at Financing Wind Europe on 1st November, and again in our Emerging Markets Attractiveness Index report earlier this week.

Turkey also announced a tender for 1GW of new onshore wind just this month, to build on its already-solid onshore base: the nation had 6.9GW of installed onshore wind capacity at the end of 2017. Its government has been keen to support offshore wind to meet its 2023 wind power target of 20GW.

And the potential is certainly there. A 2015 study by Totaro & Associates estimated Turkey’s capacity for offshore wind to be in the region of 32GW.

But while onshore wind steams ahead, offshore wind is stalling – and we think that government policy itself is partly to blame for investors’ reticence.

One issue is Turkey’s high local content requirements. Onshore wind and solar projects awarded under Turkey’s ‘Yeka’ wind tenders require around 60% of local content, and officials have said that the Turkish ministry of energy and natural resources would ensure the local manufacturing of offshore turbine parts too.

But here’s the problem. The early success of pioneering offshore wind regions, such as countries around the North Sea, was aided by skills and infrastructure borrowed from domestic oil and gas operations. Turkey has no such advantage, although initial exploration of oil and gas resources is currently underway. Building a successful Turkish offshore market will require importing expertise – but government policy discourages this.

It could be argued that experts in offshore wind – Siemens Gamesa, MHI Vestas et al – should set up facilities in Turkey, as they have in other countries like the UK, to fulfil local content requirements. But the Turkish government has not made its long-term plans for offshore wind clear. Without a clear pipeline of projects, companies will not be persuaded to invest on this scale.

Other factors may be putting investors off, too. The government has stipulated that offshore turbines must be of at least 6MW in capacity. And developers of offshore wind in the Mediterranean and the Aegean face challenges because of the distance, by sea, from established manufacturing and service hubs in northern Europe. Both of these considerations will raise costs.

Finally, the cancelled offshore wind tender had a ceiling price of $80/MWh. Given the challenges that Turkey faces, this is stretching the bounds of feasibility. It is possible – the first large-scale wind farm in the US, Vineyard Wind, will cost $74/MWh for the first phase of 400MW – but that doesn’t mean it’s easy, especially in a new market.

The lack of interest from investors in Turkey’s first offshore wind tender has sent a message to the government that its offer is not attractive enough. Turkey needs to take note and change its policies to encourage the international expertise that is needed to build its offshore market.