Turkey’s Energy Storage Market is ‘Fully Open Now’

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With a commitment to add 1GW of new solar PV and wind power every year, Turkey’s energy storage needs are coming sooner rather than later.

The country’s energy regulator has already acted to allow market participation for storage, and local companies are ready to deliver, says Can Tokcan, managing partner of Turkey’s energy storage company EPC Inovat.

Turkey has around 97 GW of power generation capacity – in 2011 it had about half of that. It currently has about 9 GW of solar and about the same amount of wind on grid, and is committed to annual gigawatt targets over the years 2017-2027.

Feed-in tariffs are available for wind, solar, biomass, hydroelectric and geothermal, and in 2020, according to official figures, 4,900 MW of renewable energy was installed, while almost no new generation from fossil fuels came on the grid.

As with other markets, the entry point for battery storage was a series of relatively small projects that serve as demonstration and evaluation tools to find the right use cases and market directions.

in April 2021, Energy storage.news reported on the commissioning of Turkey’s first grid-connected battery storage project, a 500kW/500kWh system designed to help balance local supply and demand spikes for a city in the north of the country.

But the biggest steps have been taken in the area of ​​regulation.

“What we’re seeing in terms of regulation is going to accelerate markets pretty quickly,” says Tokcan.

A few weeks after this initial project went live, the National Energy Market Regulator (EMRA) made changes to allow investment and ruled that energy companies should be allowed to develop energy storage in three different segments:

  • Energy storage integrated into energy production
  • Integration with energy consumption
  • Independent energy storage

“The general expectation is that Turkey will install about 2 GW of batteries in the next 10 years,” says Can Tokcan of Inovat.

“Turkey is a large industrial country. But there may still only be 2 MW of storage installed. However, we do have a lot of discussions and in fact we have a pipeline of around 100 MW of projects that we are discussing for storage applications. So we can see that things are going uphill very quickly and the potential is there.”

Regulations open the market to a variety of use cases

In the first category above, storage with generation, power generation facility licenses can be upgraded to include energy storage – without renewable producers losing their feed-in tariffs. Solar systems in Turkey usually have about 1.2 to 1.3 times more installed capacity than they can feed into the grid.

The difference between the megawatt peak and the megawatt limit of the grid connection can be stored and sold at the current feed-in tariff, which builds the business case, says Tokcan.

As we speak, several solar PV projects are being built in Turkey, each exceeding 100MW. Inovat expects some energy storage to be integrated into some of these solar parks.

“It’s very romantic to have as much renewable energy as possible. But it also creates many problems for the network in terms of instability. The more we invest in renewable energy like the rest of the world, the more we’re losing on-demand power,” says Tokcan, emphasizing the “crucial role” that energy storage plays in this dynamic.

Category two, energy storage systems integrated with energy consumption, is likely to be deployed in large industrial facilities that want to integrate storage to enable more renewable energy, add backup power or solve power quality issues, and arbitrage their electricity costs through peak demand shaving or arbitrage.

The inclusion of the final category, stand-alone energy storage, in the EMRA decision means that energy storage can participate in ancillary services, as has been successfully demonstrated in the UK, much of Europe, parts of the US and Australia.

Industrial plants with battery storage systems large enough to meet the minimum technical requirement of 10 MW for ancillary services could also take part.

The Turkish market is “fully open now,” Tokcan says. “If you wanted to invest in 10MW, 20MW energy storage in Turkey, you can fully participate in ancillary services.”

The ancillary services market was opened up for energy storage in a “completely public and transparent process,” he says.

In fact, all energy markets in Turkey are generally operated transparently, from day-ahead, intraday and ancillary services to the balancing energy markets, Tokcan says. Pricing data, generation data and consumption data can all be viewed and Inovat is currently modeling the financial return on participation in the primary spectrum for a number of potential projects.

Although Turkey is connected to grids in Europe, the transmission system operator (TSO) Turkish Electricity Transmission Corporation (TEIAS) has decided that installing energy storage systems would be better for frequency response than building additional infrastructure to connect its high-voltage lines to European grids to perform the frequency response locally.

TEIAS has already published its technical requirements for energy storage in order to participate in spectrum services. The TSO is also aware that it operates the third longest network in Europe and energy storage could be a good tool to solve problems at different points of the system.

“Small but significant” projects for distributors

Inovat has built four Battery Energy Storage System (BESS) projects in Turkey so far. These are pilot, R&D projects developed for various power distribution companies. Their size ranges from 336 kWh to 448 kWh.

“The size is of course relatively small, but it is significant considering that it is one of the first few applications in Turkey,” Tokcan says of the projects.

The regulator provides funding for distribution companies in Turkey, and the outcome of Inovat’s projects could create the possibility for energy storage investments to be partially funded by the government, he claims.

The 21 Turkish sales companies are privatized. However, your investments in the expansion or renewal of the infrastructure are paid for through a government “Capex Support Program”.

“Following these projects, storage investments will also be added to the list for Capex support; That is, if the distribution company can show that installing a storage facility actually defers investment, comparable investment, then it will be funded by the government.”

So, it seems that even at this early stage of Turkish market development, there are multiple ways to invest in energy storage.

Can Tokcan says it’s great to see companies from outside Turkey interested in the market but believes the market has some fairly high barriers to entry. Inovat’s main competitors will be other Turkish companies, at least for now, he says.

Grid codes are quite unique and distribution companies and the TSO have very different specific requirements. Even SCADA integration is a challenge in itself, and these and other aspects “need to be carefully addressed by a local team,” says Tokcan.

“Of course, the on-site work and installation must be carried out with a local team, since a foreign company coming to Turkey – let’s say a large EPC company – and completing the project alone is almost impossible. Of course, they can send a finished product to Turkey, but a local team is still needed to complete the installation and connection.”

Inovat is a subsidiary of the Turkish holding company Tetico, which is active in numerous industrial sectors, from investments in renewable energy to defence, aeronautics and entertainment technology. In addition to being an EPC, the energy storage company makes its own system equipment and claims to make everything but the battery cells and inverters.

Its Ankara factory can assemble 200 energy storage system chassis per year and manufacture residential, commercial and industrial (C&I) and utility-scale battery storage products equipped with Inovat’s proprietary Energy Management System (EMS).

Due to their R&D nature, the few projects that Inovat has already carried out also cover a large number of use cases. This includes batteries stacking applications such as peak demand management and VAR support, microgrid and islanding capabilities, and more, giving the company valuable experience in this young market.

Progress at the level of the big picture

From the overall perspective, Turkey has many reasons to invest in energy storage.

Most of the fossil fuels burned in the country for energy production are imported. The International Energy Agency (IEA) found in 2021 that 93% of its oil and 99% of its gas was imported. Air pollution and CO2 emissions from coal use remain significant, with the use of locally sourced coal often being prioritized over other imported fuels.

A 4,800 MW nuclear power plant will come online in 2023 and will help diversify the national energy mix, and reducing primary energy consumption is also a focus for policies such as Turkey’s National Energy Efficiency Action Plan (NEEAP) which aims to increase consumption in several sectors to reduce 14% between 2017 and 2023.

And as Can Tokcan points out, the history of the solar industry in Turkey is only about a decade long, but it has come a long way since the early 2010s. The IEA said renewable electricity generation accounted for 44% of total electricity generation in 2019, surpassing the national target of 38.8% for 2023.

Still, the IEA said in 2021 that the country could go much further on its renewable energy targets given the significant resources Turkey possesses.

The progressive liberalization of the gas and electricity markets improves their transparency, which Tokcan alludes to facilitates competition for energy storage. EMRA’s new regulations also allow the construction of R&D energy storage projects of up to 1MW by universities, technology development centers and industrial zones, providing another opportunity to explore the energy storage use cases in Turkey.

The creation of a single market could also allow Turkish companies to compete internationally as well, claims Can Tokcan.

“Logistically and technically to create these [energy storage] Solutions in Turkey is actually quite feasible. Because of the [low] Costs, but also because of the high-quality production and engineering.”

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