Final Report

Turkey: Rooftop Solar PV Market Assessment

Submitted By: Tetra Tech

511, 5th Floor, D Mall,

Netaji Subhash Place, Delhi, India- 110034

www.tetratech.com

DISCLAIMER:

“This report has been disclosed in response to a public access request, in accordance to the World Bank’s Policy on Access to Information. The report and its content, including the opinions, findings, interpretations, and conclusions contained therein have not been endorsed by the World Bank. Under no circumstance should anything in this report be attributed to the World Bank, its Executive Board of Directors, officers, or any of its member countries. Nor should this report be construed as an endorsement or recognition by the World Bank, its Board, officers, or member countries of the validity or authority of anything contained in the report.”

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Final Report

Turkey: Rooftop Solar PV Market Assessment

January 31, 2018

Prepared by:

Tetra Tech ES India Pvt. Ltd.

511, 5th Floor, Plot No. A-1,

D Mall, Netaji Subhash Place,

Pitampura, New Delhi, India

WWW.TETRATECH.COM

http://www.tetratech.com/

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Acknowledgements

This report presents a summary of the main findings from the activity “Turkey: Rooftop Solar PV

Assessment,” which was financed by the Energy Sector Management Assistance Program (ESMAP)

together with the World Bank’s Europe and Central Asia Region.

The report was prepared by the Tetra Tech team, which included Ujjwal Bhattacharjee, Rakesh

Kumar Goyal, Apoorv Nagpal, Sugandha Chauhan, Shahab Alam from Tetra Tech ES India Pvt. Ltd.;

Wietze Lise, Mehmet Kocaoglu, Gokhan Tosun, Duygu Kucukbahar-Beygo and Ismail Ozdamar from

AF Mercados Turkey; Shirish Garud and Alekhya Datta from TERI India. The Tetra Tech team

acknowledges the close cooperation and support from the Ministry of Energy and Natural Resources

(MENR), including Mr. Oguz Can, Ms. Dilan Kavruk, Mr. Mustafa Caliskan and Mr. Sebahattin Oz. The

Tetra Tech team also appreciates the guidance from the World Bank team, led by Jas Singh and

Yasemin Örücü, and included Almudena Mateos Merino and Pranay Kohli (Solar Consultant).

A roundtable discussion was held on December 14, 2017 in Ankara to discuss and debate some of

the report’s findings and recommendations. The Tetra Tech team appreciated the comments and

feedback received from the many government and private sector participants.

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Table of Contents

ACKNOWLEDGEMENTS _____________________________________________________________ I

ABBREVIATIONS AND ACRONYMS ___________________________________________________ V

EXECUTIVE SUMMARY ____________________________________________________________ VII

1. ROOFTOP SOLAR IN TURKEY AND LESSONS FROM INTERNATIONAL EXPERIENCE __________ 1

1.1 INTRODUCTION ________________________________________________________________ 1

1.2 RSPV LESSONS FROM INTERNATIONAL EXPERIENCE _______________________________________ 4

1.2.1 CALIFORNIA - UNITED STATES _____________________________________________________ 4

1.2.2 INDIA______________________________________________________________________ 5

1.2.3 GERMANY __________________________________________________________________ 5

1.2.4 CHINA _____________________________________________________________________ 5

1.2.5 JAPAN _____________________________________________________________________ 6

1.3 BUSINESS MODELS ______________________________________________________________ 9

1.3.1 SELF-OWNERSHIP MODEL (FIT) ____________________________________________________ 9

1.3.2 RESCO OR ROOFTOP-LEASING MODEL (FIT) ___________________________________________ 9

1.3.3 RESCO MODEL (NET-METERING) _________________________________________________ 10

2. POLICIES AND BARRIERS TO RSPV DEVELOPMENT IN TURKEY _________________________ 11

2.1 POLICIES ____________________________________________________________________ 11

2.1.1 REGULATORY _______________________________________________________________ 11

2.1.2 TARIFF ____________________________________________________________________ 11

2.1.3 LICENSING PROCEDURE ________________________________________________________ 11

2.1.4 UNLICENSED RSPV SYSTEMS _____________________________________________________ 12

2.1.5 METERING, MONITORING AND VERIFICATION _________________________________________ 12

2.2 BARRIERS ___________________________________________________________________ 13

2.2.1 LEGAL, REGULATORY AND PROCEDURAL _____________________________________________ 13

2.2.2 FINANCIAL AND TARIFF _________________________________________________________ 13

2.2.3 TECHNICAL CAPACITY AND AWARENESS ON RSPV SYSTEMS ________________________________ 14

2.2.4 CONSUMER PERCEPTION _______________________________________________________ 14

2.3 SUMMARY OF BARRIERS, INTERNATIONAL EXPERIENCE AND RECOMMENDATIONS FOR TURKEY _________ 15

3. RSPV MARKET POTENTIAL FOR TURKEY ___________________________________________ 18

3.1 MARKET SURVEY ______________________________________________________________ 18

3.2 MARKET POTENTIAL ____________________________________________________________ 20

3.1.1 REALIZABLE SOLAR INSTALLATION RATIO _____________________________________________ 23

3.1.2 ESTIMATION OF THE MARKET POTENTIAL ____________________________________________ 24

3.1.3 GRID CAPACITY ______________________________________________________________ 24

3.1.4 GROWTH IN SALES OF RSPV _____________________________________________________ 25

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3.1.5 INCOME LEVEL ______________________________________________________________ 25

3.1.6 CREDITWORTHINESS __________________________________________________________ 26

4. APPLICATIONS OF RSPV: PRE-FEASIBILITY ASSESSMENTS OF BUILDINGS ________________ 28

4.1 RSPV SYSTEM SIZE AND BUILDING SELF-CONSUMPTION RATIO ______________________________ 30

4.2 FINANCING RSPV _____________________________________________________________ 32

5. FINANCIAL VIABILITY OF RSPV IN TURKEY _________________________________________ 33

5.1 RESIDENTIAL SECTOR ___________________________________________________________ 34

5.2 INDUSTRIAL SECTOR ____________________________________________________________ 35

5.3 COMMERCIAL AND PUBLIC SECTORS _________________________________________________ 35

5.4 SENSITIVITY ANALYSIS __________________________________________________________ 36

6. RECOMMENDATIONS AND ROADMAP FOR RSPV DEVELOPMENT IN TURKEY_____________ 38

6.1 RECOMMENDATION 1 – SET ANNUAL TARGET FOR RSPV __________________________________ 38

6.2 RECOMMENDATION 2 – ESTABLISH DEDICATED, LOW-INTEREST LENDING FACILITY WITH BANKS FOR RSPV

SYSTEMS ________________________________________________________________________ 39

6.3 RECOMMENDATION 3 – TRANSITION FROM FIT TO NET METERING ____________________________ 39

6.4 RECOMMENDATION 4 – INCENTIVIZE THE INDUSTRIAL SECTOR TO ADOPT RSPVS __________________ 40

6.5 RECOMMENDATION 5 – WAIVE THE SURVEILLANCE CERTIFICATE AND OTHER TRANSACTION COSTS ______ 40

6.6 RECOMMENDATION 6 – ESTABLISH SINGLE WINDOW/ONLINE DISCOM APPROVAL FOR RSPV SYSTEMS UP TO

150 KW ________________________________________________________________________ 41

6.7 RECOMMENDATION 7 – CREATE CAPACITY BUILDING PROGRAMS _____________________________ 41

6.8 RECOMMENDATION 8 – CREATE OUTREACH PROGRAMS ___________________________________ 43

6.9 RECOMMENDATION 9 – DEVELOP TECHNICAL STANDARDS __________________________________ 43

7. IMPLEMENTATION PLAN_______________________________________________________ 44

7.1 TARGETS, AND MONITORING AND EVALUATION FRAMEWORK _______________________________ 44

7.2 SCHEDULE ___________________________________________________________________ 46

REFERENCES ____________________________________________________________________ 48

APPENDIX-1 ____________________________________________________________________ 50

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List of Tables TABLE 1-1: ELECTRICITY GENERATION CAPACITY IN TURKEY, 2014-2017 (MW) 1 TABLE 1-2: COMPARISON OF KEY FEATURES OF VARIOUS RSPV MARKETS 7 TABLE 2-1: PERMITS REQUIRED AND ISSUING INSTITUTION 13 TABLE 3-1: QUESTIONNAIRE FOR VARIOUS STAKEHOLDER GROUPS 18 TABLE 3-2: CLASSIFICATION OF BUILDING CATEGORIES IN TURKEY 22 TABLE 3-3: USABLE AREA ESTIMATION OF WEIGHTED AVERAGE RATIO OF F-TYPE AND P-TYPE BUILDINGS 22 TABLE 3-4: ESTIMATION OF USABLE AREA FOR RSPV 23 TABLE 3-5: ACCESS FACTORS FOR BUILDING CATEGORIES 23 TABLE 3-6: ESTIMATION OF ACTUAL REALIZABLE SOLAR AREA AND TECHNICAL POTENTIAL OF RSPV 24 TABLE 3-7: GRID CAPACITY LIMIT FOR RSPV 25 TABLE 3-8: RSPV MARKET POTENTIAL BASED ON INCOME LEVEL AND CREDITWORTHINESS 26 TABLE 4-1: BUILDING CHARACTERISTICS INCLUDED IN PRE-FEASIBILITY STUDIES 29 TABLE 4-2: BUILDING ROOF TYPE AND PROXIMITY TO ELECTRIC DISTRIBUTION NETWORK 30 TABLE 4-3: RSPV SIZE AND SELF-CONSUMPTION RATIO 31 TABLE 5-1: PARAMETERS FOR ESTIMATION OF THE FINANCIAL AND ECONOMIC VIABILITY OF RSPV 33 TABLE 5-2: RESIDENTIAL SECTOR – RSPV FINANCIAL VIABILITY 34 TABLE 5-3: INDUSTRIAL SECTOR - RSPV FINANCIAL VIABILITY 35 TABLE 5-4: COMMERCIAL AND PUBLIC SECTORS - RSPV FINANCIAL VIABILITY 35 TABLE 5-5: RSPV CAPITAL COST SENSITIVITY ANALYSIS 36 TABLE 5-6: BUSINESS MODELS FOR THE RESIDENTIAL SECTOR 36 TABLE 5-7: BUSINESS MODELS FOR COMMERCIAL SECTOR RESULTS 37 TABLE 5-8: SUMMARY OF KEY FINDINGS 37 TABLE 6-1: ANNUAL TARGETS FOR RSPV 38 TABLE 6-2: FINANCIAL RETURNS FOR INDUSTRIAL RSPV 40 TABLE 6-3: RECOMMENDATIONS FOR CAPACITY BUILDING PROGRAM 41 TABLE 6-4: EXPECTED IMPACTS OF OUTREACH PROGRAMS 43 TABLE 7-1: KEY PERFORMANCE INDICATORS (KPIS) TO MONITOR RSPV TARGETS 46

List of Figures FIGURE 1-1: EVOLUTION OF SOLAR POLICY IN TURKEY 2 FIGURE 1-2: STAKEHOLDERS SUPPORTING SOLAR DEVELOPMENT IN TURKEY. 3 FIGURE 1-3: SOLAR RADIATION MAP OF TURKEY 3 FIGURE 1-4: EVOLUTION OF FIT IN CHINA (JULY 2008 TO JANUARY 2015) 6 FIGURE 1-5: GROWTH OF SOLAR PV IN JAPAN DUE TO FIT 6 FIGURE 1-6: GROSS-METERED SELF-OWNERSHIP BUSINESS MODEL 10 FIGURE 1-7: GROSS-METERED RESCO OR ROOFTOP-LEASING BUSINESS MODEL 10

FIGURE 1-8: NET-METERED SELF-OWNERSHIP BUSINESS MODEL 10

FIGURE 1 9: NET-METERED RESCO BUSINESS MODEL 10 FIGURE 2-1: RECOMMENDATIONS FOR QUICK APPROVAL OF RSPV IN TURKEY 12 FIGURE 3-1: AWARENESS OF SOLAR ROOFTOPS AND INFORMATION MEDIUMS 19 FIGURE 3-2: MOTIVATION FOR ADOPTION OF ROOFTOP SOLAR 19 FIGURE 3-3: PERCEIVED BARRIERS TO RSPV ADOPTION 20 FIGURE 3-4: PREFERRED INCENTIVES FOR ROOFTOP SOLAR ADOPTION 20 FIGURE 3-5: ESTIMATED ANNUAL RSPV PENETRATION 27 FIGURE 4-1: EXAMPLES OF TYPICAL ROOF TYPES IN TURKEY 28 FIGURE 6-1: RSPV PENETRATION BY SECTOR 38 FIGURE 6-2: COMPARISON OF RSPV COST AT FIT AND NM 39 FIGURE 7-1: KEY FACTORS ANALYSED IN PREPARING THE IMPLEMENTATION PLAN 44 FIGURE 7-2: PRELIMINARY SCHEDULE FOR IMPLEMENTATION PLAN 47

file:///C:/Users/shahab.alam/Desktop/Turkey%20Final/Turkey%20Solar%20-%20Final%20Report_Tt.docx%23_Toc505713106file:///C:/Users/shahab.alam/Desktop/Turkey%20Final/Turkey%20Solar%20-%20Final%20Report_Tt.docx%23_Toc505713114file:///C:/Users/shahab.alam/Desktop/Turkey%20Final/Turkey%20Solar%20-%20Final%20Report_Tt.docx%23_Toc505713117

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Abbreviations and Acronyms Abbreviation Full Name

AC Alternating Current

ADB Asian Development Bank

CAGR Compounded Annual Growth Rate

CAPEX Capital Expenditure

ÇATIDER Association of Roofing Industrialists and Businessmen, Turkey (Cati Sanayici ve Is Adamlari Dernegi)

CERC Central Electricity Regulatory Commission, India

CNM Community Net Metering

CTF Clean Technology Fund

CUF Capacity Utilization Factor

DC Direct Current

DGRE Directorate General of Renewable Energy. YEGM (Yenilenebilir Enerji Genel Müdürlüğü)

DISCOM Distribution Company

DSM Demand Side Management

EBRD European Bank for Reconstruction and Development

EE Energy Efficiency

EEG Erneuerbare Energien Gesetz (Renewable Energy Act), Germany

EIRR Economic Internal Rate of Return

EMRA Energy Market Regulatory Authority, Turkey

EPC Engineering Procurement Construction

ESCO Energy Service Companies

FAQ Frequently Asked Questions

FI Financial Institution

FiP Feed-in-Premium

FIRR Financial Internal Rate of Return

FiT Feed-in-Tariff

F-type Flat roof type

GENSED Turkish Solar Energy Industry Association (Güneş Enerjisi Sanayicileri ve Endüstrisi Derneği)

GIS Geographic Information System

GUNDER International Solar Energy Society – ISES Turkish Branch

GW Giga Watt

GWh Gigawatt hour

HGT High Tariff Growth

Hr. Hour

IEA International Energy Agency

IND Industrial

IRENA International Renewable Energy Agency

IRR Internal Rate of Return

KfW KfW Development Bank, Germany

KPI Key Performance Indicator

kWh Kilowatt hour

LCOE Levelized Cost of Electricity

LRMC Long Run Marginal Cost

M&E Monitoring and Evaluation

M&V Monitoring and Verification

MAB Multifamily Apartment Buildings

MENR Ministry of Energy and Natural Resources, Turkey

METI Ministry of Economy, Trade and Industry, Japan

MNRE Ministry of New and Renewable Energy, India

MOE Ministry of Environment, Japan

MW Mega Watt

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Abbreviation Full Name

MWh Megawatt hour

NM Net metering

NPV Net Present Value

NREAP National Renewable Energy Action Plan

O&M Operation and Maintenance

OIZ Organized Industrial Zone

OPEX Operational Expense

PACE-D Partnership to Accelerate Clean Energy Deployment Technical Assistance

PLF Plant Load Factor

PPA Power Purchase Agreement

PPP Purchasing Power Parity

P-type Pitch roof type

PUB Public

PV Photovoltaic

R&D Research and Development

RE Renewable Energy

RES Renewable Energy Sources

Res. Residential

RESCO Renewable Energy Service Company

RETCOM Retail Company

RPO Renewable Purchase Obligation

RPS Renewable Portfolio Standards

RSPV Rooftop Solar Photovoltaic

S.M.A.R.T. Specific, Measurable, Attainable, Relevant and Time-bound Targets

SETNET Solar Energy Training Network

SIR Solar Installation Ratio

sq. ft. Square feet

sq. m Square meter

STG Stable Tariff Growth

tCO2 Tonne of CO2

TEDAS Turkey Electricity Distribution AS (Turkiye Elektrik Dagitim AS)

TEIAS Turkish Electricity Transmission Company

TENVA Turkey Energy Foundation

TERI The Energy and Resources Institute, India

TLY Turkish Lira

TPDDL Tata Power Delhi Distribution Limited

TURKOTED Turkish Cogeneration & Clean Energy Technologies Association

TurSEFF Turkey Sustainable Energy Financing Facility II

USD US Dollar

VAT Value Added Tax

W Watt

WACC Weighted Average Cost of Capital

WB World Bank

YEKA Renewable Energy Resource Areas (Yenilenebilir Enerji Kaynak Alanları)

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Executive Summary Turkey has significant renewable energy (RE) potential, including solar, mainly as a result of its geographic location. Taking advantage of this potential will decrease the country’s dependence on imported fossil fuels as well as reduce greenhouse gas (GHG) emissions. Recognizing this, the government has established a target of at least 30% (or 127.3 TWh) of the total electricity generation from RE by 2023. In addition, it has set targets of 3 GW of installed solar power by 2019 and 5 GW by 2023. As a result, the solar market in Turkey has grown exponentially over the last few years, with installed solar capacity growing from 40 MW in 2014 to 3,421 MW at the end of 2017. The solar boom in Turkey has been primarily limited to larger projects. Most of them are, however, under 1 MW in size in order to take advantage of the unlicensed feed-in-tariff (FiT) schemes. In contrast, in countries with more developed solar markets, such as Germany, the United States and Japan, a significant portion of solar capacity is produced by rooftop solar photovoltaic (RSPV) applications with 1 kW to 10 MW capacities. Given the fast pace of urbanization and corresponding residential, commercial and industrial markets, this study concludes that there is a significant potential for RSPV deployment in Turkey. A first-order assessment of the RSPV market potential has been carried out at the request of the Ministry of Energy and Natural Resources (MENR) and its Directorate General for Renewable Energy (DGRE) with financial and technical support from the World Bank. This report also presents a roadmap for the development of the RSPV market in Turkey. The market assessment includes three main consumer sectors: 1) residential, 2) commercial and industrial, and 3) public buildings. In order to gain an understanding of the current state of RSPV in Turkey, several market examination tools were employed. These included a review of existing solar-related policies and regulations, solar resources, usable rooftop areas, and a market survey of key stakeholders. Field visits to representative buildings were then used to collect the data needed to carry out financial and economic analyses of representative sites. The study also benefited from inputs from the DGRE and World Bank teams. Finally, a workshop was conducted on December 14, 2017 in Ankara to share findings and gather feedback from stakeholders. This further informed the study and aided in developing the final recommendations and roadmap.

Status of RSPV in Turkey As of the end of 2017, roughly 200 MW of RSPV had been installed in Turkey. The installations are mainly in large industrial and commercial establishments. A FiT for renewable energy generation was introduced in 2010. For solar photovoltaics (PV), the FiT has been fixed at US$133/MWh. However, depending upon the use of locally produced equipment, the FiT can go up to US$196/MWh. The FiT is applicable to both licensed and unlicensed projects up to 1 MW capacity, but only licensed projects with capacities above 1 MW can benefit from the local FiT premium. As a result, only 17.9 MW had been installed until 2017 under the FiT scheme. A draft regulation was introduced in January 2018 to incentivize RSPV below 10 kW capacity. The regulation is expected to be notified in the coming months. While the FiT can be a good driver for RSPV in Turkey, as in other countries, MENR has indicated the ending of the FiT in 2020. As international experience shows, a FiT alone may not be sufficient to achieve ambitious national RSPV targets. As the RSPV sector is still developing in Turkey, much can be learned from established solar markets. Table ES1 illustrates the important features of RSPV policies in the United States, Germany, India, China and Japan. The far-right column shows what Turkey can learn from these global experiences.

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Table ES1: Lessons on RSPV development from international experience

Parameter USA Germany India China Japan Lessons for Turkey

Permitting and Licensing Requirements

• On-line permitting practice

• Single-window clearance

• Streamlined permitting process

• No permit fee for small residential PV systems

• Single-window clearance

• Technical standards are pre-defined

No data available • Online application system

• Requires both a pre- and final inspection

• Licensing and permitting procedure should be simple, online and time bound

FiT vs. Net-Metering

• Net-metering • Market-based net-metering

• Net-metering is mostly used

• Net-metering (self-consumption) and FiT co-exist

• A FiT policy has been implemented

• Move towards net-metering

Self-Consumption

• Net-metering and self-consumption are popular in the United States

• Self-consumption is legally permitted under the Renewable Energy Act (amended in 2014)

• 25 of the 29 states have prepared policies on net-metering and self-consumption

• Self-consumption is allowed

• FiT is the main option

• Self-consumption must be encouraged

Other Key Incentives

• Green building incentive, soft loans, guaranteed loan, property tax exemption, capital subsidy, tax credits, up-front rebates on RSPV system cost

• Guaranteed grid inter-connection for all RSPV plants and low-interest loans

• Accelerated depreciation, capital subsidy, training and capacity development programs

• National Renewable Energy Fund with tax benefits, renewable purchase obligation (RPO) for utilities, capital subsidies as high as 30 – 50% for distributed generation

• Residential incentive of $0.20/W for systems priced below $4.10/W. A lower subsidy of $0.15/W for systems priced between $4.10/W and $5.00/W. RPO, tax incentives of 30% against standard purchase prices or 7% tax deduction (for small & medium enterprises)

• Initial push to consumers for whom RSPV is less financially attractive

• Variable incentive scheme based on solar resource availability

• Develop capacity building and outreach programs.

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Energy Storage for Rooftop Solar

• AB 2514: Directing utilities to set an energy storage target

• Self-Generation Incentive Program (Law AB 327): To identify optimal locations for distributed resources

• Electric Tariff Rule 21: Interconnection and smart inverters, permitting, inspection and safety

• KfW 275 incentive: 30% investment grant on equipment purchased with low-interest loans

• Pilot projects to demonstrate energy storage in supporting a national-level action plan

• Capital subsidy for PV systems with energy storage

• Innovation in the Energy Storage Technology Revolution: New Action Plan (2016-2030): R&D grants for energy storage

• Outline for the Strategy of Driving National Innovation

• R&D grants for storage with SPV

• Storage Battery Strategy: integrated strategic policies for storage batteries

• Technical requirements by METI include a guideline for grid interconnection to secure electricity quality

• Electricity Business Act: A requirement for the approval of large electricity storage systems of more than 80,000 kWh

• Evaluate battery storage option with RSPV. In Turkey, the peak energy demand falls between 5 to 10 PM and the peak tariff is 90% more than the day tariff. Such tariff difference is likely to offer a business case for battery storage with RSPV

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RSPV Market Potential in Turkey

Market Survey A market survey was conducted with the following objectives: 1. To assess the gaps in current policies and procedures pertaining to RSPV implementation. 2. To determine the barriers and difficulties faced by various stakeholders in RSPV implementation.

This included consumers and financial institutions (FIs), as well as engineering, procurement and construction (EPC) companies.

3. To determine what support measures are required to encourage the various stakeholders to adopt RSPV.

4. To gain a better understanding of the RSPV market potential. A market survey was issued to a sample of 243 stakeholders, mostly over the telephone using a pre-developed questionnaire. Survey respondents were selected to provide a representation of the country and to cover all key stakeholders. Stakeholders received a questionnaire based on their stakeholder category. The survey results for each category of stakeholders were analyzed for building characteristics, use of roofs, motivation for RSPV, barriers in the implementation of RSPV, selected business mode, financing requirements, market potential, etc. The key findings from the survey were:

• 92% of respondents indicated that, at present, their roof was not being used.

• 64% of the rooftops are of the pitch type (P-type), 24% are flat and 12% are a mix of flat and P-type construction.

• 58% of the respondents declared that environmental concerns were the main motivation for RSPV adoption; 51% of respondents declared a reduction in their electricity bill as their main motivation.

• For 36% of respondents, a lack of awareness on related policies and regulations constitutes the greatest barrier to RSPV implementation. For 34% of respondents, the greatest barrier is a lack of knowledge on how to arrange financing.

• In terms of incentives, 65% of the respondents indicated a preference for the FiT scheme, while the remaining respondents preferred the net-metering model. 46% of respondents indicated a preference for buy-down incentives. A further 26% of respondents indicated a need for low-cost financing.

• Half of the EPC community believes that RSPV development in the commercial sector is most appealing. An overwhelming 83% of the EPC community believes that the lack of skilled labor is a critical barrier to RSPV adoption.

• FIs expressed difficulties in providing finance to EPC companies, because most of them are early-stage firms with weak balance sheets. A mismatch between the current FiT (which only lasts 10 years) and most RSPV systems (with 25-year lifespans) was also concern.

Estimation of Market Potential for RSPV

A three-step bottom-up approach was adopted to estimate the RSPV market potential in Turkey: 1. Determination of usable roof area using building data and geographic information system

(GIS) imagery mapping. 2. Technical potential of RSPV. 3. Market potential of RSPV.

Determination of Usable Roof Area: Seven of the Tukey’s 81 provinces were selected as representative states to cover country’s varying features, such as solar radiation, availability of sun, roof type, building density, and consumer categories. A random data set of 909 polygons across seven provinces for residential, commercial and public categories was prepared and building stock data from 1992 to 2016 was used for further analysis. All 909 polygons were mapped on Google Earth to develop the solar polygon largely based on roof type (Figure ES1).

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Figure ES1: Main and solar polygons

The ratio of the main polygon area and solar polygon area was determined for all 909 polygons under three categories: residential, commercial and public. To determine the representative multiplication factor for each category, a weighted average was used. These multiplication factors were applied to building data to determine the usable roof area. In this way, the total usable area for RSPV installation in Turkey was estimated at 1.1 billion square meters (m2). Technical Potential of RSPV: The total usable area was further adjusted to account for 1) shading from other parts of the roof or from neighboring buildings and trees, 2) the use of roof space for other applications, such as ventilation, heating/air conditioning, dormers or chimneys, and 3) installation and racking of the PV panels. To account for these factors, an access factor was estimated based on similar global studies. Considering all the aforementioned factors, the technical potential of RSPV in Turkey is estimated at about 46.8 GW, as shown in Table ES2. It should be noted that the technical potential assumes RSPV system, regardless of physical or economic viability and, thus, it is not practically achievable. Table ES2: Estimation of RSPV technical potential

Building Type # of Buildings (in thousand)

Base Area (million m2)

Weighted Average

Usable Area

Usable Area (million m2)

RSPV Technical

Potential (GW)

Residential 8,230 1,269 47% 596 23.2 Commercial and Industrial 950 875

57% 499 21.5

Public 69 93 45% 42 2.1

Total 9,248 2,237 - 1,137 46.8

Market Potential of RSPV: The market potential is the technical potential that is economically viable and achievable. To estimate the RSPV market potential, four key elements were considered:

1. Grid capacity 2. Growth in RSPV sales 3. Income level 4. Creditworthiness

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The grid capacity available for RSPV was estimated by considering the total energy demand in Turkey in GWh and a 25% absorption capacity of the grid for intermittent RE (i.e., wind and solar)1. Further considerations were the grid capacity available for RE after subtracting the solar and wind capacities already in operation and an estimated 30% contribution from RSPV to the total available RE grid capacity. Thus, the grid capacity for RSPV is estimated at approximately 6.5 GW over the next 10 years. The grid capacity was further adjusted to take into account the impact of affordability and creditworthiness, as shown in Table ES3. Table ES3: Estimated grid capacity for RSPV in Turkey

RSPV Sectors Grid Capacity for RSPV (MW)

Income Level - Impact Factor

Creditworthiness - Impact Factor

RSPV Market Potential (MW)

Residential: Single-family 764 0.5 0.8 306

Residential: Multi-family 2,519 0.3 0.5 378

Residential: Total 3,283 683 Commercial 1,488 1 1 1,488

Industrial 1,523 1 1 1,523

Commercial & Industrial: Total 3,011 3,011 Public 291 0.7 0.8 163

Total (MW) 6,585 3,858

Based on this analysis, the market potential for RSPV in Turkey has been estimated at 3.9 GW. Annual RSPV penetration was estimated using an S-curve trajectory as shown in Figure ES2. According to the study of DGRE, the market potential of RSPV for residential buildings over next 10 years is estimated as: (a) 1.8 GW - Basic Scenario, (b) 4.0 GW - Medium-advanced Scenario, and (c) 7.5 GW - Advanced Scenario.

Figure ES2: Estimated annual RSPV growth in Turkey

Pre-Feasibility Assessment of RSPV Field visits to 18 buildings were conducted to gather data for prefeasibility assessments. These buildings were selected as representative buildings in the residential, commercial and industrial, and public sectors. Key considerations in conducting the prefeasibility assessments included:

1. Solar PV system size, including roof structural stability. 2. Solar generation potential. 3. Accessibility and grid interconnection.

1 25% grid renewable energy absorption capacity is based on study by AF Mercados, Turkey.

200431

866

1,543

2,335

3,006

3,435 3,662 3,770

3,819

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

An

nu

al R

SPV

Pen

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MW

Year

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4. Financing requirements. 5. Financial and economic assessments.

Based on modelling carried out for India, a RSPV system with a capacity of 80% of the building connected load was shown to cause losses (concerning RSPV energy not self-consumed) of around 1%. Thus, in the interest of maximizing self-consumption, it is recommended that the RSPV system size not exceed 80% of the building’s connected load. For the 18 surveyed buildings in Turkey, four financial indicators were estimated: electricity (or the levelized cost of electricity, LCOE), internal rate of return (both economic – EIRR and financial – FIRR), net present value (NPV), and payback period. The analysis also looked at economic indicators based on both net-metering2 and 10-year FiT schemes3. An Excel-based model was developed based on a standard cash flow methodology to determine these financial and economic parameters. All financial and economic parameters – such as interest rate, debt equity ratio, and operation and maintenance costs – were taken based on Turkey’s current market. The results for the residential and industrial sectors are given in Table ES4. Table ES4: The EIRR and FIRR for residential and industrial consumers

Building RSPV Capacity

EIRR FIRR NPV Payback Period

LCOE

(kW)

Net-metering FiT-10 y ($) (Years) ($/kWh)

AE1_Res 15 21% 16% 15% 14,355 7.9 0.15

AE2_Res 15 22% 16% 15% 14,355 7.9 0.15

Batikent_Res 56 40% 29% 28% 81,527 6.5 0.12

Nezih_Res 30 25% 19% 18% 29,279 7.4 0.14

Doga_Res 6.5 14% 8% 8% 1,058 9.8 0.20

Aydinlar_Ind 48 17% 5% 24% -5,114 9.4 0.13

Turanlar_Ind 60 12% 2% 11% -16,192 10.1 0.15

Temsa_Ind 100 12% 2% 11% -26,284 10.1 0.15

In the residential sector, the projected financial rates of return (FIRR) on RSPV investments are generally high, largely due to the higher grid-based electricity tariff. The results indicate that the sample projects using a net-metering (or self-consumption) scheme are all financially attractive to these consumers. In the industrial sector, the FIRR is relatively low for all industrial buildings, mostly due to the lower industrial tariff. In these cases, a 10-year FiT scheme offers a better return on RSPV investments for these customers. The financial and economic results for the public and commercial sectors show that the size of the RSPV system and availability of solar resources cause differences in the FIRR and EIRR. Detailed results for the respective buildings are given in Table ES6. Table ES6: The EIRR and FIRR for public and commercial consumers

Building

RSPV Capacity

EIRR FIRR NPV Payback Period

LCOE

(kW) Net -metering FiT-10y ($) (Years) ($/kWh)

IBC_Com 4 1% Very Low Very Low -5,547 13.2 0.26

Muyar_Com 32 24% 5% 9% -2,967 8.8 0.16

Batikent_Com 600 Very High 42% Very High 394,664 6.3 0.11

Ulusoy_Com 72 29% 8% 13% 2,081 8.3 0.15

2 Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. 3 Feed-In tariffs are payments to electricity users for the renewable electricity they generate.

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Building

RSPV Capacity

EIRR FIRR NPV Payback Period

LCOE

(kW) Net -metering FiT-10y ($) (Years) ($/kWh)

Ikizler_Com 280 Very High 23% 953% 118,803 6.9 0.12

DGRE_Pub 192 58% 14% 26% 44,779 7.6 0.13

Guzel_Pub 160 58% 14% 29% 37,002 7.6 0.13

EEE_Pub 160 Very High 22% 404% 73,785 7.0 0.12

MOH_Pub 40 70% 14% 29% 10,225 7.6 0.13

Menderes_Pub 75 70% 14% 32% 20,817 7.6 0.13

A sensitivity analysis was conducted using three variables: 1) solar resource, 2) capital cost, and 3) business model4. The findings show that for the residential sector, a 1 kWh/m2/day reduction in solar resources results in a corresponding reduction in the IRR by approximately 6%. For the industrial sector, it changes by around 10%. The pubic and commercial sectors incur an even larger change of roughly 19%. The IRR for public and commercial consumers is more sensitive to capital costs than the IRR for residential and industrial consumers. The FiT model yields a higher IRR than net metering due to a higher FiT than the grid tariff. In terms of business models, the RESCO model, whereby a private company owns the RSPV system and sells electricity to the consumer, offers higher returns due to lower costs. The difference between the IRR in RESCO and self-owned models increases as the system size increases.

Barriers to RSPV Development in Turkey As part of the assessment, several barriers to achieving the RSPV market potential were identified. They include:

Legal, Regulatory and Procedural

• Complex and lengthy licensing/permitting procedures, complex decision-making for multi-family apartment buildings, lack of obligations and guidance for DISCOMS to connect RSPVs.

• Residents are not eligible to trade electricity; only firms are allowed to do so.

• There is no RE purchase obligations (RPOs) for RETCOMs, DISCOMs, and large industries.

• Lengthy and complex processes for obtaining surveillance certificates5 to import solar panels.

• Lack of awareness of the RSPV program and promotion by the government among various stakeholders.

Financial and Tariff

• The FiT scheme lasts 10 years, while the typical lifespan of a RSPV system is 25 years. This creates uncertainty regarding the future revenues and thus profitability of investments.

• Banks require collateral to provide loans, which is difficult for small consumers to arrange.

• Banks are hesitant to finance EPC companies, as most of them are relatively new firms and have neither a track record nor a strong balance sheet.

• Companies lack capacity and financing to develop the RESCO business model which has proven to be popular in other countries.

Technical

• Lack of skilled technicians, which is a main concern for EPC companies.

4 For all the analyses, the self-owned business model has been used. The sensitivity of the results was tested on the Renewable Energy Service Company (RESCO) model. In the RESCO model, a service company typically leases the roof for generating and selling electricity from RSPV systems. 5 The surveillance certificate is a certificate for a waiver of duties on imports of materials for RSPV installations.

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• Low availability of quality suppliers and installers.

• Non-availability of standards for products, workmanship, grid connection and installation in general.

Recommendations Based on the analyses, the following recommendations are proposed to achieve the estimated RSPV market potential of 3.9 GW over a period of 10 years. Set Annual Target for RSPV: The Ministry of Energy and Natural Resources (MENR) should set a target of ‘3.9 GW of RSPV by 2026’ and communicate this target to all stakeholders. The target should include annual milestones and sub-targets for each market segment. To make needed mid-course corrections, the targets for all three consumer categories should be monitored on a quarterly basis. Establish a Dedicated, Low-Interest Credit Line through Commercial Banks for RSPV Systems: The

market survey showed that 25% of survey respondents indicated a preference for low-cost finance

as an incentive for RSPV investments. Such a measure is consistent with global experience, which

suggests that implementing financial incentives in the initial deployment period (up to 500 MW) can

help stimulate the RSPV market. Some EPCs may also need credit enhancement mechanisms.

Transition to Net-Metering: MENR has indicated that the FiT policy will end in 2020. As the financial analysis shows, over the next six years the rates of return under net metering schemes will surpass those under the existing FiT for consumers in all sectors, except the industrial sector, because the FiT will remain higher than the grid tariff until 2027. A net metering scheme will also impose a reduced financial burden on electricity consumers as compared with the current FiT. It is thus recommended that the government transition from the FiT to net metering for RSPV systems. Offer Additional Incentives to the Industrial Sector to Promote RSPV: Given its high potential, high electricity consumption and better access to financing, the industrial sector represents a significant segment of the RSPV market. The profitability on industrial RSPV systems, however, is low under the net metering scheme, with IRRs of 2 to 5%. MENR should develop a program specifically targeting the industrial sector with additional incentives, which may include tax rebates for using electricity generated from RSPV, up-front cash incentives, a higher tariff (equivalent to that for the residential sector) for supplying electricity to the grid from RSPV after self-consumption, simplified procedures, easy access to information, special connection protocols, etc. Remove the Surveillance Certificate and Reduce Transaction Costs: The requirement for a surveillance certificate (certificate for imported PV systems issued by the Turkish Ministry for Economy) should be waived for RSPV systems. Alternatively, the application process should be simplified to make it easier for a residential consumer to obtain a certificate. Create a single Window/Online Approval for RSPV Systems6 up to 150 kW: MENR should work with EMRA, TEDAS and others to simplify the permitting and licensing process. Having an online single-window and time bound, integrated permitting and licensing platform, would substantially reduce the transaction costs for new RSPV installations. Develop and Implement Capacity Building and Training Programs: Training programs should be developed at all levels: for policy makers, FIs, DISCOMs and EPC firms. In addition, training should be

6 All permits, licenses and approvals such as construction, grid connection, safety, environment, etc. should be provided by making a single application on one platform.

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provided to create a large pool of skilled technicians that EPC firms and other relevant players can draw upon. Conduct Outreach Programs: Creating stakeholder awareness of government programs and policies, business models, technical aspects, etc. should be done through targeted outreach programs. Develop Technical Standards: Technical standards should be developed for RSPV products, workmanship, grid connections and installations.

Implementation Plan for RSPV An implementation plan was prepared to develop the RSPV market in Turkey drawing from the following resources: international experience, the market assessment, the financial and economic analyses, identification and analysis of key barriers, the roadmap and stakeholder consultations. For the implementation of the RSPV program, the capacity of all stakeholders at all levels should be built by using various capacity building techniques, e.g., the capacity of DGRE and regulators should be built for policy making and program development/implementation through technical assistance activities including engaging with similar institutions in countries where RSPV programs are running successfully. To build the capacity of the general public, train-the-trainers programs should be implemented. The media for outreach should be selected based on the targeted stakeholder. For example, tailored workshops should be held for policy makers, and exhibitions and roadshows for the public at large and customized approaches for sector-specific consumers. The implementation plan should be monitored using four key performance indicators: RSPV capacity installed, electricity generated from RSPV, number of RSPV projects installed, and number of RSPV projects financed. Each indicator has been detailed for its importance, measurement methodology, and base and annual target values across the three consumer categories. The implementation program consists of a detailed plan for capacity building, outreach, change management, and the implementation of recommendations made. The plan has been mapped on a 10-year Gantt chart.

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1. Rooftop Solar in Turkey and Lessons from International

Experience 1.1 Introduction Turkey has given significant priority to electricity generation from renewable energy sources. This was supported by way of legislation in 2005 (Law No. 5346- Utilization of Renewable Energy Sources for the Purpose of Generating Electrical Energy) and subsequent policies on the generation of electricity through the utilization of Renewable Energy (RE) resources. The total installed capacity at the end of 2017 was 85,200 MW with a breakdown as follows: 32% hydro, 27.1% natural gas, 21.9% coal, 7.6% wind, 1.2% geothermal, and 10.2% other sources (Table 1-1). This capacity included 628 hydro plants, 41 coal fired plants, 207 wind plants, 40 geothermal plants, 290 natural gas plants, 3,616 solar plants and 199 other types of power plants7. Total solar capacity reached 3,421 MW at the end of 2017. Table 1-1: Electricity generation capacity in Turkey, 2014-2017 (MW)

Installed Power Capacity By Fuel/ Resource 2014 2015 2016 2017

Geothermal 405 624 821 1.064 Hydro from Reservoirs 16,607 19,077 19,559 19,776 Hydro from Rivers 7,034 6,791 7,123 7,490 Hydro (unlicensed, < 1 MW) - - - 7 Wind (licensed) 3,630 4,498 5,738 6,482 Wind (unlicensed, < 1 MW) - 5 13 34 Solar (licensed) - - 13 18 Solar PV (unlicensed, < 1 MW) 40 249 820 3,403 Renewables: Biomass, biogas, landfill gas and Waste 288 345 467 575

FO Nafta, DO 659 866 369 304 Local coals, namely Hard Coal, Asphalt and Lignite 8,573 9,023 9,842 9,873 Imported Coal 6,063 6,064 7,474 8,794 Single fuel: Natural Gas and LNG 21,476 21,222 22,156 23,064 Multi-fuels: Solid and Fluid Fuels 668 653 667 683 Multi-fuels: Fluid fuels and Natural Gas 4,074 3,674 3,354 3,434 Thermal (unlicensed, < 1 MW) 57 82 201 Total 69,516 73,148 78,497 85,200

Source: TEIAS The country introduced Feed-in-Tariffs (FiT) for RE generation in 2010. Within the requirements of the FiT, the price is fixed at US$133/MWh for solar photovoltaics (PV) and can go up to US$196/MWh based on the use of locally produced equipment for licensed projects. Both licensed and unlicensed solar projects up to 1 MW capacity benefit from the FiT; however only licensed projects can benefit from the premium for locally produced products. Several developments in the RE sector, such as decreasing investment costs of solar equipment, development of technical know-how and new regulatory amendments for unlicensed generation have accelerated the growth of solar PV. Applications for solar PV systems, mostly ground-based, with a total capacity of 9,000 MW were received by June 2013 for 600 MW announced capacity, where a total capacity of 582 MW has received the right for pre-license authorizations. Out of these solar PV projects with pre-licenses,

7 Installed capacity data from Transmission System Operator TEIAS. Source: http://www.teias.gov.tr/sites/default/files/2018-01/Kguc2017.pdf (accessed 24-01-2018)

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only 18 MW had been developed by the end of 2017. No further licensed solar PV has been approved since then. The Supply Security Strategy Paper (2009) and National Renewable Energy Action Plan (NREAP, 2014), published by the Ministry of Energy and Natural Resources (MENR), have set targets for 2023: 49% of installed power capacity and 38% of total electricity generated to be supplied by RE. The aim is to have 3 GW of installed solar PV by 2019 and 5 GW by 2023. Figure 1-1 presents the development of policies relevant to solar in Turkey.

Figure 1-1: Evolution of solar policy in Turkey There are a number of key stakeholders engaged in and supporting the development of the solar and RE sector in Turkey. These include public institutions, Engineering Procurement Construction (EPC) companies, private investors, financial institutions and many others as can be seen in Figure 1-2.

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Figure 1-2: Stakeholders supporting solar development in Turkey. Solar radiation varies greatly throughout the different regions of Turkey. The Southeast and Mediterranean regions have the most favorable conditions with 3,038 and 3,014 hours of average annual peak sunshine duration, respectively. The two regions receive 1,650 kWh/m2 and 1,590 kWh/m2 of average annual irradiation, respectively. In contrast, the Marmara and the Black Sea regions are less suitable for solar energy production since they receive only 2,519 and 2,317 hours of average peak annual sunshine duration and 1,396 kWh/m2 and 1,338 kWh/m2 of average irradiation levels, respectively. The Figure 1-3 illustrates levels of solar radiation across Turkey.

Figure 1-3: Solar radiation map of Turkey Source: The Directorate General of Renewable Energy (http://www.eie.gov.tr/MyCalculator/Default.aspx)

http://www.eie.gov.tr/MyCalculator/Default.aspx)

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By the end of 2017, around 200 MW of RSPV had been installed in Turkey. RSPV can play an important role in achieving the target for solar generation. For the promotion of RSPV in Turkey, a draft regulation was introduced in April 2017 to incentivize RSPV up to 10 kW and published in January 2018 by EMRA. The policy lays out certain provisions for the installation and execution of RSPV systems. It includes a provision on the application process for establishing solar facilities and for selling electricity generated from such facilities.

In countries with developed solar markets, RSPV has made a significant contribution to the total installed capacities. Examples include Germany, USA, Japan and the emerging economies of China and India. As the RSPV sector in Turkey is still developing, a number of valuable lessons can be learned from established solar markets. In the following section, some of the more critical lessons from these countries have been identified.

1.2 RSPV Lessons from International Experience

1.2.1 California - United States The United States has one of the most developed solar markets and has experienced a significant growth in overall installed solar capacity, with an increase from 1.2 GW in 2008 to an estimated 40 GW in 2016. The United States has a comprehensive policy landscape regarding RSPV. The making and implementing of energy policy in the US takes place at several levels: federal, state and local, with a large number of policies being drafted and executed at the local (municipal and state) level. (This is in contrast to Germany and China where policies were drafted and executed on a national level.) An example of U.S. state level policy is California, which has numerous solar policies governed by the state itself. This state has as many as a hundred policies including financial incentives, regulatory policies detailing mandates on California’s Renewable Purchase Obligations (RPO), building codes and related regulatory concerns such as solar power installation rebate, solar energy development standards, and interconnection standards for small generators, etc.8 The state of California has ramped up its RPO requirements in recent years. Known as the Renewable Portfolio Standards (RPS), the original legislation required 20% of energy to be produced by RE by 2017. However, since 2006, this original requirement was amended towards a more aggressive RPO initiative of 20% by 2010, seven years earlier than originally planned. A further amendment in 2011 called for 30% by 2020 and a last amendment in 2015 called for 50% of energy to be produced by RE as of 20309. As early as 1979, California introduced net metering (NM) to encourage solar deployment. NM is designed to compensate for excess power generated from solar sources at the retail price of electricity (generally around 17 to 20 US cents/kWh). NM and subsequent financial compensation has been highly successful in the United States. The most popular business model used to execute compensation is the third-party model. In California, this includes all parties who avail of the state’s Power Purchase Agreement (PPA) through a Renewable Energy Service Company (RESCO). Throughout the country, NM and subsequent compensation is promoted and encouraged through financial benefits in the form of tax rebates and soft loans and several incentive schemes.

8 For a detailed list of policies, please refer to the following link: http://www.dsireusa.org/ 9 http://www.energy.ca.gov/renewables/tracking_progress/documents/renewable.pdf

http://www.energy.ca.gov/renewables/tracking_progress/documents/renewable.pdf

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1.2.2 India The government of India has set an ambitious target of 175 GW of electricity to be added by RE by 2022. Of the total 175 GW, 100 GW have been assigned to solar power of which 40 GW is to be added by decentralized and RSPV projects. According to a study conducted by The Energy and Resources Institute (TERI) in 2014, the market potential of RSPV in India was estimated at 124 GW. In 2016, the cumulative installed PV capacity stood at 12.3 GW, with grid connected rooftop capacity at roughly 1 GW. Similar to the United States, India has a comprehensive and complicated policy landscape. It was a late entrant in the solar market and, as such, its policies are based on the experiences of developed countries. Both central and state level policies are in place for solar and RSPV. Most of the Indian utilities have made provisions for RSPV including single window clearance procedures. Technical standards for various solar systems are also well defined. Most of the states have provided options for NM with exception of only few states allowing for a FiT scheme. The most popular model for RSPV in India is the self-consumption model - in this model, the owner consumes the electricity produced by the RSPV system and sells any excess power to the grid. The Ministry of New and Renewable Energy provides incentives in the form of Central Financial Assistance. For the residential consumer category, this entails a 30% capital subsidy on the benchmark cost of RSPV in all states except special category states10 where there is a 60% capital subsidy on the benchmark cost.

1.2.3 Germany Germany has one of the world’s largest solar PV markets, with 42 GW of installed capacity and an annual growth of 2.4 to 2.6 GW in the installed capacity until the target of 52 GW is achieved11. Nearly 65% of Germany’s solar PV capacity comes from RSPV. Germany’s rooftop solar development is primarily led by the national RES Act and its amendments (also known as the EEG Act). The RES Act highlights the key market driving policies, which include legislation on FiT, Feed-in-Premium (FiP) and market tendering. The country has set RE targets of 40%-45% by 2025 to 55%-60% by 2035. A final target is set for an increase to 80% by 2050 (150-200 GW). A key to Germany’s successful solar market is its pre-defined and streamlined permitting process for standardized solar systems. In addition, local permits and inspections are not required for residential RSPV installations. There are also no permit fees for small residential RSPV systems. Germany promotes the “Self-Consumption” model for RSPV to achieve greater growth in the national solar market. The government has also promoted a multi-owner/investor scheme in which many users own or invest in a single rooftop project, such as for multifamily apartment buildings (MABs).

1.2.4 China China has the world’s largest PV market, with almost 46% of the global solar PV capacity. As of 2016, it had an installed PV capacity of 77.4 GW. The rapid growth in China’s solar sector has been the result of the government’s declaration that any projects operational by June 30, 2016 would be eligible for a FiT rate of roughly 15 US cents/kWh. Projects completed after this date would receive a lower FiT rate. This led to a significantly high capacity addition in 2015. According to the National

10 Refer to the following link for more information: https://factly.in/what-are-special-category-states-history-numbers-behind-scs/ 11 http://mnre.gov.in/file-manager/UserFiles/workshop-gcrt-0870616/german.pdf

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Energy Administration, the country aims to add over 110 GW in solar PV in the period of 2016-2020. The FiT incentives that led to the boom in the Chinese solar market were especially tailored to include distributed generation, as shown in the Figure 1-4 below12. Further enablers to the growth of the solar market included low cost materials and human resources, an increased electricity tariff and soft loans provided by state-owned Chinese banks.

Figure 1-4: Evolution of FiT in China (July 2008 to January 2015)

1.2.5 Japan Japan had an early lead in the solar PV technology market. In 1994, subsidies for solar systems were available for 50% of the system cost. These incentives were gradually reduced to 33% in 1999. As a result, over 250,000 residential PV systems were set up and increased the cumulative solar PV capacity from 43.3 MW (1994) to 1,422 MW (1999)13. The country has set a target of 64 GW of solar PV by 2030. In 2012, Japan introduced a FiT scheme. This led to an increase in solar PV installation and added significant PV capacity across all consumer segments. As a result, installed PV capacity in Japan increased from 3.81 GW in 2012 to 8.55 GW in 2013 (Figure 1-5). Up until mid-2014, a total of 10.5 GW of new PV capacity was installed. Cumulative rooftop capacity stood at 16.3 GW out of 23.3GW total solar PV installed in 2014.

Figure 1-5: Growth of solar PV in Japan due to FiT

12 https://d2oc0ihd6a5bt.cloudfront.net/wp-content/uploads/sites/837/2015/06/2015_06_03_ASEF_ADB_AECEA_Frank_Haugwitz_FINAL.pdf 13 https://www.eu-japan.eu/sites/default/files/imce/minerva/pvinjapan_report_minerva_fellow.pdf

https://d2oc0ihd6a5bt.cloudfront.net/wp-content/uploads/sites/837/2015/06/2015_06_03_ASEF_ADB_AECEA_Frank_Haugwitz_FINAL.pdfhttps://d2oc0ihd6a5bt.cloudfront.net/wp-content/uploads/sites/837/2015/06/2015_06_03_ASEF_ADB_AECEA_Frank_Haugwitz_FINAL.pdfhttps://www.eu-japan.eu/sites/default/files/imce/minerva/pvinjapan_report_minerva_fellow.pdf

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Although FiT levels have been steadily declining since their introduction, it is still cost-effective to install RSPV systems. The current FiT for solar power in Japan is 42 Yen (or about 38.6 US cents/kWh). Japan has different FiTs for various RE technologies, e.g. Wind (23.1 Yen/lWh for=> 20 kW and 57.7 Yen/kWh for 15 MW and 42 Yen/kWh for < 15 MW capacity)14. Regarding permits and licensing, Japan uses a similar system to the United States and Germany of online applications. A comparison of key parameters of the five countries is provided in Table 1-2. Table 1-2: Comparison of key features of various RSPV markets

14 http://www.meti.go.jp/english/policy/energy_environment/renewable/pdf/summary201207.pdf 15 https://pubarchive.lbl.gov/islandora/object/ir%3A158830/datastream/PDF/view 16 http://m.klgates.com/files/Event/b9e44c37-184a-4d2d-8edb-356ee4a10af1/Presentation/EventAttachment/8a62eb09-014c-47e7-9b7d-a4e41d36ade8/FAQ_Japan_Feed-in-Tariff_System.pdf 17 http://www.nrel.gov/docs/fy14osti/60419.pdf 18 IEA PVPS – Review and Analysis of PV Self-Consumption Policies

Parameter California (USA) Germany India China Japan Permitting and Licensing Requirements

• Online permitting practice

• Single window clearance.

• Streamlined permitting process

• No permit fee for small residential PV systems15

• Single window clearance

• Technical standards as pre-defined

• Data Not Available

• Online application system

• Requirement for both a pre- and final inspection1617

FiT Vs Net Metering

• Net-metering (NM)

• FiT • Most states have NM policy with exception of few states offering FiT

• Both Net-metering (Self Consumption) and FIT co-exist in China

• Japan has both FiT and net-metering but uses mostly FiT

Self-consumption18

• Net-metering and self-consumption is popular in the US

• Self-consumption is legally permitted under the Renewable Energy Act (amended in 2014)

• 25 states out of the 29 states have prepared policies on net-metering and self-consumption.

• Self-consumption is allowed

• Self-consumption is allowed

Other Key Incentives

• Green building incentive, soft loans, guaranteed loan, property tax exemption, capital subsidy (e.g. California Solar Initiative), tax credits,

• rebates for purchasing renewable solar generation equipment

• Guaranteed grid inter-connection for all RSPV plants, cross subsidy (EEG surcharge) is not levied on energy generated from RSPV

• Accelerated depreciation, capital subsidy, modifications in the building bye-laws to encourage rooftop solar, Renewable Energy Certificates (for both residential and commercial), RPO, training

• National RE Fund with tax benefits, RPO for utilities, capital subsidies as high as 30 – 50% for distributed generation

• Residential incentive of $0.20/W for systems priced below $4.10/W whereby a lower subsidy of $0.15/W is available for systems priced between $4.10/W and $5.00/W, RPO, tax incentives of 30% against

https://pubarchive.lbl.gov/islandora/object/ir%3A158830/datastream/PDF/viewhttp://m.klgates.com/files/Event/b9e44c37-184a-4d2d-8edb-356ee4a10af1/Presentation/EventAttachment/8a62eb09-014c-47e7-9b7d-a4e41d36ade8/FAQ_Japan_Feed-in-Tariff_System.pdfhttp://m.klgates.com/files/Event/b9e44c37-184a-4d2d-8edb-356ee4a10af1/Presentation/EventAttachment/8a62eb09-014c-47e7-9b7d-a4e41d36ade8/FAQ_Japan_Feed-in-Tariff_System.pdfhttp://www.nrel.gov/docs/fy14osti/60419.pdf

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The following are key lessons and features from these five countries which can help inform the policy and strategy for accelerating the installation of RSPV in Turkey:

19 https://www.gtai.de/GTAI/Content/EN/Invest/_SharedDocs/Downloads/GTAI/Fact-sheets/Energy-environmental/fact-sheet-energy-storage-market-germany-en.pdf?v=7 20 http://mnre.gov.in/file-manager/advertisement/EoI-Energy-Storage-Demonstration-Project-for-supporting-Renewable-Generation.pdf 21 http://www.intersolar.in/en/news-press/news/industry-news/energy-storage-in-india-an-overview.html 22 http://en.cnesa.org/featured-stories/2016/5/8/chinas-energy-innovation-action-plan 23 http://www.china.com.cn/zhibo/zhuanti/ch-xinwen/2016-05/23/content_38515829.htm

programs for solar professionals and rebates

standard purchase prices or 7% tax deduction (only applies to small and medium enterprises)

Energy Storage for Rooftop Solar

• AB 2514: Directing utilities to set Energy Storage target

• Self-Generation Incentive Program (Law AB 327): To identify optimal locations for distributed resources

• Electric Tariff Rule 21: Interconnection and smart inverters permitting, inspection and safety

• KfW 275 incentive: 30% investment grant on equipment purchased with low-interest loans provided by KfW19

• Pilot projects on demonstration of energy storage in supporting RE20

• National level action plan

• Capital subsidy for PV systems with energy storage21

• Innovation in the Energy Storage Technology Revolution: New Action Plan (2016-2030): R&D grants for energy storage22

• Outline for the Strategy of Driving National Innovation: R&D grants for storage for SPV projects 23

• Storage Battery Strategy: formulate and implement integrated strategic policies for storage batteries

• Multiple subsidy programs by the Ministry of Economy, Trade and Industry (METI) and the Ministry of Environment (MOE)

• Technical requirements by METI including a guideline of grid interconnection to secure electricity quality as of 2013

• Electricity Business Act: A requirement for the approval of large electricity storage systems of more than 80,000kWh

https://www.gtai.de/GTAI/Content/EN/Invest/_SharedDocs/Downloads/GTAI/Fact-sheets/Energy-environmental/fact-sheet-energy-storage-market-germany-en.pdf?v=7https://www.gtai.de/GTAI/Content/EN/Invest/_SharedDocs/Downloads/GTAI/Fact-sheets/Energy-environmental/fact-sheet-energy-storage-market-germany-en.pdf?v=7http://mnre.gov.in/file-manager/advertisement/EoI-Energy-Storage-Demonstration-Project-for-supporting-Renewable-Generation.pdfhttp://mnre.gov.in/file-manager/advertisement/EoI-Energy-Storage-Demonstration-Project-for-supporting-Renewable-Generation.pdfhttp://www.intersolar.in/en/news-press/news/industry-news/energy-storage-in-india-an-overview.htmlhttp://en.cnesa.org/featured-stories/2016/5/8/chinas-energy-innovation-action-planhttp://www.china.com.cn/zhibo/zhuanti/ch-xinwen/2016-05/23/content_38515829.htm

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1. Rooftop Solar Policy • Set specific targets for RSPV capacity installations, as in India and Japan.

• Set solar RSPV size ranges and limits. India set limits for a solar PV system size to be in the range of 1 kW to 1 MW. A cap on the system size is also specified in the range of 80 to 100% of a facility’s connected load. A further minimum limit on self-consumption at the source is set around 80% of the energy produced from an RSPV system.

2. FiT vs Net Metering • Promote NM schemes, as was done in the United States and India. • Consider additional incentives when justified, such as China, which offered an additional

financial incentive (roughly 6 US cents/kWh) over the retail electricity tariff to encourage self-consumption.

3. Availability of Consumer Finance: • Improve access to financing. In developed markets, such as the United States, Japan and

Germany, access to financing from commercial banks was important. In developing markets, access to low-cost financing, such as from state banks in China or through International Financial Institutions for India, for the RSPV sector24 were needed.

4. Permits and Licensing: • Streamline licensing and permitting. Pre-defined and streamlined procedures, as was

done in Germany and the United States, is important. California introduced the Expedited Solar Permitting Act (solar bill AB 2188) in 2014 to streamline and encourage adoption of RSPV, giving a deadline of one year for implementation to all 540 jurisdictions in California. This has led to an increase in RSPV and a general growth of California’s solar market.

5. Capacity Development • Extensive capacity building program can help in achieving RSPV targets, such as in India.

USAID’s PACE-D program and the Indian Government’s SETNET program aim to train over 400,000 skilled workers in the solar sector.

1.3 Business Models Business models are also important in operationalizing investments in RSPV implementation. A brief description of different business models from international experience is provided below.

1.3.1 Self-Ownership Model (FiT) For FiT self-ownership business model, the roof owner is also the owner of the RSPV assets. The owner finances the RSPV with equity or receives a loan from a bank. The owner engages an EPC firm to install the RSPV system and then enters into a PPA contract with the electric utility to sell the generated electricity at the FiT rate. The owner makes separate payments to the electric utility for the electricity consumed on site, as shown in Figure 1-6. The above business model appears to be the preferred investment model for RSPV in Turkey.

1.3.2 RESCO or Rooftop-Leasing Model (FiT) Under these business models (shown in Figure 1-7), the RESCO is the owner of the RSPV assets and, as such, finances the system and signs a PPA with the DISCOM (Rooftop leasing model) or the building owner (RESCO model). The RESCO pays monthly rent for the rooftop use to the building owner(s). This scheme allows building owners to create revenue from roof space without being associated with any bank or electric utility transactions. The 5 MW rooftop solar program in Gandhinagar, India is an example of the rooftop-leasing/RESCO model under a FiT scheme.

24 Some Financial Institutes (FI’s) in India have in fact set up dedicated credit lines for solar power development in India. For example, Punjab National Bank, State Bank of India, etc.

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Self-Ownership Model (Net-Metering or NM) This business model is similar to the self-ownership model under a FiT in that the facility or roof owner owns the RSPV assets and transacts with the bank and DISCOM (Figure 1-8). The key difference is that the power generated is not sold at the FiT, but rather deducted from the owner’s utility bill. In other words, the owner pays the utility for the net electricity consumed (calculated as grid electricity consumed minus the solar electricity fed into the grid). If the solar generation exceeds the owner’s grid consumption, the excess energy can be rolled over month to month. This business model is more commonly used in the residential sector in other countries.

1.3.3 RESCO model (Net-Metering) RESCO model can also be applied in conjunction with a NM scheme. In this case, the RESCO owns the RSPV assets and transacts with banks, EPC firms and the utility (Figure 1-9). The building owner enters into a PPA with the RESCO and consumes the solar power generated by the RSPV system. Any excess solar generation is netted with the electricity consumption from the grid. An example of this are the utility assisted businesses, offering a solution to high RSPV adoption costs, which are prevalent in the United States.

The following sections explore the different elements of the analytical framework concerning RSPV development. Section 2 outlines the policies and barriers impeding RSPV uptake in Turkey. Section 3 presents the technical and market potential for RSPV in Turkey. Section 4 offers a pre-feasibility assessment of a set of surveyed buildings identified in field visits to various provinces. Section 5 presents the results of financial and economic analyses of representative systems. Finally, Sections 6 and 7 provide a recommended roadmap and implementation plan.

Figure 1-8: Net-metered self-ownership business model

Figure 1 9: Net-metered RESCO business model

Figure 1-6: Gross-metered self-ownership business model

Figure 1-7: Gross-metered RESCO or Rooftop leasing business model

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2. Policies and Barriers to RSPV Development in Turkey While the last decade has seen an increase in solar installations in Turkey, there is a need to further strengthen and streamline solar-related regulations and policies. Key issues need to be clarified, including licensing and grid connection procedures, grid connection costs and tariffs. Further issues that require clarification include metering, monitoring and verification. For each of these, the existing conditions have been analyzed, as well as the national energy policies and targets.

2.1 Policies

2.1.1 Regulatory The Electricity Market Law25 is the main legislation concerning the electricity sector in Turkey. It governs the electricity generation, transmission, distribution, wholesale and retail sale, import and export, and market operation activities. The rules and procedures related to the licensing issues, as well as the necessary permits (granted by EMRA), are regulated under the Electricity Market Licensing Regulation26.

2.1.2 Tariff The Turkish solar market is currently supported by a feed-in-tariff (FiT) mechanism, in which the tariff is fixed at US$0.133/kWh. Solar projects using locally produced equipment can access a maximum FiT of US$0.196/kWh. However, local equipment premiums are only available for licensed solar PV. This may accelerate in 2018 once licenses can be provided in accord with the 600 MW tender procedure27. As of 2017, licensed projects with a combined installed capacity of 18 MW were completed. Within the framework of providing additional incentives for local equipment production in Turkey, a tender notice was published on October 20, 2016 for the first solar Renewable Energy Resource Area (YEKA) of 1 GW. After some delays in the tender process, the final bids for the solar YEKA tender in the Karapinar region were submitted to DGRE on 14 March, 2017. The Kalyoncu - Hanwha Q Cells Group won the tender with the lowest bid of US$69.9/MWh, just below the tender’s ceiling price of US$80.0/MWh.

2.1.3 Licensing Procedure Solar generation projects over 1 MW of installed capacity have to obtain a license for grid interconnection. Under the 2013 Electricity Market Law (No. 6446), MENR is required to annually announce the maximum total capacity that can be connected to the grid. The Turkish Transmission Company (TEIAS) then approves the announced capacity28. If a region has more than one developer, the bidding for license is conducted by TEIAS. The developer offering the highest contribution fee is selected. Upon selection, the developer receives an invitation letter from EMRA. A grid connection agreement is then submitted to TEIAS to allow for transmission connected generation. The agreement is also sent to the local DISCOM to allow for distribution-grid connected generation. Connection requirements are defined in Appendix 18 of the Turkish Grid Code. The connection investment can be made by either TEIAS or the developer and is paid back to the developer over a 25 Electricity Market Law of 2001 (Law no: 4628); replaced by Electricity Market Law of March 14, 2013 and numbered 6446. Further published in the Gazette dated March 30, 2013 and numbered 28603. 26 Electricity Market Licensing Regulation; published in the Official Gazette dated November 2, 2013 and numbered 28809. 27 This tender procedure was completed in June 2013. This comprised a total installed capacity of 600 MW. 9000 MW applied to this tender, but due to grid constraints only 600 MW of projects were approved. The next steps involved various additional requirement to obtain a generation license. Until end-2017, projects amounting to 18 MW were completed. More projects can be expected in 2018. Note that new tenders for licensed solar PV are not planned, except for YEKA. 28 Bidding is conducted if there are multiple applications for the same grid capacity. There is much interest for solar PV, so this always led to multiple applications and the need to organize a tender.

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period of ten years. Lastly, the cost of interconnection is borne by the developer.

Figure 2-1: Recommendations for quick approval of RSPV in Turkey

2.1.4 Unlicensed RSPV systems At present, solar generators below 1 MW capacity do not require a license. There is, however, no provision for power off-take (either in transmission or distribution grid) despite the RSPV system being connected to the grid29. These generators do qualify for the FiT scheme, but not for the additional local equipment premium incentive. DGRE has proposed a simplified licensing and interconnection process (shown in Figure 2-1) for RSPV up to 10 kW capacity.

2.1.5 Metering, Monitoring and Verification There are a couple of concerns regarding the use of FiT for RSPV, such as the cost difference between the higher FiT tariff and the lower average wholesale power purchase cost of DISCOMs, and the inability to assess the impact of bi-directional power flow into the grid. This is especially relevant in Turkey where commercial losses are high. In some areas, the retail tariff is lower than the FiT, such as in the Organized Industrial Zones (OIZ) where the FiT is nearly double the retail tariff. Such cost differentials put enormous strain on the financial health of the system and electricity consumers who eventually have to pay the difference. In the next section, the key barriers regarding RSPV in Turkey are summarized along with recommended mitigation measures.

29 Grid connection procedure exists. The solar PV (as well as RSPV) requires to obtain an approval letter (cagri mektubu), among others in order to qualify for grid connection and FiT.

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2.2 Barriers There are several barriers to achieving the RSPV market potential in Turkey. These barriers, described below, are grouped into four categories – 1) legal, regulatory and procedural, 2) financial and tariff, 3) technical, and 4) consumer perception.

2.2.1 Legal, Regulatory and Procedural 1. Lengthy grid connection and permitting procedures. Small-scale investors in RSPV systems face

a lengthy application process for RSPV system to various authorities for various permits Table 2-1. Even though a separate regulation has recently been published for RSPV systems up to 10 kW, small-scale investors will still have to go through the same steps as larger investors (those who invest in systems of 10 kW up to 1 MW). For small-scale investors, this leads to a long connection time (around 6-12 months) with high transaction and application processing costs of around $1000, irrespective of the size of the installation. To demonstrate, the following permits are required for installation of RSPV systems:

Table 2-1: Permits required and issuing institution

Permit required Agency

Connection Opinion & Invitation Letter DISCOM

Connection Agreement DISCOM

Distribution System Usage Agreement DISCOM

Connection Capacity Approval TEIAS

Provisional Acceptance TEDAS

Fire Report Relevant department in the fire brigade

Technical Evaluation Form Approval DGRE

Project Approval Municipality

Special Building Permit Municipality

2. Complex decision-making for multifamily apartment buildings (MABs). Until recently, the legal

status and subsequent leasing rights of MAB roofs were unclear. However, this has now been clarified. The process for MAB owners to jointly make decisions about investing in RSPV systems, applying for collective loans, selecting contractors, signing contracts, determining ways to equitably share the power generated, etc. are complicated with multiple owners.

3. Lack of incentives for DISCOMS to connect RSPV systems. DISCOMs and large industries are not obligated to purchase RE and do not have incentives to connect many small RSPV systems to their network.

4. Homeowners cannot trade electricity: At present, only firms are allowed to sell renewable energy. This excludes homeowners in the residential sector, who make up a significant part of the rooftop market. This restriction includes RSPV systems of up to 1 MW and poses a challenge to homeowners since they would not be remunerated for excess power delivered to the grid.

5. High import costs. A Surveillance Tax is applied to imported solar panels. The Surveillance Tax waiver certificate can be obtained from the Ministry of Economy. However, it is a lengthy process and imposes an added barrier for early stage solar EPC firms from foraying into the RSPV market. This increases the overall cost of RSPV systems which impacts their overall cost-effectiveness.

2.2.2 Financial and Tariff 1. Low incentives for unlicensed generation. Non-availability of financial incentives, such as VAT

exemption or investment initiatives as many other countries have used, does not encourage RSPV systems.

2. Lack of streamline in application for loans for MABs. For MABs, the building management unit or homeowner association is generally not eligible to take a loan for common purpose

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equipment such as RSPV installations. Apartment owners often have to take individual loans, which imposes practical limitations in mobilizing debt for RSPV.

3. Nascent EPC industry. Not all EPCs are financially and technically competent. Many EPCs are relatively new firms and have weak balance sheets. Consequently, they may not qualify for finance, either for working capital loans or to pursue a RESCO business model.

4. Short loan tenures. As some RSPV systems, particularly in the industrial sector, have longer payback periods, with some longer than the current FiT tenure of ten years, long-term debt is needed.

5. High systems operation fee: For small-scale RSPV systems (between 10 to 250 kW), the system operation fee could potentially limit investment. The system operation fee for unlicensed generation has been revised for 2018 as the following (decision No. 7516-9):

• 0-10kW: 0 TLY/year

• 10-250kW: 833.99 TLY/year

• >250kW: 1667.98 TLY/year

2.2.3 Technical Capacity and Awareness on RSPV Systems 1. Lack of skilled technicians. A large pool of capable technicians will be needed to handle a major

growth in the RSPV market. 2. Lack of knowledge on impact of RSPV on the grid. Impact of RSPV on the local and central grid is

not well understood.

2.2.4 Consumer Perception There is a general lack of information about RSPV systems, current policies, their costs and benefits, financing options, business models, and technical considerations. Perceptions of consumers including perceived risks of RSPV adoption have been determined by a market survey. These barriers generally refer to a lack of information and awareness about the following aspects of RSPV:

• Policies or regulations (36%)

• Funding arrangements (34%)

• Information sources (22%)

• Quality suppliers and installers (21%)

• Cost-benefit aspects (19%)

• Maintenance of RSPV systems (11%)

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2.3 Summary of barriers, international experience and recommendations for Turkey S. N

Barriers International Experience Turkey Recommendations

1 • No mandate requiring RSPV deployment.

• DISCOMs are not RE obligated entities.

• Japan has a target of 45 GW RSPV by 2030.

• India has a target of 40 GW RSPV by 2022.

• California state has a target of 30 GW solar by 2020

• Germany has a target of 2.4 -2.6 GW of solar addition per year as per their EEG Act30

• China has a target of 105 GW of solar PV capacity by 202031

• In India, the RPO targets for each state are fixed by the respective state regulators. It is generally 0.5% to 1% of the total power purchase

• Recommendation number 1 – Set annual target for RSPV.

• EMRA should set RPO targets for each DISCOM.

2 • Trading of excess energy is not clearly defined. FiT is currently the only available incentive. Financial uncertainty among users as FiT only lasts for 10 years, while the life span of an RSPV system is 25 years.

• How to arrange funding for rooftop solar remains difficult and unclear.

• Many EPC firms are new or start-up companies with weak balance sheets and consequently do not qualify for securing finance.

• Germany uses FiT, FiP and market tendering as its key market driving policies.

• The driving factors for RSPV in the United States are its local policies (at state, utility and municipality level). There are 117 rebate programs in the United States.

• India has several programs of dedicated low interest financing for RSPV, including the following:

• World Bank: $625 Million ($125 Million from CTF – a highly concessional loan).

• Asian Development Bank: $500 Million.

• KfW Development Bank: Proposed Euro 1 Billion (mostly for RSPV).

• Indian Govt.: Around $1.2 Billion in capital subsidy.

• Recommendation number 2 – Dedicated credit line for an initial 500 MW of RSPV capacity (with low interest lending).

• Thorough cost-benefit analysis to demonstrate the extent to which loans can be recovered during the FiT term.

• Develop consumer finance products.

• Consider credit enhancement mechanisms for EPC firms.

30 Energytransition.org 31Goal of solar energy development in China will increase to 230 GW. Frontnews. Available from: https://frontnews.eu/news/en/10910. Accessed on Jan 24, 2018

https://frontnews.eu/news/en/10910

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S. N

Barriers International Experience Turkey Recommendations

• India’s MNRE “Channel Partner” program for EPC accreditation.

3 • MABs are not allowed to seek loans collectively.

• Unfavourable cost-benefit aspects of rooftop solar32.

• Unclear or not properly defined regulations for various aspects of RSPV (e.g. offtake of excess generation for small consumers).

• Lack of information on rooftop solar.

• Lack of technical standards.

• Concerning trading of excess energy, invoicing liability is a constraint when a resident is not registered as a firm.

• Net metering and/or an additional incentive are very common in international markets, including Germany, the United States and Japan. This is especially due to high retail tariffs.

• Recommendation number 3 – Transition towards net-metering as it offers an attractive return on investment for RSPV.

4 • Subsidized Organized Industrial Zones (OIZ) retail prices will slow down the transition to net-metering for industrial clients.

• No data available • Recommendation number 4 – Provide greater incentives to industrial RSPV users.

5 • The costs of the Surveillance Certificate and various other permits discourage RSPV system investors. Those applying undergo high transaction and application process costs (around $1000).

• No data available • Recommendation number 5 – Re-evaluate the Surveillance Certificate and transaction costs.

6 • Complex permitting process. Multiple permits and approvals are required, in construction, electric utility, municipality, fire department, buildings, etc.

• Irrespective of the size of RSPV, permitting procedures are the same and can take roughly 6-12 months to complete.

• The State of California and India have an online permitting application process.

• Recommendation number 6 – Single window/online approval for RSPV systems of up to 150 kW.

• Process of obtaining permits and approvals must be streamlined and standardized.

7 • The capacity for developing RSPV is very limited in Turkey. There is a lack of skilled manpower.

• Lack of quality suppliers and installers.

• The Indian government’s SETNET program is aiming to train 400,000 skilled workers in solar.

• Recommendation number 7 – Create capacity building programs.

• Develop training programs on RSPV.

8 • Lack of outreach programs in Turkey. • Japan’s national outreach program to promote RE though print, radio and audio-visual media

• Recommendation number 8 – Create outreach programs and targeted awareness campaigns.

32 RSPV costs (inclusive of panels, installation, balance of plant, etc.) are high

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S. N

Barriers International Experience Turkey Recommendations

9 • Impact of RSPV on the grid needs to be assessed.

• Lack of standardization of safety requirements in design, installation and integration with the grid.

• Japan has two layers of inspection requirements to ensure a high quality of RSPV installation.

• Recommendation number 9 – Prescribe technical standards.

• DISCOM must make site inspections of the RSPV installation. Only DISCOM staff should be authorized to conne