Enhancing the Renewable Energy Auctions in Turkey

Abstract

Auction mechanism has been a promising market-based mechanism to promote the generation of electricity from renewable energy sources (RES-E).The success of this mechanism relies on accurate determination of auction design criteria in view of country specifics. Turkey is one of the countries applying this mechanism. The aim of this study is to provide an overview of the design criteria of the renewable energy auction mechanism and to make recommendations as required to improve the effectiveness of this mechanism. Assessments and recommendations as part of this study shall seek to provide an opportunity to review such auction design criteria, benefiting from past experiences, which shall in turn enhance the effectiveness of new auctions. Applied incentives have boosted the share of RES-E in Turkey in the last ten years. Feed-in-Tariff has driven rapid growth in renewable markets and enhanced manufacturing industries. This analysis results show that a large-scale capacity-based auction volume through a single tender created enough competition and large volumes of renewable energy being secured at lower prices. Within the scope of long-term plans, auctions should be held regularly at predetermined intervals in order to facilitate market predictability for investors, and could lead to competition. Renewable auctions to be carried out should be smaller in volume and be distributed across different geographical regions.