Europe’s largest vertically integrated module manufacturer is located in Türkiye. The continent’s largest solar panels, the 1.35 GW Kalyon Karapinar PV power plant, are also located there. This didn’t happen by accident.
It is a crucial time for solar energy in Türkiye. In the first two months of 2024, the country added 1.1 GW of new generation capacity, equivalent to about half of the total number of PV installations in 2023. And as pv magazine discovered at SolarEX 2024, a three-day fair in Istanbul in April 2024, the number of domestic module assembly companies has exploded. Various figures were discussed on the show floor, but the general consensus was that there are at least 80 and probably more than 90 Turkish module assemblers.
What’s behind the boom? The installations are moving in the right direction, but not at a pace that can support such an increase in production capacity. Supportive industrial policies and punitive import barriers provide, at least in part, an explanation.
Doubling
Understanding the Turkish solar market means coming to grips with the range of protectionist measures now in place. As solar stakeholders in the European Union continue to debate the appropriate response to ultra-low prices of Chinese modules, Türkiye has stepped up anti-dumping measures over the past seven years and increased friction at the border.
In 2017, the government unveiled a list of 16 China-based PV manufacturers whose imported modules would be subject to a $20/m2 fine.2 anti-dumping duties. Those were the lucky ones, as other Chinese companies were hit by the same measure with a $25 fee. That was followed by a new ‘surveillance duty’ applied to imports of modules in 2020 – an indirect tax intended to reduce the tax on value added (VAT) for importers. And in March 2024, anti-dumping measures were extended to imports from more competitively priced markets. A rate of $25/mo2 is now in effect for solar panels imported from Vietnam, Malaysia, Thailand, Croatia and Jordan.
As if that wasn’t enough to discourage module imports, changes to VAT rules in November 2023 have had a significant impact on the cost per watt of foreign solar. Importers can no longer deduct VAT resulting from trade policy measures. The effect can be seen in an example calculation from analyst PwC, which proposed a 530 MW module with a unit price of $0.11/W. It produces eye-catching results. Before November 24, 2023, which brought about the rule change, the total cost for that hypothetical module, after accounting for trade policy measures, was $110.30, equivalent to $0.21/W. Under the new VAT regime, the same model would come to $269, or $0.51/W.
The government’s actions are not limited to banning foreign modules. There are many incentives aimed at supporting domestic production of modules. In summer 2023, a new ten-year feed-in tariff (FIT) of 1.06 TRY ($0.03)/kWh was introduced for PV systems installed between July 1, 2021 and December 31, 2030. Projects using PV modules located in Türkiye will receive even more support and benefit from a new five-year FIT of TRY 0.288/kWh.
A government-backed green energy loan program also eases access to financing, while the country’s long-standing practice of designating “organized industrial zones” – areas that benefit from special tax treatment – helps to attract investment in all kinds to facilitate domestic production.
International ambition
These are the market conditions, but where will they lead? Consolidation likely. Module manufacturing in Türkiye is largely a module assembly business with a strong core of incumbents, plus a long line of newcomers. According to PwC’s analysis, only eight major companies have an annual production capacity of more than 1 GW, and as of February 2024, only one Turkish manufacturer produced solar energy blocks.
Kalyon PV sits at the top of an ever-growing pile. It is also the only domestic manufacturer to produce its own blocks, wafers and cells. The current annual production capacity in Kalyon is 2 GW for modules and solar cells. That figure is likely to increase, according to Kalyon, as the company expects module production capacity to reach 10 GW over the next decade.
Between new installations in Türkiye and the company’s operations abroad, there will be enough demand to accommodate that growth, a company spokesperson at SolarEX said.
“We believe that the capacity of the Turkish market will increase in line with our expansion,” they said. “We believe in Turkish investors in the next ten years [will] have the financial capacity, and we believe the market has sufficient capacity. Our main market will be in the United States, I think. The reason we try to sell there is because our product is real [high] quality and we are one of two companies in Türkiye to achieve UL [Underwriters Laboratories] certification, which allows the products to be sold in the US market.”
For large-scale Turkish manufacturers like Kalyon PV, the United States is the land of opportunity. The Uyghur Forced Labor Prevention Act keeps competition from China at bay, while the incentives to support green investments in the US Inflation Reduction Act (IRA) offer tempting opportunities.
“Our domestic product percentage is 90%,” the spokesperson said. “We have a clean supply chain and we can prove it [United States] investors, that’s why they’re really interested in our products.”
Kalyon is not the only Turkish company with American ambitions. In April 2024, Elin Energy started producing solar panels at a location in Texas. The company has already signed agreements with US distributors and plans to increase production capacity to 2 GW within 18 months. It followed a similar announcement from Energate Solar in October 2023. Energate plans to ramp up module production in the United States and has also set a target of 2 GW. The company said it planned to produce 500 MW of gallium-doped monocrystalline passivated emitters, back-contact silicon panels and TOPCon (tunnel oxide passivated contact) panels in 2023, before expanding to 1 GW in 2024.
It is clear that the United States has potential for Turkish module manufacturers. However, competing in the European Union remains a challenge. There is no way to match Chinese modules by price.
Chinese influence
The major manufacturers are also difficult to beat in terms of technology. This was evident from the large number of equipment and raw material suppliers that made the journey from China to SolarEX 2024. A Chinese supplier of solar cells said pv magazine the company decided to attend the fair at the last minute, motivated by the increasing demand from module assemblers.
For equipment suppliers, Türkiye offers a potential lifeline in a challenging global market. Demand has decreased due to the continued oversupply of modules in Europe. While manufacturers have put plans for capacity expansion on hold, Chinese companies offering turnkey module assembly lines are turning to Türkiye.
And despite trade barriers, Chinese manufacturers are finding their way to the market by investing in domestic production. Astronergy – part of the Chinese conglomerate CHINT Group – recently announced a new factory in Adana, Türkiye. A company spokesperson confirmed this pv magazine that production is expected to begin at the site in the third quarter of 2024, with an official inauguration of the factory planned for the fourth quarter of 2024. The production facility is located in the industrial zone organized by Haci Sabanci and is expected to employ 150 people employ in its first phase. The 22,000 m² site will produce the N5 and N7, negatively doped, “n-type” TOPCon modules using solar cells sourced from other Astronergy sites with cell production capacity.
A spokesperson for Astronergy said Türkiye “is a place with a lot of potential in the field of solar energy. Therefore, Astronergy’s high-quality PV modules will begin production in the Turkish market. This will be the first direct investment [in the country from a] top six, tier-1 manufacturer of PV modules.”
What now?
There’s more to come: more capacity and more options. It may not be enough to support the number of new market entrants assembling modules, but the stage is set for continued growth in solar installations, with energy storage also likely to play an increasingly important role. Türkiye’s National Energy Plan predicts that solar energy will account for 28% of total installed generation capacity by 2035 and that energy storage systems will reach 7.5 GW of installed capacity by that date. The plan assumes that installed solar capacity will increase by 3 GW per year until 2030, and up to 4 GW per year between 2030 and 2035.
The country’s largest module manufacturers also have plans to increase their capacity. According to Mehmet Ozenbas, director of Strategy&, part of the PwC network, there could be four Turkish manufacturers producing solar cells in two to three years. Ozenbas said pv magazine Smart Solar Technologies is expected to begin domestic production of solar cells in 2024. The company also plans to produce its own wafers in the near future. Elin Energy brand Sirius and Schmid Penkintas are also pursuing domestic ambitions for cell and wafer production.
‘Onshoring’ these key stages in the solar panel supply chain appears to be the next big step for PV production in Türkiye. The number of module assembly companies in the market may have soared, but it will be those with their own supply chains that will be best placed to make waves on the global stage.
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