The proliferation of module assembly businesses in Turkey shows no signs of slowing down. Despite protective measures aimed at bolstering domestic manufacturing, industry consolidation seems inevitable. The SolarEX trade fair in Istanbul showcased ambitions for international expansion, domestic growth, and increasing interest from Chinese suppliers.
Turkey boasts the largest vertically integrated module manufacturer in Europe. Additionally, the continent's largest solar array, the 1.35 GW Kalyon Karapinar PV power plant, is situated within its borders. These achievements are not coincidental.
The solar industry in Turkey is experiencing a significant turning point. In the initial two months of 2024, the country witnessed the addition of 1.1 GW of new generation capacity, roughly equivalent to half of its total PV installations in 2023. As observed by pv magazine at the SolarEX 2024 trade fair in Istanbul in April 2024, there has been a substantial surge in the number of domestic module assembly businesses. While specific figures varied, it was generally agreed upon that there are at least 80, and possibly more than 90, Turkish module assemblers.
Diving Deeper: Unraveling the Turkish Solar Market Dynamics
To comprehend the Turkish solar market, one must grapple with the array of protectionist measures currently implemented. While solar stakeholders within the European Union engage in discussions regarding the appropriate response to the ultra-low pricing of Chinese modules, Turkey has spent the past seven years intensifying its antidumping measures and increasing friction at its borders.
In 2017, the government released a list of 16 PV manufacturers from China, subjecting their imported modules to antidumping fees of $20 per square meter. These manufacturers were considered fortunate, as other Chinese businesses faced a higher fee of $25 under the same measure. Subsequently, in 2020, a new "surveillance duty" was imposed on module imports, serving as an indirect tax aimed at increasing value-added tax (VAT) for importers. Furthermore, in March 2024, antidumping measures were expanded to include imports from more competitively priced markets. Solar modules imported from Vietnam, Malaysia, Thailand, Croatia, and Jordan now incur a tariff of $25 per square meter.
Adding to the deterrents against module imports, alterations to VAT regulations in November 2023 have significantly impacted the cost-per-Watt of foreign photovoltaics. Importers are now unable to offset the VAT generated through trade policy measures. This change is vividly illustrated in a sample calculation provided by analyst PwC. Consider a 530 MW module priced at $0.11/W. The implications are staggering: prior to November 24, 2023, factoring in trade policy measures, the total cost for this hypothetical module amounted to $110.30, equivalent to $0.21/W. However, under the new VAT regime, the same model would cost $269, or $0.51/W.
Government initiatives extend beyond restricting foreign module imports; numerous incentives are designed to bolster domestic module manufacturing. In summer 2023, a new 10-year feed-in tariff (FIT) of TRY 1.06 ($0.03)/kWh was introduced for PV systems installed between July 1, 2021, and December 31, 2030. Moreover, projects utilizing PV modules manufactured in Turkey receive additional support, enjoying a further five-year FIT of TRY 0.288/kWh.
Furthermore, a government-supported Green Energy Loan program simplifies access to finance, while the country's longstanding tradition of designating "organized industrial zones" — areas receiving special tax benefits — facilitates investment in various domestic manufacturing sectors.
Eyeing the Global Stage
Given the prevailing market conditions, consolidation appears to be the likely trajectory. Module manufacturing in Turkey predominantly revolves around module assembly, characterized by a handful of established players and a multitude of newcomers. According to PwC analysis, only eight major companies boast annual manufacturing capacities exceeding 1 GW. As of February 2024, only one Turkish manufacturer was engaged in producing solar ingots.
Leading the Charge: Kalyon PV Sets the Bar High
Kalyon PV stands atop a continuously expanding landscape. It proudly holds the distinction of being the sole domestic manufacturer producing its own ingots, wafers, and cells. Presently boasting an annual manufacturing capacity of 2 GW for modules and solar cells, Kalyon anticipates further growth. The company envisions its module production capacity skyrocketing to as much as 10 GW within the next decade.
A company representative at SolarEX expressed confidence that the anticipated growth in manufacturing capacity will be easily absorbed, thanks to a combination of new installations in Turkey and the company's expanding presence overseas.
"We foresee the Turkish market expanding in tandem with our growth," they stated. "Over the next decade, we anticipate Turkish investors will have the financial means, and we are confident in the market's capacity. Our primary focus will be on the United States market. The rationale behind this strategy is the exceptional quality of our product and our status as one of only two companies in Turkey to obtain UL (Underwriters Laboratories) certification, enabling us to sell our products in the US market."
For major Turkish manufacturers like Kalyon PV, the United States represents a promising frontier. The Uyghur Forced Labor Prevention Act serves as a barrier against competition from China, while the incentives outlined in the US Inflation Reduction Act (IRA) offer enticing prospects for green investment.
"Our domestic product rate stands at 90%," stated the spokesperson. "With a transparent and clean supply chain, we can readily demonstrate its integrity to investors in the United States, which is why they are showing considerable interest in our products."
Kalyon isn't alone in its aspirations for the American market. In April 2024, Elin Energy commenced solar module production at a facility in Texas. The company has already forged agreements with US distributors and aims to scale up production to 2 GW within 18 months. This follows a similar announcement from Energate Solar in October 2023. Energate intends to bolster module production in the United States and has also set a target of 2 GW. The company outlined plans to manufacture 500 MW of gallium-doped monocrystalline passivated emitter, rear contact silicon panels, and tunnel oxide passivated contact (TOPCon) panels in 2023, with an expansion to 1 GW in 2024.
The United States presents promising opportunities for Turkish module manufacturers. However, competing in the European Union remains a daunting task. Matching the price competitiveness of Chinese modules proves to be an insurmountable challenge.
Influence from China
The dominance of major manufacturers extends to their technological prowess, as evidenced by the significant presence of equipment and raw material suppliers from China at SolarEX 2024. According to one Chinese solar cell supplier who attended the event, the decision to participate was made at the eleventh hour due to surging demand from module assemblers.
Türkiye: A Beacon for Equipment Suppliers in a Turbulent Market
In a global market fraught with challenges, Türkiye emerges as a beacon of opportunity for equipment suppliers. With demand diminishing amid the persistent module oversupply in Europe, manufacturers have halted capacity expansion plans. Consequently, Chinese companies specializing in turnkey module assembly lines have shifted their focus to Türkiye.
Overcoming Trade Barriers: Chinese Manufacturers Invest in Domestic Production
Despite trade barriers, Chinese manufacturers are forging pathways into the market through investments in domestic production. Astronergy, a subsidiary of the Chinese CHINT Group conglomerate, recently unveiled plans for a new factory in Adana, Türkiye. A spokesperson for the company confirmed to pv magazine that production is slated to commence at the site in the third quarter of 2024, with an official inauguration scheduled for the fourth quarter of the same year. Situated within the Haci Sabanci organized industrial zone, the manufacturing facility is expected to initially employ 150 individuals. Spanning 22,000 square meters, the site will specialize in producing N5 and N7 negatively-doped "n-type" TOPCon modules, utilizing solar cells from other Astronergy facilities with cell manufacturing capabilities.
An Astronergy spokesperson emphasized Türkiye's immense potential in solar energy, underscoring the decision to commence production of Astronergy's high-quality PV modules in the Turkish market. This marks the first direct investment from a top-tier, tier-1 PV module manufacturer in the country.
What Lies Ahead?
The journey continues with more capacity and enhanced capabilities on the horizon. While it may not suffice to accommodate the influx of new market players assembling modules, the stage is set for sustained growth in solar installations, with energy storage expected to assume a more prominent role. Türkiye's National Energy Plan outlines ambitious projections, forecasting that solar energy will contribute 28% to the total installed generation capacity by 2035, while energy storage systems are anticipated to reach 7.5 GW of installed capacity by the same year. The plan envisions a steady increase in installed solar capacity, reaching 3 GW per year until 2030 and escalating to 4 GW per year from 2030 to 2035.
Leading module manufacturers in the country are gearing up to enhance their capabilities. Mehmet Ozenbas, director at Strategy& (part of the PwC network), anticipates that within the next two to three years, Türkiye could see four domestic manufacturers venturing into solar cell production. Ozenbas informed pv magazine that Smart Solar Technologies is poised to initiate domestic solar cell production in 2024, with plans to manufacture its own wafers shortly thereafter. Additionally, Elin Energy's Sirius brand and Schmid Penkintas are also pursuing ambitions for domestic cell and wafer production.
Bringing these pivotal stages of the solar module supply chain onshore appears to be the imminent leap forward for PV manufacturing in Turkey. While the market has witnessed a surge in the number of module assembly businesses, it will be those equipped with their own supply chains who are primed to make significant strides on the global stage.
From PV Magazine