Weekend reading: A manufacturing bridge between Europe and Asia

According to Turkish solar industry insiders, there are more than 60 module manufacturers in the country. Murat Guven, founder and CEO of Kaangokay, an independent solar consulting firm, lists 72 companies that are either active or eligible for “investment incentives” but “may cancel them or delay … investments.”

The picture provides a stark contrast to the solar industry, which had a handful of mostly small-scale players between 2018 and 2020.

“We now have very good regulations,” says Tolga Murat Özdemir, vice president of GENSED (Güneş Enerjisi Sanayicileri ve Endüstrisi Derneği, the Solar Energy Association of Turkey) and CEO of Kontek, an engineering, procurement and construction services company based in Izmir. . Referring to net metering rules that increase demand, Özdemir adds: “We have suffered for 10 years, but we have worked hard to get good rules (for solar energy) in place.”

The regulation in question creates an attractive economic environment, especially for commercial and industrial (C&I) solar and domestic manufacturers of fertile turf. Chinese modules are banned in Turkey under strict anti-dumping rules, and C&I systems incorporating domestic modules can receive tax breaks of 30 or 40 percent. As a further protectionist measure, imported non-Chinese modules attract tariffs – interestingly based on panel weight – of up to $95 per panel.

As a result, standard Turkish mono-PERC (passivated emitter back contact) modules can cost $0.40/watt of generation capacity to $0.43/W, compared to $0.22/W to $0.25/W in China and the rest of Europe.

Strong demand

Nevertheless, the Turkish market is thriving, if not booming. Although the government’s installation figures require some interpretation, GENSED director Özdemir says that in 2022, approximately 2.5 GW of solar energy was installed. “It will be at least 3 GW next year,” he adds.

Others are less optimistic, putting the 2022 figure at 1.5GW, but it’s clear that Turkey’s industrial base is shifting to solar to reduce electricity bills. The country is still largely dependent on energy imports, and major industrial consumers have sought to reduce spending. The 30-40% tax incentive available when using domestic modules and the net metering tariff structure make C&I solar attractive. The ability to “cycle” off-site PV systems via the grid and using net metering is an added boost for businesses with fewer rooftops suitable for solar use or in higher cost areas.

Enter more manufacturers

Turkey’s solar manufacturing sector has responded to strong C&I conditions, high prices and tax incentives for domestic production. PV module manufacturing and, to a lesser extent, cell production is booming in Anatolia.

That production expansion was on full display at the Solarex trade fair in Istanbul in April. There was a dazzling array of booths from new Turkish module manufacturers. Due to the relatively high prices and incentives of the panels, large Turkish industrial companies are setting up module production lines to supply their own C&I projects.

“We see considerable growth in the production segment,” says Kaangokay founder and CEO Guven. “The reason for this is that panel prices were artificially kept very high in Turkey, especially at the end of 2021 and throughout 2022. Some Turkish textile manufacturers are aware of sales and global market costs and are particularly concerned about the border. carbon regulations, have decided to become panel manufacturers themselves rather than pay these high profit margins to producers.”

Evidence of these high margins can be found in some announcements by Turkish manufacturers. Antalya-based CW Enerji has been manufacturing solar modules since 2010 and proudly claims to be the country’s “408th largest company” by sales – as tracked by the Istanbul Chamber of Industry and Commerce.

In addition to module production, CW Enerji participates in the entire supply chain of solar power projects, from investment to operation and maintenance, and is planning a public listing. “The IPO documents show that the company sold modules at a net profit margin of 19 percent in 2022,” says Guven. This compares to a margin of 5.7% in 2020 and 0.3% in 2021. Guven estimates that CW Enerji’s current generating capacity is only 900MW.

Upstream extension

Currently, the majority of solar energy production in Turkey is still module assembly. Large and established producers have upgraded facilities with the latest technologies such as M10 cell formats, double glass enclosure, large modules and multi-rail connection due to high demand. They are also deploying negatively doped, n-type cells, namely TOPCon (tunnel oxide passivod contact) devices – enabling proper practices that allow solar cells to be imported from China with limited trade barriers.

There is some cell production capacity in Turkey, the most significant of which is the Kalyon production facility outside the capital Ankara – which also has ingot and wafer production. Istanbul-based Smart Solar Technologies is believed to be working to expand production of the cells, although some cell-making equipment suppliers have reported slow progress.

China’s HT-SAAE has the longest experience in cell production in Turkey and has an annual production capacity of about 800 MW. However, since its production is located in the “Istanbul Free Trade Zone”, it is considered to be outside the customs territory of Turkey and operates only for export. The company currently manufactures cells and modules at its facility for export, without trade restrictions, to the US market. It ships from its Chinese factories to Europe, not Turkey.

Vertically integrated manufacturer Kalyon, which recently achieved UL certification for its modules, reports that it has achieved its first 25 MW sale to the US and plans to increase sales overseas as well. However, Kalyon admits that “prices so low” in Europe remain a barrier. The company has begun a “three-phase” production expansion plan, under which it plans to increase TOPCon cell capacity by approximately 900 MW, bringing its total cell capacity to 2 GW. Not all of these lines are served by Kalyon’s own ingot and wafer production.

“Turkey’s solar energy export level, excluding free zone exports, is around $14 million – and most of these exports go to Syria,” says Kaangokayn Guven.

Equipment delivery

As demand for upgrades and expansions is strong, Chinese PV module manufacturing equipment suppliers are doing brisk business in Turkey. As the table below shows, the country’s incumbent solar manufacturers work almost exclusively with Chinese line integrators, including Jinchen, SC-Solar and Confirmware.

Top 15 active solar module manufacturers in Turkey, 2023

*Capacity calculations are based on 300 working days in three shifts, M10 cells are used in the production of solar panels. Some theoretical capacities are estimates. Source: Kaangokay

Suzhou-based SC-Solar reports that it has supplied 16 production lines to Turkey, with the largest line having an annual production capacity of 500 MW. Smaller suppliers of production equipment are also gaining a foothold. Zenith Solar, which operates about 300 kilometers outside Beijing, reports that its largest project in Turkey is a 750 MW module production capacity delivered to CW Enerji. It has also sold individual tools to Kalyon and is aiming to sell 500 MW of equipment in Turkey this year.

With Turkey’s market outlook strong—GENSED predicts 30-35 percent annual growth by 2035—it’s possible that the country’s solar manufacturing sector could become an important link in the global solar supply chain, with strong ties to China’s industry and nearby, Europe’s edge. However, for this to happen, incumbents must continue to scale to become more competitive and expand their manufacturing supply chain, a process that Kalyon is currently embarking on.

Such a development would also increase the utilization rate of solar energy plants, which is currently around 30–45 percent, according to Kaangokay CEO Guven. He points out, however, that “an accurate estimate is not possible because new manufacturers produce for storage and some new manufacturers for their own consumption.”