Turkey has awarded contracts for the construction of solar power plants with a total installed capacity of 800 megawatts (MW), which are estimated to bring in about $500 million in investment.

The tenders under the Renewable Energy Zone Auction Mechanism (YEKA) cover six plants in central Konya, south-central Karaman, southern Antalya, eastern Malatya and Van, and western Kütahya provinces.

The winning companies will have the right to sell the electricity they produce at a fixed price in foreign currency for 20 years.

The tender set the initial selling price for electricity at $5.5 cents per kilowatt-hour. However, all bids closed at a minimum price of $3.25 per kilowatt-hour, which is half the current free market price for electricity.

The YEKA scheme was introduced in 2016 to facilitate land allocation for investors, facilitate the deployment of large projects, and encourage domestic production of renewable energy technologies.

The two largest solar power plants were awarded to Kalyon and Temmuz Güneş. Kalyon will build a 385 MW plant in Konya, while the latter has been granted the right to build a 200 MW plant in Karaman.

In 2024, the government released an update to the YEKA model to attract more investor interest. The main improvements included simplifying post-tender procedures for obtaining permits and introducing financial incentives, such as transmission fee waivers.

All parties will make a one-time payment for each MW of solar power plant capacity they install, ranging from USD 67,000 to 270,000. The Ministry of Energy and Natural Resources is expected to be paid approximately $101 million for the rights to build the plants.

Consequences of station construction

According to the Energy Ministry, about $500 million will be invested in the construction of the plants.

The electricity generated will prevent the import of approximately 280 million cubic meters of natural gas per year, reducing energy imports by $140 million at current prices.

Turkey has limited oil and natural gas resources and suffers from a high current account deficit due to large energy imports.

Although electricity consumption in Turkey has tripled in the last two decades, it is expected to grow even faster in the coming years due to the long-term energy transformation, which involves replacing fossil fuel energy with electricity.

A week ago, Turkey finalized tenders for 1,200 MW of wind farms, which are expected to attract $1.2 billion in investment.

Once completed, these power plants will increase Turkey’s installed wind and solar capacity, which currently stands at around 32,000 MW, by 6.3%.

By 2035, the government plans to increase this figure to 120,000 MW. The Ministry of Energy aims to hold YEKA auctions of at least 2 thousand MW annually.

To date, about 5850 MW of solar and wind energy has been produced under the YEKA project. Some projects have been canceled, some have been completed, and some are in the investment phase.