Manufacturers to Support New Model in YEKDEM

There are positive developments regarding the high energy costs in industry, an issue raised by industrialists under PAGEV's leadership. PAGEV Chairman Yavuz Eroğlu's proposal for a "Germany model" received a positive response from the Ministry of Energy and Natural Resources. The announcement by Energy and Natural Resources Minister Fatih Dönmez that they are working on a new model under YEKDEM has reassured industrialists. Industrialists say they are ready to contribute to determining the new model through collective deliberation. PAGEV Chairman Eroğlu stated that transitioning to an auction-based and TL-denominated incentive system in the new model would be the most appropriate solution for all parties. An important development has occurred regarding the YEKDEM (Renewable Energy Resources Support Mechanism) fee, which has caused electricity bills—one of the most significant cost items for industrialists—to reach astronomical levels. The "Germany Model" proposed by PAGEV Chairman Yavuz Eroğlu of the Turkish Plastics Industrialists Research, Development and Training Foundation to ease the YEKDEM burden on industrialists' shoulders received a positive response from Energy and Natural Resources Minister Fatih Dönmez. Announcing that they are working on a new model regarding the YEKDEM fee, Minister Dönmez stated, "YEKDEM will end as of the end of 2020. The incentive period is ending. We will transition to a different method. We will continue with a different model."

"The inclusive solution: replacing fixed prices in YEKDEM with auction-based free competition model"

PAGEV Chairman Yavuz Eroğlu, emphasizing that while they support renewable energy, loading renewable energy incentives onto industrialists' backs is no longer sustainable, said: "We are seeing positive developments regarding energy costs lately. EPDK will not increase electricity tariffs for three months as of 30 June, keeping them at current prices. BOTAŞ will apply a 12.5 percent discount on gas sold to power plants generating electricity from natural gas, and a 9.7 percent discount to industrial and commercial subscribers. However, while this is a positive development for small businesses, those consuming 7,000,000 kWh or more annually, as well as all industrialists operating within Organized Industrial Zones regardless of their consumption, fall into the high-consumption user category. This tariff will not cover them. That is, bills may continue to increase due to YEKDEM. While total consumption of all industrialists in 2019 was 94 million MwH, 68 million MwH of this consumption—72 percent—was consumed by organized industrial zones and individual users falling into the high-consumption user category. Therefore, unfortunately, the bills of the vast majority of our industrialists will continue to rise due to YEKDEM. While the changes made by our ministry, heeding our justified demands, are positive developments for our industrialists, the accumulated YEKDEM fee continues to place heavy pressure on production, employment and competition. We support renewable energy but we say that loading renewable energy incentives onto industrialists' backs is no longer sustainable. We view Energy and Natural Resources Minister Fatih Dönmez's announcement that they are working on a new model for YEKDEM as a welcome development. As industrialists, we are extremely pleased that our voice is being heard. We are also ready to contribute solution-oriented approaches to new arrangements regarding YEKDEM."

The Germany model is the ideal for renewable energy

Eroğlu, saying that as industrialists they are working to heal the wounds of coronavirus and compensate for the losses incurred, but are struggling with high energy costs as the wheels start turning again, said: "A system where all renewable energy investments are loaded onto industrialists is no longer sustainable. As a solution, we propose transitioning to a TL-based model with competitive auctions in renewable energy. In this regard, the Germany model can be taken as an example. The validity of dollar-based-purchase-guaranteed YEKDEM incentives already expires on 31 December 2020. Therefore, we must open a new chapter in YEKDEM and close the era of currency-based, state-guaranteed fixed-price systems. Instead of currency-based high fixed-price incentives in YEKDEM that are continuously increasing and unpredictable, with high costs that distance our industrialists from competitive production, we must transition to an auction method with competitive conditions and a TL-based support model. We must open renewable energy investments to competition," he said. Noting that a new model in YEKDEM is essential for industrialists, Yavuz Eroğlu concluded his remarks as follows: "Germany, which stands out with its renewable energy work, applies an auction model open to competition in renewable energy instead of fixed high-price incentives. If this system is implemented in Turkey, costs will drop significantly and thus industrialists will be able to breathe easier. Our government has previously experimented with auction-based procurement and succeeded. For example, in the RES YEKA-2 auction conducted in four regions of Turkey on the last day of May last year, prices between 3.53 and 4.56 cents per kilowatt-hour (kWh) were given. Looking at these developments, while the wind energy price specified in Schedule 1 currently mentioned in YEK was 7.3 cents per kilowatt-hour, it was reduced to nearly half with the auction. Thus, the YEKDEM share to be added to the industrialist's electricity bill was tested as to how it could be reduced. Turkey, reading developments correctly and needing to open a new chapter in energy in 2021, will open the way for production, employment and competing with the world if it realizes this move."