General Electric Co., which aims to to expand its Turkish energy business as the state sells power assets, may revive a plan developed before the 2008 credit crisis to build wind turbines in the country.
Local unit General Elektrik Ticaret & Servis AS may start manufacturing turbines and so-called nacelle casings, with half the output likely to be sold within Turkey as the government targets a 20-fold increase in wind capacity by 2020, said Mete Maltepe, head of GE’s local energy unit.
Turkish companies have been going overseas to buy wind- generation equipment because they relied on export insurers such as Euler Hermes SA, the world’s largest insurer of trade credit, when financing was scarce. Generators will be more likely to buy domestically as the global recovery takes hold and more loan facilities become available, Maltepe said.
“If the number of companies that need financing through export insurers such as Hermes falls, and we do expect it to change, then we may dust off plans to make the equipment in Turkey,” he said. “We are ready for that.”
GE will expand its energy business in Turkey and keep overall investment in the nation the same even after the sale of a stake in the country’s second largest bank, Kursat Ozkan, head of GE’s Turkish operations, said Oct. 1.
GE agreed to sell 18.6 percent of Turkiye Garanti Bankasi AS to Spain’s Banco Bilbao Vizcaya Argentaria SA for $3.78 billion as part of a global effort to reduce financial assets, The Fairfield, Connecticut-based company said Nov. 2.
Government Target
GE wants to generate “significant” business as Turkey increases wind power capacity to 20,000 megawatts by 2020 from less than 1,000 megawatts now, Maltepe said. Currently GE gets turbine wings and poles from Turkish producers.
GE has provided about 8,000 megawatts, or 17 percent, of Turkey’s power capacity, mainly with gas and steam turbines and some wind turbines, Maltepe said. GE turbines account for about 30 percent of total generation, he said.
A planned government incentive of 5.5 euro cents a kilowatt-hour to wind power producers needs to be increased to at least 7.5 cents to justify investments, he said. The subsidy is awaiting parliamentary approval.
The draft guarantees a price of 5.5 euro cents per kilowatt-hour for wind and hydroelectric power and 10 cents for solar energy, Energy Minister Taner Yildiz said in Ankara. Companies are already investing in wind power at those levels and they’re “investable figures,” he said.
Wind turbine prices, which fell during the global economic crisis, have steadied and will start rising unless other, less costly sources of renewable energy are developed, Maltepe said.
Middle East
GE Energy Financial Services, a GE unit, bought half of Ankara-based Gama Enerji AS in 2007 and announced plans to invest at least $4 billion until 2015 to build 3,000 megawatts of power plants in Turkey and the Middle East. GE will invest in energy by itself or with a partner as Turkey expects to double national power capacity to 90,000 megawatts in 10 years, said Orkan, GE’s country chief.
The company will seek to tap a market for so-called smart grids that may be worth $2 billion after the government sells off electricity distribution assets, Maltepe said. The government will raise as much as $16 billion from the sale of 20 electricity grids, due to be completed by the end of this year, Energy Minister Taner Yildiz said Oct. 12.
“We don’t expect new operators of the grids to immediately start seeking smart grid systems as they will first have to deal with the existing network improvements,” Maltepe said. “We are already in talks with four or five companies on this but we expect the real interest in smart grids within two years.”
Smart grids use digital technology to optimize power use. Siemens AG and Areva SA are the main competitors in this market, Maltepe said.
GE’s energy unit may buy Turkish companies that make equipment for low- and medium-voltage transmission networks, Maltepe said. “We are looking around and in talks for this but we don’t know when the talks will conclude.”
To contact the reporter on this story: Ercan Ersoy in Istanbul eersoy@bloomberg.net.
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.
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