Wednesday, 28 October 2020
Much like its EU counterparts, Turkey is experiencing rapid growth in sustainable electricity generation; historical highs in renewable share were achieved in the Anatolian nation earlier this year. Foton Energy are a newcomer to the Turkish green energy transition, providing a IREC trading platform. Here we talk with Can Arslan, one of the founders who offered his insights on the Turkish EAC market.
1. Give us a brief origins story for your company, how you and Sila (co-founder) got started.
Sila and I met during our professional energy trading and origination career in Turkey. Sila with extensive experience in renewable energy project financing, has taken leadership to register the very first renewable projects in energy attribute certificate schemes. I have worked in risk management and commodity trading; but driven mainly by new energy technologies. We have been discussing to develop a new business which would accelerate the energy transition in Turkey.
The conclusion of our discussion is that energy transition is dependent on the consumers’ will to change. The markets need a new player with a business model to motivate consumers to change. Renewable energy certificates is a good use-case here. Consumers need to be informed well about the certificate product; how they can reach it; the prices and the price differences due to the additionality of the projects should be transparent and justifiable. We have noticed that there is a need of third party between REC sellers and buyers, which will give fundamental information of the product digitally, explain the prices transparently and do the marketing objectively.
Energy Web Foundation’s EW Origin was a perfect tool for us to implement in Turkey. Short after we started Foton, we have become an active member of Energy Web Foundation. In 6 months, we have finalised the test of IREC trading platform in Turkey. We have met potential buyer, sellers in Turkey and presented them the use case. The reactions were extremely positive over the demo of the platform. Large energy suppliers, generators and consumers lined up to join the network in a short time.
2. What is the scope of your Trading Platform, in terms of geographical reach and market capitalisation?
The scopes of the trading platform are being a point of contact for renewable energy assets to register IREC Services and reach out the IREC demand digitally, being a facilitator for IREC traders to reach out IREC supply in various amounts, being a transparent settlement point to ensure the end-users and their shareholders for the local IREC prices.
In terms of geographical reach, Foton is candidate to become an IREC platform operator in Turkey. Turkey is 5th largest energy consumer with 290 million MWh in Europe after Germany, France, UK and Italy. Quickly after the liberalization of Turkish Electricity market on 2001, Turkish Renewable Energy Transition started on 2010 with Feed-in Tariff support mechanism. As of today 50 percent of the total installed capacity 46.5 GW is based on renewable energy resources. Annual renewable energy generation reached 47 percent of the total electricity generation.
These numbers would give the potential future demand for the REC market. At the moment market capitalization is 0.15 percent of the potential future demand.
3. Your trading platform is based upon Energy Web technology, which uses a block chain approach. Does this offer any advantages in the EAC market?
Future is digital! Before starting with blockchain technology, we should embrace the demand for the digital platform, where anyone can see bids & offers in the market. Transparency will make the procurement process of the RECs better standardized. Then we understand why we develop decentralized technologies aka blockchain. There are two main aspects to choose the blockchain technology; one is that blockchain technology enable us to create vast amount of users on the platform securely, using four-eyes principle username & password plus public address of the wallet aka digital identity; two is that blockchain technology enable users register, transfer, redeem EACs easily by their own thanks to the decentralized database.
The benefits of blockchain technology in EAC Markets is that it empowers local issuers and authorities to control the life cycle of the certificates faster and it is easier for users to contribute to the market, which has potential to increase the amount of transactions.
4. Can you give an overview of the state of the EAC market in Turkey, in particular key developments and main challenges?
Turkey is an observer in EU Energy Community. Since the liberalization in 2001, Turkey has taken impressive steps to support the local energy resources, which thrived the renewable energy capacity. The 10-year feed-in tariff applications are expiring this year and Turkish regulators are looking forward to support renewable energy investments with voluntary schemes such as EACs.
Turkish GO system as announced today supports newly introduced “Green Tariff”. If the consumer voluntarily registers to Green Tariff, the amount of energy consumed by the consumer has to be settled with the Turkish GOs by the supplier.
While introducing a national REC model, regulators allow other EAC schemes, such as IREC and VER to continue. Within a 3-year timeframe, Turkey will test voluntary and compliance models in a regulatory sandbox to increase the liquidity and volume of the market, which can later evolve into hybrid EAC models to take place.
5. What do we have to look forward to from Foton over the next 12 months?
The next 12 months is very critical for Foton to drive the attention of the consumers to EACs. We believe that Energy Web’s IREC Trading Platform will double the amount of IRECs traded in Turkey.
This platform experience will be reported for public in detail to show the effect of simplification of EAC processes, traders without barriers to market-entry, platform operators on EAC traded volumes.
6. How do people get in contact with you if they wish to get more information about your platform?
We are surprised by the number of contacts, we received from our website. We have had well 50 percent of our new contacts through our website.