cube: heating april 2008 - brg building solutions hea… · netherlands energy label creates...

China DAIKIN and GREE to Launch Air Conditioner Module Plant in ChinaCzech Republic Czechs May Get Subsidy for Environmentally-Friendly HeatingDenmark DANFOSS A/S: Financial Statement 2007Finland RETTIG 2007 Financial ResultsGermany BOSCH THERMOTECHNIK Grows InternationallyGermany CENTROTEC 2007 Revenue at €405 MillionGermany RWE Unit Raises Heat Pump Customers in 2007Mexico Danish GRUNDFOS To Invest €30 Million into Plant ExpansionNetherlands Energy Label Creates Opportunities in the Building and Installation MarketSwitzerland SCHULTHESS Posts FY Net of CHF 32.8 MillionSwitzerland ZEHNDER: Growth through AcquisitionsUSA GE First to Announce Water Heaters That Will Meet New DOE ENERGY

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Heating April 2008

International Market Strategy

International strategic market research and consultancy on building product and related markets

Europe Market Summaries for 13 'Group 1' Countries Now Published

Turkey Renewable Energy: Market Opportunities And Legislation

Monthly Special

BRG Consult NewsletterHeating April 2008

China: DAIKIN and GREE to Launch Air Conditioner Module Plant inChinaThe Japanese air conditioner manufacturer DAIKIN Industries, Ltd. has entered into a co-operation with its Chinese peer GREE Electric Appliances Inc. of Zhuhai to jointly set up an air conditioner metalmodule plant in China.

The new plant requires an infusion of JPY 2 billion to JPY 4 billion or about CNY 140 million to CNY 280 million. How much they will invest respectively will be decided at a later date. The plant is scheduled to begin in the Autumn of 2009.

In addition, GREE received a large order from DAIKIN. GREE will manufacture about 500,000 air conditioners, which are originally planned to be sold in Japan, for DAIKIN from late 2009.

Both sides want to partner in the R&D of energy-saving air conditioners and strive for a production capacity of 1 million in 2009, an effort to cut DAIKIN's cost and raise DAIKIN's sales of energy-savingair conditioners outside Japan.

Source: Sinocast

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Czech Republic: Czechs May Get Subsidy for Environmentally-Friendly HeatingCzech family house owners who burn coal and want to switch to more environment-friendly ways of heating can now apply for a subsidy for the purchase of boilers burning biomass, solar systems and heat pumps, Environment Ministry spokesman Jakub Kaspar has told CTK.

He said Environment Minister Martin Bursik recently signed the respective directive that allows the State Environment Fund (SFZP) to start providing the subsidies. The aim of the project is for as manyof the 450,000 households that now burn coal to switch to more modern and environmentally friendlyways of heating. Besides, heavily polluting the air, "coal is an non-renewable source whose mining damages the Czech landscape and it poses a potential threat to further municipalities such as Horni Jiretin and Cernice (both north Bohemia), " Kaspar said. He alluded to the plans to lift coal mining limits in north Bohemia.

The Czech Republic can draw up to CZK 20 billion from European funds for this purpose by the end of 2013, the daily publication Lidove Noviny (LN) writes today. The subsidy to the purchase of a biomass burning boiler that costs up to CZK 100,000 amounts to 50% of the cost and maximally CZK50,000. The person who buys a heat pump that costs an average of CZK 200,000 will get a subsidy amounting to 30% of the cost and maximally CZK 60,000, LN writes. The project is not, however, faultless, LN writes and quotes Kaspar as saying that "there is no legal title to the subsidy. As soon as the package of money from the European funds is exhausted, it will be exhausted." Besides, only the owner of very well insulated family houses that also have duly insulated windows will get a subsidy for the purchase of a heat pump, the paper writes. ($1=CZK 16.343).

Source: Czech News Agency

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Denmark: DANFOSS A/S: Financial Statement 2007Net sales increased by 14% to DKK 22.2 billion from DKK 19.4billion in the same period last year. Growth was 12%, when converted at last year's exchange rate and adjusted for acquisitions and divestments, compared to 14% in the same period the year before. The number of employees increased to 22,323 from 20,612 in 2006.

According to Jørgen M. Clausen, President and CEO, "Danfoss faced major challenges in 2007 in theform of high raw material prices and, in the second half-year in particular, the financial unrest on the American market, which put the profit under pressure. In general, however, we gained market sharesand, in order to meet the demand, we have brought forward investments in new production capacity."

In 2008, net sales are expected to be between DKK 23.5 and 24.5 billion. Compared to 2007, this willequal growth of between 6% and 10%.

Source: www.danfoss.com

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Finland: RETTIG 2007 Financial ResultsAfter strong demand in 2006, particularly towards the end of the year, RETTIG ICC made a good startinto 2007 with very satisfying levels of order intake. This was supported by warm weather in most European countries enabling construction either to continue through or to start up earlier depending on the market. By the middle of the third quarter, however, a noticeable change of trend was apparent and it became obvious that the higher order intake during the first quarter was to a large extent triggered by projects that had been brought forward. As the third quarter wore on and the beginning of the usual high season approached, the optimism so evident at the major European tradefair ISH in March faded quickly, with business running behind expectations. The fourth quarter was characterised by a reasonable level of demand but was insufficient to compensate for the two previous rather poor quarters.

The sales volume of panel radiators, which make up more than 70% of RETTIG ICC's sales, was 8.4million units. This is a fall of 0.3 million units in comparison with the previous year, although somewhat better than 2005. Compared with the previous year, sales of underfloor heating systems increased by 8%, and sales of special radiators (including towel warmers and design radiators) werealmost at last year's level. Sales of valves and controls exceeded those of the previous year by 5%,while sales of other products were largely stable in comparison with the previous year.

In general, the adjustment of the capacity utilisation level within the production sector to the prevailingmarket situation in western Europe continues. The excess capacity among western-European panel radiator manufacturers has led to the RETTIG Group's plan to cease panel radiator production in Vienenburg in Germany. It is the intention to convert the Vienenburg site into a logistics centre for theGerman-speaking countries. Assembly of underfloor-heating products will remain at this location. Production in China ceased at the end of 2007 as a result of demand for radiators produced in Chinabeing too low. The Chinese subsidiary will continue to import and sell PURMO products on the localmarket.

In order to meet the increasing demands of a highly competitive business environment, RETTIG ICChas launched a new brand concept. This key measure has also entailed the introduction of a revisedorganisation model and a new visual identity of the two brand umbrellas. The objective is to further increase efficiency within the sales, production and support functions.

In April 2007, a joint venture agreement was entered into with the Russian conglomerate SANTO HOLDING, Russia's largest manufacturer of cast-iron radiators. The new joint venture company is called SANRET. Operative from the fourth quarter onwards, it will open up new sales channels for the sale of steel panel radiators currently produced within RETTIG ICC.

About RETTIG

RETTIG ICC's heat emitter products include steel panels, convectors, decorative, bathroom and electric radiators as well as underfloor heating systems. Its product portfolio also includes ventilationproducts, thermostatic valves for heating and cooling, balancing valves, electronic controls and programmers, along with stainless-steel chimney systems. The products are manufactured in RETTIG plants: 16 in total, located in 10 different countries.

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Products are marketed to architects, installers and wholesalers via two brand umbrellas and BusinessUnit Controls. The PURMO RADSON umbrella contains DIANORM, THERMOPANEL and LVI. TheVOGEL & NOOT umbrella incorporates FINIMETAL and MYSON.

Source: www.rettig.fi

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Germany: BOSCH THERMOTECHNIK Grows InternationallyBOSCH THERMOTECHNIK defended its position as the leading European manufacturer of heating products in fiscal year 2007. At €2.8 billion, sales were on a par with the previous year. This is attributable to the strong international business, which almost offset the weak development in the German market. Outside Germany, BOSCH THERMOTECHNIK grew by approx. 7%, so that international sales now account for 69% of total sales – up from 64% in the previous year. While theGerman heating market as a whole slumped by 26% in 2007, BOSCH's sales in Germany were downby approx. 15% on the previous year's level. At year-end, BOSCH THERMOTECHNIK employed approx. 13,100 people, roughly 200 more than a year earlier.

"Our main challenge in 2007 was to cope with the weakness in the German heating market but we didwell in relation to the market as a whole. Our international operations, especially our WORCESTER brand in Great Britain, have developed very well," said Klaus Huttelmaier, member of the Managing Board of BOSCH THERMOTECHNIK when presenting the figures for fiscal year 2007 at the SHK trade show in Essen.

Rising oil and gas prices and the growing importance of climate protection have driven the demand for energy-efficient devices, in particular. BOSCH THERMOTECHNIK achieved strong growth in condensing boilers, which meanwhile account for one third of total sales. The renewable energy systems business also developed positively, albeit not quite as dynamically as in previous years. Thiswas attributable to weak sales of solar systems in Germany as a result of the modernisation backlog,which were not entirely offset by increments in the up-and-coming Southern European markets. Heatpumps achieved moderate growth.

The company intends to return to past growth rates in the current fiscal year and to outperform the market again. "We are well positioned in both geographic and technological terms. Moreover, we invested heavily in promising growth segments in the past two years," said Klaus Huttelmaier. The company has expanded its Portuguese production facility in Aveiro. It now has a total capacity of 250,000 collectors per year – partly in the heart of the promising solar markets of Southern Europe. Electric heat pumps are also produced directly in the heart of the key sales regions of Europe and America, namely in Tranås (Sweden) and Fort Lauderdale (USA).

BOSCH THERMOTECHNIK wants to strengthen its position and win additional market share also inGermany. The company plans to overcome the modernisation backlog – which is caused by the uncertainty currently prevailing among consumers – with comprehensive advice for its customers. "Nevertheless, the German government should swiftly introduce comprehensible, nation-wide regulations for the heating market to encourage consumers to make the necessary investments," Huttelmaier added. The proposed political measures should focus on achieving the highest possibleCO2 savings instead of promoting the use of certain technologies.

BOSCH THERMOTECHNIK expects the global heating technology market to grow by 3% to 4% to a total volume of €25 billion in 2008. While demand for condensing boilers will primarily focus on Europe, sales of electric heat pumps and solar collectors are likely to increase on a global scale.

About BOSCH THERMOTECHNIK

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BOSCH THERMOTECHNIK and its subsidiaries is a leading supplier of resource efficient heating products and hot water solutions in Europe. In fiscal year 2007, the company generated sales of approx. €2.8 billion (69%outside Germany) and employed approx. 13,100 people. BOSCH THERMOTECHNIK has strong international and regional brands and manufactures a diversified product range in 18 plants in nine European and North American countries.

Source: www.bosch-presse.de

Germany: CENTROTEC 2007 Revenue at €405 MillionCENTROTEC Sustainable AG, Brilon, successfully completed the 2007 financial year with record sales and earnings despite an extremely difficult situation in the German heating market, and thus broadly achieved the revenue and earnings forecasts that had already been revised upwards in the course of the year. All three segments contributed towards this achievement thanks to their profitableorganic growth.

Consolidated revenue for 2007 rose organically by 6.2 % to €406.4 million (2006: €396.3 million). Meanwhile EBITDA grew by 44 % to €43.6 million and the operating result (EBIT) of €27.6 million wasmore than double the prior-year figure of €12.5 million.

Outlook for 2008

CENTROTEC expects organic revenue growth to be in the upper single-digit percentage range for thecurrent financial year, reaching €435 to 445 million. The Gas Flue Systems segment will contribute approx. €110 million towards revenue, with an EBIT margin of just under 10 %. Revenue of approx. €290 million is the target for the Climate Systems segment, with an EBIT margin of 6% to 7%. Revenue of just under €40 million and an earnings margin from operations of 8% to 9% is expected inthe Medical Technology & Engineering Plastics segment. These expectations are confirmed by the progress of the market and of business in the first two months of the current financial year.

Source: www.centrotec.de

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Germany: RWE Unit Raises Heat Pump Customers in 2007RWE Energy, the sales and grid unit of German utility RWE AG, increased the number of its heat pump customers by over 27% or 9,000, in 2007, RWE said on March 25, 2008.

In some of RWE Energy's regional utilities the customers of this new form of energy rose by up to 57% on the year. For comparison, the average annual increase of customers in the sector was merely 1.0%.

Overall, more than 40,000 German households are now using RWE Energy's heat pumps for heating.RWE is becoming more active in its efforts to attract new heat pump customers, RWE Energy's CEO,Andreas Radmacher, said. To achieve this goal, the regional units are employing some special instruments, he added.

Source: German Business Digest

Mexico: Danish GRUNDFOS To Invest €30 Million into Plant ExpansionDanish pump manufacturer GRUNDFOS A/S will invest DKK 225 million ($44.7 million/€30.2 million) to expand its newly opened Mexican plant and raise the facility's workforce, board chairman Niels DueJensen said at the opening ceremony.

GRUNDFOS plans to carry out the expansion by 2010. The unit currently covers a production area of18,000 m2, while taking up a total area of 100,000 m2. The number of the factory's employees will increase to 500 from 150 at present.

The setting up of the Mexican plant and its forthcoming expansion are part of GRUNDFOS' efforts to increase its sales on the North American market, the world's largest, of which the Danish group holdsa mere 6.0%, Danish daily Erhverv Pa Nettet wrote.

Source: Nordic Business Digest

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Netherlands: Energy Label Creates Opportunities in the Building andInstallation MarketAccording to the latest figures, around 50% of existing dwellings in the Netherlands achieve relativelylow energy efficiency levels (E, F, and G labels). An estimated investment of €2.4 billion would be necessary to only improve existing dwellings in the social rent sector up to a D label. These are conclusions based on figures by governmental energy and climate agency SenterNovem.

The continually increasing energy prices are an important impulse to implement energy saving measures and the Energy Label is known by at least 40% of Dutch households. However, research also shows that consumers do not know which measures are most effective to reduce energy usage levels and do not want to put much effort into finding and bringing together the best parties in order toachieve the maximum energy efficiency. This is a reason for many consumers to abandon their planstowards more energy efficiency. The implementation of the Energy Label could thus constitute an opportunity for building contractors and installation companies to form a single point of contact regarding energy efficiency for consumers, especially in the renovation sector.

Source: www.bouwenwonen.net

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Switzerland: SCHULTHESS Posts FY Net of CHF 32.8 MillionIn the year 2007, SCHULTHESS Group once again reported significant growth in a challenging market environment, attributable almost exclusively to the Heating/Cooling Technology Division. Profitability, on the other hand, fell below expectations, as the operating result is just slightly above the same period of the previous year. The reason is that the capacities which were built up in 2006 were not fully utilised, especially in the second half of 2007. Also, due to fewer incoming orders, actual costs exceeded the budget. Adjustments have been made by reducing the work force, and theresult for the current year is expected to improve considerably.

Group sales rose by CHF 54.0 million, or 17.6%, from CHF 306.6 million a year ago to CHF 360.6 million. 95% of this was achieved through organic growth and virtually exclusively by the Heating/Cooling Technology Division. Operating profit (EBIT) went up marginally from CHF 46.4 million to CHF 47.6 million, representing an EBIT margin of 13.2% (prior year: 15.1%). Net income after taxes also improved slightly from CHF 32.3 million to CHF 32.8 million. The margin of 9.1% is below last year’s of 10.5%.

Although SCHULTHESS Group has grown considerably in the past year, the result is less than satisfactory. While the Heating/Cooling Technology Division reported double-digit growth rates, the operating result did not meet expectations and was just slightly above the previous year. The primaryreason was the disappointing developments in the German construction industry, which fell far short of projections. As a result, the added capacities at the new ALPHA-INNOTEC heat pump plant couldnot be fully utilised, especially in the second half of the year. Furthermore, the start-up of the new heat pump factory resulted in considerable additional non-recurring costs, which also had a negative impact. To reduce over-capacities, a cutback in personnel was necessary, which caused an additional burden on expenses. At the same time, the positive effects of new cost-cutting measures will not be felt until later.

In the Heating/Cooling Technology Division, SCHULTHESS Group is focusing on renewable energiesand energy-efficient applications. Heat pumps and controlled ventilation systems are the key products of this segment, in addition to process-based cold water units for serial products and systemconstruction in the capital goods sector. However, heat pumps are increasingly combined with other regenerative energy sources, such as solar thermal products. Therefore, CORONA SOLAR GmbH, amanufacturer of solar energy systems, was acquired in July 2007. Division sales rose from CHF 184.2 million to CHF 236.8 million, up 28.5% over the same period last year.

Source: AFX International Focus

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Switzerland: ZEHNDER: Growth through AcquisitionsThe economy overall continued to develop positively in Europe in 2007. Contrary to this general trendthe European heating sector already began to lose momentum in mid-year. This led to weaker demand in the second half of the year. Radiators were particularly strongly hit and sales fell year-on-year. However, because of further companies now included in ZEHNDER's consolidation matrix, totalsales increased. The comfort ventilation business, which benefited from the ongoing trend towards energy-efficient construction, was substantially more dynamic. In the reporting year sales were up 21%, of which two-thirds is attributable to organic growth.

Overall, ZEHNDER reached total sales of €444.4 million in 2007, which corresponds to a growth rateof 4%. Without the enlarged consolidation matrix sales would have dropped by 2% because the market shrank – particularly in France, Germany, and Italy, the three main sales areas. Sales revenues in Spain and China also declined. The above countries contributed some 60% of total sales. Conversely, sales development in Holland, Switzerland, the United States and various other countries such as Belgium and a number of states in Eastern Europe was very satisfactory. The growth in these countries, however, could not balance out the decline in ZEHNDER's main sales regions.

Acquisitions in Sweden and the UK

In the fiscal year 2007, ZEHNDER Group took over the Swedish company FRESHMAN AB, and BISQUE Group Limited, a British company. FRESHMAN develops, manufactures and sells or rents air filter units for commercial and industrial customers. These units are now being marketed in 10 European countries under the ZEHNDER Clean Air Solutions label. BISQUE Group trades in radiators and sells them via various supply channels. The take-over of BISQUE has made ZEHNDERGroup the leading supplier of high quality radiators in the UK.

Outlook for 2008

Experience has shown that the sales situation in the period between early summer and the beginningof winter is decisive for ZEHNDER Group's business development. In view of the short-term nature ofZEHNDER's business (low order backlog as a rule; the period between order intake and completion ofthe order is usually less than three weeks) it is difficult to make a meaningful forecast on business development at this time. Management does not believe that the economic climate in the main sectorof industry will change in the short term and thus expects the difficult business environment to continue. At the same time it wants to point out that the new product launches and stronger marketing efforts have created good conditions for the Group's further successful development.

In the first quarter of the current year the Group took over the entire capital of the British GREENWOOD company. GREENWOOD markets ventilation components (waste air ventilators, heatrecovery equipment; air distribution systems) for domestic housing construction. The company has approximately 100 employees. In 2007 it reported sales of £16 million and was profitable. GREENWOOD is a leading supplier in domestic ventilation. This acquisition was financed via a bankloan and disposable liquid funds.

Source: www.zehndergroup.com

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USA: GE First to Announce Water Heaters That Will Meet New DOEENERGY STAR(R) StandardsIn the wake of the Department of Energy's recent announcement that creates ENERGY STAR criteriafor residential water heaters, GE is proud to introduce two innovative products that will meet the new requirements. The GE Hybrid Electric Water Heater and GE Tankless Gas Water Heater, both currently in development, represent the latest in a series of GE appliances designed to help energy efficiency in the home.

The DOEs new ENERGY STAR program, for heat pump water heaters and tankless water heaters, isthe result of many months of analysis of technologies, market opportunities and consumer interest. GE was one of the key participants in the criteria-development process and urged the DOE to adopt aggressive standards for high-efficiency ENERGY STAR water heaters. ENERGY STAR standards are important because second only to residential heating and cooling, home water heating is the number one residential energy consumption.

GE Hybrid Water Heaters

The GE Hybrid Electric Water Heater combines energy-saving heating technology with traditional electric heating systems used in most standard water heaters on the market today without sacrificing the amount of hot water it can deliver. This hybrid technology is designed to absorb heat in ambient air and transfer it into the water. Target availability is the fourth quarter of 2009.

GE Tankless Gas Water Heater

Available from May 1, 2008, the GE Tankless Gas Water Heater will be offered in two sizes (7.5-gallon-per-minute flow and 9.4 gallon-per-minute flow), indoor and outdoor. The 7.5-gallon-per-minuteflow will be available for natural gas; the 9.4-gallon-per-minute flow will be available for natural gas orLP gas.

Source: Business Wire

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Monthly Special: Market Summaries for 13 'Group 1' Countries Now PublishedBRG CONSULT is pleased to announce that it has recently published preliminary 'Product Summaries' (Yellow Pages) for the 13 largest (Group 1) countries as follows:

- France- Germany- UK- Italy- Spain- Belgium- Netherlands- Austria- Sweden- Poland- Russia- Czech Republic- Turkey.

BRG CONSULT's offering within the heating sector has evolved in line with the changing pace of thecurrent and likely future market situation and has therefore been extended to cover selected renewable technologies in addition to traditional/conventional products.

Therefore, the full detailed coverage of BRG CONSULT's 2008 programme includes 30 country coverage of the European markets for:

- boilers & burners- radiators- water heaters- heat pumps- solar thermal systems- solid fuel/biomass boilers.

For more detailed information on BRG CONSULT's heating studies, please contact Mr. David Harrop([email protected]) or alternatively call +44 (0)208 832 7860.

A detailed proposal is available upon request.

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Monthly Special: Renewable Energy: Market Opportunities And LegislationThis article focuses on Turkey's renewable energy potential. Currently electricity is mainly generated in Turkey using thermal power plants (which consume coal, lignite, natural gas and fuel oil), geothermal energy and hydro power plants. Turkey has no large oil or gas reserves. The main indigenous energy resources are lignite, hydro and biomass. Turkey has to adopt new, long-term energy strategies to reduce the share of fossil fuels in primary energy consumption, therefore the development and use of renewable energy sources and technologies is increasingly vital for the sustainable economic development of Turkey. The most significant developments in renewables have been observed in wind, hydropower and geothermal.

Renewable Energy Investment Opportunities in Turkey

Turkey’s renewable energy sources are plentiful and renewable energy supply provided approximately 12% of total primary energy supply (TPES) in 2003 (i.e. 10.10 million tons of oil equivalent (Mtoe), making it the second-largest domestic energy source after coal. The primary renewable energy resources (RER) in Turkey are: hydro, biomass, wind, biogas, geothermal and solar.

Solar

The yearly average solar radiation is 3.6 kWh/m2-day and the total yearly radiation period is approximately 2,640 h, sufficient for solar thermal applications. Despite this huge potential, flat-platesolar collectors for domestic hot water production in coastal regions are the only real use of solar energy. Approximately 8 million m2 of solar collectors were produced in 2004 and the total solar energy production is estimated at 0.290 Mtoe.

The amount of sunlight that Turkey receives annually is equivalent to roughly 11,000 times the amount of electricity generated in Turkey in 1996. Clearly, both photovoltaic and solar-thermal systems could be used to great effect. Use of solar thermal is already widespread. Turkey's total solar energy potential is 35 Mtoe per year and solar energy production is expected to reach 602 kilo tonnes of oil equivalent (Ktoe) in 2010 and 1,119 Ktoe in 2020.

Wind

Turkey's technical wind energy potential is 88,000 MW and its economic wind energy potential is 10,000 MW. 40 new wind farm projects (totalling approximately 1400 MW) have already obtained licences and 751 licence applications (totalling approximately 78,000MW) are still awaiting approval.

Some cities in Turkey have relatively high wind speeds. These have been classified into six wind regions with a low of about 3.5 m/s and a high of 5 m/s at 10m altitude, which corresponds to a theoretical power production of between 1,000 and 3,000 kWh/(m2yr). The most attractive sites are the Marmara Sea region, the Mediterranean Coast and the Aegean Sea Coast.

Geothermal

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Turkey has one eighth of the world's geothermal potential and is ranked seventh in the world. The cost of electricity generated from geothermal reserves ranges from €0.03 to €0.10c/kWh, the bottom end of which is competitive with conventional systems. Data accumulated since 1962 show that about 4,500 MW of geothermal energy usable for electrical power generation may exist in high enthalpy zones. Heating capacity runs at 350 MW which is equivalent to 50,000 households, this canbe increased to 500.000 households by 2010.

The Turkish Government enacted Application Regulation of the Law on Geothermal Resources and Natural Mineral Water on 11.12.2007. Regulation encloses the procedure, elements and sanctions inrelation to; issuing Licence for operation; transferring this licence; auditing the actions; resource and the environment; revoking the Licence; protecting the resources; leaving the area of the Licence in relation to the geothermal resources and natural mineral water that are specified or will be specified and gas, which origins from geothermal.

There are 11 other geothermal fields, all in far south-west Turkey, which maybe suitable for geothermal power production. The Germencik-Aydın field in the Aydın Province is the most promisingone. Power generation potential in this field has been estimated to exceed 100 MW.

Hydropower

The economic hydropower potential has been estimated at 127.000 MW per year, of which 35% has been exploited and its total hydroelectric potential is 46,000 MW.

There are 678 sites available, 135 of them are under operation, for hydroelectric plant construction, distributed over 26 main river zones. The total gross potential and total energy production capacity ofthese sites is nearly 37 GW and 127 TWh/yr respectively, about 30% of which may be economically exploitable. At present only 35% of the total hydroelectric power potential (approximately 13,000 MW)is operational. The national development plan aims to increase this to 100% by 2010. The contribution of small hydroelectric plants to total electricity generation is estimated at 5-10%.

Biomass

Biomass still represents a significant share of total energy consumption in Turkey, despite a drop from20% in 1980 to 8% in 2005. Fuel wood and animal waste are the main biomass fuels used for heating and cooking in many urban and rural areas. The total recoverable bio energy potential was estimated at 16.92 Mtoe in 1998. This estimate is based on the recoverable energy potential from agricultural residues, livestock farming wastes, forestry and wood processing residues and municipalwastes. Total biomass production was 7.3 Mtoe in 2005 and is expected to be 52.5 Mtoe in 2030.

Legislation on Renewable Energy

Although Turkey is not a party to Kyoto Protocol (Minister of Forestry recently announced that Turkeywill be a party to Kyoto Protocol under certain conditions), having signed the United Nations Framework Convention on Climate Change it is committed to managing greenhouse gas emissions.The goal is to maintain emissions at the level of 1990 (3,15 per capita). Therefore, Turkish government keeps focusing on renewables. Turkey enacted its first specific renewable energy law in

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2005 (the Renewable Law) but there are also provisions regarding renewable energy in the ElectricityMarket Law (which authorises EMRA to take measures to promote renewable energy use) and in secondary legislation.

The purpose of the Renewable Law is "to expand the use of renewable energy resources for generating electricity and to benefit from these resources in a secure, economic and qualified manner;and to increase the diversification of energy resources, reduce greenhouse gas emissions, assess waste products, protect the environment and develop the related manufacturing sector to realize these objectives."

The Renewable Law covers wind, solar, geothermal, biomass, biogas, wave, stream, tidal, river and arc type hydroelectric generation facilities and hydroelectric generation facilities either canal or run ofriver type or with a reservoir area of less than 15 km2.

Conclusion

Turkey has great renewable energy potential and is keen to reduce its dependence on fossil fuels by increasing its use of RER.

The wind sector is a good example for the increasing demand to understand the generation of electricity with renewable resources. EMRA has stated that 751 Licence applications for RER electricity generation projects with a total capacity of approximately 78,000 MW were pending approval in November 2007. It is expected that government will call for tenders for wind Licences. A highly competitive market is emerging in Turkey and there will be further opportunities for foreign investors to enter it, both as foreign direct investors and as partners with local companies that have already obtained generation Licences.

Source: www.mondaq.com

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