By: AGBI

Turkey has scrapped import duties on battery cells used in electricity storage, seeking to accelerate investment in renewable energy as demand outstrips domestic production.

Analysts say the tariff cut could spur further investment from Gulf companies, which have been expanding their presence in Turkey’s renewable energy sector.

The 30 percent levy on cells used in lithium iron phosphate batteries was reduced to zero until December 31 under an announcement in the official state gazette this month.

The tax was imposed in May last year and intended to protect local battery makers and encourage them to scale up production.

But rising domestic demand has forced the government to roll back the tariff on lithium-based cells, a major input for electric vehicles and power storage.

As renewable energy investments accelerate, storage technologies have become an integral part of the sector, İbrahim Erden, chairman of the Turkish Wind Energy Association, told AGBI. They provide greater flexibility for the grid and help ensure more efficient use of the electricity generated, he said.

“This regulation will reduce the investment costs of storage projects, support the implementation of more projects and increase investment appetite,” he said.

International interest in Turkey’s renewable energy sector has grown this year, driven by a stronger focus on expanding generation and electricity storage capacity.

Saudi utility firm Acwa is among those investing. In February it announced plans to develop two solar power plants in eastern and central Turkey, with a combined value of $2 billion.

The two facilities, in the provinces of Sivas and Karaman, will each have 1 gigawatt of capacity. Turkey’s state-owned Energy Generation Corporation is contracted to buy the power from both.

Turkish and Acwa officials are expected to announce a further $3 billion in renewable investments, including an energy storage component, on the sidelines of the Cop31 climate summit to be held in the Turkish city of Antalya this November.

The new Saudi projects are part of a broader trend of overseas investors buying into Turkey’s strong renewable energy potential, Erden said.

“Recent collaborations and investment agreements with Gulf countries in the renewable energy sector are concrete indicators of this interest,” he said.

“We expect similar collaborations to increase in energy storage investments, wind energy, and offshore wind projects in the coming period.”