Solar Powered Irrigation Systems

November 2021

Indicative Return:

5% – 10%

Investment Timeframe

Short Term (0–5 years)

Market Size

Ticket Size

Other

Business Model Description

Investments in irrigation modernization projects for the adoption of more efficient irrigation technologies such as solar powered irrigation systems which can be combined with drip irrigation and other efficient pressurized irrigation techniques

Expected Impact

This IOA will promote more efficient water consumption in agriculture and reduce agricultural production costs.

Regions

Central Anatolia Region, Mediterranean Region, Southeastern Anatolia Region

Sector
Food and Beverage > Food and Agriculture

Direct Impact SDGs:

Indirect Impact SDGs:

Sector
Food and Beverage

Development need: Significant challenges remain for Turkey in combatting hunger and climate change. The relevant indicators across SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) suggest that the existing measures are insufficient to reach the target levels of poverty alleviation in the country by 2023, rendering food security and price stability increasingly important.

Policy priority: Turkey’s 2nd Voluntary National Review on the Sustainable Development Goals, 11th Development Plan, and the 2020 Presidential Program place agriculture among the priority development areas. All of these documents highlight concerns over price stability and agricultural productivity. Development within this sector is also vital for rural livelihoods

Gender inequalities and marginalization issues: The share of women working in the agriculture sector is 25.1%, while the share of men is 14.9%. (23) This sector mainly provides employment to women in rural areas as seasonal workers. While this is the case, most of the production equipment are reportedly owned by men. (24) 24.8% of the Turkish population is classified as ‘rural’ by the FAO. (25)

Investment opportunities: There is a growing international and domestic demand for organic and sustainably produced food products. Moreover, advancements in agricultural technology provide opportunities for more cost-effective and sustainable production methods

Key bottlenecks: Turkish agricultural production mainly consists of smallholder farmers with fragmented land ownership. While increasing quality standards and technological efficiency, it is important to ensure that changes in the procurement and production systems do not drive these farmers out of the market.

Subsector
Food and Agriculture

Development need: Access to adequate food and meeting nutrition needs and increasing agricultural productivity and climate resilient agricultural practices are all areas of improvement for Turkey’s development trajectory. Agriculture contributed to 5.8% of the GDP in 2018, and this figure is expected to decrease to 5.4% by 2023 (2)

Policy priority: Essential development goals noted by the 11th Development Plan, the VNR on SDGs and the 2020 Presidential Program include improving prosperity in rural areas and achieving sustained food security by increasing the yield and quality of agricultural products; the sustainable management of land and water resources; combatting climate change, desertification and erosion; and protecting biodiversity

Gender inequalities and marginalization issues: The share of women working in the agriculture sector is 25.1%, while the share of men is 14.9%. (23) This sector mainly provides employment to women in rural areas as seasonal workers. While this is the case, most of the production equipment are reportedly owned by men. (24) 24.8% of the Turkish population is classified as ‘rural’ by the FAO. (25)

Investment opportunities: There is a growing international and domestic demand for organic and sustainably produced food products. Moreover, advancements in agricultural technology provide opportunities for more cost-effective and sustainable production methods

Key bottlenecks: Turkish agricultural production mainly consists of smallholder farmers with fragmented land ownership. While increasing quality standards and technological efficiency, it is important to ensure that changes in the procurement and production systems do not drive these farmers out of the market.

Market Size and Environment
Critical IOA Unit

Irrigation Potential Number of farming households

Turkey is the 7th biggest agricultural economy in the world. (14 There are over 4 million farming households in Turkey (15).

Turkey’s irrigation potential is 8.5 million ha, 93% surface water resources, 7% groundwater. (13)

Indicative Return

5% – 10%

Academic research in the field finds that, under the current circumstances, a photovoltaic irrigation system has an investment rate savings of 4,6% relative to a diesel based irrigation system. (12)

Investment Timeframe

Short Term (0–5 years)

Investments in small-scale or individual solar energy projects are predicted to yield returns in 4 to 5 years for investors. (12)

Ticket Size

Other

Market Risks & Scale Obstacles

Capital – CapEx Intensive
Investments in SPIS require a high initial capital cost, and render the adoption of such systems inaccessible to many small and medium-scale farmers unless under ownership/shared economies or special financial provisions
Business – Supply Chain Constraints
Inadequacy of the current regulations governing energy markets- recent regulation of 2019 allegedly paves the way for agricultural enterprises to sell surplus energy to the grid, but widescale complaints can be found online
Capital – Requires Subsidy
It is crucial that new irrigation technologies or any such transformation is affordable to the farming population in order to secure the water-using rights of the people vis-à-vis the private sector. 67% of the Turkish farming population only own between 0.1-5 hectares of land (15)

Sustainable Development Need

Solar-powered irrigation systems provide a clean alternative to fossil fuels and enable the development of low-carbon irrigated agriculture. In areas with limited access to energy, they contribute to rural electrification and reduce irrigation-related energy costs (9)

In Turkey, agricultural irrigation constitutes 75% of total water consumption which is approximately equal to about 30% of renewable water availability (10). The average per capita availability of water is shrinking due to the relatively high growth rate of the population (11).

Irrigation can be a significant source of GHG emissions under conventional methods. There is a potential reduction in GHG emissions per unit of energy used for water pumping (CO2-eq/kWh) of 95-97% as compared with pumps operated with grid electricity and 97-98% as vs. diesel pumps (9)

Gender & Marginalisation

25.1%,of the agricultural workers in Turkey are women. In total, 24.8% of the Turkish population is classified as rural. (23,25) Improving energy security in rural areas will contribute to rural and female livelihood

Expected Development Outcome

>Improve the accessibility of electricity needed for irrigation in farms and agricultural enterprises, especially in rural areas that are off the grid. This will extend the provision of basic utilities to previously uncovered areas, improving livelihoods and contributing to rural development

>Increase agricultural productivity and income due to improved access to water; additional cropping season, diversification of cropping pattern, higher value crops.(9)

Gender & Marginalisation

Provide affordable energy access for rural population / female led households

Primary SDGs addressed

2 – Zero Hunger

1.4.1 Proportion of population living in households with access to basic services

2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

2.c.1 Indicator of food price anomalies

Current Level87.8% (2017) (21)

$15,706.89 (2016) (22)

12.90 (2014) (22)

12.90 (2014) (22)

7 – Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.1.2 Proportion of population with primary reliance on clean fuels and technology

7.2.1 Renewable energy share in the total final energy consumption

Current Level100% (21)

59.8 % (access to natural gas – 2017) (21)

13.08% (2018) (1)

Target Level100%

51% (1)

Secondary SDGs addressed

Directly impacted stakeholders
Indirectly impacted stakeholders

People
The farming population through increased access to more efficient irrigation technologies and electricity for areas that are off-the-grid
Gender inequality and/or marginalization
rural population who will benefit from development, with lack of access to affordable energy / female-led households with lack of access to affordable energy
Planet
Rural development, crop yield and environment through higher water and energy efficiency

Outcome Risks

The prospect of higher returns per hectare might encourage some farmers to expand planted areas or to switch to higher-value, more water-intensive crops. (20)

Solar power irrigation systems require high initial capital costs and might be individually inaccessible to small-holder farmers.

Without the necessary training or external consultancy, the optimal operation and maintenance of SPIS and drip irrigation might not be achieved.

Impact Risks

Unexpected Impact Risk

Efficiency risk

Execution risk

Impact Classification

B—Benefit Stakeholders

What

reduced water consumption in agriculture

Who

Water use associations, farmers and private sector irrigation companies will benefit from this model.

Risk

High Risk (Solar power irrigation might be inaccessible to small-holder farmers, the optimal operation and maintenance of SPIS and drip irrigation,harvest of more water-intensive crops.)

Impact Thesis

This IOA will promote more efficient water consumption in agriculture and reduce agricultural production costs.

Policy Environment

The 2020 Presidential Program: states the importance of supporting modern irrigation systems in agriculture.

The New Economic Program of 2020-2022: states the importance of supporting modern irrigation systems in agriculture.

The 2019-2023 Strategic Plan of the Ministry of Agriculture and Forestry: states the importance of supporting modern irrigation systems in agriculture.

11th Development Plan: emphasizes the importance of reducing carbon emissions and switching to renewable energy resource, both to reduce export dependency in energy needs and for the preservation of the environment

Financial Environment

Financial incentives: 50% grant support is offered by the Ministry of Agriculture and Forestry for the individual use of modern pressurized irrigation technologies by farmers registered under the Farmer Registration System. (18)

Fiscal incentives: Ziraat Bankası offers low-interest credits for investments in modern irrigation systems. Similar initiatives by Şekerbank and QNB Finansbank for investments in irrigation. (19)

Other incentives: TURSEFF has a Sustainable Energy Financing Project, The WB and EBRD currently have a US$ 254.00 million irrigation modernization project, İzmir Development Agency plans to launch a 25 million TRY support program for energy and water efficiency projects to cover energy efficiency

Regulatory Environment

The Ministry of Agriculture and Forestry, the Institution for Supporting Agricultural and Rural Development, the Ministry of Energy and Natural Resources and the State Hydraulic Works Agency are the regulating bodies for the activities in this IOA

Legislation of 12 May 2019: paved the way for the sale of excess/surplus energy used in agricultural solar enery irrigation systems to the grid. (17)

“The General Directorate of State Hydraulic Works (DSI) supervises the use of water resources in Turkey. DSI issues the licenses for water abstraction and inspects the quantities of water abstracted by licence holders. This is regulated by the following laws: Groundwater Law No 167 of 23 December 1960. Groundwater Bye-law of 20 July 1961. Regulation on Water Allocation of 10 December 2019. Groundwater Technical Regulation of 23 June 1972. (26)”

PRIVATE SECTOR

Solar PV installers and manufacturers such as Dal Solar, Power Enerji, Güneş Tarım, CW Enerji etc. Domestic and international banks providing feasible credit and financing options for agricultural development and renewable energy projects- Ziraat Bankası, Şeker Bank, QNB Finansbank

GOVERNMENT

The Ministry of Agriculture and Forestry, The Ministry of Energy and Natural Resources, State Hydraulic Works (DSI)

NON-PROFIT

The Institution for Supporting Agricultural and Rural Development, GUNDER, GENSED