A lecture-based WPP recovery project -1-
One of the important turning points in my renewable energy adventure, where I first started with solar energy, was the Wind Power Plant (WPP) Project that we set out to achieve in Kandira, Izmit. I will write about the events that took place in this article starting from the beginning of this project, which was the scene of great struggles and continue to write about the rest in the following weeks.
In my solar energy adventure that I started in 2011, different types of renewable energy such as wind energy and biogas were also interesting to me. We had developed projects in biogas and even helped developers in different places. For example, we extracted the biogas potential of the Elazig province and made it into a report.
The project that we actually put into place was on wind energy. We decided to buy a project that was developed in 2007 from a business person in Ankara from this field. Of course, you pay a serious amount per MW with these types of purchases.
Before purchasing the project, we completed technical, financial and legal reviews. This project, which is located on the backs of the beach where Babali village is located near Kefken in the Kandira district of Izmit, was satisfactory in every sense. In the project, which meets wind blowing from the Black Sea coast directly from the front, the capacity factor is 39%. Let me explain the capacity factor for my readers who are not from the sector: The net capacity factor (KF) of the power plant is the division of the total energy produced by the plant in a certain time period to the energy that can be produced at full capacity
In wind energy projects, those with a capacity factor above 35% are considered to be projects with high attraction.
The search for a letter of guarantee for funding from the World Bank
After paying the first instalment of the project development costs and purchasing the project, we contacted the most active banks in the market to finance the project. We were generally well received. Even in terms of project financing funds, we met with a bank who makes use of funding from the World Bank which is used for Turkia's most important projects. In order to take advantage of the loan they had, we had to bring a letter of guarantee from another bank. Therefore, we started to negotiate with other banks.
While we were in talks with 5-6 banks for a letter of guarantee, we got the first big blow. The July 15 incident broke out. In particular, even a top 5 bank said to us "the country is currently suffering from a coup attempt, forget giving out new credit, we are now calling on existing loans". All the other banks also left the table one by one.
One bank, which was the smallest in terms of volume amongst the banks we interviewed, turned out to be the bravest of all and invited us for our project we had previously discussed in November 2016. “You had a letter of guarantee request for the loan of the bank that used the World Bank funds. We opened up our limits, let’s talk about this” they said.
After long negotiations and some additional guarantees, we were able to get the letter of guarantee. Thanks to that letter, we were entitled to a loan made with World Bank funding. In December 2016, we made the first big payment to the turbine company and placed the order.
Unexpected developments and difficulties
While we were thinking that everything was ok, in the environment of that period, we slowly started to enter a vortex that we had a hard time getting out of. We had to use the money we had allocated for the capital of the wind project so that my other ventures would not fail, and our cash reserves began to rapidly erode. We had to give cash support to those companies because if these companies went bankrupt, it would spread to all my other businesses and this would drive all 4 of my companies into bankruptcy.
However, you can imagine how difficult it was for me when I received cash demands from 4 of my companies that normally would not demand such things. After all, the business cycle was causing for foreign investors in Turkia to leave one by one, companies were going down or applying for bankruptcy, financial institutions were ever so delicate and aggressive and the needs for cash rapidly grew day by day. The 10 banks we spoke to prior to the July 15 incident, who had assets in Turkia had called us to say “we are thinking of leaving Turkia” and those that were planning on making investments in Turkia called to say “we have decided not to invest in Turkia”. All of them started to work hard to get out of the country as soon as possible. We had also fallen into great difficulties.
Additional loan negotiations spanning 2 years
In all this confusion, we contacted the bank from which we received a letter of guarantee and explained the situation. We voiced the need for cash. Stating that they understood the situation before, they started to talk with us about the use of additional loans. However, due to a sudden mystery, our additional loan request, which went through the committee, could no longer pass through the board. Then we fell into a bigger hole. We did not have a chance to go to another bank due to the environment.
These negotiations continued for about 2 years. Then the bank compared the additional loan with the credit risk and decided that keeping the project alive was more favourable than ruining it and used the collateral they had. The situation was already very clear when the calculations were first done. However, it took them 2 years to take initiative in this regard. The long marathon talks ended in March 2019 when we got the additional loan. Of course, during these negotiations, you will appreciate that both the main loan bank and the turbine company were pressuring us about when we would make the remaining payments.
Senvion's bankruptcy shock
15 days after we secured this financing, we had the next big blow. The turbine firm Senvion declared bankruptcy. Senvion (formerly Repower), with over 6,000 turbines in Europe, was one of the best turbine companies of its time. This German turbine company took its place amongst the best in the competition until it was sold to the Indians by a wrong decision. Here I am conveying what has been told to me. After buying Suzlon Repower, an Indian firm, transferred the technology and sold the rest to an American fund. The American fund that bought it succeeded in reviving the company, especially in terms of technology, with a serious investment and changing its name to Senvion. Thanks to the improvements made, they again took their place amongst the highest quality and efficient turbines. Then at this point, when we were evaluating alternative turbines for Turkia, the Senvion Turkia General Manager had got into contact with us and that’s how we decided to go ahead with Senvion.
In the comparisons we made with Class III turbines and the scenarios that came about, the Senvion turbine had by far the best production values. And because there wasn’t a proper O&M team (operation and maintenance) in Turkia, we chose Senvion. While the Senvion turbine with the highest quality components was technically superior, they had financially bogged down the company. The company was seriously burning cash, its revenues did not exceed its expenses and the gap was widening. The company officially went into bankruptcy when the American fund providing the financing withdrew its support for its investments that constantly burned cash. They officially announced that Senvion went down in April last year. More precisely, in Germany, they first entered a bankruptcy-like process, and then in August they decided to officially go bankrupt and shut down. They also sold the company's only revenue-generating O&M division in Europe to Siemens Gamesa.
At the end of a great struggle of 2 years when we recovered the finances, we said, "From now on, we will complete this project at full speed”. We were all shocked when Senvion's bankruptcy was announced exactly 15 days after our limit was opened and our loan was approved. Actually, we had seen the symptoms of this already. As soon as the loan was approved, when I called the officials at Senvion and said, "Good news, we have secured the financing, we are ready to do the project," they did not welcome this news with great joy, and they said, "Okay, we will come back to you" and they did not. At first, I didn't make sense of it, because after a long wait of 2 years, we had the result and it was time to put everything back on track. When I put pressure on them, they said, "Strange events are happening within the company, we cannot get any approval for the continuation of this project" 3 days before announcing their sinking to the public. When Senvion's bankruptcy announcement was made, I said, "Okay, now it's clear why they took it slow".
Remaining unresponsiveness although we were understanding
As the top official of a company that has gone through very difficult times, I told the executives at Senvion this: “We understand your situation very well. I hope you get out of this process as soon as possible. No matter what happens, we are always with you. " Then I added: “We are ready to pay the remaining 30% of the turbines. Once we make this payment, we want to bring these turbines to Turkia as soon as possible”.
Although we said these things, we could not get a response. We met with all managers in Germany and in Turkia, no one would take the initiative and resume the process. We could not make any sense. We thought everyone might be feeling confused during the bankruptcy process and therefore at first, we didn’t put much pressure on them. Then, when days started to chase weeks, and then months, frankly, I started to panic. In June, I raised the flag of rebellion and said, "Enough, if you are not going to take the initiative and complete this process, then direct us to an authorized person." They kept stalling us for months. Finally, the information I needed came out of their mouths: "We no longer have authority, the bankruptcy lawyers have all the power to the board of directors." As soon as I heard this, I immediately said, "Then get us to meet with the authorized bankruptcy lawyers." In this regard, the Senvion managers were also stalling us. I remember asking "When will you enable us to see your bankruptcy lawyers?". At the end of this process, frankly, they got tired of us and said "Okay, we will arrange this meeting, just give us some time".
A big mistake made due to a legal error
At the end of a period of approximately 3 weeks in total, an authorized lawyer in the law office assigned to the board of directors of Senvion talked to us on the phone. Everything was going very well with a friendly dialogue. After two meetings over 10 days, the lawyer said, "Okay, we are sending you the agreement to resume." However, he did not come back to us. When we insistently wanted to meet with him, he appeared again 1 week later and said to me on the phone, "We don't have turbines, we can't give you any." At first, I thought he was kidding, then when I realized that he was serious, “What do you mean, you can't give us any turbines? You were giving them to us just last week, what did you do to our turbines? " I asked. He gave me nothing. Then suddenly it came to my mind and the question randomly came out of my mouth, "You gave away our turbines to another project, right?" Again, the German bankruptcy lawyer on the line gave us nothing. Then I got it. I immediately started saying: “You have no right to this. We paid for 70% of those turbines, we want to pay 30% more and buy our turbines, that's all,” and he said, “You paid 70% but you do not own the turbines. So, the title (ownership) has not been given over to you. That's why we can do whatever we want with the turbines, according to German bankruptcy laws". At first, I did not fully understand what he meant, then when I asked the lawyers, I understood the situation. There was a serious mistake of attorneyship on our side. You pay 70% of the money and you still don't get the title. This time, we were going down in flames due to a fault of the professionals. Afterwards I asked, "What will you do with our 70% money?” I got the following response that caused me to panic: "Of course, you have the right to sue." I then said to myself, “What the hell? By the time we win this, I would have lost my marbles”. I then said “You are not giving our turbines to anyone, I am getting on a plane and am coming to Hamburg, and I definitely will not return without our turbines. " In a few days, I completed my preparations, got on the plane and went to Hamburg.
3 fronts of the struggle in Hamburg
I took care of three important things in these few days. First, I made an appointment with Senvion's bankruptcy lawyer, albeit by force. He didn't want to make an appointment at first. They even stopped taking on our phone calls. I texted the company's chairman of the board of directors and everyone, including other board members. Then, out of professional courtesy, they gave us an appointment for a few days’ time.
Secondly, I asked for support from my neighbour Selda. Selda is a German Turk, born and raised in Germany. She is also the Director in an international German company in Turkia. She directed me to both of the German Chamber of Commerce, AHK, and helped me to hire a decent lawyer. During these conversations, I realized that: no matter how much you speak the common language of English, it is not like speaking one's mother tongue. Selda had determined 3 lawyers to support us with the most accurate communication method from the most accurate source. Then we sat down and evaluated the situation together. I spoke to all three of them on the phone. Finally, we found the right lawyer. We agreed with a local law firm of good lawyers in Hamburg. They did not demand a lot of money in numbers, and they spoke much more realistically than other lawyers. Also, the lawyer who was dealing with me had left the office of German bankruptcy lawyers before and knew the team there well. My aim was also to start the dialogue.
Thirdly, we contacted the Ministry of Commerce through AHK. From there they put me in touch with the Trade Attaché in Hamburg. The Commercial Attaché, Mr Ugur turned out to be a very solid man. He never left us alone, he personally attended the meetings we needed. It provided support for translations.
Although I was very tired on the way to Hamburg, I could not sleep. Although I normally used to sleep on the plane, I could not sleep due to stress. I chose a movie and started watching it. I set out to watch Alita, the latest film by my favourite director and screenwriter, Canadian James Cameron. I had found the exact movie I was looking for! One scene especially motivated me in this film, which talks about Alita, who has an angel-like heart with an incredible will and fighting ability, against Nova, the head of evil who controls everything. In fact, I can say that I watched this scene three more times after the movie ended.
Grewishka's massive size and cybernetic body grants him great strength but during his first battle with Alita, he loses an arm which shocks him and forces him to retreat. Alita must be incredibly strong to cleave off Grewishka's arm, implying that he was built to be very sturdy even by cyborg standards. After his upgrade, Grewishka is far more resilient and when Alita tries to kick through his arm again during their second battle, he shrugs her off. He also has the ability to extend his cybernetic fingers, known as grind-cutters, into long tendrils which can cut through other cyborgs with ease. He uses these grind-cutters to slice Alita into several pieces during their second encounter. However, he is a big target and during their third and final battle, Grewishka is no match for Alita who easily dodges or cuts through everything he throws at her and slices him in half, finally killing him. Here is the fight scene I mentioned: https://www.youtube.com/watch?v=T35dw8uwNEY *
This fight scene and Alita not leaving the fight until the end summed up my situation. I was going to Hamburg with my arms broken and in incredible financial difficulties. Everyone, including the bank, thought the project was bankrupt and I was finished. There was no hope left for anyone, including the professionals. I was on my way to struggle for my life.
I went to Hamburg and got in touch with the lawyer. On the same day, we went to their offices and had our first meeting. The next day, we went to Senvion's headquarters and entered a meeting with a bankruptcy lawyer. Thankfully, Mr Ugur Ozcan, our Commercial Attaché, also joined us. We had a firm introduction to this first meeting. I can say that the first part of the meeting was successful. Then we went to lunch at around 12.30 the same day.
Understanding the bankruptcy lawyer
At lunch I had the opportunity to get to know the bankruptcy lawyer better. At one point during the meal, he mentioned the political tensions between Germany and Turkia. I said to him, “We have no business with politics. In fact, as the renewable energy sector, we are doing a job above politics. All politicians and relevant stakeholders need to assist in the transformation from fossil fuels to renewable energy because the climate change we are experiencing threatens all humanity” and added; "It is very unfortunate that Senvion is going through bankruptcy during such an energy revolution. I wish they could continue."
We were able to understand each other better with the lawyer during the meeting. We got together one more time in the afternoon. The meeting in the morning went well, but we still hadn’t got any results. I kept saying to the bankruptcy lawyer at lunch "When will we start to discuss the conditions of bringing the turbines Turkia?". And each time, the bankruptcy lawyer ignored me. In the end, I said it again while raising my voice and he just couldn’t handle it anymore and the following words came out of his mouth: “It is not clear whether we will sign the continuation agreement with you. Obviously, you have come this far, but as I told you before, we no longer have your turbines, so we are unlikely to sign an agreement to continue. "
He then said the following words that seriously bothered me: “I'm sorry, but my job is not to empathize. Your situation does not concern me. I take care of my business, focus on how I can generate maximum cash for the company".
What he meant was they were selling the turbines twice in order to generate cash for the company. The men had literally crossed us out.
I was horrified at these words. He was saying that after so much effort that we went through, we are still unlikely to give the turbines to you. I was having a hard time controlling myself, and despite everything, I calmly said, "You all know that these turbines are our right and I will not leave without getting our rights" and we ended the meeting that way.
The 2 strategies we came up with
Afterwards, we went to our lawyer's office and held an evaluation meeting. Everyone knew we were playing our last cards now. We determined two strategies:
- The Turbine towers were made by a firm by the name of Ege Kule. Ege Kule was bought by a Korean company called CS Wind in early 2019, but the towers were physically in Izmir. We were supposed to stop the towers from exiting Turkia. Because there would be no turbine without the tower. At that time, the project they gave for our turbines got interrupted. Immediately I called my lawyer and asked if he could put precautions in place for our towers in Turkia. When he said they could do it after a day of research and exchange of ideas, I asked him to act immediately. We immediately initiated the necessary procedures to get a cautionary decision.
- When the German lawyers said the words "We can do whatever we want, the German bankruptcy laws protect us", this really caught my attention. Then we found a fine detail. Our German lawyers also confirmed this. Perhaps the German bankruptcy laws provided legal grounds for any action the bankruptcy lawyers would take, but what they did according to Turkish law was, to say the least, “fraud”. Because they took 70% of the turbine money and sat on it without giving us the product.
Thereupon, the next morning, our lawyers reported these two issues to the German bankruptcy lawyer:
- We are taking measures for the towers, we will not take our towers out of Turkia (and we did exactly that, we started the proceedings to get a cautionary decision and shared this with the German bankruptcy lawyers)
- We will personally file a fraud case against you (both the bankruptcy lawyer who was dealing with us and all the lawyers who looked at the Senvion file in his office) in Turkia.
After these conversations, the course of the work changed again and the cursor turned to our side. Because they couldn’t take the turbine out of Turkia, they could not fulfill their obligations to both us and the men they sold our turbines to in Italy. Also, Turkia is an attractive country. Especially for the Germans. Nobody wants to have a problem personally in a country like Turkia. They know that one day they will somehow end up here, even if it's for a holiday.
Two days turned into two weeks
Still, we could not get any results. Something was always blocking our process. I had planned to go to Hamburg for 2 days, get the job done and return. It took me 2 weeks to conclude this issue.
During this time, I also had contact with Turkish parliamentarians in Hamburg. After understanding the situation, they stated that they would give their political support if I couldn’t resolve the issue through negotiations. My backup plan was ready.
While I was visiting the Turkish-origin MPs from the Hamburg Parliament, I suddenly found myself in the visitor delegation from the European Union and joined the tour of the Parliament building. Here you can see a photo taken from those moments above.
I ran around the river in Hamburg every day to relieve my stress. I ate ice cream. Meanwhile I found spiderman in the streets of Hamburg.
All joke aside, they hung a poster of the Spiderman movie on all billboards to promote Spiderman's new movie and let the Spiderman hit the streets of Hamburg.
A nice meeting at a bad time
In the meantime, I experienced another interesting incident. While I was moping on the stone moulds made for people to sit by the river, someone sitting next to me asked, "Are you okay?". I turned my head. A long-haired hippie-style man was staring at me, smiling sympathetically. With him was his wife of African descent and their very sweet daughter. When he smiled, I inevitably smiled and said, "Well, I’m getting there." Then he said, "I've been looking at you all morning, you look like your world has been destroyed, what's wrong with you?". I said to him, "My world is not yet destroyed, but it is about to collapse," and I explained the subject based on his sincerity. The man turned out to be in the wind power business. He was doing a niche job of inspecting turbines, which is a purely technical business. If I searched for such a person, I wouldn't be able to find it. Then, before the turbines were loaded on the ship, we agreed and checked them out with this man and made sure everything was done properly. In order to confirm, I asked him "What do you think about Senvion turbines?". He said exactly this:
“Senvion turbines are amongst the best quality turbines on the market. I know this from thousands of checks I've done. Because they use the best of everything in their components. The fact that they will not be in this market makes me sad both as a worker in this sector and as a German".
I thought to myself, "This man was sent to me as if to dispel all the hesitations in my mind." I was happy to meet him.
A tough walk on thin ice
Meanwhile, the bank that gave the letter of guarantee and the additional loan was constantly bothering me. "Serhan Bey, what happened, is this done?" they kept asking. This question meant the following; “If we don't get the turbines, the project is over”. This meant finishing the project, pulling the plug with all kinds of execution. On the one hand, I was calming them down and constantly saying, "We're going to figure this out, don't worry."
In fact, if we could not buy the turbines, the project would collapse and our bankruptcy would be finalised. In other words, we had a situation that was trying to reach the opposite shore by walking over a very thin layer of ice.
On the 10th day, bankruptcy lawyers called my lawyer and said, “Okay, we discussed all the details. We agree to give you your turbines, but we have procedures to handle". I was a little relieved. I waited another 5 days for them to finalize those procedures. Finally, I signed my signature and returned to Istanbul in the evening of the same day. Frankly, I was relieved on my return to Hamburg, where I was experiencing great stress.
On my return from Hamburg, I gathered all professionals working for the Izmit Kandira WPP project and explained the situation. Everyone was in a lot of stress and at the end of the conversation everyone felt a lot of relief.
Afterwards, we focused on our business and engaged in fiery work to bring the turbines to Turkia. After finalising all the details on the contracts and bank side, there was no longer any obstacle for our turbines to start. We also resolved the technical aspects of the business. You can imagine that even organizing the logistics of this business was a job in itself.
Proof that Senvion gave up on us
Meanwhile, we faced another reality while talking about bringing the turbines to Turkia. A concrete example emerged that Senvion had given up on us. The EkoRE logo was normally used on the nacelle of the turbines (the head part where the turbine engine is located). Since they gave our turbines manufactured in 2017 to another project, they tried to wipe away the EkoRE logo and send it to the other people they sold them to. So maybe wiping off the logo saved us time. We reacted just in time when the turbines were about to be shipped. So, we intervened when our plug was about to be pulled. Had I been a little late to go to Hamburg, the wind would have been blowing in the place of our turbines.
This information had emerged in my conversation with the regional director I met to send the turbines to Turkia. When he told me "Serhan, there is a problem. There is no EkoRE logo on the nacelle anymore, we have wiped it because we will send it to another project. We have two possibilities here. Either you will wait for the logo to be made again or we can send it like this", and I responded, "The logo is not important. Send us the turbines no matter what”.
Turbines coming to Turkia
Our turbines set out in early October and arrived at the port on October 29, one of my favourite days. We all went to one of the ports in Kocaeli Korfez to get our turbines with great enthusiasm. The operation of the port did not let us in, saying that there was a lack of documents, whatever the wisdom. We managed to complete the documents they wanted and we went inside at noon. When we saw the ship that brought our turbines from afar, our two sets of wings stood like lions on the deck of the boat.
Seeing this, I said to myself "Thank God". Then we went on the boat one by one. The following photos were taken:
The whole team enjoyed the moment with great happiness. We roamed one by one among the wings, the nacelles and other parts on the deck and inside the ship. The main parts had arrived completely. Here are those moments:
Until the evening of that day, they worked on unloading the turbines from the ship and moving them to the main warehouse.
I returned to Istanbul in the evening with peace of mind. Later, we completed all customs procedures in order to be able to withdraw our turbine from the port. You can imagine how difficult we were with this. Somehow, we figured it out. We also agreed with the German Robur company for the installation. Weeks after October 29, Robur company's professionals arrived on the field. Here, too, we did what was necessary to issue the visas for the Robur team one by one so they can come to the field. A few days after finally arriving on the field, on my birthday, November 26th, we met on the field with full staff. Robur's senior executives were also present at this meeting. I gave a historical speech to the whole team on the day of the installation start. Here is the video of that speech:
As if I had predicted everything in this video, I had said “we were having problems with the logistics and crane company”. Make a note of this. Because my next article will be about this topic.
After this historical talk, I left the field in the evening to give a speech on sustainability at an event organized by my dear friend Kerem Siral at Soho House. After the event, we celebrated my birthday with all my friends.
While I thought that our work was easier with the arrival of the turbines during my birthday celebration, I also thought that we had a long way to go. On the one hand, I was saying to myself ‘we are yet to see what awaits us’. I had a feeling that things would not go so easily.
I will share what later happened in the next article that I will write about our Izmit Kandira WPP project.
Lessons to be learnt from these experiences
Take financing as a priority regardless of the project. Do not say “we can get it either way”. First, secure the financing, then start the project. I also thought that I had secured the financing, but I had to use the money I allocated for this project so that other companies would not go bankrupt. Although it was not a correct move, I had to.
In fact, make sure you have a spare source of financing for difficult times. Such a resource can save you from big trouble or even bankruptcy. If I had money on the side after the July 15 events, I would have prevented the formation of this environment that would pile up like dominoes and eventually cause me great trouble.
2) Human Resources
Always work with the best. Especially lawyers, accountants and technical staff are very important. Cutting the numbers to use second-third quality professionals will make you pay much more. It can even lead to bankruptcy. The mistake of paying 70% of the turbines' money and not putting the title on us almost completely bankrupted us.
3) Your environment
Make friends with quality people who are successful in their work. It was my luck that Selda was my neighbour. We established a good bond; Thanks to her being a German Turk and knowing how to appeal to Germans professionally, I found the best possible lawyer for me and got behind me a chamber of commerce that works effectively like AHK.
4) A fight to the end
Whatever happens, don't stop fighting. Fight until the last moment, just as Alita lost half of her body and arm in the movie, and survived by striking the camel with one last jump. Thanks to this struggle, I managed to save our lost turbines. A lot happened in between, but I never quit the struggle and reached the conclusion. Also, a strict follow-up is always very important.
I wanted to give information about the Alita movie. Don't worry, Alita gets Grewishka towards the end of the movie. This is the last round fight between them: https://www.youtube.com/watch?v=ks8Uj-EL_t8
These are the clips showing Alita's struggling spirit and efforts to hold on to life:
Fighting scene in the bar: https://www.youtube.com/watch?v=Um8i-glXSzY