The Energy Sector in Turkey

The Energy Sector in Turkey

Overview

  • Release Date: December 16, 2016

According to Oguz Türkyılmaz, former Chief of the Chamber of Mechanical Engineers of TMMOB (Turkish engineers and architects chamber association), the electricity production in Turkey doubled since 2002, but the share of domestic resources in the primary energy supply declined from 31.6 % to 24 %. With the increase of oil, natural gas and coal imports, the energy dependency rate has reached 76 %.

Public presence in the energy sector

It is observed that the current energy policies in Turkey aims at ending the state participation.

– The publicly-established oil distribution company, Turkey Petroleum Oil Distribution Company  (TPPD) illustrates the trend. The exploration, drilling and production activities of Turkish Petroleum (TPAO) is planned to be taken over by an international company (TPIC).

– BOTAŞ is expected to be divided in storage, sales and transmission divisions. Storage and sales activities are foreseen to be privatized too.

– With the complete privatization of electricity distribution, the public was completely withdrawn from the distribution sector. The last experienced staff of TEDAŞ (Turkish Electricity Distribution Company) are transferred to other public institutions.

– As result of privatization of large parts of EÜAŞ (Electricity Production Company) plants, the share of electricity production fell by 17%.

Regulations for the transmission activities carried out by the State owned enterprises are being made for these activities to integrate the market.

Through the changes made in the electricity sales tariffs, the profits of the private tiers have been increased. Projects such as Akkuyu Nuclear Power Plant, TANAP have been taken out of the internal control mechanisms by international agreement status. Such projects are given ‘strategic investment’ status and additional support such as tax advantage is provided.

Future of the power plants

The government expects an annual increase of 5-6 % in electricity demand and gave permission to new energy production projects. However, in line with recurring incidents in the country’s economy, the rate of electricity demand tends to slow down.

The total installed capacity of the existing, licensed, investment phase and waiting for licenses, is 130 GW. It is is 65 % more than Turkey’s installed capacity (78,43 GW) by the end of October 2016. This number does not include the nuclear power plants, so this data shows that there is an excessive accumulation of energy projects.

As a matter of fact, some managers in the energy sector say that many projects in the investment phase will be canceled, some power plants will shut down and some will go bankrupt. Because of the increase in foreign exchange rates and the narrowing of credit opportunities from abroad, with future sales and transfers, we can foresee that the monopolization process in the sector will accelerate.

 

Installed Capacity (MW)
Installed capacity of power plants in Turkey (october 2016)78.434
Licenced projects as of July201640.211
Existing plants + plants in investment processes118.645
Projects allowed to take license3.132
Projects in application stage8.555
2016 1st quarter project stock130.332
2023 target125.000

Table 1: Existing and new power plant projects in Turkey (1 December 2016)

In addition to the existing plants, the production amount that Turkey can obtain from domestic lignite and renewable energy sources awaiting for evaluation which is 727 billion kWh. is detailed on the table below.

Electricity generation Capacity (kWh/year)
Hydroelectricity49 billions
Wind128 billions
Geothermal9 billions
Sun400 billions
Biogas35 billions
Domestic lignite106 billions
TOTAL727 billions
Turkey’s electricity consumption263 billions

Table 2: Domestic and renewable sources available for electricity generation

About Oğuz Türkyılmaz

One of the former executives of TMMOB Chamber of Mechanical Engineers, Oğuz Türkyılmaz is an industrial engineer who graduated from METU (Middle East Technical University), and who has 43 years of professional career in the energy sector. He has been the Chairman of TMMOB Chamber of Mechanical Engineers, Energy Working Group for many years.

About Author

Arnaud Lefevre

Arnaud Lefevre is the Chief Executive Officer of Dynatom International. Arnaud is in charge of the international development of the business portfolio.