Increased energy demand and a stronger focus on renewable energy makes for great opportunities in Turkey.
Economic expansion, rising per capital income, positive demographic trends and the rapid pace of urbanization have been the main drivers of energy demand in Turkey, which is estimated to increase by around 4 % per annum until 2023.
After many years of relying on gas import from countries such as Russia and Azerbaijan for its power production, Turkey has taken steps to free itself of this dependence. Changing geopolitical conditions in the region, especially strained relations with Russia and Iran, mean that Turkey’s high dependency on these two suppliers is not sustainable in the long term.
Turkey’s vision for 2023
The ambitious vision for 2023 includes the following targets for the energy sector in Turkey:
- Lifting up installed power to 120,000 MW (76000 MW as of June 2016)
- Increasing the share of renewables to 30 percent (10% as of today)
- Maximizing the use of hydropower
- Increasing wind power installed capacity to 20,000 MW
- Installing power plants with 600 MW of geothermal and 3,000 MW of solar energy
- Extending the length of transmission lines to 60,717 km
- Reaching a power distribution unit capacity of 158,460 MVA
- Extending the use of smart grids
- Raising the natural gas storage capacity to 5 billion m3
- Establishing an energy stock exchange
- Commissioning nuclear power plants (two operational nuclear power plants, with a third under construction)
- Building a coal-fired power plant with a capacity of 18,500 MW
The total amount of investments required to meet the energy demand in Turkey by 2023 is estimated to be around USD 120 billion, more than double the total amount invested in the last decade.
As a result of the Turkey Wind Atlas prepared by Electric Affairs Research Administration (EIE) and calculations made on it, Turkey’s technical wind energy potential is stated to be around 88 000 MW.(Wind Energy Estimate System, 2003, 19).
As of June 2016 the installed capacity in wind is 4900 MW. Investors and operators have increasingly shifted their attention towards operational efficiency and improving technical feasibility of projects.
Five major turbine manufacturers dominate the market in Turkey namely Enercon, Nordex, Vestas, GE and Siemens.
The Ministry of Energy and Natural Resources determined the baseline feed-in tariff for wind energy at 7.3 USD cent/ kWh. with an extra bonus for locally manufactured component which is an extra 3.7. USD cent/ kWh.
Turkey getting on offshore wind radar
The Offshore wind market has yet to emerge in Turkey is being eyed by companies involved in the industry in Europe.
According to Turkish media, Turkey holds the potential for 40 gigawatts of wind energy that is currently untapped, and that the first stage will take two years before a project becomes operational. As the result of a separate research project on the potential for the Turkish coastline, organizations are expected to bid for a project to generate 800 megawatts of offshore wind farm energy.
Developing offshore wind in Turkey will cost EUR 2 billion and will require the construction of 8 to 9 thousand wind turbines, according to the Akdeniz International Univeristy.
However, an issue that arises for the investors now eyeing the Turkish market is the offshore wind tariff, which has not yet been agreed, according to Daily Sabah newspaper.
As of June 2016, the installed capacity in solar energy is 535 MW. The target for 2023 is 5 GW, meaning that the installed capacity must grow by 10 times. Turkey has the second highest potential in terms of annual sunlight in Europe after Spain.
Solar PV in Turkey is divided into two categories as unlicensed and licensed. Unlicensed projects (projects of 1mw and below) currently make up all of Turkey’s installed capacity.
The main incentive for solar in Turkey is a $133 USD/MWh feed-in tariff, which is available for 10 years for projects that commence operations by December 31, 2020. There is an incremental tariff of up to $67 USD/MWh for using domestic content. The local manufacturing sector is currently underdeveloped and generators are heavily dependent on imported products.
Turkey has the second highest potential in Europe after Norway. As of June 2016, installed capacity in hydro is 26250 MW. 6800 MW of this consists of run of river projects.
- Turkey recently focuses on small & medium size hydro electric power plants (HEPP) instead of large scale dams where Norwegian companies are highly competent
- Turkey has limited production of turbines and electronic mechanics for HEPP and therefore will have to import these
- License owner companies has limited operations & management expertise
- Privatization of the existing generation assets
Please contact Ali Basol at Innovation Norway’s office in Istanbul for more information about opportunities in renewables in Turkey.
+90 212 284 43 62