17 Apr

  • By herdem
  • In Energy
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General Outlook of the Energy Market

Turkey’s high economic growth which had reached almost double digits numbers by the middle of the last decade and stands around an annual average of 4% dictates new and innovative solutions to Turkey in order to reshuffle its energy infrastructural base. In line with the fast economic growth Turkey’s energy needs has already increased to reach an annual growth rate of 9% in the recent years. Given such an energy hungry market it is not a surprise that based on the 2012 data, energy industry has accounted 32% of all the deals for private sector transactions and privatizations. Usually the decision taken by the authorities for the liberalization of the energy market is accounted for such growth in the Turkish energy market. Considering the global trend of liberalization not only in energy sector but in many of the regulated sectors had made such an effort of market liberalization an imperative. Especially important for the liberalization of the Turkish market was the adaptation of Electricity Market Law and Natural Gas Market Law in 2001 and the establishment of Energy Market Regulatory Authority (EPDK).

However liberalization of the energy market and the concomitant reforms have to go hand in hand with a structural change in the Turkish energy market which still relies heavily on non renewable fossil fuel based energy resources.  Turkey’s annual energy bill which amounts to USD$ 60 billion can only be reduced through the transformation of the Turkish energy market along the renewable lines. This is a dire need since Turkey has long taken the decision to cut down spending and reduce its lingering current account deficit which has been haunting the country’s economy for years. Moreover the legal framework has to be ensured by the authorities in order to facilitate such a transformation towards the renewable energy. In this regard 2005 dated Renewable Energy Law, which aims for the better utilization of renewable resources for electricity generation alongside the diversification of energy resources , has been serving as a major corner stone in this transformation. The law was amended in 2010 to provide the electricity producers from renewable energy resources a purchasing price guarantee for 10 years period.

New Expectations in the Turkish Solar Energy Market

Given such a macro-economic background It is  by no means a surprise that Turkey is expected to attract a USD$ 1.2 billion worth renewable energy project in the midterm. Turkey, as a country geographically located in the midst of the Mediterranean climate zone, offers a diverse range of opportunities for the renewable energy projects.  According to one of the Turkish dailies the initial investment is going to focus on Turkey’s solar energy capacity and will try to utilize this capacity to produce renewable energy. The first tenders are expected to be organized in order to exploit the solar energy opportunities in two of the Eastern Anatolian cities; Erzurum and Elazığ.

Turkey has a great potential for solar energy for geographical and climatic reasons. Some southern parts of the country receive sun rays in almost 300 days of the year with an average of 19 degrees Celsius. Renewable Energy Law has envisaged and allotted spaces for the solar energy projects up to 600 megawatts. Previously 496 different companies have applied for projects that would amount to 863 megawatts and to 15 billion Euros. However Turkish Electricity Transmission Company (TEİAŞ) initially only allowed for the projects that amount to 600 megawatts to proceed with the additional advantage to benefit from the investment incentives. In this regard 258 projects which have been deemed convenient by the bodies have been endorsed and sent to the Ministry of Energy. It is highly probable that following the initial tender the solar energy projects will go on and the investment will increase by the end of the year.

Conclusion

Turkey has already adopted a policy more geared towards the support for renewable energy opportunities. The targets set for the energy sector for the year 2023 includes the attainment of 30% of the Turkey’s energy needs from renewable energy resources. This includes installation of capacity for wind energy that can sustain 20.000 megawatts, a capacity of 3.000 megawatts for the solar and the capacity of 650 megawatts for the geothermal energy. Such targets are attainable for Turkey but it will require more focus for the R&D in the renewable energy sector alongside continuous legal arrangements to keep up with the fast pace of change in the global and the Turkish renewable energy markets.


Herdem Law Firm, Istanbul Turkey

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