Turkey, due to its geographical location that makes it a natural bridge between Europe and Asia, plays a key role in terms of energy on both a regional and European level. To fully exploit its potential, the country must, however, complete the industry’s reform process initiated by the government ten years ago. This is what emerges from the latest International Energy Agency (IEA) report on Turkey, published recently. With a growing energy demand, increasing oil and gas imports and an energy mix largely based on fossil fuels, Turkey – emphasizes the IEA – has a unique opportunity to enter the renewables sector, save energy and diversify its mix.
The energy numbers
Turkey’s total primary energy supply (TPES) – reads the Reports – has, in the last forty years, recorded an increasing trend to meet the needs of a rapidly growing economy.
In 2015, the country’s TPES amounted to 129.7 million tons of oil equivalent (MTOE), with a 54% increase compared with 2005 (84.2 MTOE). Just 24.8% of energy needs, amounting to 32.2 MTOE, was met by domestic production, which is why Turkey is highly dependent on oil and gas imports. The country’s energy mix is dominated by fossil fuels which, in 2015, accounted for 87.6% of the TPES (in 2005 they accounted for 88.1%), a level that ranks eighth among the IEA member countries. Turkey’s total final consumption amounted to 85.8 MTOE, that is, approximately 70.6% of the primary energy supply.
The Ankara government’s policies, summarized in the Vision 2023 plan, aim at ensuring the country secure, sustainable and affordable energy, diversifying its supply routes and countries of origin, promoting domestic production and improving energy efficiency to limit the growth of total final consumption. Specifically, Vision 2023 plans for the amount of wind and geothermal energy in the mix to rise to 30% and for energy consumption to fall by 20% below 2010 levels. The "strategy for the electricity market and security of supply" of 2009 launched a process for opening up the electricity market, through the gradual elimination of cross subsidization and increased competition.
With a growing energy demand, increasing oil and gas imports and an energy mix largely based on fossil fuels, Turkey has a unique opportunity to enter the renewables sector, save energy and diversify its mix.
The IEA's prescription
In its Report, the Agency invites the Turkish government to continue on the path of reform, by adopting a program for energy efficiency and the development of alternative sources. The IEA acknowledges the efforts made in this sense over the past ten years, stressing that privatization and the reforms of the electricity market have attracted the interest of the financial community, leading to a real boom in private investments. These injections of capital have, in turn, enabled the electrical power generation capacity to double between 2007 and 2014, ensuring the Turkish population access to energy.
"To attract even more investment", explains the Director General of the IEA, Fatih Birol, "the liberalization of the energy market must make further progress".
The Report identifies three guidelines: to strengthen the independence of system operators and of the regulatory authorities; to abolish market distortions and to continue to invest in more flexible and modern infrastructure for gas and electricity. These pillars are key, according to the IEA, to ensuring the country a stable and reliable electricity supply and to ensure sustainable economic growth and greater diversification.
The challenges: integration, dependence and emissions
To attract even more #investment the liberalization of the #energy market must make further progress. @IEABirol
One of Turkey’s strong points, and not only in terms of energy, is its unique geographical position. The country’s regional integration, observes the IEA, is making progress, thanks to the construction of the Transanatolian Natural Gas Pipeline and access to the European electricity network (ENTSO-E), but the process must go on. "Turkey’s contribution is essential for regional and European energy security" emphasized Birol.
With the drop in gas and the development of the global LNG trade, Ankara has a great opportunity to reform its own gas market, introducing more competition and diversification and investing more in infrastructure. Gas accounts for 40% of Turkey’s electricity production and the demand for blue gold has more than doubled in the past decade, making the country increasingly dependent on imports.
One of the major problems that the government has to deal with is the high dependence on fossil fuel imports, combined with the fast growth of carbon dioxide emissions, which have more than doubled since 1990. Turkey, observes the IEA, has for the first time set a goal to reduce greenhouse gas emissions. To reduce CO2 and atmospheric pollution further investments will however be needed in technologies for clean coal and for the rapid rebuilding of old plants. "Clean coal and nuclear power may - along with increased energy efficiency and renewables - form part of a secure and low-carbon energy mix", explained Birol, adding, however, that "to ensure high standards in terms of the environment and security, legal guidelines will be introduced".
In conclusion, the IEA advises the Ankara government to continue to implement Vision 2023 and finalize a long-term energy policy agenda that encourages private investments in the industry. Clear, long-term targets for renewables and energy efficiency, faster authorization procedures and greater integration in the network may ensure Turkey a sustainable and long-lasting economic growth.