FLANDERS INVESTMENT & TRADE MARKET SURVEY

RENEWABLE ENERGY

IN TURKEY

RENEWABLE ENERGY IN TURKEY December 2014

Prepared by: Ezgi Çeri Fidan, Trade Consultant, Flanders Investment & Trade, Istanbul office Edited by Raphael Pauwels, Trade Commissioner.

Renewable Energy in Turkey | December 2014 3

Content

Table of Contents

Content ............................................................................................................................................................ 3

List of Tables .................................................................................................................................................... 4

List of Figures ................................................................................................................................................... 4

1 Introduction ............................................................................................................................................. 5

2 Turkey's Dependence on Imported Energy .............................................................................................. 7

3 Renewable Energy in Turkey .................................................................................................................... 9

3.1 The Renewable Energy Market in Turkey .............................................................................................. 9 3.1.1 Hydroelectric Energy in Turkey ....................................................................................................... 13 3.1.2 Wind Energy in Turkey .................................................................................................................... 16 3.1.3 Solar Energy in Turkey ..................................................................................................................... 19 3.1.4 Geothermal Energy in Turkey .......................................................................................................... 27 3.1.5 Biomass Energy and Biofuels ........................................................................................................... 31

3.2 Renewable Energy Policies and Regulations in Turkey ........................................................................ 33 3.2.1 Common Laws & Regulations for Renewable Energy Generation: ................................................. 33 3.2.2 Public and Private Incentives for Renewable Energy Projects ........................................................ 35

3.3 Air Quality & Greenhouse Gas Emission Control ................................................................................. 39

4 Energy Efficiency .................................................................................................................................... 42

5 Selected Sector Related Fairs ................................................................................................................. 45

6 Sector Establishments and Institutions .................................................................................................. 46

7 Selected Sector Related Associations ..................................................................................................... 49

8 Sources .................................................................................................................................................. 49

4

List of Tables

Table 1: Feed-in tariffs in Turkey ............................................................................................................. 9

Table 2: Top five countries; annual investment / net capacity additions / production in 2013 ........... 10

Table 3: Renewable energy potential in Turkey .................................................................................... 11

Table 4: Solar water heating collectors global capacity and additions, top 12 countries, 2012 ........... 21

Table 5: Feed-in tariff for renewables ................................................................................................... 37

Table 6: Legislation directly related to climate change adaptation ...................................................... 40

List of Figures

Figure 1: Total energy imports of Turkey ................................................................................................ 7

Figure 2: Current account balance excluding energy imports ................................................................ 8

Figure 3: Installed capacity by resources, 2020 .................................................................................... 10

Figure 4: Total installed power in Turkey, 04.2014 ............................................................................... 11

Figure 5: Wind power installed capacity in Turkey ............................................................................... 17

Figure 6: Solar water heating collectors global capacity, shares of top 10 countries, 2012 ................. 20

Figure 7: Solar water heating collector additions, top 10 countries for capacity added, 2012 ............ 20

Figure 8: Highest installed geothermal capacities in EU ....................................................................... 29

Figure 9: Geothermal power capacity additions, share of additions by country, 2013 ........................ 29

Renewable Energy in Turkey | December 2014 5

1 Introduction

This report analyses the development of the renewable energy sector in Turkey, its current situation,

strengths and weaknesses. We hope to shed some light on where and how Flemish companies can

find business opportunities in this bourgeoning sector in Turkey.

Turkey has big ambitions in renewable energy, and it is very well positioned thanks to its natural

‘assets’: sunshine, wind, rivers... And, apart from hydropower, the whole field of renewable energy in

Turkey is still very young, younger than it is in Flanders or the rest of Western Europe.

This means there's still a lot of growth in this domain to be realised in coming years. Which offers a

nice perspective to companies from Flanders: they can find a new market in Turkey for their

products, services, experience and knowhow developed over the past decades.

There are opportunities for developers of wind, solar, biomass or other power projects, for suppliers

of technical components or complete installations, for products and materials that enhance the

energy efficiency - and the 'green' character - of buildings, for engineering knowhow for the so-called

'smart grid', and for other kinds of consulting.

In order to set the background, it must be mentioned that Turkey is heavily dependent on its

neighbouring countries for its energy needs, as shown in its elevated oil and gas imports. It is

especially dependent on Russia for natural gas.

National and international energy policies play a very important role in regional and global power

equilibriums and their importance is increasing. In this respect, diversification of energy resources

and their transportation routes, efficient use of local resources and the use of existing energy

resources with various technological and strategic practices in the most efficient way possible, are

necessary in order to improve energy security and reduce dependence on foreign energy sources.

In recent years, growing volatility in global crude oil markets and concerns over climate change have

become major challenges all over the world. In this regard, energy is considered as a key issue for

sustainable economic development. As in many countries, energy is one of Turkey’s most important

issues for economic growth and social progress.

The Turkish economy has been rapidly growing during the past decades. Turkey also faced a rapidly

growing demand for energy in the last two decades. Primary energy demand is projected to reach

220 Mtoe (millions of tonnes of oil equivalent) in 2020 which means a 92 percent increase from the

current level (114.5 Mtoe).

It is estimated by the International Energy Agency (lEA) that Turkey will likely see the fastest medium

to long-term growth in energy demand among the IEA member countries. It is estimated that total

final energy demand and the total primary energy demand will more than double and reach annually

170.3 and 222.4 Mtoe respectively by 2020. It is also estimated that electricity, natural gas and oil

demand will reach 398-434 billion kWh, 59 BCM (Billion cubic metres of natural gas) and 59 million

tons respectively. In order to meet such an immense growth in energy demand, huge levels of

investment are required in all three sectors alike.

To meet the growing demand in the coming years, the power plant capacity needs to be increased

from 63,620 MW in 2013 to around 100,000 MW in 2023. According to the Turkish Ministry of Energy

this will require investments of around USD 130 billion.

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It is estimated that USD 33 billion will go to hydropower, USD 30 billion to wind and solar power

plants, USD 21 billion to coal-fired and nuclear power plants, USD 7 billion to gas power plants, and

USD 18 billion on expanding, improving and adapting the "grid" (electricity distribution).

Turkey is extremely foreign-dependent in energy. In 2013, crude oil and natural gas imports reached

USD 36 billion, together with coal, refined oil products, and lignite, these imports had reached USD

5.9 billion and constituted 22 percent of the total USD 252 billion in imports. While these sectors

exported USD 8 billion, their net imports totalled USD 47 billion. If we take the average of the five

years between 2009 and 2013, then the average is around USD 42.5 billion. The bill is rising with each

passing day.

Turkey’s energy strategy is multi-dimensional. It strives at diversifying its energy supply sources and

routes, as well as its energy basket by increasing the share of the renewables and adding the nuclear

energy.

Having a substantial potential for renewable energy resources, Turkey ranks seventh in the world and

first in Europe in terms of geothermal energy. Turkey also aims at further increasing its use of hydro,

wind and solar energy resources. Turkey envisages producing 30% of its electricity need from the

renewables by 2023.

Turkey has participated in the Founding Conference of the “International Renewable Energy Agency”

(IRENA) on 26 January 2009 in Bonn and has signed the “statute” of IRENA. Therefore, Turkey has

become one of the founding members of IRENA.1

Turkey has a substantial amount of renewable energy potential and the utilisation rates are growing.

Hydro, wind and solar energy resources are the major portions of its renewable portfolio. The aim of

this report is to examine the current situation and potential of renewable energy in Turkey.

Ezgi ÇERİ FİDAN Administrative & Commercial Assistant

1 Ministry of Foreign Affairs’ Energy Report