Overview

Electric Power Sector

total market size = (total local production + imports) - exports)                                                                                 Units: $ millions
Source: Ministry of Energy and Natural Resources, State Institute of Statistics.

Turkey, with an electric power generation capacity of approximately 100 GW, is Europe’s sixth largest electricity market and the 14th largest in the world. Approximately 54% of Turkey’s electric power generation capacity comes from renewable energy, including hydroelectric, wind, solar, geothermal, and biomass power plants, making Turkey the 5th largest generator of renewable energy in Europe and the 12th largest in the world.

Turkey currently has approximately 31,500 MW of hydroelectric, 25,750 MW of natural gas, 20,000 MW of coal, 11,000 MW of wind, 8,000 MW of solar, 1,700 MW of geothermal, and 1,700 MW of biomass power plant installed capacity. The Turkish Ministry of Energy and Natural Resources is planning to have an additional amount of 10,000 MW wind and 10,000 MW solar power plant capacities to its energy mix within the next 10 years through licensing tenders.

Turkey has a large and growing manufacturing base which requires an increasing amount of power generation. The annual growth rate in additional power generation capacity has been around 5% due to the increasing economic activity and a rising population in Turkey.

Turkey committed to achieve net-zero emissions by 2053. As a result, Turkey plans to continue supporting renewable energy investments including nuclear energy projects on a BOT or build-own-operate (BOO) basis. Turkey is also open to public-private partnerships. The government provides power purchase guarantees with a high feed-in-tariff until the debt is recovered. Turkey will most likely phase out coal power plants before beginning the process of phasing out gas power plants, though this is at a much later stage given Turkey’s needs to establish other base load power plants to replace existing fossil fuel power plants.

Turkey has been considering nuclear energy power plants as a future base load and designated three locations for the implementation of three separate nuclear power plant (NPP) projects. These planned NPPs are large power plants with total capacities between 4000-5000 MW. The first NPP project is the Akkuyu Nuclear Power Plant project being built by Rosatom of Russia. The first unit is expected to be operational in 2023. The other three units are expected to be completed by the end of 2026. However, supply chain issues and sanctions on Russia may delay the project’s full completion. This power plant will ultimately have four 1200 MW VVER units and will be operated by Rosatom for 60 years. The other two NPP projects were planned in Sinop and Thrace, however they are stalled for the time being.

The U.S. Commercial Service Turkey organized the Eurasia Small Modular Reactor (SMR) Forum on April 5 and 6, 2022, drawing significant interest from public and private-sector leaders alike. SMR technologies will play an important role in meeting Turkey’s growing demand, replacing existing coal power plants, and providing support to green hydrogen. SMR power plants will be much safer, more readily deployable, and more affordable than traditional, large nuclear power plants.

Turkish regulations stipulate that renewable energy investments of less than 5 MW do not require a license from the Energy Regulatory Authority (EMRA). Roof-top solar energy producers can sell their excess electricity to the grid at a maximum limit of 5 MW if they are production plant owners, and 10 kW if they are homeowners. Solar and wind energy investments receive customs duty exemptions, corporate tax deduction, and other incentives.

Renewable energy power plants established for the purpose of agricultural irrigation, potable water, and waste-water treatment facilities do not require licensing. Solar or wind energy prosumers are entitled to net-metering with the grid operator. Organized Industrial Zones (OIZs) receive special incentives for establishing power plants within their zone.

Approximately four years ago, the Ministry of Energy and Natural Resources (MENR) established the YEKA Renewable Energy Zone through which it awards license contracts, including power purchase guarantees. This model requires a certain percentage (generally more than 60%) of local manufacturing. MENR announces at least 1000 MW YEKA wind and solar tenders every year for license groups of 10, 15, 20, 25 MW.

The national electric transmission company, TEIAS, owns and operates approximately 1.5 million Km of medium to high voltage electric transmission power lines spread throughout the country. TEIAS conducts tenders for the establishment of new sub-stations and transmission lines as well as air and video surveillance, live maintenance, repair, and maintenance of existing lines. U.S. firms should find good Turkish partners to bid in these tenders.

Turkey’s transmission lines connect to 21 distribution grids operated by private companies. These 21 distribution grid companies operate approximately 71,000 Km of distribution lines. One of the aims of distribution system operators (DSOs) or electric distribution companies (DISCOs) is to increase the efficiency of the existing grids by either replacing the old transformers or lines and/or installing smart grid systems.

The ELDER Association of Distribution Systems Operators is active in advising their members on the implementation of smart grid systems. Under a project approved by the EMRA, ELDER had a Smart Grid Roadmap prepared for DSOs which outlines what type of smart grid systems should be deployed by their members.

Another study by ELDER highlights the benefits of using energy storage systems in distribution grids. In five DSOs, pilot projects exist using various energy storage system types. The aim of connecting energy storage systems is to:

• Decrease grid losses
• Demand Control
• Micro Grid Dispatching
• Reactive Power Support
• Frequency Control
• Dispatch Management

Turkey has a semi-liberalized and moderately regulated market. Energy Exchange Istanbul (EXIST) is Turkey’s electricity spot market, which manages day-ahead and intraday markets where 40% of electricity is traded among 854 market participants. EXIST’s website features electricity prices in real time.

Leading Sub-Sectors

• Smart grid systems (SCADA, GIS, AMR, AMI, Automated Demand Side Management, PLC and other communication systems, Volt-VAR control systems, OT, CIS, Control Centers, etc.)
• Grid modernization and voltage and frequency regulation systems
• Solar energy power generation engineering and design services
• Geothermal power plant equipment
• Waste-to-energy systems
• Wind turbines and generators
• Energy storage systems
• Smart LED Lighting Systems
• Fuel cells
• Hydroelectric turbines and coal gasification systems
• Micro Grid Systems
• Small Modular Reactors (SMRs)

Opportunities

The U.S. Trade & Development Agency (USTDA), the Export-Import Bank of the United States (EXIM Bank), and the U.S. International Development Finance Corporation (IDFC) consider financing renewable energy projects in Turkey. The European Development Bank of Reconstruction (EBRD) and the International Finance Corporation (IFC) have been very active in Turkey, providing renewable energy and energy efficiency projects financing in Turkey.

Resources

• Export-Import Bank of the United States (EXIM Bank): https://www.exim.gov/
• U.S. International Development Finance Corporation (DFC): https://www.dfc.gov/
• U.S. Trade & Development Agency: https://www.ustda.gov/
• World Bank Country Page: https://www.worldbank.org/en/country/turkey
• International Finance Corporation: https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/home
• European Bank for Regional Development Country Page (EBRD): https://www.ebrd.com/turkey.html

For further information on the energy sector, contact:

Serdar Cetinkaya

Energy and Mining Leader

U.S. Commercial Service

U.S. Embassy, Ankara, Turkey

Serdar.Cetinkaya@trade.gov