Wind energy currently accounts for 2 percent of the country’s generated energy at 2,000 MW, but government predicts the wind power energy industry would grow 10 folds by 2023.
The government is also providing incentives for the development of solar power, geothermal energy and biomass power industries, but the share of these sources in Turkey’s electricity production remains negligible.
Energy-dependent Turkey is scrambling to find alternative energy resources to fuel its fast- growing economy while trying to address challenges to narrow its current account deficit, driven by high prices of oil and gas.
Turkish energy imports is expected to cost over 60 billion U.S. dollars in 2013 while its consumption of electricity will rise by 6 percent to 9 percent annually in the next decade or so.
That puts the government under pressure to find alternative energy sources to keep powering the economy.
With a renewed vigor on domestic energy resources, Turkish government has turned to coal, which is abundantly available in Turkey, to reduce its dependence on external hydro-carbon resources.
The signing of a deal last week with Emirati oil and power company TAQA, an investment valued at 12 billion dollars, to develop lignite coal field in Afsin-Elbistan basin in southern Turkey was a landmark agreement to generate 45 billion kwh of energy per year.
“The government should have explored for establishing additional coal-fired power plants a long time ago. The country’s economy desperately needs this,” Ismail Altunsoy, the head of Ankara-based Association for Energy Reporters and Media (EGAD), told Xinhua.
“If this deal goes through as planned, it will bring extra 18 percent to 20 percent additional power capacity to the established power base in Turkey,” he added.
The share of natural gas in Turkey’s overall electricity and heat generation is over 45 percent, according to the International Energy Agency (IEA). As the natural gas prices are moving closely in line with the oil prices, the electricity generated from imported gas mostly from Iran and Russia adversely affects Turkish industry’s competitiveness.
World Energy Council Turkish National Committee board member Necdet Pamir has said that Turkey remains highly dependant on natural gas for the generation of electricity.
“The total volume of anticipated electricity from natural gas power plants that have recently received operating licenses from the government is higher than Turkey’s current electricity generation volume… This means that we are increasing our dependence on natural gas for the coming years. This should not be the case; we need to promote diversification of sources,” he explained.
Turkey is also trying to position itself as a hub for energy routes between European customers in the west and energy suppliers in the east in order to benefit from the diversification of energy supplies. It has signed Trans-Anatolian gas pipeline (TANAP) with Azerbaijan last year to transport Caspian gas supplies to Turkey.
The construction of the 7 billion dollars worth TANAP pipeline, planned to have an initial capacity of 16 billion cubic meters a year and may go up as high as 31 bcm eventually, is set to start in 2014, and is scheduled to be completed by 2018. Azeri gas is almost 40 percent less expensive than Iranian and Russian gas and is expected to play a major role in fulfilling the rising demand from Turkey that is expected to hit as much as 70 billion cubic meters of natural gas per year by 2020 from the current consumption level of 46 billion cubic meters.
Turkey hopes TANAP can link to other pipelines extending to Europe such as Nabucco-West or Trans-Adriatic Pipeline (TAP).
Ankara is also looking to new markets for liquefied natural gas (LNG) supply to support gas demand in Turkey. It currently purchases from Algeria and Nigeria under long-term contracts. Turkish Energy Minister Taner Yildiz has announced recently that Turkey is also seeking to buy LNG from Qatar and more oil from Libya.
KURDISH OIL DEALS
Alternatively Turkey is also cultivating deeper ties with Kurdistan regional government in northern Iraq to meet some of its oil demands and possibly gas in the future at a relatively competitive prices. Ankara has rebuffed the Iraqi government calls not to deal with the regional government on hydrocarbon deals, saying that Turkish companies have the right to deal with the Kurdistan regional government under the 2003 Iraqi constitutional provisions.
Anglo-Turkish company Genel Energy has started this week to transport crude oil from northern Iraq to Turkey via trucks for the first time as the Kurdistan regional government halted exports through the Baghdad-controlled Iraq-Turkey pipeline last month in a dispute over payments to oil companies operating in Kurdistan. The state oil firm Turkish Petroleum Corporation (TPAO) has also investment in autonomous region.
Yildiz has recently said that Turkey will respect the Iraqi constitution. Noting that presently 39 companies from 19 countries are engaged in the energy business in northern Iraq, Yildiz wowed that Turkey is also subject to the same conditions as other companies which are doing business in northern Iraq.
Turkish Ambassador in Washington Namik Tan said last week that “as a growing country, Turkey cannot turn its back on resources that are nearby. We do the same things American companies do.”
Tan lamented that “when it comes to our companies, however, there are complaints. We do not understand the reason for this discomfort regarding Turkish companies.”
Turkey’s move to acquire major petroleum reserves in northern Iraq aimed to secure strategic commodity for Turkish economy which imports 98 percent of its petrol needs from abroad. A recent agreement between northern Iraq and Ankara will see a new pipeline exporting crude directly to Turkey by August of 2013 and, by Ankara’s estimates, pumping one million barrels a day by 2015.
“Being able to provide energy from a neighboring country will put Turkey in a very advantageous position in the following years, ” Mehmet Sepil, president of Genel Energy said in an interview with Turkish daily recently.
Erdal Saglam, a business columnist with Hurriyet daily, believed the cards are being reshuffled in Iraq over energy deals. “It is obvious that Turkey needs to be among players in this energy game. But while doing so, Ankara needs to tread carefully here,” he warned.
As part of the diversification policy, Turkey has awarded a 20 billion dollars worth contract to Russian firm Rosatom to build a nuclear plant in southern Turkey. It is also entertaining bids for a plant on the Black Sea from South Korea, China, Canada and Japan. The government announced it will start building a third one within the next five years.
Inanc Kabadayi, head of Istanbul Young Entrepreneurs Association, said Turkey needs to focus on renewable energy sources to narrow current account deficit (CAD) problem which was mainly driven by energy imports.
“Turkey should mobilize businesses to make them invest in renewable like wind and solar power to find a solution to CAD,” he noted.
That is easier said than done, however. Renewable energy industry in Turkey is still at infancy stages.