Interview: Gülsüm Azeri
How can Turkey work to meet its 2023 energy goals?
GULSUM AZER‹: Although Turkey experienced a slowdown in 2012, over the last years the country has been one of the fastest growing economies in the world. This has led to accelerating energy demand across all domestic industries. According to figures provided by the Ministry of Energy and Natural Resources, the total primary energy demand in Turkey is expected to reach 222.4 megatonnes of oil equivalent by the year 2020.
As such, the government has set forth a number of 2023 development targets for the energy sector. These include installing 125 GW in power capacity (up from 57 GW in 2012), and increasing national electricity generation by over 100%. The authorities aim to increase natural gas storage capacity to 5bn cu metres (bcm), up from 2.6bcm in 2011. At the same time, electricity generation capacity from coal is targeted to reach 17-18 GW, wind capacity to grow from 1 GW to 20 GW, and geothermal capacity to hit 600 MW. Under this scenario, the total share of renewable sources in the energy basket would be an estimated 30%. Nuclear energy will also play a key role in Turkey’s energy future, which is why plans are in place to install enough nuclear power facilities by 2023 to account for 8% of electricity.
Power plant development will also include construction of natural gas combined cycle plants, which produce lower carbon dioxide emissions than all other fossil fuel facilities. They are advantageous because they can be turned on and off “on demand”, providing balance and continuity in line with changing market needs. We are now developing a natural gas combined cycle power plant in Samsun at a cost €600m. Once operational in 2013, the plant will have a capacity of 870 MW and meet close to 3% of Turkey’s energy needs.
Finally, Turkey will have to leverage its strategic geographic location to obtain energy from neighbouring countries, in many cases through the implementation of regional pipeline projects. There is also potential for further gas exploration in the Mediterranean and the Black Sea. The latter is especially significant, as evidenced by our work off the shores of Romania, Bulgaria, and Ukraine. Depending on the outcome of these projects, future exploration may be done in Turkish waters.
What steps can energy regulators take to improve the business environment and attract more interest in the sector from foreign investors?
AZER‹: Turkey has become one of the world’s major energy markets. The republic ranks 21st globally for primary energy consumption and 20th for electricity generation. However, Turkey possesses very few domestic natural resources, producing only 2.4m tonnes of oil and marginal amounts of natural gas. As of yet, the nation has no nuclear power facilities.
This means Turkey must import 93% of its oil requirements and 99% of its natural gas needs. In 2012 the national energy import bill reached a total of $60bn. Given these challenges, policymakers should take steps to enhance energy security. First among these is improving the business environment by making the legal system more predictable and transparent. Furthermore, policymakers should expedite the liberalisation of the market to encourage private sector investment. The recently adapted Turkish electricity market law is an important step in this direction. With the addition of the new petroleum and natural gas law the investment environment will be more attractive for both local and foreign investors. In the last decade, total investment in the country’s electricity market – which now produces 239bn KWh of electricity and has a capacity of 57 GW – was $50bn, about 60% of from the private sector. This share can be increased even further given the right regulatory conditions.
Turkey has made great economic and political progress in the last decade, emerging as an attractive location for investors. That is why OMV has invested $2.5bn in Turkey since 2006, taking steps to enter every segment of the local energy market, from electricity generation, to distribution of petroleum products, and the import and wholesale of natural gas.
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