Turkey has become one of the fastest growing energy markets in the world in parallel to its economic growth registered over the last ten years. The successfully implemented privatization program in the said period – power distribution is now completely in private sector hands, while the privatization of power generation assets is set to be completed within the next few years – has given the country’s energy sector a highly competitive structure and new horizons for growth.
Economic expansion, rising per capita income, positive demographic trends and the rapid pace of urbanization are the main drivers of the energy demand, estimated to increase around 7 percent per annum until 2023.
One of the latest steps the Turkish government has taken towards a more competitive energy sector, the establishment of an energy stock exchange, is in its final stage of planning. The energy stock exchange will not only enhance the liberalization of the market but will also ensure transparency and help maintain a healthy balance between supply and demand once it has become operational in 2014.
In addition to having a huge domestic market, Turkey is strategically located between major energy consumers and suppliers, thus serving as a regional energy hub. The existing and planned oil/gas pipelines, the critical Turkish straits and promising finds of hydrocarbon reserves in the country itself give Turkey increased leverage over energy prices and reinforce its gateway status.
The renewable forms of energy --hydro, wind, solar, geothermal and others -- are abundant in Turkey and encouraging policies backed by favorable feed-in tariffs are expected to increase their share in the national grid in the coming years. The Turkish government has made it a priority to increase the share of renewable sources in the country’s total installed power to a remarkable 30 percent by 2023, while taking the energy efficiency concept to realization by enacting laws that set principles for saving energy, both at the individual and corporate levels.
As important as the renewables are in Turkey’s energy strategy in the coming years, technologies such as waste processing and reducing of greenhouse gasses are also often cited together with this new form of power generation as critically important supplementary practices. Sustaining the environment by resorting to renewable resources is accompanied by such measures and regulations, either in effect or soon-to-be in effect, -- lowering carbon emissions, increasing generation/transmission efficiency, and promoting the use of waste management technologies.
The sum of these factors have profoundly shaped Turkey’s energy sector and turned it into one of the most attractive investment destinations in the world. In line with the implementation of investor-friendly regulations and the high increase in demand, the Turkish energy sector is becoming more vibrant and competitive, attracting the attention of more investors for each component of the value chain in all the energy sub-sectors.
The total amount of investments required to meet the energy demand in Turkey by 2023 is estimated to be around USD 120 billion, more than double the total amount invested in the last decade.
Turkey’s ambitious vision for 2023, the centennial foundation of the Republic, envisages grandiose targets for the energy sector in Turkey. These targets include:
- Lifting up installed power to 120,000 MW
- Increasing the share of renewables to 30 percent
- Maximizing the use of hydropower
- Increasing wind power installed capacity to 20,000 MW
- Installing power plants with 600 MW of geothermal and 3,000 MW of solar energy
- Extending the length of transmission lines to 60,717 km
- Reaching a power distribution unit capacity of 158,460 MVA
- Extending the use of smart grids
- Raising the natural gas storage capacity to 5 billion m3
- Establishing an energy stock exchange
- Commissioning nuclear power plants (two operational nuclear power plants, with a third under construction)
- Building a coal-fired power plant with a capacity of 18,500 MW
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