Anticipated Renewable Energy Targets for the Turkish Republic’s 100th Anniversary
December 14, 2012
By Evrim Özyorulmaz*
Turkey’s AKP government plans to base its election campaigning on the slogan “Turkey Is Ready: The Target is 2023.” The importance being given to the renewable energy sector by the government, which plans to accomplish impressive energy projects in time for the centennial anniversary of the Turkish Republic, is indicated clearly in the following quote (.PDF):
“The share of indigenous and renewable energy sources in the production system will be increased to the maximum extent. The production capacity based on the wind energy will be re-doubled 20 times and be increased from 1000 MW to 20,000 MW. We will rank among the top 10 countries for the production of electricity from solar energy. Geothermal and solar energy based power plants are going to be set up. In 2023, the share of renewable energy sources in electricity generation is aimed to be at the level of at least 30%.”
The ruling party also has put in an appearance on all relevant occasions. These include the participation of either the prime minister or the other key staff of the government at the openings of wind power plants, for example, in the last few years. Through these opportunities, the importance given to renewable energy sources has again been attested.
New Laws on Energy
The regulations that oversee the private sector have also been drafted during the AKP’s mandates; the “Renewable Energy Law” amounted to a revolution in the energy sector. Nuclear power plants are also seen as part of meeting the energy demand of Turkey. In fact, in their 2023 targets, being presented as a “giant step,” the government has said that in total, “eight nuclear reactors of 10,000 MW will be deployed in Mersin Akkuyu and Sinop. Besides, the construction of four additional reactors of 5000 MW will also be started.”
It is certainly impossible to know whether the AKP government will remain in power until 2023, but debate can at least be made regarding whether or not these goals can be achieved, and at what cost.
The recent history of Turkey’s energy policies involves the transfer of the energy sector to private ownership, in the context of influential trends favoring renewables like global warming and climate change phenomena, plus the target of EU integration.
Further, resulting from the multinational energy giants wanting to have control over this new market, the legal framework for private sector investment in the market has started to be created. First, in 2005, the “Renewable Energy Law” No. 5346 was passed, and promoted as an incentive law. Through various revisions the law was updated, most recently with the Law Nr. 6094 adopted in December 2010.
Related to the efficient use of renewable energy, some economic and financial difficulties are being experienced in Turkey as in many other parts of the world. Although various arrangements have been made on this subject, their practical competences should still be discussed. According to the WWF 2011 Report on the future of renewable energy and Turkey, the main critiques about the challenges in front of the renewable energy was headed as: 1. inadequate intake assurances, 2. the criteria on connections to the grid circuits, 3. the high cost of exploration activities of geothermal resources, 4. difficulties that consumers are facing while specifying the electricity source, 5. conflict between the objectives of renewable energy and nature protection, 6. the location of transformers and transmission difficulties from the source to the transformer, and 7. the lack of R & D funds.
What Is Being Promoted with Renewable Energy Incentives?
With the announced solar energy purchase price of 13.3 USD cents/KWh in the above-mentioned “Renewable Energy Law” No. 6094, solar energy investment completely lost all of its excitement. It is believed that this law led investors to indirectly distance themselves from the idea of a solar energy investment. Within the conjuncture, it is obvious that the proposed prices could redeem the investment itself – barely – after a 20-year period. This proves that the government’s set objectives related to solar energy remain impossible to achieve.
Even for the investments to be made by 2015 a 10-year purchasing guarantee is given, there is still an uncertainty for the investments after this date. For those seeking to invest in the wind and geothermal energy sectors, such uncertainties may lead to questionable approaches for private capital investments too. Promoting nuclear energy with no boundaries, the government does not want to guarantee the future of renewable energy, since the renewable energy sector is subject to the operation of free market mechanism as conclusive (.PDF).
When compared again with nuclear energy, the figures reveal more clearly the government’s seriousness in promoting renewable energy. While the 15-year purchase guarantee of 12.35 Dollar cents/kWh (excluding VAT) for nuclear energy is already being given to the Russian company Rosatom’s Akkuyu NPP Electricity Generation JSC, the 10-year purchase guarantee from the unit price of 7.3 USD cents/kWh is set for wind energy investments. Further, there is nothing within the scope of the law regarding wind investments after the year 2015.
It is possible that the subjected law is only meant to spur investments in more cost-effective areas (hydroelectric power plants, among other renewable energy sources). However, whether or not to invest in hydro is still being discussed, because of its potential adverse effects on the environment. In the intervening period of time, especially after the June 2003 bylaw of the “Agreement of the Right to the Use of Water,” the size of investments in Turkish hydroelectric power plants attests to this situation, in comparison with the non-significant investment figures in other areas of renewable energy. Together with a particular clause in the law stated below, which is particularly applicable for the hydroelectric projects, the approval of any project that may damage the environment must be approved by the relevant ministry only in regards to:
“National parks, nature parks, natural monuments and nature conservation areas, conservation forests, wildlife development areas, specific areas of environmental protection with the approval of the responsible Ministry, for natural protected areas with the approval of the board of the relevant protection zone; it shall be given the allowance for the establishment of the power generation plants based on the renewable energy sources.”
Auditing: Putting the Cat among the Pigeons
In parallel to the related law, from publishing the bylaw in October 2011 it has emerged that auditing activities shall be handled by privately-owned auditing companies. This means that auditing activities as already made by the Republic of Turkey’s Energy Market Regulatory Authority will be assigned to the control of the private sector, essentially putting the cat among the pigeons. The ramifications of this situation today are a matter for debate.
So far, it has been explained that renewable energy investments will be excluded from other energy sources since the incentives that the AKP government is providing are inherently causing companies to move into the most profitable fields of energy, rather than renewables. At the same time, it has been seen that with the government’s current policies of renewable energy the targets are unrealistic and unattainable, since the given guarantee and the stimulus are not sufficient for promoting investments on renewable energy.
It is also inevitable that similar steps already taken during the hydroelectric power plant investments will lead to other types of problems and damages. For example, in hydro projects, auditing mechanisms for the construction and operation phases were not determined clearly and/or the policy makers failed to get the opinions of either non-profit organizations or the people living near the location of the project in question.
Thus, if the necessary lessons are not taken from Turkey’s recent experiences with Hydro, there will always be the potential for other similar problems for other types of renewable energy projects. In Turkey, electricity production by renewable energy sources at one-hundred-percent capacity is possible without environmental degradation is possible; however, a deviation from the current market functioning is required. This means that the law and regulations should be more transparent, the incentives should be higher for renewables, and that not only the government, private sector and a few individuals should have an active role.
If the challenges stated above can be overcome, electrical energy generated from renewable energy sources in Turkey could reach its full capacity efficiently in future, and perhaps in time for the republic’s historic anniversary.
Anticipated Renewable Energy Targets for the Turkish Republic
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Evrim Özyorulmaz is a Research Assistant and Ph.D. candidate in the Department of Economics at the Izmir University of Economics in Izmir, Turkey. Currently assistant to the Head of the Sustainable Energy Division, she received her M.A. in Financial Economics in 2011, after graduating in 2007 with a double major from the university’s International Trade and Finance and Business Administration Departments.
