Turkey positions itself as a regional leader in renewable energy and has set new targets for further expansion of its clean energy sources. In his address to the UN High-Level Dialogue on Energy in New York, earlier this September, the President of the country Recep Tayyip Erdoğan pointed out that his country ranks 5th in Europe and 12th globally in installed renewable power capacity.
According to the International Energy Agency (IEA), electricity produced from renewable sources across solar, wind and geothermal has tripled in the last decade in Turkey, reaching 44 per cent in 2019 and exceeding the government’s initial 38.8 per cent target.
Despite Turkey’s notable advances in the deployment of renewable power plants and alignment of its environmental regulations with the EU standards, the country’s energy sector remains highly reliant on fossil fuels such as gas, oil and coal. The 2019 report of the Organisation for Economic Co-operation and Development (OECD) suggests that 88 per cent of the country’s energy needs are still covered by fossils while renewables account for only 12 per cent.
The profuse presence of non-renewable sources in Turkey’s overall energy mix has been conditioned by its fast-growing economy and rapidly increasing energy needs from the early 2000s. The growth has shaped the fundamental principles of Turkey’s energy policy, security of supply and market reform that drove up not only the need for use of imported fossil fuels but also their domestic production.
What contributes to the expansion of renewables in Turkey?
The first steps in support of clean energy sources were taken in the same period, the early 2000s, when the Renewable Energy and Energy Efficiency legislation was passed together with a new Electricity and Natural Gas legislation.
“Turkey has experienced the fastest surge in energy demand among OECD countries”, Mustafa Çelebi, Head of Wind and Solar Group and Vice-Chair of the Energy Market Regulatory Authority of the Republic of Turkey (EMRA) tells CEENERGYNEWS. “According to studies, this trend will continue in the medium and long term”, he underlines, adding that for example, “Turkey’s electricity generation infrastructure has had a dramatic rise in the total installed capacity from 31.8 gigawatts (GW) to 95.9 GW since 2002”.
Energy experts also mention other forces behind the expanding renewables. They include constantly decreasing instalment prices – already a global trend – alongside the improving regulatory environment and investment incentives.
According to Mr Çelebi, two important legal instruments that have backed the growth of renewables since 2002 in Turkey are the Electricity Market Law and the Renewable Energy Law.
“These important improvements encourage the domestic and foreign investors and they easily see the opportunities when the whole organisations, I mean governments, regulators, consumers, network operators, SME’s, NGO’s [are willing] to achieve these goals together”, he emphasised.
Another stimulus is a ten-year feed-in tariff (FiT) system under the Renewable Energy Support Mechanism (YEKDEM). With the help of this incentive, the instalment of domestically manufactured equipment for renewable electricity generation comes with additional premiums.
On a broader level, linking local production of technology with renewable energy incentives reflects the country’s firm conviction that a crucial part of its self-sufficiency in the energy sector is the presence of a solid domestic technological capacity. This is partly why the government of Turkey has developed special policies to increase the domestic production of machinery and equipment of renewable energy sources.
More on support mechanisms
Turkey’s feed-in-tariffs that promote investment in renewable power plants including wind, solar, biomass, hydro and geothermal represent policy tools that provide guaranteed, the above-market price for electricity producers.
Feed-in-tariffs under the Renewable Energy Support Mechanism YEKDEM was relaunched after the first round which ended in June 2021. It came back with an upgraded mechanism in response to the inflation of the Turkish Lira against the US dollar and Euro. This means that “the new YEKDEM prices always stay updated which is important for the investment return”, as explains Mr Çelebi.
Back in 2016, the government of Turkey introduced another support instrument—the Renewable Energy Resource Areas (YEKA), a tender process for the procurement of large-scale renewable energy projects in renewable energy zones that are most suitable for renewable power generation. These schemes have been successful in driving sizeable new investments and the government has demonstrated a willingness to adjust the terms of the auctions for future projects to ensure investor interest.
Another addition to the mix of favourable factors is the Turkish government’s new target for strengthening the share of renewables to 30 per cent before 2030. With the new objective, the installed capacity of geothermal is expected to increase from the current 1335 megawatts (MW) to 3,000 MW by 2023, wind capacity from the present 10,000 MW to 16,000 MW and solar from the current 7,000 MW to 16,000 MW by 2027, according to Mr Çelebi.
The regional context reinforces the potential
The broader regional context further reinforces the tremendous potential of the country’s renewable sector and with it, boosts investment opportunities.
“Our region’s countries have historical ties and also economic and social interactions with each other,” states Mr Çelebi. “The region has a big potential because of their emerging economies, young populations and being a connection point between Europe and Asia. The demand for energy rises dramatically because of the growing consumption in the industry and residents.”
This triad of the new YEKDEM scheme, the government’s new renewable targets and the increasing energy demand of Turkey, “provide amazing investment opportunities for the domestic and foreign investors”, continues Mr Çelebi.
What can be the future of green hydrogen in Turkey?
Turkey’s strong renewable potential can be coupled with new opportunities for emerging green hydrogen production. Considering Europe’s increasing demand for this energy technology and Turkey’s connectivity to Europe in the form of trading and energy infrastructure, experts believe that the country could become an exporter of green hydrogen.
At present, Turkey does not have a national hydrogen strategy but reportedly, it is already being considered as a prospective export product to Europe.
“We know that a lot of investigations have been conducted by the researchers to prove the technology,” emphasised Mr Çelebi. “The prices are relatively high at this moment, but just like the solar technology evolution, it will drop in the near future. With the help of these advances, we will gain another tool to fight carbon emission.”
“A new hydrogen economy will emerge in terms of production, transport and supply of hydrogen,” he concludes. “These expectations push the policymakers, regulators, investors, and also many other sectors because of the value chain. I think that there is a big potential in this area and we can easily see the signals from these significant developments.”