Turkey and the energy transition

Alparslan Bayraktar, Deputy Undersecretary in Turkey’s Ministry of Energy and Natural Resources provides an opinion piece on the Daily Sabah website about the country’s needs to develop more sustainable energy infrastructure. Having just been to Turkey, there is no doubt that there are important challenges ahead for Turkey. What is not mentioned in this article is the need to address energy demand through improved energy efficiency. Importantly, it is starting to happen and hopefully we will soon have an article related to demand issues.

 

TurKEY for Energy

The energy sector is currently undergoing a grand transition, faced with tremendous challenges. In particular, these include fundamental changes in market design and business models through decentralization and digitization. We still see energy security as the major driver of energy discussions. All countries, whether resource rich or scarce, are interested in providing affordable and reliable energy in a sustainable manner.

Energy security largely depends on sufficient investments. International Energy Agency (IEA) highlights that investment decisions taken today determine how energy supply and demand will unfold tomorrow. It mentions $44 trillion investments in the global energy supply and $23 trillion in energy efficiency is required to cover the estimated growth in energy demand through 2040.

Foremost among the prerequisites to attract investment is a political and regulatory certainty. On the contrary, in current global agenda, the only certain thing we observe is uncertainty. While the recent extension of the OPEC deal is pushing prices up, it still remains to be a question whether it would be effective enough to curb excess supply.

There are also major uncertainties emanating from both the rapid market changes and the geopolitical dimensions of unconventional gas and LNG supply. Moreover, how a possible renegotiation process of the Paris Agreement will shape the future of climate talks remains an open question.

Beyond uncertainty in energy and environmental policy, we also experience uncertainties in other policy areas at global and regional levels including trade, monetary, security and immigration policies among many others.

In this global picture, Turkish energy markets are also in a transition period. Our energy markets can be described by two main characteristics which are also the major challenges that we face. The first one is a growing demand. According to the IEA, Turkey will likely see the fastest medium- to long-term growth in the field of energy among IEA member countries, while the second challenge in the market is the dependency on imports. Unfortunately, we heavily rely on imported resources.

Addressing these challenges, our new energy policy is built on three main pillars – security of supply, foreseeable markets and the utilization of domestic resources. Investment in infrastructure is essential in maintaining supply security.

For the infrastructure investment in the energy market, Turkey is going to invest extensively in power grids both at the transmission and distribution levels. When it comes to the gas market, the main objective is to make gas networks and relevant facilities capable of delivering more gas in any direction with the least cost.

Through foreseeable markets, we aim to achieve more competitive structure, creating right price signals for energy investors. Right price signals would translate in to affordable energy prices for households, the commercial sector and the industry. Delivering affordable prices to our industry would, in turn, enable them to become more competitive in the global arena.

The third dimension of our new energy policy is utilizing domestic resources. We are increasing the relatively low share of domestic coal in our energy mix through clean coal technologies. In renewables, we have even more ambitious goals. We recently had a very competitive tender for a 1-gigawatt solar power plant in the Konya-Karapınar area, which will be one of the largest single-site projects in the world.

A similar tender would be held for wind projects on July 27. Through our newly established Renewable Energy Resource Area (YEKA) model, we are aiming to utilize renewable resources and reduce our current account deficit through local manufacturing. Additionally, the projects will bring new jobs into the region as well as business opportunities to our small- and medium-sized enterprises.

Turkey is a reliable alternative energy supply route and a crucial player for the European Union’s energy security. In this regard, once completed, projects like TANAP, TAP, TurkStream and potential prospective projects will boost supply security for many European countries.

New projects are selected on the basis of three main principles, according to which, all stakeholders should mutually benefit and all risks should be fairly allocated; any project should contribute to national and regional supply security as well as contribute to regional peace, stability and prosperity.

Last year, we hosted the 23rd World Energy Congress under the “Share for Peace” theme. While continuing to support and contribute to establishing peace in the region, the 22nd World Petroleum Congress will once again emphasize our determination to become a key country for energy in the region, under the theme of “TurKEY for Energy.”

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