The government of Turkey could achieve its aims of expanding electricity supply to meet the needs of a growing economy, and reducing dependence on imported natural gas, without adopting the coal-led strategy laid out in its official plans.
Analysis from research company Bloomberg New Energy Finance, funded by the European Climate Foundation and commissioned by WWF-Turkey and published today, shows that an alternative approach – based on building up generation capacity in renewable energy such as wind, solar and hydro-electric – could be achieved at comparable costs while also benefiting Turkey’s environment and reducing its dependence on fossil fuel imports.
The study found that it would cost almost the same (around $400bn) to build up and run Turkey’s electricity generation to meet the growth in power demand between now and 2030, whether the capacity gap is closed with a mix of domestic lignite resources and hard coal or with investment in a mix of renewable energy technologies. The latter approach would take advantage of expected significant reductions in the levelised cost of electricity per MWh for both solar photovoltaics and wind over the next decade and a half.
Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, said: “This study shows that Turkey could pursue a cleaner energy development pathway to 2030 at similar costs to the coal-based plan that is being proposed, at the same time as limiting some risks. Total costs would be similar and, while there might be some extra grid improvement and balancing costs, there would be reduced exposure to commodity prices, as well as reduced carbon emissions and air pollution, which has been such a blight for coal-based economies.”
Uğur Bayar, director of the board of WWF-Turkey, said: “The question we asked Bloomberg New Energy Finance was: is a sustainable and a cleaner energy mix in power generation possible for Turkey? What could be the cost of such a scenario? The analysis concludes that a renewables-based energy strategy to overcome dependence on natural gas could be cost-comparable to a strategy that is focused on coal. If externalities such as carbon costs are factored in, the comparison looks even better for renewables.
“The Electricity Market Law of Turkey aims at sufficient, high-quality, uninterrupted, cost-efficient and environment-friendly supply of power to consumers. With its findings that point to exactly these targets, we hope that this analysis will serve as a useful reference tool for policy-makers.”
The 53-page report, entitled Turkey’s Changing Power Markets, examined in detail the Turkish government’s official plans, which assume that power demand will increase at more than 5% per year between now and 2030 to keep pace with economic growth. The plans also see a big fall in gas-fired generation, a sharp rise in coal-fired generation, and an approximate doubling in Turkey’s power sector emissions.
The report compared this version of the future against two other scenarios. Both reflect a more conservative view of future power demand in Turkey than the government’s own projection. If Turkey follows a similar trajectory to other Western European countries, then power demand will undershoot official forecasts by some 25% by 2030, as the economic mix changes and energy efficiency kicks in.
The first of these two scenarios, dubbed “business-as-usual” or BAU, represents the report’s view of the future under current policies. It is less optimistic than the official plan about the government targets of building 20GW of wind and 10GW of nuclear capacity by 2023. Consequently, it sees fossil fuels contributing 61% of total power generation in Turkey by 2030.
The second scenario, known as Renewables Development Pathway or RDP, would see renewables including hydro-electric raising their share of total generation from 29% in 2013 to 47% in 2030, while the gas-fired share drops from more than 40% to 26% and that of coal falls from 27% to 18%. Emissions would continue to grow slowly for the next few years, but then stabilise rather than rising steeply.
Tolga Baştak, CEO of WWF-Turkey, said: “There are no valid reasons for Turkey not to choose sustainable use of clean energy for meeting its increasing power demand. WWF-Turkey believes that 100% renewable energy is vital for meeting the twin goals of climate change mitigation and energy security. As a start, Turkey needs to ramp up its renewable energy target to 50% by 2030. We have provided a detailed account of other policy recommendations, which hopefully will provide valuable input for Turkey’s long-term energy strategies.”
Janis Hoberg, analyst at Bloomberg New Energy Finance and co-author of the report, said: “Turkey’s power market is at a crossroads that could see the country lock into a carbon-intensive energy system or follow a renewables development pathway with higher up-front costs but significant fuel costs savings in the long term.”
Matt Phillips, director of the European Climate Foundation’s International Energy Project, said: “We have been delighted to support this work. It provides the evidence showing a clean electricity pathway for Turkey is very attractive, achievable and affordable.”
To download the report, please visit: about.bnef.com/white-papers/turkeys-changing-power-markets