Turkey, faced with strong demand growth and high import dependency, is undertaking ambitious projects in new nuclear power, coal power and renewables. In an exclusive interview, Taner Yildiz, Minister of Energy and Natural Resources, explains how the Turkish government is shaping the country’s energy strategy, but notes that the private sector will have to make the investments. “Having put in place a transparent, competitive market structure, I am confident we are able to ensure security of supply through the market.” This interview was made for World Energy Focus, a freely available monthly publication from the World Energy Council produced by Energy Post.
Few countries face greater energy challenges than Turkey. Not only has the country had the second highest growth in gas and electricity demand in the world over the past decade, after China, it also has to import three-quarters of its energy resources. In addition, Turkey aspires to be an energy hub between East and West – and is serious about its climate commitments.
The man who is responsible for balancing these competing concerns is Taner Yildiz, who has stood at the helm of the Turkish Ministry of Energy and Natural Resources since 2009. An electrical engineer by education and experience, Yildiz has a clear vision of Turkey’s energy course: the State should direct the energy system, the market should do the work, guided by an independent regulator. Top priority for the government: security of supply.
We interviewed Yildiz as the World Energy Council’s Turkish National Committee is preparing to be the hosts for next year’s World Energy Congress, which Yildiz promises will be “the biggest ever”.
Security of supply is regarded as the top priority of your Strategic Energy Plan (2015-2019). Do you believe a competitive energy market dominated by private players can guarantee security of supply?
“As you know, energy investments are large, requiring long term finances and a great deal of market analysis in advance. I believe the private sector should invest in the energy sector. Governments should tend to channel their public funds to social programs and infrastructure projects. In the past, the State took care of energy infrastructure investments. In the 1980s and 1990s we started experimenting with public-private partnerships. Then, partly as an effort to align with the Acquis Communautaire of the EU, we adopted extensive reforms to achieve a transparent, competitive and fair playing ground for private sector actors. Since 2001, our laws actually dictate that the State will not make additional investment in the electricity generation sector as long as private sector investments are able to guarantee security of supply. It is an honour for me to underline that this strategy has been successful until now.”Â
Rosatom’s subsidiary Akkuyu NGS has recently been rewarded a preliminary license for building Turkey’s first nuclear power plant at Akkuyu, in Büyükeceli, Mersin Province, which is to start operations in 2023. Do you believe nuclear power to be cost-effective over the long term, given the fact that the cost of renewables is coming down quickly?
“I agree that renewable technologies are fast becoming more competitive. Yet we are not totally there. Furthermore, Turkey needs more baseload capacity and nuclear power is the most reliable option for this. So, going nuclear is not just a price-based decision, but part of a grand strategy taking supply security concerns into account. Still, these are long-term decisions and inherently involve some of the risks you hint at, but I believe the agreement we have reached with our partners in nuclear deals could be considered even-handed.”
About Taner Yildiz
Taner Yildiz graduated from the Istanbul Technical University as an electrical engineer and worked for Kayseri Electricity Generation Company. He was elected to the Parliament in 2002 and was appointed Minister of Energy And Natural Resources on 1 May 2009.
Yildiz says that being an electrical engineer “helps me a lot in not only running the daily affairs of the ministry, but also in developing future-oriented strategies. As I have educational background and work experience in the energy sector, it is easier to follow and understand new developments, be it in the field of energy related technologies or in energy markets. I can develop deeper understanding and form common grounds when in touch with representatives of the energy industry. As a matter of fact, my colleagues suggest they do not have to work so hard to brief me about my agenda.”
The Akkuyu nuclear power plant (NPP) is being financed by Rosatom, but how will it operate in the market? Will it get a fixed payment from the government?
“For Akkuyu NPP, for the first two of a total of four units, the government has pledged to buy 75% of the electricity generated at a previously determined price. For the remaining two, when they come on-line, only 25% will be bought by the government. So, in sum, 50% is to be bought by the government. The rest will be sold in the market and will have to compete.”
Do you intend to further expand nuclear power capacity to 10,000 MW as mentioned in your Strategic Energy Plan?
“Akkuyu with Rosatom will have 4800 MW total capacity. We have also concluded a deal with our Japanese counterparts who formed a consortium with the French to build the second NPP of Turkey in Sinop. Its total capacity is expected to be 4400 MW. And we are considering additional opportunities, watching the markets, evaluating options under alternative scenarios and technologies.“
How can you guarantee safety in view of the earthquakes that regularly occur in Turkey?
“Well, geography still decides the fate of nations. Turkey has always been an earthquake prone land. We have suffered much in earthquakes, but we are learning from our bitter experiences. Much has been done in upgrading building codes. Even more attention is paid to the safety of energy infrastructure. Earthquake and environmental safety is our top-most priority in nuclear projects. We have demanded safety requirements well beyond international standards.“
“I think that Turkish Stream is a feasible project and can be achieved”
How far do you want renewables to expand in the next five years and how will you ensure that this happens?
“Currently the share of renewable contribution to the electricity mix is on average around 28% (mainly hydroelectricity). According to our Strategic Plan for 2019, we are planning to increase hydroelectric capacity from 25 GW to 32 GW, wind capacity from 5 GW to 10 GW, geothermal capacity to 700 MW, solar capacity to 3 GW and biomass capacity to 700 MW. We will keep on supporting renewables in the form of feed-in tariffs and other support mechanisms. The Turkish renewable market is currently booming and there is huge investor interest. So I believe we will reach these targets, but we can provide additional support mechanisms if the necessity arises.“
You want to reduce the share of natural gas in power generation. Doesn’t this contradict Turkey’s desire to be a major gas hub?
“Energy import bills comprise the biggest share of our total imports and a considerable portion of our trade deficit. Natural gas constitutes almost half of the fuel mix of our electricity generation and 98% of that gas has to be imported. Numerous supply crises that we experienced in the past, some as a result of market conditions, others due to state-to state interactions, made us decide that we have to do something about it. Our target is to reduce the share of natural gas in electricity generation from 44% now to 38% by the end of 2019. This target does not contradict our plans to be a major gas hub. Even when the share of natural gas decreases, in absolute terms demand and the volumes consumed will still keep on rising!“
When do you think you can reach agreement on Turkish Stream and how will this affect your relations with Russia?
“We have mostly had good energy relations with Russia and this continues to be so. Additionally, energy trade between us is increasing. I think that Turkish Stream is a feasible project and can be achieved. As our energy partnership is improving, so do our relations in general.”Â
“We are watching the shale gas revolution with great interest”
What is your domestic shale gas policy?
“We are watching the shale gas revolution with great interest and keep in touch with sector actors. Some shale gas deposits are already identified. We would like to utilise them if possible, of course paying utmost attention to the environment.“
The Strategic Plan mentions an intention to expand electricity generation from domestic coal-fired power. What does this mean in regard to your climate commitments?
“Currently, the contribution of indigenous coal power plants to electricity generation is around 40 TWh but we are planning to increase it to 50 TWh by 2017 and 60 TWh by 2019. In order to realise these goals, we know that we have to accelerate investments in the coal sector and explore new coal fields. We are considering options such as awarding the coal fields in the form of royalties to possible investors. In addition, we will modernize existing plants to improve efficiency and limit negative environmental effects. I would like to underline that per capita emissions of Turkey are well below OECD averages and apart from renewables, lignite and hard coal resources are the only indigenous alternatives we have to cover ever increasing demand. Even after the realisation of these projects, our emissions will be considerably less than those of many developed countries.“
The Plan pays a lot of attention to demand side management, energy efficiency and energy saving. However, it also notes that so far not much has been achieved on this front. How do you intend to change this?
“There is a great potential for efficiency gains in Turkey, especially in buildings, industry and transport. In fact, we consider energy efficiency as an additional energy source and my ministry will continue to utilise it to the highest extent. We have reorganized our institution responsible for carrying out and coordinating energy efficiency activities in Turkey. We will improve inspection and training, increase public awareness, upgrade the regulatory framework. We are planning to complete our energy efficiency road map and communication plan by next year.“
What do you expect come out of the Paris Climate negotiations in December? What do you regard as a possible climate commitment for Turkey in Paris?
“Turkey has some special circumstances which have also been recognised by the Convention Parties in Cancun, Mexico. In Doha in 2012 it was decided to provide support for Turkey in technology, capacity building and financial mechanisms. We do our best but it is a little bit early to be too specific about commitments. Yet I want to be optimistic about the outcomes of Paris Climate Negotiations in December. This is a huge process and I believe as humanity we are making some progress although not as fast as hoped.”
World Energy Congress
Turkey is the host of the World Energy Council’s 23rd World Energy Congress, which will be held 9-13 October 2016 in Istanbul. Yildiz says he believes “this congress will be the most successful one ever organised with record level participation and high level of interest. This will also be a perfect chance of publicity for investment opportunities in the Turkish energy sector. The successful completion of the Congress will provide further prestige to Turkey and accelerate its recognition as an important energy actor in the region. For all these reasons, my Ministry is providing all support to the Turkish National Committee and the World Energy Council and will continue to do so. I personally pay close attention to the ongoing preparations and my door is always wide open to the World Energy Council and the Turkish National Committee.”Â
[adrotate group=”9″]