BETTER Turkey SWOT Analysis Analysis of Turkey.pdf · BETTER Turkey SWOT Analysis Project...

Contract N°: IEE/11/845/SI2.616378

Bringing Europe and Third countries closer together through renewable Energies

BETTER

Turkey SWOT Analysis

Project Coordinator: CIEMAT

Work Package 5 Leader Organization: DLR

Task 5.4 Leader Organisation: NTUA

Additional Deliverable

March 2015

Additional Deliverable: Turkey SWOT Analysis

Contract N°: IEE/11/845/SI2.616378

Project Acronym: BETTER

Bringing Europe and Third countries closer together through renewable Energies

Turkey SWOT Analysis

March 2015

Project Coordinator: CIEMAT

Work Package 5 Leader Organization: DLR

Task 5.4 Leader Organisation: NTUA

Authors: Chara Karakosta, Katerina Papapostolou, Vangelis Marinakis (NTUA)

Contributions from: CIEMAT

Additional Deliverable

Disclaimer: The sole responsibility for the content of this report lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein.

Intelligent Energy – Europe (IEE) Contract N°: IEE/11/845/SI2.616378

Bringing Europe and Third countries closer together through renewable Energies (BETTER)


PREFACE

BETTER intends to address RES cooperation between the EU and third countries. The RES

Directive allows Member States to cooperate with third countries to achieve their 2020 RES targets

in a more cost efficient way. The core objective of BETTER is to assess, through case studies,

stakeholders involvement and integrated analysis, to what extent this cooperation can help Europe

achieve its RES targets in 2020 and beyond, trigger the deployment of RES electricity projects in

third countries and create win-win circumstances for all involved parties.

The case studies focusing on North Africa, the Western Balkans and Turkey will investigate the

technical, socio-economic and environmental aspects of RES cooperation. Additionally, an

integrated assessment will be undertaken from the “EU plus third countries” perspective, including

a quantitative cost-benefit evaluation of feasible policy approaches as well as strategic power

system analyses. Impacts on the achievement of EU climate targets, energy security, and macro-

economic aspects will be also analysed.

The strong involvement of all relevant stakeholders will enable a more thorough understanding of

the variables at play, an identification and prioritisation of necessary policy prerequisites. The

dissemination strategy lays a special emphasis on reaching European-wide actors and

stakeholders, well, beyond the target area region.

PROJECT PARTNERS

No Participant name Short Name Country code

CO1 Centro de Investigaciones Energéticas, Tecnológicas y Medioambientales

CIEMAT ES

CB2 German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt e.V.)

DLR DE

CB3 Energy Research Centre of the Netherlands ECN NL

CB4 JOANNEUM RESEARCH Forschungsgesellschaft mbH JR AT

CB5 National Technical University of Athens NTUA GR

CB6 Observatoire Mediterranéen de l’Energie OME FR

CB7 Potsdam Institute for Climate Impact Research PIK DE

CB8 Vienna University of Technology TUWIEN AT

CB9 United Nations Development Program UNDP HR




TABLE OF CONTENTS

1. INTRODUCTION ....................................................................................................................... 5

2. TURKEY SWOT ANALYSIS ...................................................................................................... 8

3. DISCUSSION .......................................................................................................................... 21

4. REFERENCES ........................................................................................................................ 23

5. ABBREVIATIONS .................................................................................................................... 26




1. INTRODUCTION

The SWOT methodology is a strategic analysis tool that combines the study of the strengths and

weaknesses of an organization, territory, project or sector with the study of opportunities and

threats in its environment. The goal is to help define a development strategy [1, 2]. It is commonly

accepted that a project’s strengths and weaknesses demonstrate the project’s internal

characteristics and are controllable; and opportunities and threats are determined by external

factors on which the project has no direct control but can react to its own advantage. SWOT

analysis is a methodology allowing understanding and planning on how to use strengths to exploit

opportunities, to recognize and repair or avoid weaknesses, and to defend against or sidestep any

threats.

The SWOT analysis has been applied to a great extent in the regional energy planning and

management [3, 4], as well as in renewable energy schemes [5 - 7]. In particular, SWOT analysis

has been used so far in order to investigate and assess the current status of renewable energy

sources (RES) in different regions [8, 9] yielding a good basis for formulating policy

recommendations regarding enhanced utilization of RES. The use of SWOT Analysis for exploring

energy sector conditions and developing an environmental strategic plan could enable a correct

comprehension of the current energy situation and serve as a basis for objectives and strategies

proposal [2].

The current SWOT analysis is used in order to assess Turkey’s, situation as conducive to

implement RES projects under Article 9 of the Renewable Energy Directive (RED). The aim is to

identify factors that are favourable (Strengths, Opportunities) and unfavourable (Weaknesses,

Threats) to the use of Art. 9. The SWOT Analysis is utilised to assess the specific strengths and

weaknesses of Turkey, and the opportunities and risks of cooperation mechanisms between

European Union (EU) and Turkey. The SWOT analysis helps to create opportunities and then

capitalise on them, as well as manage possible threats, so that the 2020 RES targets will not be

compromised by unfavourable evolution.

The SWOT analysis intents to identify win-win actions for both EU Member States and neighbouring countries by providing answers to the following questions:

How can we make the most from the regions´ strengths to increase the cumulative welfare of both EU and the regional countries?

How can we circumvent the regions´ weaknesses by choosing the best technology options?

How can we create opportunities and then capitalize on them?

How can we manage possible threats, so that the 2020 RES targets will not be compromised by unfavourable evolution?

The particular approach differs from the typical SWOT analysis, since the Strengths and

Weaknesses accounts for the current host country’s situation assessment regarding the

implementation of cooperation mechanisms, while the Opportunities and Threats for the possible

future (internal and external) developments in the ability to change the current situation.



D9.3. Information Packs of BETTER – 5th Version

Figure 1: SWOT Analysis - BETTER Approach

In the above context, a three-level framework is followed in order to cover important dimensions

regarding the assessment of a host country for the implementation of cooperation mechanism. As

proposed in BETTER deliverable “D2.4: Issues that are Likely to Play a Key Role in the

Implementation of the Cooperation Mechanism” developed by Potsdam Institute for Climate Impact

Research (PIK) [10], a host country should be examined in a macro-economic, micro-economic

and acceptance level.

Macro-economic issues can play an important role in implementing RES projects under the

umbrella of cooperation mechanisms. Without any political will and support and thus without the

regulatory framework to facilitate and encourage the implementation of joint projects investments in

these projects are hardly feasible. However, macro-economic feasibility is not enough to ensure

micro-level attractiveness, so that private firms may be uninterested to invest in Article 9 projects

although from a macroeconomic point of view it would be rational. Accordingly, by defining policies

and institutions to promote and support joint projects with third countries policy-makers have to

translate the macro-economic advantages into micro-economic opportunities for the project.

Finally, from a social acceptance point of you, if the public discourse is mainly characterized by

oppositional groups arguing against joint projects, policy-makers may not be willing to create

favourable investment conditions in terms of support mechanism and regulation.

Within this three level structure, 13 pivotal factors were identified reflecting the favourable and non-

favourable conditions for joint projects in Turkey (Figure 2). These factors were presented to

experts and stakeholders in order to gather feedback and proceed with the SWOT analysis based

on the responses received.



D9.3. Information Packs of BETTER – 5th Version

Figure 2: SWOT Analysis Structure

The current SWOT Analysis for Turkey has been conducted taking into account an extended

literature review, examining potential opportunities and barriers that promote or hinder the

development and implementation of cooperation mechanisms in the country. EU and Turkish

stakeholders’ involvement was the key guarantee that the proper questions are addressed that

assumptions are valid and that results are meaningful and open opportunities for market

development. Bilateral meetings with stakeholders, as well as stakeholder workshops provided

feedback to the SWOT analysis. Therefore, discussions, as well as face to face meetings with

experts and regional stakeholders at the BETTER Regional Workshop implemented in Ankara,

Turkey on the 15th of May, 2014 were important to intensify, enhance and finalise the initial SWOT

analysis.

Intelligent Energy – Europe (IEE) Contract N°: IEE/11/845/SI2.616378 Bringing Europe and Third countries closer together through renewable Energies (BETTER)


2. TURKEY SWOT ANALYSIS

Strengths (current)

Weaknesses (current)

Opportunities (future)

Threats (future)

Energy system strategy and energy outlook

Important increase of RES electricity production [11].

Increased electricity generation from hydroelectric stations [12].

Turkey's intention to make privatization in every sector of the energy market [13].

Turkey's electricity demand grew by more than 90% from 2001 to 2011 [14].

The equipment used for the construction of RES power plants is imported.

Plans and agreements for the construction of new projects (hydropower stations, wind turbines, biomass projects) [15], [16].

Plans for modernization of

existing power plants.

These projects involve

thermal and hydroelectric

stations.

Turkey expects significant

investments in RES within

the next 10 years, as

demand for energy is

increasing faster than the

economic growth of the

country.

Turkey intends to become

an energy exporter.

The important extraction

costs of coal and its

extensive use, as a

national energy source,

create the need for

exploiting new energy

technologies and abandon

the great dependence on

According to estimations, the annual increase in electricity consumption for the years 2010-2020 is expected to be around 7% [17].

Limited incentives for geothermal development projects where there is huge potential.

Existence of limited

network development

actions.



conventional fossil fuels

for electricity generation.

RES Industry development

The equipment used for the construction of wind parks and hydro-electric power production projects are imported.

Lack of experience and appropriate domestic human resources for managing large energy and environmental projects.

Incentives for the establishment of companies that produce RES equipment, so that it will not be necessary to import them [18].

Energy security Excellent destination for

both electricity and natural gas exports [14].

For several years, Turkey constitutes an electricity importer country.

Turkey is establishing itself as a transit country for natural gas transport to the European market [14].

Dependence on other countries. Imports of oil, natural gas, coal for electricity generation [19].

Market structure of energy system

Long-term contracts to purchase electricity produced from RES [20].

Small scale producers (installed power up to 0.5 MW) are exempt from the issue of relevant license [21].

Privatization of a part of infrastructures.

Electricity imports and

exports in Turkey have

been released.

There is significant reliance on international markets, as well as on foreign suppliers [22].

Grid and Interconnections

Existence and continuing development of new interconnections with neighboring countries. Several cross-border interconnections designed or already in operation [23].

Development and enhancement of the transmission grid in order to make the country an

Important electrical losses on the network [24].

There was not a complete

and detailed inventory of

the capabilities of existing

infrastructure.

Technical limitations on

distribution network -

increased losses and

availability problems.

Efforts to enhance and

improve the distribution

and transmission network.

Effort to reduce network

losses and electricity

thefts

Plans for construction and

expansion of the new

cross-border electricity

interconnections.

Existence of network

infrastructure that needs

strengthening and proper

maintenance.



energy exporter.

Turkey is already

interconnected with EU

Members. The

interconnection is realized

by the ENTSO-E\SCR.

Permanent synchronous

operation of the Turkish

and Albanian electricity

transmission systems with

the Continental Europe

system [25].

RE Regulatory & Policy Framework

Existence of a legislative framework aimed at providing incentives to power generators. The legislative acts of 2005 [26], 2011 (law on utilization of renewable energy sources for the purpose of generating electrical energy) laid the foundations in this direction as they determined the guaranteed prices.

Electricity Market Law [28] of 2001 obligated TEIAS and distribution companies to give priority to RE producers to be connected to the network.

The license to be issued is

up to 99% less expensive

than the electricity

generation from

conventional sources.

Legislations and creation

of mechanisms that

introduce private initiative

in electricity generation

(BOT, BOO TYPE

Existence of bureaucratic obstacles that delay the issue of the appropriate licenses [27].

Legislation review where necessary.

Emphasis and design of

actions for the promotion

of dispersed generation

with RES technologies.

Turkey becomes a

member of the EU.

Delays in privatization and

private sector

participation.



CONTRACTS, TOR).

Institutional Framework for RES deployment

Providing incentives for RES projects through the Renewable Energy Law (2011) [29].

Creation of workgroups aiming at reducing barriers and strengthening private initiative in the field of RES.

Although electricity imports and exports in the country have been liberalized, Turkey is feeling the effect of the worldwide recession through a decline in export demand and capital inflows [30].

Creation of a competitive market.

Possibility of private

investors’ participation in

RES projects through

dispersed energy

production and electricity

distribution.

Limited incentives for electricity generation from biomass and geothermal energy despite they are fields with unexploited potential [31].

Financial risks and uncertainty

Possibility of project financing from the European Union (especially for projects involving energy generation from biomass).

Funding from the Turkish

banking system.

Efforts to attract domestic and foreign investors [32].

Investment interest and creation of international partnerships.

Relatively favourable conditions to the starting and operation of a local firm. (Ease of doing business 55/189 [33].

Limited use of financial instruments for the development of RES investment.

General country risk is relatively high (4 in OECD index) [34].

Creation of energy exchange.

Development of

cooperation mechanisms

between neighboring

countries.

The conversion rate between Turkish lira and foreign currencies affects the investment cost [35].

Investment facilitation

Set FITs for energy produced from hydroelectric plants, biomass, geothermal units, solar energy and hydropower parks [36].

Energy market liberalization, synergies from mergers of small

Bureaucracy and complex procedures governing investment despite the considerable efforts to revise the existing legislative framework [37], [38].

Redefinition of FITs

depending on the target

that will be set.

It is the investor who bears

the cost of the

interconnection with the

network. In some cases

In Turkey the delay in utilization of RES that have attracted the interest of private investors, in conjunction with the government investments in the electricity generation from nuclear energy impedes the participation



scale companies. because of long distances

this cost is crucial to the

outcome of the

investment.

of private capital in RES investments [39].

Increased investment

costs as equipment used

in RES projects is

imported.

RES capacity/potential/ Available Technology Options

Research development in the electricity sector with a focus on RES.

Large solar, wind and especially hydro [12] and geothermal [40] potential.

The energy production from RES is primarily due to the existence of hydroelectric power stations. The hydroelectric power stations cover approximately 20% of electricity generation [41].

Existence of hydroelectric power stations, solar parks, wind turbine installations [19].

Unexploited RES (especially geothermal) potential [42].

Exploitation of the very high RES potential aiming at reduction of energy imports.

Appropriate conditions for wind turbine installation in the Aegean Sea and the Sea of Marmara [16].

Participation in research

projects of the 6th and 7

th

European framework

exploiting the research

opportunities offered by

EU.

Public awareness/acceptance

Promotional campaign for RES advantages (advocating for the environmental and socio-economic benefits).

RES are perceived as less

risky activities than

nuclear and other fossil

fuel technologies (such as

coal).

Neocolonialism

Possible rejection due to negative environmental impacts of RES (visual impacts, deforestation, etc.).

Possible rejection by workers in coal and other fossil fuel sectors.

High social acceptance due to environmental benefits at the local level as a result of a decarbonized energy mix (e.g.: lower local pollutants).

High social acceptance due to job creation and economic stimulation in rural areas.

High acceptance due to Turkish RES industry

Economic benefits of RES deployment are only captured by a small fraction of society.

Negative environmental effects (visual impacts, deforestation) due to RES plants for exports are not minimized.

Best and less expensive RES potentials are used for exports and not for huge domestic demand.



development.

High acceptance due to revenues from exports.

High acceptance due to safer working conditions than fossil fuel related activities.

If environmental and social safeguard standards for RES exports were put in place, there would be higher social acceptance.

Environmental effects

High potential to reduce many local and global environmental impacts associated to fossil fuels due to the RES availability along the country.

Potential negative environmental impacts of RES technologies deployment (visual intrusion, impacts on ecosystems and biodiversity).

Additionally, for wind, risk of changes on migratory routes of birds and noise impacts. For hydro, high risk of impacts on fauna and water (eutrophication of reservoir water, alteration of hydrological regimes and river course and increased sedimentation).

The increase of RES electricity in the future scenarios contributes to reduce most of the potential environmental impacts.

Climate change could be reduced around 45% in the strongest future scenario (compared to BAU 2020)

Mineral resource depletion could be affected due to the strong increase of PV. The most efficient PV technologies should be considered in order to minimize this potential effect.

Wind onshore and PV production plants will require large areas. Other environmental impacts not covered by this analysis might occur when implementing these plants. Additional studies should be conducted in order to minimize the potential in-situ impacts.

Socio-economic effects

Compared to fossil fuel and nuclear related technologies, RES projects are less risky activities (lower health and safety risks).

Turkish industrial

The electricity sector in general has a high health and safety risks and this could contaminate RES activities.

The electricity sector has high gender

Economic growth as a result of RES deployment in a wide range of sectors.

Job creation as a result of the local content incentives.

Benefits in terms of job

Risk of not benefiting local communities.

Job loss in some parts of the value chain that is not supplied locally.

Bad distribution of benefits.



capabilities are already

able to produce locally

most goods and services

along the RES value

chain.

The existing local content

policies incentives seem to

be effective.

discrimination.

High skills and paid jobs might not be local.

creation and economic activity in rural areas.




Strengths

Turkey provides an especially attractive option for RES projects under Article 9 for a wide variety of

reasons.

As regards Turkey’s energy and RES profile, it is characterized by a high solar, wind and

especially geothermal [43, 40] and hydro potential [12, 44]. The last decades Turkey faces

important increase of RES electricity generation, especially from hydroelectric power stations,

which cover approximately 20% of electricity generation [45]. Apart from the hydroelectric power

stations, there are also solar parks and wind turbines installed in the region [46].

Turkey intends to privatise every sector of the energy market. Since 2005, a regulation policy has

been progressively implemented in Turkey to support the unbundling process. A legislative

framework has been established, aimed at providing incentives to RES power generators.

The legislative acts of 2005 and 2011 (Law No. 5346 on Utilization of Renewable Energy Sources

for the Purpose of Generating Electrical Energy) [26] laid the foundations in this direction as they

determined the guaranteed prices. The effort is further enhanced by the creation of mechanisms

that introduce private initiative in electricity generation (BOT, BOO TYPE CONTRACTS, TOR).

This law was a key step towards strengthening the decentralized renewable energy sector

because it includes various kinds of incentives to promote renewable energy. Some incentive

mechanisms, such as licensing, land appropriation and purchase guarantee by a constant feed-in

tariff were introduced to the Turkish market for electricity generation from renewable energy

sources [47, 48].

In addition, the Electricity Market Law of 2001 obligated TEIAS (Law No. 4628) [27] and distribution

companies to give priority to RES producers to be connected to the network, showing that RES-E

is high on Turkey’s political agenda and providing, in this way, incentives for RES cooperation

projects [49].

Investment risk for RES projects was reduced in Turkey through the establishment of Feed-in-

Tariffs (FITs) for energy produced from hydroelectric plants, biomass, geothermal units, solar

energy and wind parks, as well as through the energy market liberalization and synergies from

mergers of small scale companies [50].

The restructuring of companies will enhance the performance of the electricity sector, reducing

cost and debt, as well as attracting new investments and cooperation opportunities between

neighbouring countries.

According to the “Electricity Market and Security of Supply Strategy”, approved in May 2009, the

Turkish government has outlined an overall target for renewable sources, aiming to provide at least

30% of electricity generation by 2023 [51]. The Strategy Paper draws together the essential

elements for ensuring security of supply and enhancing competitiveness in the rapidly growing

electricity market of Turkey, minimizing the risk for potential investment under the umbrella of the

cooperation mechanism. In addition, the new law, namely “Renewable Energy Law”, which

comprises new incentives for renewable energy productions, was enacted at the end of 2010.




Under this law, the government aims to increase energy production from renewable energy

resources, giving further incentives to potential investors [29].

Regarding Turkey’s energy market structure, long-term contracts are supported for the purchase of

electricity produced from RES. Licenses to be issued for RES electricity generation are far less

expensive compared to those from conventional energy sources, while small scale producers are

exempt from having to issue a license [20].

Efforts are made for the development and enhancement of the transmission grid, since Turkey has

expressed intentions to become an energy exporter. Several cross-border interconnections with

neighbouring countries are designed or are in operation. Turkey is already interconnected with

European Member States. Interconnections are directed firstly to the north rather than the south. In

particular, the Turkish grid is interconnected to those of Armenia (220 kV), Azerbaijan (154 kV),

Bulgaria (400 kV), Georgia (220 kV), Greece (154 kV), Iran (154 kV and 400 kV), Iraq (400 kV),

and Syria (400 kV) [17]. It is worth mentioning that development of new interconnections with

neighbouring countries is designed through several projects [11].

Efforts to attract domestic and foreign investors have succeeded to raise investment interest and

facilitate creation of international partnerships. Funding opportunities for RES projects are available

in Turkey from various sources. Apart from funding from the national banking system, financing

from the European Union is also possible, especially in the case of projects involving energy

generation from biomass [23].

With regards to acceptance level, RES are perceived as less risky activities in terms of health and

safety compared to other energy sources, such as nuclear and other fossil fuel technologies.

Turkish industrial capabilities are already able to produce locally most goods and services along

the RES value chain, while the existing local content policies incentives seem to be effective in

supporting RES projects.

Weaknesses

One of the main Turkey’s weaknesses as regards the country’s RES status is that it has

unexploited RES (especially geothermal) potential, which may reduce the investment

attractiveness [42].

For several years, Turkey constitutes an electricity importer country [15]. Compared to Turkey’s

domestic electricity needs, its energy resource endowments are modest [17]. In addition, Turkey's

electricity demand grew by more than 90% from 2001 to 2011 [14]. Major shares of the energy

demand are met by natural gas, oil and coal imports, indicating the dependency of the country in

conventional fuels.

Based on the International Energy Agency (2010), Turkey will likely see the fastest medium to

long-term growth in electricity demand among the IEA member countries. Closely intertwined with

economic growth, energy use in Turkey is expected to roughly double over the next decade, and

electricity demand is likely to increase even faster [37].

This fact could indicate a further barrier for the country to make use of the cooperation mechanism

for RES exporting between Turkey and European countries taking into account that the higher the




energy demand growth, the greater the risk that the existing supply and new energy infrastructure

investments will not be able to provide the required energy supply.

The technical limitations on the distribution network lead to increase of electrical losses and

availability problems on the network, which hinder the possibility of exporting electricity to

neighbouring countries. In addition, despite the fact that the Turkish electricity market has a

multitude of different electricity sources from various energy forms, there is no complete and

detailed inventory of the capabilities of existing infrastructure in the country.

In terms of RES industry in Turkey, there is lack of experience and appropriate domestic human

resources for managing large energy and environmental projects; which is also intensified by the

fact that the equipment used for the construction of RES power plants is imported, further

highlighting the vulnerability of Turkish industry to support RES project.

As regards the RES investment readiness in Turkey, there is limited use of financial instruments for

the development of RES investment. Bureaucracy [28] and complex procedures delay investment

despite the considerable efforts to revise the existing legislative framework [37], [38]. Although

electricity imports and exports in the country have been liberalized, Turkey is feeling the effect of

the worldwide recession through a decline in export demand and capital inflows [30].

In terms of social acceptance, there is a possibility of RES projects rejection not only due to

negative visual impacts of the infrastructure or deforestation and negative environmental impacts

of RES technologies deployment (visual intrusion, impacts on ecosystems and biodiversity), but

also due to workers in coal and other fossil fuel sectors unwillingness. The electricity sector, in

general, has a high health and safety risks and this could contaminate RES activities, while there is

high gender discrimination and it is possible that high skills and paid jobs will not be local.

Opportunities

There is high hydro- and wind power potential still remaining unexploited [52, 53] and the Turkish

government has extensive plans of exploitation, aiming at the reduction of energy imports and the

initiation of energy exports, and thus a conducive environment for the implementation of joint

projects to be developed. These plans include the construction of new RES projects and the

modernization of existing power plants involving thermal and hydroelectric stations. Regarding

wind turbine installation, conditions in the Aegean Sea and the Sea of Marmara are considered

appropriate [16]. This opens opportunities for RES cooperation and investments on renewable

energy electricity.

Regarding the development of RES industry in Turkey, incentives have been provided for the

establishment of companies that produce RES equipment [18]. Moreover, concerning the grid,

efforts to enhance and improve the distribution and transmission network, to reduce network losses

and electricity thefts, as well as to construct and expand the new cross-border electricity

interconnections are in process.

The foreseen privatization of a part of the energy system infrastructures consists an opportunity for

Turkey, in terms of market structure, accelerating the establishment of a competitive market for

RES deployment, which emphasises the attractiveness of Turkey as a host country of joint

projects. The fact that the RES regulatory and policy framework is oriented towards the design of




promotional actions of dispersed generation with RES technologies, complemented by the support

of the institutional framework for RES deployment, facilitates the future participation of private

investors’ in RES cooperation projects. Investments can also be facilitated by the possible

redefinition of FITs, depending on the target that will be set.

The interconnection with the ENTSO-E/SCR to benefit from synchronous parallel operation [54]

and the integration of the Turkish electricity market into the EU’s internal electricity market consists

an opportunity to attract domestic and foreign investors. It should also be noted that in meetings in

April 2014, the ENTSO-E Regional Group Continental Europe (RG CE under the System

Operation Committee) Plenary and the Regional Group Continental South East (RG CSE under

the System Development Committee), respectively, decided on the permanent synchronous

operation of the Turkish and Albanian electricity transmission systems with the Continental Europe

system [25].

Synchronisation with the ENTSO-E/SCR through three lines to Greece and Bulgaria (completed in

2007 and in 2008 for each of the 400 kV lines) provides the necessary technical conditions for

importing/exporting significant amounts of electricity, taking in to account that the physical transfer

of electricity is a prerequisite of Article 9. Despite the fact that the EU neighbour countries of

Turkey, Greece and Bulgaria, do not need major amounts of RES import in order to reach their

targets, they could however act as “RES cooperation hubs” for other EU countries. This would

mean that Turkey exports RES-E generation only to Greece and/or Bulgaria and those countries

would make use of statistical transfers to other EU countries.

With regards to the social dimension, a high social acceptance is possible due to environmental

benefits at the local level as a result of a decarbonized energy mix (e.g.: lower local pollutants), job

creation and economic stimulation in rural areas. Turkish RES industry development, as well as

revenues emerged from exports may give an important opportunity in deploying RES and

developing RES-E project in the area. In addition, it is worth mentioning that the increase of RES-E

in the future scenarios contributes to reduce most of the potential environmental impacts. Possible

job creation in a wide range of sector and the respective economic growth may also lead to social

acceptance of such projects.

Threats

The energy and technological status of Turkey may cause problems that hinder the development of

cooperation mechanisms in the region. According to estimations, the annual increase in electricity

consumption for the decade 2010- 2020 is expected to amount to 7% [17], causing the risk that the

existing supply and new energy infrastructure investments will not be able to provide the required

energy supply. Meanwhile, the existing network infrastructure needs strengthening and proper

maintenance, which is not supported by adequate network development actions. In addition, the

fact that the majority of the equipment used for the construction and operation of wind farms,

hydropower projects and other projects for the exploitation of RES is imported can lead to

increased investment costs. This creates a significant dependence on international markets, but

also from foreign suppliers.

A major threat to the development of Turkey's electricity market and especially in the development

of RES is the delay of privatisations and the limited participation of the private sector. The Turkish




market in recent years is in a phase of transformation with the increasing private participation in

various sectors of the economy [31].

The fact that there has not been made a complete and detailed inventory of the capabilities of

existing infrastructure may potentially result to non-rational use of them. This fact consequently

constitutes a threat to the Turkish energy planning impeding the achievement of high RES

deployment.

In addition, the conversion rate between Turkish lira and foreign currencies affects both investment

costs and the costs of purchase and use of equipment. Therefore, any instability in the

international economic and political field is expected to have a major impact on RES cooperation

investments [35].

The national energy strategy of Turkey seems like to envisage the introduction of a nuclear energy

program and the construction of additional gas-fired power plants rather than concentrating on the

introduction of large-scale renewables to cover its demand [39].

The delay in utilization of RES that have attracted the interest of private investors, in conjunction

with the government investments in the electricity generation from nuclear energy [55] impedes the

participation of private capital in RES investments. In parallel, the persistence of non-economic

barriers (e.g. complex and long-lasting administrative processes for the approval of new projects),

as well as additional payments (e.g. licensing costs, fixed and auctioned grid connection fees,

balancing costs in case of direct marketing) hinder enhanced RES deployment.

Another factor that strongly influences the future of RES deployment in Turkey is the possibility of

whether or not Turkey becomes a member of the EU and whether or not it will align its national

targets with those at EU/Community level. The difference between domestic and EU targets (i.e.

whether or not Turkey will become a member) also influences the exported amount and share of

RES(-E) from Turkey to the EU.

Important threats may emerge from a social acceptance and environmental point of view.

Economic benefits of RES deployment may only be captured by a small fraction of society, while

best and less expensive RES potentials are used for exports and not for huge domestic demand.

In addition, negative environmental effects (visual impacts, deforestation) due to RES plants for

exports are not minimized, while mineral resource depletion could be affected due to the strong

increase of PV.

Figure 3 presents in brief the main strengths, weaknesses, opportunities and threats addressed

after extended research conduction and stakeholders consultation process for the case study of

Turkey with regards to the investigation of cooperation mechanism in the region.




Figure 3: Turkey SWOT Analysis




3. DISCUSSION

There are huge opportunities for RES deployment and cooperation in Turkey, due to its large

unexploited RES potential. However, when looking at the country’s energy demand in combination

with the dependence on energy imports, this potential might become more reasonable to be

exploited domestically and not necessarily for RES cooperation under Art 9. In addition, the

important extraction costs of coal and its extensive use as a national energy source creates the

need for exploiting new energy technologies and abandon the great dependence on conventional

fossil fuels for electricity generation

Several actions should be taken, for creating favourable conditions so as this potential to be

transformed into an important opportunity. In principal, there is a need of an appropriate legal and

regulatory framework, as well as energy planning and strengthening of national policies for RES

development that could reduce risks associated with RES cooperation projects. In this context,

technology transfer will enhance the science and technology capacity on renewable energy

production, strengthening also the political will in this field. Due to its considerable RES potential

Turkey should aim to get in bilateral negotiations with selected EU member states to analyse RES

export possibilities in the mid- to long-term.

In addition, in case non-economic barriers, such as complex and long-lasting administrative

processes for the approval of new projects, as well as additional payments, such as licensing

costs, fixed and auctioned grid connection fees, balancing costs in case of direct marketing are

encountered, then investment opportunities will be emerged.

Turkey could easily benefit from the development of a detailed inventory of the capabilities of

Turkey’s infrastructure in existence. This process does not involve any legislative restructuring or

substantial funding, but, once completed, it could prove to be a major advantage for the country,

constituting a solid base for energy planning and RES project scheduling. A review of certain

pieces of legislation and parts of the regulatory framework is necessary, however, in order to

alleviate the problem of bureaucracy that delays the issue of RES project licences.

Opportunities will also be created and then capitalized, under condition that the government’s

extensive plans for exploitation through new projects and modernization of installations are

realised. This could also restrain Turkey’s long-electricity-importing history and reverse this

characteristic by reducing energy imports and initiating energy exports, as imposed by the

country’s intentions.

There is a need for large investments and exploitation of cooperation opportunities. In this context,

Turkey’s eligibility for the cooperation mechanisms of Article 9 can present an opportunity for the

country, encouraging technology transfer that will enhance the science and technology capacity on

renewable energy production, strengthening also the political will in this field [56].

Additional benefits of cooperation are the development of the Turkish RES market, the

corresponding technology transfer and know-how with regard to the market and grid integration of

RES. This would enable Turkey to build already at an early stage adequate framework conditions

for enhanced national RES deployment later on.




Turkey is an excellent destination for both electricity and natural gas exports. Therefore, Turkey’s

power system could act as a bridge for the region, providing among others, opportunities for the

implementation of RES cooperation mechanisms between neighbouring countries.

Efforts are already made for the ensuring of development funding for RES projects, while research

is undergoing for the electricity sector with a focus on RES. These efforts can be further addressed

by Turkey’s participation in relative EU research programmes, where it can benefit from both

funding and technology transfer.

Public acceptance could be also enhanced taking into consideration the opportunities that stem

from several environmental benefits gained from its implementation as a result of a decarbonized

energy mix (e.g. lower local pollutants). It is associated with the fact that renewables are

considered carbon-free and non-pollutant energy sources. In addition, the job creation and

economic stimulation in rural areas, Turkish RES industry development, revenues from exports

and safer working conditions provide a stable and favourable environment for RES cooperation

mechanisms.

In some cases, though, as it is with wind farms and solar plants, local opposition can be strong and

may be able to stop a renewable project from being implemented. In most cases this is associated

with the visual impact of the RES technology and the possible rejection by workers in coal and

other fossil fuel sectors create questions for the public acceptance. Some of the RES projects

could be hindered by barriers related to capital and production costs, reliability, intermittency and

incentives, which may be addressed as the technologies become more mature and further

experience is gained. Although some RES projects (e.g. wind onshore and PV production plants)

require large areas for their implementation, the increase of RES electricity contributes to reduce

most of the potential environmental impacts.




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5. ABBREVIATIONS

BAU Business as Usual

BOO Build-own-operate

BOT Build-Operate-Transfer

CE Continental Europe

CSE Continental South East

EC European Commission

ECRB Energy Community Regulatory Board

EIA Energy Information Administration

EIE General Directorate of Electrical Power Resources of Turkey

EMRA Energy Market Regulatory Authority

ENTSO-E European Network of Transmission System Operators for Electricity

ESMAP Energy Sector Management Assistance Program

EU European Union

FDI Foreign Direct Investment

FIT Feed-in-Tariffs

IEA International Energy Agency

OECD Organisation for Economic Co-operation and Development

MENR Ministry of Energy and Natural Resources

MNA Middle East and North Africa

MNSSD Middle East and North Africa Sustainable Development Department

MS Member States

PV Photovoltaics

RED Renewable Energy Directive

REN21 Renewable Energy Network for the 21st Century

RES Renewable Energy Sources

RES-E Renewable Energy Sources of electricity

RG Regional Group

SCR Synchronous Continental Region

TEIAS Turkish Electricity Transmission Company

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