Turkey’s rapidly growing economy has substantially increased the energy consumption and expanded the size of Turkey energy market. The country’s annual primary energy consumption in the last 25 years rose from 55 million tons of oils to 155 million tons. However, high dependence on foreign energy sources poses significant burden on economy, including foreign trade deficit. Consequently, fluctuations in global energy prices directly puts pressure on Turkish economy.
Hence, Turkey aims to reduce dependence on foreign energy sources through domestic technology investments including for renewable energy sources. In order to meet the energy demand required by the high growth potential, a large amount of domestic energy investment has been made in recent years through various government incentives. Our Turkey market research shows that within the scope of Public-Private Sector Cooperation alone an investment of $9.4 billion has been made in the last 30 years.
Turkey’s electricity generation capacity was 91,000 megawatt (MW) as of year-end 2019. The share of renewable energy sources in this capacity was around 44,000 MW. Hence, 2019 has been a productive year in terms of production of renewable energy with 44 percent share of total electricity production. The share of solar and wind power plants in total electricity generation was slightly above the level of 10%, while hydro energy accounted for approximately 34% of renewable energy production.
In order to achieve a successful transition to a low carbon energy system in Turkey, it is important to increase the share of solar and wind power plants in total energy production. Lower costs of solar and wind-based technologies and supportive policies for renewable resources in recent years can be motivating for investors looking to invest in Turkey renewable energy industry. Renewable energy plants in Turkey received incentive payments totalling around USD 6.41bn/EUR 5.78bn under the Renewable Energy Support Scheme (YEKDEM) in 2019.
Under the YEKDEM scheme, renewable energy plants such as wind, hydropower, geothermal, biomass and solar can qualify for feed-in tariffs (FiT). Wind and hydropower facilities receive a FiT of USD 0.073 per kWh under the scheme, geothermal facilities get a FiT of USD 0.105 kWh, while the tariff for solar and biomass plants stands at USD 0.133 kWh. As a result of our market analysis in Turkey, we have found out that the country is looking to have 818 plants with a combined capacity of almost 21.9 GW that will generate 82.5 million MWh of renewable energy power in 2020.