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Turkey: Energy And Infrastructure Forecast, Risks And Opportunities 2019 – OpEd

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Energy supply security is on of Turkey’s prime concerns. Our installed capacity has reached 90 GWe, whereas peak demand was at 50 GWe in August 2018. Electricity generation has reached to 300 billion KWhours in 2018. Our local lignite production was about 50+ million metric tons in 2018. Hard coal production was 2 million metric tons. Imported hard coal was 30 million metric tons. Natural gas consumption was expected 53 billion cubic meter (bcm) in 2018.

Economies and businesses are always shaped by expectations, just as market expectations are important in economic forecasts themselves. Within our professional capacity, we have tried to outline a draft forecast for the upcoming days. While it may not necessarily foresee the future in all its detail, it is better to have one, rather than none. Here are our short term new year predictions:

Our local energy markets are in need of restructuring for about 50+b US Dollar current debt. Power plant ownership changes may occur.

The import tax as imposed on imported coal was a deterrent figure for future investments for imported coal firing thermal power plants. Anyhow the latest thermal power plants are exclusively built by Chinese companies due to their ultra low lump sum turnkey prices, covered by cheap PBoC project financing. However these plants have poor design, they have low spares, short life span. If you desperately need electricity generation, then price is not so important. The tax will be collected by our Treasury, and end price is also taxed so our Treasury will get all money from both ends, all other parties are intermediaries in the long run.

On the other hand, 5-6 $Cents per kwh electricity purchase guarantee by public enterprises for local coal firing energy generation is a good booster for newcomer investors. However it is not so pleasing to place power plant construction orders to Chinese contractors just because of their ultra cheap turnkey prices for new local coal firing thermal power plant investments.

These plants do not meet national standard, norms, rules, regulations, laws. They have poor design which are not applicable for local coal, they have limited or almost no spares and high breakdown, low availability and low life span during operation.

New tenders for local coal firing thermal power plants are in Cayirhan-2, Eskişehir Alpu, Konya Karaman, Trakya Saray. Soma Deniş, Soma- Eynez and Çan thermal power plant investment projects are ongoing. Local people are not so comfortable with new local coal investments. There will be growing public reactions expected to stop these investments.

There are still imported coal firing investment projects in Çanakkale, Aliağa, Amasra, Iskenderun bay although imported coal with current floating prices between 90-100 USD per ton of 6000 kcal/kg LHV are too expensive and hence they are not encouraged any more.

COP24 Poland 2018 meetings also advised the international investors not to invest on coal firing thermal power plants.

We also noted that recent CFB based thermal power plants are not suitable to fire high moisture content local local. High moisture content local coal can not be fired in CFB boilers since it is frozen in winter and it is in sludge (mud) form in summer time. Indirect firing pulverized coal based thermal power plant design is best for local coal with more that 30 years of proven operation.

On the other hand, two 1000 MWe each wind and solar tenders were completed. We expect to have more of these investments in future.
Solar power investments are reduced to 700-800 US$ per kw, whereas fossil fired thermal power plants are at 1500-2000 US$ per kw. Solar power needs no fuel, whereas thermal power plants needs fossil fuel which makes environment polluted. Solar power plant are available only on daytime which makes 2000 hours at least per year, whereas thermal power plants can work 6000- 7000 hours per year.

Solar power can generate electricity at 3-4 US cents per kw-hour, whereas thermal power plants sell electricity at 5-6 Us cents per kw-hour. Based on these new market figures, renewable energies are getting more competitive and feasible in the long run.

East Med offshore explorations will be more on diplomatic agenda in near future. Offshore fields around Cyprus will be the focus for fair share of natural resources.

On negotiation table behind closed doors in Moscow and Ankara (and Sochi), there were negotiations for new prices on natural gas sales, more concessions on 63 bcm capacity Turkish Stream underwater pipeline construction project and better terms for 4800 MWe nuclear contract etc.

Nuclear power is too expensive in terms of unit kw-hour compared to prevailing average electricity prices in the local market and waste disposal problem is not solved yet. There is limited activity in Akkuyu NPP, whereas Sinop NPP is on hold, and its feasibility is in evaluation. We should note that in the long term Mersin Akkuyu nuclear project may also serve as a new Russian military seaport on Mediterranean coast to reinforce Russian presence on hot seas.

Arab and especially rich Gulf countries are completely ignorant of the events which took place at our environment since they have worse incidents they face every day. We have fair deals with Iran due to our favorable gas purchase agreements. However due to their increased internal gas demand, they stopped sending gas to our system as of December. We have gas supply and energy generation drop in our energy markets. US Embargo on Iran will have its impact.

National Security is to be reinforced since SouthEast insurgency may get worse. As seen everywhere in the world, such as in Ireland, Scotland, Bask in Spain, if minorities are not fairly represented in the national parliament, then they may look for their alternative solutions.

Bankruptcy postponement epidemic in the local markets spreads to low capital- small companies. that will be a high impact on our economy despite of unrealistic pictures as pronounced by public officials. People has lost confidence to public declarations. Foreign exchange rates may dive once again low in time.

The European Union has frozen accession meetings completely for participation since all remedy requests are returned with futile responses. Luxemburg, Germany, Austria, Sweden, Denmark have already voiced necessary applicable counter measures. Death penalty, unavoidable bribery and public corruption, sexual abuse under 15 are unacceptable and non-negotiable for Europeans.

There is a wide range consensus for low profile public appearance. People deactivate their accounts in social media. They are not interested in any public expression. Newspaper columns are repetition of earlier articles. People are indifferent to every event since so many nasty things have happened in the near past with no reasoning no meaning we can name.
Immigration applications Western universities among academics and young professionals are on high rise. Similarly capital move from local to international markets are getting increased.

We believe that these are a few warning indicators, of which you will seldom read such candid forecast from a local source for our home environment anywhere else. We would be pleased to receive your comments and feedback over the course of the upcoming year.

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Haluk Direskeneli

Haluk Direskeneli

Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP, Entergy), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of Chamber of Turkish Mechanical Engineers Energy Working Group.

One thought on “Turkey: Energy And Infrastructure Forecast, Risks And Opportunities 2019 – OpEd

  • Avatar
    April 20, 2019 at 7:23 am
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    I just want to give you my good meant advice, it is the advice from someone who knows the Turkish energy sector since 1992, please, do not expect anything positive from European countries and of course from the USA, those are just a pack of dishonest elements trying to squeeze politically your country and to rob you. I think that the way you are presently following is the best for Turkey you should keep your independent stance, maybe there are some temporary problems but the worse what can happen is losing the control over independent managing of your industry. In any case, I do not advise you to enter into EU, it would be a fatal mistake there is no way back, the old EU members will treat you there as a second rank country, just like a market for their products. They are not interested in development of your industry, just the opposite, to let you be hanging on the European funds; as a security you will never push something forward what they do not like. In fact you can expect they will run the strategy of deindustrialisation of Turkey. Take an example of Ukraine what those countries can do with a single country.

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