A new report by TSKB Energy Working Group: Energy Outlook 2020

1 December 2020
- 3 min Read

You can reach the report "Energy Outlook 2020" by TSKB here.

TSKB Energy Working Group published a report on the energy sector, which has always been among the key sectors due to its effects on the economy as well as its direct relevance with global geopolitical relations and the environment. The “Energy Outlook 2020” report analyzes in detail the energy investments and financing dimension of the energy sector as well as its various sub-components such as electricity, natural gas, oil, renewable energy and energy efficiency, while evaluating the leading dominant and determining trends in the energy market.

TSKB Energy Working Group prepared a detailed report on the Turkish energy sector. The report analyzes various sub-components of the energy sector in the light of the developments in the past two years, and highlights the leading dominant and determining trends in the energy market as well as energy investments and financing matters. Furthermore, thematic headings specific to the energy sector are presented under separate sub-sections in a way to complement each other.

Stating that TSKB closely monitored energy-related topics, Dr. Kubilay Kavak, Head of TSKB Energy Working Group and Escarus CEO, shared his views on the report. “In addition to the importance it attaches to the sector in general, TSKB Energy Outlook 2020 report particularly highlights green energy investments. In the report, we not only shared our analyses on recent developments but also addressed sectoral trends that will affect both the players in the energy sector and all of us as consumers. At TSKB Energy Working Group, we will continue to produce such in-depth publications on the energy sector, which is of vital importance for our country."

Some highlights from the “Energy Outlook 2020” report prepared by experts of the TSKB Energy Working Group with a thorough content of approximately 100 pages include the following:

Electricity Demand Decreased During the Pandemic.

In 2020, gross electricity generation declined in Turkey with the impact of a drop in the demand for electricity during March-June due to the Covid-19 pandemic. Decreasing by 0.6% in March year-on-year, the gross electricity generation declined by 14.6%, 16.5% and 2.6% on an annual basis in April, May and June respectively. As of the end of September, the total gross electricity generation stood at 226.9 TWh, marking a decline of 1.1% year-on-year.

YEKDEM Application Period Extended by 6 Months.

As per the Presidential Resolution published in the Official Gazette on September 18, 2020, the condition for the commissioning of the power plants eligible for the Renewable Energy Resources Support Mechanism (YEKDEM) by December 31, 2020 was extended until June 30, 2021. According to the Resolution, the feed-in tariff applicable to the generation plants that are covered by YEKDEM and will be commissioned from January 1, 2021 until June 30, 2021 shall apply until December 31, 2030.

Solar and Wind Power Dominate Electricity Generation.

The share of renewable energy, particularly of electricity generated in wind power plants and solar power plants, within the total energy supply is gradually increasing. The main factors underlying this include the fact that the power plants in question are environmentally-friendly as well as a downward trend in generation costs and a rise in the compliance of such power plants with the electricity grid thanks to emerging technologies.

Digitalization Gains Greater Importance in Production, Distribution and Trade on Electricity Markets.

The transition to real-time settlement in electricity markets ensures faster response to changing consumer demands in electricity grid services and increases profits, while the cost of electricity used by end consumers decreases. As the grid integration of renewable energy-based power plants increases, it becomes more and more important to predict wind and weather conditions accurately in real time and to create a more reliable electricity grid. To that end, investments in digitalization, artificial intelligence and big data analysis are expected to reduce uncertainties in business models, automate the previously-manual processes, and boost efficiency in electricity trade.

Investments in Renewable Power Plants Maintain Significance in Financing.

Renewable energy projects are categorized as environmentally-friendly projects from a sustainability perspective on one hand, and they stand out with an opportunity to sell at the same price level in line with the current YEKDEM tariff in return for declining fixed investment amount per MW on the other. Therefore, the financing of projects benefiting the existing YEKDEM tariff has dominated the sector in terms of new investment financing in the last couple of years. In the coming period, projects that minimize their risks will stand out in terms of financing. Projects which meet international standards on environmental and social terms and manage risks with action plans will also be able to access finances through the issuance of “green bonds”, the examples of which have grown rapidly in the world in recent years.

Recent Natural Gas Explorations Will Reduce Turkey's Import Dependency in Natural Gas.

320 billion m3 of natural gas reserves were explored in the Black Sea, according to a statement issued on August 21, 2020. On October 17, 2020, it was announced that there were additional gas reserves of 85 billion m3 in the same region, thus increasing the total explored gas reserves from 320 to 405 billion m3. Recent explorations and ongoing seismic and deep-drilling activities point out to a potential rise in the natural gas production of Turkey in the coming period.

Applications for Mini YEKA SPP Contests Will Be Received Between January 18-22, 2021.

Contests for Small-Scale Renewable Energy Resource Areas (Mini YEKA SPP), which are planned for solar power plants, will exhibit 10 MW, 15 MW and 20 MW each in 36 provinces. The contests will be held for a total connection capacity of 1,000 MW. The applications for contests will be filed between January 18-22, 2021. Under the mini YEKA SPP, the ceiling price at baseline was set at 30 kurush/kWh for each contest, and the duration for purchasing electricity was set as 15 years from the date of concluding the contracts.

Investments in Rooftop and Facade Solar Systems Are Expected To Increase.

Global climate change, population growth and increase in per capita energy consumption have increasingly more significant negative impacts on modern distribution networks, creating the need for finding alternative and clean energy sources, and, accordingly, integrating further photovoltaic (PV) sources into the grid. Solar power generation stands out particularly in modern distributed electricity grids, and PV systems integrated into buildings are also present in developed countries in addition to roof and facade applications. Turkey stands out among other European countries in terms of sunshine duration and the intensity of solar irradiance. It is among the regions that benefit solar power the most. The encouraging attitude of the public sector on the matter also raises the expectation that investments in rooftop and facade solar systems will increase.

Hybrid Technologies Can Be Used for Internal Consumption At Power Plants.

Two new regulations allowing for electricity generation from multiple resources at the current and future power plants in line with sectoral needs were published. These regulations enabled a combination of installed capacities of the auxiliary source and main source at power plants for a joint evaluation over the main source so that power plants generating electricity from multiple energy resources can be established on the condition that they are connected to the grid at the same connection point. Meeting internal consumption is reported to be the main purpose of integrating hybrid technologies into power plants.

Climate change and global warming will have serious consequences.

About half of the carbon emissions from energy use occur due to the energy used in industry. As the world moves towards a lower carbon goal, the global energy system is restructured. Throughout this restructuring process, it is anticipated that the global energy demand will continue to grow depending on improving welfare and living standards, but the energy demand will shift towards cleaner resources from fossil fuels, while renewables are expected to gradually play a more important role in meeting the rising energy needs of the world. Global studies focus on topics such as increasing the diversity of energy supply mix, offering more options to consumers, localizing the energy markets and improving integration.