BMI View: Our view that Turkey remains the most attractive power market in the Central and Eastern Europe (CEE) region remains in play. We foresee power demand in Turkey to be robust over the next decade, given the high levels of investment being channelled into its power sector, the country's capacity expansion plans and its improving economic outlook. Power sector expansion continues to benefit from strong political backing as the government strives for greater energy security and for reducing the country's heavy reliance on imports of natural gas through expanding domestic capacity - with renewables and domestically sourced coal leading the way. Yet, while the outlook is bright, the development of Turkey's power sector is complicated by the county's precarious economic and political position.
|e/f = BMI estimate/forecast. Source: EIA, national sources, BMI|
|Generation, total, TWh||267.980||280.700||293.340||308.430||324.110||340.290||356.520|
|Consumption, net consumption, TWh||226.3||239.2||252.2||265.1||280.7||296.7||311.3|
|Capacity, net, MW||75,150.7||79,727.9||83,806.9||87,593.2||91,176.9||95,199.5||98,806.0|
Key Trends And Developments
The failed coup-attempt in July 2016, and the following period of power consolidation by the AKP, has had little impact on our outlook for the Turkish power sector. We stress that the same government remains in power - with a strong track-record of creating a business environment conducive to investment. The political importance of power mix diversification away from imported natural gas will ensure that government support for non-hydropower renewables remains robust over the coming several years.
We expect thermal generation to dominate the electricity generation mix to the end of our forecast period. While coal- and gas-fired electricity generation will grow in absolute terms, we expect both to lose their share of generation to hydropower and non-renewables (and potentially nuclear). By 2025 we expect gas to account for 40.08% of total electricity generation (as opposed to 45.24% in 2015), coal to account for 28.71%, hydropower to account for 18.74% and non-hydro renewables to generate 11.84% of all electricity.
Natural gas will remain the predominant source of electricity in the Turkish power mix over our 10-year forecast period to 2025. The renegotiation of contracts to offset lira weakness - with contracts denominated in USD - and additional imports coming, highlight the fuel's continued importance in the mix. This view is strengthened by the fact there is significant gas infrastructure already in place - both pipeline interconnections and generation capacity - and by the fall in gas prices, which, in Turkey's case, are closely indexed to the oil price.
High power consumption growth rates, coupled with aims to lower reliance on imported natural gas, will mean that the country will aim to increase electricity trading with Eastern Europe and Eurasia as a part of broader power supply diversification strategy. In order to facilitate such plans, the Turkish government will focus efforts on improving a highly inefficient grid infrastructure, with smart grid deployment being crucial to improving transmission & distribution (T&D) performance.
While we maintain our positive outlook for Turkey's renewables segment, we do not believe the sector alone can rebalance the country's power mix. We expect the government to meet its target of generating 30% of electricity from hydropower and non-hydro renewables sources (wind, solar, biomass and geothermal) by 2023, with our forecasts projecting 22% (hydro) and 12% (non-hydro) being generated by that year. On the other hand, lower capacity factors for non-hydro renewables and the risk of drought - which would limit hydropower output - suggest that the sector will be unable to contribute a greater proportion of the power mix by the end of our forecast period.
The Turkey Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The Turkey Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for Turkey to test other views - a key input for successful budgeting and strategic planning in the power market.
- Target business opportunities and risks Turkey's power sector through our reviews of latest power industry trends, regulatory changes, and major deals, projects and investments in Turkey.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Competitive Landscape analysis.
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).