BMI View: Turkey will remain one of the best non-hydropower renewables markets in Europe over the next decade, as supportive fundamentals - in the form of an ambitious diversification push away from imported gas power and robust power consumption growth - will support capacity growth in the segment. While risks in the market are increasing, as political uncertainty increases in line with the AKP ' s power consolidation drive in the aftermath of t he failed coup attempt in July all the while the lira continues its depreciatory trajectory due to capital flight and dovish monetary policy , we believe strong fundamentals will support continued robust capacity growth in the Turkish non-hydropower renewables sector.
|e/f = estimate/forecast. Source: EIA, EWEA, BMI|
|Generation, Non-Hydropower Renewables, TWh||14.060||17.040||19.290||21.730||24.560||27.720||31.460|
|Generation, Non-Hydropower Renewables, % y-o-y||20.780||21.210||13.150||12.690||13.020||12.870||13.470|
|Capacity, Non-Hydroelectric Renewables, MW||5,791.7||7,248.9||8,479.3||9,897.8||11,505.3||13,198.5||14,841.4|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||30.7||25.2||17.0||16.7||16.2||14.7||12.5|
Latest Updates And Structural Trends
Turkey remains at the top of our Risk/Reward Index for Central and Eastern Europe due to the large opportunities available to investors relative to the region. The substantial rewards on offer for investors in form of the country's ambitious non-hydropower renewables capacity expansion plan is the main source of the country's outperformance. We see little scope for policy slippage for this plan, as the renewables segment comprises an important part of the country's strategy to lower the cost of natural gas imports.
The failed coup attempts in July 2016, and the following period of power consolidation by the AKP, have had little impact on our outlook for the Turkish non-hydropower renewables 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.
The lira continues to depreciate amid dovish Turkish central bank policy, capital flight and an increasing risk of fed-rate hikes - with the currency having weakened substantially to the dollar between October and December 2016 (at the time of writing). This will have an adverse effect on companies that are looking to repatriate their profits. Conversely, investors that are looking to boost their presence in the market are likely to be attracted by cheap valuations. We believe this could have a positive effect for Turkey's solar sector - which has a nascent equipment manufacturing sector, but multiple capacity tenders in the pipeline.
Turkey aims to deploy 27.5GW of non-hydropower renewables capacity by 2023 - with wind power comprising 20GW, solar power 5GW, biomass 1GW and geothermal 1.5GW. We expect cumulative capacity in the country to reach 18.3GW by 2023. The aim of this plan is that the segment will comprise 30% of total power generation by the year - with nuclear and coal each also making up 30% shares. This is due to the aim to lower the reliance on imported natural gas for power generation. With the gas-sector forecast to comprise 45.2% of total power generation in 2016. Given that we have not included any nuclear capacity into our 10-year forecast, due to the Akkuyu power plant project being riddled with uncertainty, and coal failing to boost its share beyond 29% over the same timeframe, non-hydropower renewables will be the driver of such diversification efforts.Turkey made a series of changes to its renewable energy support mechanism in June 2016. Applicants to the country's feed-in-tariff scheme will no longer compete for access to grid-connections by bidding on a price offered per megawatt installed at the facility, but rather by bidding on the electricity price on top of the feed-in-tariff whereby the lowest bidder will win.
The Turkey Renewables Report researched at source contains BMI Research's assessment of the current renewables market in Turkey. The report also contains historical data together with forecasts to end-2018 covering electricity generation (TWh) and electricity capacity (MW).
The renewables sectors covered in the report include Wind, Solar, Geothermal, Tidal and Wave, and Biomass (See Table of Contents for exact coverage). The report also features details on government green energy agendas and funding opportunities, as well as presenting a detailed list of key renewables projects currently being planned or undertaken in Turkey, their capacity, the timeframe of construction and their current status.
The report discusses the various energy policies currently in force, including targets, subsidies and the relevant infrastructure developments or limitations which might impact on renewables growth, analysing the potential effects of regulatory changes in conjunction with the background macroeconomic outlook. Finally, there is a general overview of the competitive landscape in Turkey, together with a detailed summary of the main utilities and manufacturers present and their business operations.
BMI's Turkey Renewables Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with unique independent forecasts and competitive intelligence on the Turkey renewables industry.
- Benchmark BMI's independent renewables industry forecasts for Turkey to test other views - a key input for successful budgeting and planning in the renewables market.
- Target business opportunities and risks in the Turkey renewables sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in the country.
BMI Industry View
Summary of BMI's key industry forecasts, views and trend analysis covering the renewables market in Turkey, regulatory changes, major investments and projects and significant multinational and national company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the renewables sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2010-2012) and forecasts to end-2018 for electricity generation (TWh) and electricity generating capacity (MW) for each individual renewables sector present in the country.
These in turn are broken down into:
Electricity Generation: Overall capacity (TWh), growth % change year-on-year, KWh per capita, % of Total Non-Hydropower renewables generation, % of total electricity generation.
Electricity Capacity: Overall capacity (MW), growth % change year-on-year, % of non-hydroelectric renewables capacity and % of total capacity.
These forecasts are in turn supported by explicit assumptions, in conjunction with analysis of the key risks to the main forecast.
Business Environment Rankings
BMI's Renewables Business Environment Rankings provide fully comparable Risk-Reward Rankings aimed at investors in the regional renewables market.
The rankings methodology makes sophisticated use of various industry, economic and demographic data point.