Turkey has learned a valuable lesson in natural gas supply security and has started to diversify its energy mix after relations soured last November between Turkey and Russia, the country’s main supplier of natural gas, partner of PricewaterhouseCoopers (PwC) global services company, said.
Relations between the two countries were severely damaged when two Turkish F-16 fighter jets on an aerial patrol shot down a Russian warplane, which violated Turkey's airspace. After a nine-month hiatus in relations, both countries decided to reconcile and relations improved.
“Supply security gained in importance after this,” Murat Colakoglu, also the EMEA Region Power & Utilities Tax Leader for the company, told Anadolu Agency in an interview.
“The government started making more efforts towards diversifying production sources and placing more importance on national coal, nuclear and renewable energy. It is important to lessen the role of natural gas in electricity production to decrease dependency,” he argued.
- Radical solutions on market liberalization
Colakoglu also said he expected more fundamental steps to be taken in the short term in Turkey’s energy market liberalization process.
“Substantial steps have been taken towards liberalization in natural gas and electricity, such as the founding of the Energy Exchange Istanbul,” Colakoglu said. “But more than 40 percent of the electricity is still generated by state-owned plants. And the government is still able to intervene in the pricing. This means we can’t talk about an entirely liberal energy market at the moment.”
The Energy Exchange Istanbul (EPİAS) was started in 2015 and became a member of the Association of European Exchanges (EUROPEX) in June 2016.
Turkey currently generates 45 percent of its electricity through natural gas plants as Turkey’s state-owned BOTAS pipeline corporation imports 98 percent of the gas, according to Colakoglu.
He also suggested that Turkey’s energy market and companies would need to “transform” their business models in line with liberalization.
“This is especially valid for electricity distribution companies,” he said.
He emphasized Turkish electricity companies had already started working like this on a micro-scale. Companies were gearing for custom-made packages for individual consumers, with discounts being offered in areas such as subscription for services of other companies as part of marketing campaigns.
- Investments deemed profitable in long-term
Colakoglu also remarked that the infrastructural network for energy within Turkey has to be substantially improved as it still is not possible to distribute natural gas everywhere within Turkey due to its inadequate infrastructure.
The same problem is valid for electricity, Colakoglu added.
“We have 77 gigawatts of installed capacity in electricity and this is planned to increase to 140 gigawatts in the near future,” he said. “But at the moment, we can only use 35-40 GW of this at peak time, and we have to concentrate on solving this problem,” he explained.
But despite these issues, energy investments in Turkey are expected to be very profitable in the long-run due to Turkey’s dynamic young population and in line with the global market's needs, Colakoglu said.
“These are issues that can and will be solved,” he said. “We know this because western countries went through the same steps to reach the stage they are at now,” he said.
By Sibel Akbay
Anadolu Agency
sibel.akbay@aa.com.tr