POWER PLANT INVESTMENTS

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• POWER PLANT INVESTMENTS
• in TURKEY

Prepared by MARDIN
ENERGY, 2010
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Facts and Figures

• Turkey is a developing country with a GDP growth
  rate of 7 per year over the last 6 years.
• Current population of Turkey is 70 million with a
  growth rate of 1 per annum.
• Energy needs of Turkey are rising very rapidly.
  According to The Ministry of Energy in the year
  2020
• o Total energy demand
  will be 250,
• o Electricity demand
  shall be 300,
• o Demand for coal
  shall be 400,
• o Demand for natural
  gas shall be 220, of 2007s figures.
• The Turkish government supports investors
  especially for the exploration of oil, gas, coal
  and the production of renewable energies (wind
  and hydro) with subsidies.
• Proven reserves are insufficient to satisfy the
  increasing demand.
• In 2008, total installed power was 42,302 MW,
  gross generation capacity was 198,300 GW and net
  consumption was 162,300 GW according to TEIAS.
  (Net consumption 2.160 KWh per capita).
• Total electricity production in 2008 was 198.3
  billion kWh, and demand was 198.1 billion kWh.
• Electricity demand is increasing at 7.04 per
  annum in the last 5 years.
• Turkey both imports and exports electricity in
  small volumes, but these volumes are most likely
  to increase geometrically. Turkey currently
  exports electricity to Greece, Syria, Iraq and
  Georgia, while importing from Bulgaria, and
  seasonally importing from Georgia.

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Facts and Figures

• The Turkish government supports investors
  especially for the exploration of oil, gas, coal
  and the production of renewable energies (wind
  and hydro) with subsidies.
• Proven reserves are insufficient to satisfy the
  increasing demand.
• In 2008, total installed power was 42,302 MW,
  gross generation capacity was 198,300 GW and net
  consumption was 162,300 GW according to TEIAS.
  (Net consumption 2.160 KWh per capita).
• Total electricity production in 2008 was 198.3
  billion kWh, and demand was 198.1 billion kWh.
• Electricity demand is increasing at 7.04 per
  annum in the last 5 years.
• Turkey both imports and exports electricity in
  small volumes, but these volumes are most likely
  to increase geometrically. Turkey currently
  exports electricity to Greece, Syria, Iraq and
  Georgia, while importing from Bulgaria, and
  seasonally importing from Georgia.

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Facts and Figures

• Turkey import 97 of natural gas.
  Turkeys production is only 2.4.
• Turkey needs 20billion kWh investment annualy
  between 2009-2020 period.
• The total length of transmission lines is about
  922,000km. The loss of these lines are about 3.
• The reason of the high electricity cost is
  thermal power plants produce 80.9 of total
  production. As we import natural gas with high
  price it effects to power generation costs.
• Total CO2 capacity eas calculated 331.76m tons
  in 2006. Power plants ihavethe biggest share with
  259m tons. It means that Turkey plays 3billion
  EUR in CO2 market.
• Total Wind Power capacity is48.000 MW in Turkey
  but current gird points and lines allow only
  13,000MW investments. Current established
  capacity is 333.35 MW and 142.80 MW under
  construction.
• Current HEPP capacity is 13,394.4 MW by 2007. It
  means that Hydro power plants has one third of
  share in total production market. Turkey has
  170b kWh capacity but only use 47.6b kWh!

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Supply Demand
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SupplyDemand Forecasts
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Electricity Demand Installed Capacity
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Monthly Electricity Consumption in Turkey
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Power Generation in Turkey by Source
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Installed Capacity Generation Breakdown
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New Licenses in the Market

• In 2008, a total of 221 generation and 18 auto
  production licenses were granted for a total of
  12GW, with the following breakdowns

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Supply Structure in Turkish Electricity Market
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Market Structure

• The Turkish electricity market is regulated
  according to the electricity market law no 2668,
  by the regulatory body EMRA (Energy
• Market Regulatory Authority, www.epdk.org.tr).
  Each market player needs a license from EMRA (as
  well as other licenses, if
• needed). The major players defined by the law
  are
• Producers ? The producers are both state
  owned and privately owned companies. They can
  sell to any licensed traders,
• distributors and free users.
• Distributors ? They are allowed to buy from
  producers and traders and are allowed to sell to
  the user (except for free users)
• within their defined territory (grid).Turkey has
  been divided into 21 distribution grids. Except
  for Kayseri, 20 of them are state
• owned. All 20 will be privatized in the coming
  years and tenders are likely to start within
  2008.
• Traders ? They are allowed to buy from
  producers, to import and buy from other traders.
  They are allowed to sell to the
• licensed distributors, free users and exports
  buyers. There are three major traders at the
  moment. TETAS (www.tetas.gov.tr) which
• is state owned, Kartet, privately owned company
  selling electricity to Iraq, and ICL, a Swiss
  company, which will start trading in the
• near future.
• Transmitters ? There is state monopoly in this
  area. TEIAS (www.teias.gov.tr) is the monopoly
  company. TEIAS transmits the electricity
• Between grids. Any transformer and transmission
  line capacity above 34.5 kV falls under their
  management, even within grids.

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Distribution Grid Map of Turkey
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Why Coal?
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Fixed Variable Costs of different Types of
Electricity Generation in Turkey
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Analysis of fixed variable costs of different
types of power generation in Turkey
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Electricity Transmission System of Turkey
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Opportunities and challenges in theTurkish
renewable energy market

• Dropping electricity demand against the backdrop
  of huge difficulties in the financial sector and
  expectations of recession across much of the
  globe has colored the outlook in 2009.
• Despite not being exempted from the global doom
  and gloom, the Turkish renewable energy
• market is still heating up, as reflected
  in consecutive disclosures of new investments
• A well-designed incentive scheme based on a
  sustainable and predictable regulatory structure
  will be the main strength of the Turkish
  renewable market in securing its place on the
  sunny side of the street.
• The proposed amendments to the Renewable Energy
  Law, meanwhile, aim to upgrade and differentiate
  the feed-in tariff structure with regards to
  sources.
• Despite the economic crises in 1994, 1998 and
  2001, the installed electricity generation
  capacity in Turkey more than quadrupled in the
  last 25 years, reaching c. 42 GW in 2008.

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Main Instutitions in the Turkish Renewable Market
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Main Instutitions in the Turkish Renewable Market
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Breakdown of Installed Hydroelectric Capacity
(37.1GW)
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Parties to Renewable Projects
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Become a Private Player

• A HPP project can be started by a private player
  in two ways
• 1- Self-initiated projects Private players may
  develop their own project and apply to the SHW
  for Water Use Agreement (WUA).
• 2- SHW and/or EIE announces the list of HPP
  projects to be transferred to the private sector
  for operation
• - more than one applicant a tender is
  launched to collect bids per kWh to be generated,
  and the winning bid is posted as income by the
  SHW.
• - one applicant the project is granted to
  the single applicant.

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Steps in HPP Projects (Projects developed by SHW
and / or the EIE)
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Steps in HPP Projects(Projects developed by SHW
and / or the EIE)
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Project schedule to build an HPP in Turkey
(Projects developed by the private sector)
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Project schedule to build an HPP in Turkey
(Projects developed by the private sector)
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State of Play Turkish Wind Market
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Annual Solar Radiation in Turkey
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Projections for Geothermal Power in Turkey
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New Mechanism

• The new mechanism has the following components
• 1- The duration of the participation to the
  scheme shall start from the date of commissioning
  for operating PPs or from the date of
  commissioning for those yet to commence
  operating. The situation regarding PPs becoming
  operational after 31 December 2015 shall be
  renegotiated after 2011.
• 2- Payments to the power suppliers shall be made
  by the Market Balancing and Settlement Center
  (MBSC) in TL, calculated with the Turkish Central
  Bank TL/e parity on the invoice date.
• 3- In the case of hybrid PPs based on intensified
  solar technologies and any other non-renewable
  technology, only the output of the former shall
  be eligible for the incentive scheme.
• 4- Benefiting from this feed-in tariff scheme
  does not preclude participation in the spot
  market (Please see Appendix 2 for the supply
  structure in the Turkish
• electricity market).

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New Mechanism

• 5- Licensees generating power for their own need
  with PPs of a maximum installed capacity of 500
  kW shall be eligible for the feed-in tariffs in
  Table 2, with the exception of the photovoltaic
  PPs. PVs with a maximum capacity of 500 kW are in
  turn provided with the following scheme
• - Generation up to 2,999 kWh/month eur
  cent 35/kWh
• - Generation between 3,000 6,000
  kWh/month euro cent 30/kWh
• 6- The output of the PVs can only be sold to the
  distribution companies.
• 7- A standard 90 discount on the system usage
  fees shall be applied to all types of
  renewable-energy based PPs.
• 8- If the mechanical and / or electromechanical
  equipment is procured from domestic suppliers,
  the feed-in tariff levels displayed on Table 2
  shall be further upgraded with the rates
  displayed on Table 3, and be applicable
• over the first five years of operation.

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Proposed Feed-in Tariff Structure
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Disclosed Renewable Energy Deals in Turkey (1H09)