Stepping up the use of local energy sources and lowering electricity prices is the main objective of Turkey’s new electricity law, approved by parliament this week. Complicated regulation on energy investment will also be scrapped in a bid to incentivise new-build capacity.
Legal amendments grant further incentivise to developers: The incentives for plants commissioned before the end of 2015 have now been extended until 2020, giving these plants a 50% discount on transmission system usage fees over five years as well as a stamp tax exemption. Annual licencing fees were also reduced slightly to between TRY 5,800 ($1,996) and TRY 290,300, depending on the installed capacity of the power plant.
Critics in parliament questioned Turkey’s shift to new nuclear instead of solar power, but the energy minister Berat Albayrak underlined the productivity of nuclear plants would be five times higher than that of solar PV of the same capacity.
The energy ministry is yet to decide on further privatisation of EÜAŞ assets, notably regarding the state utilities’ coal-fired and renewable assets. Any privatisation bids will be followed by negotiations to determine a power price that will be valid for future electricity purchase agreements (PPA). Should the Turkish Electricity Trading and Contracting Company (TETAŞ) fail to meet the amount of electricity stipulated in the current PPAs, it will have to procure the missing volumes from power plants fuelled by local coal.
Counting on domestic coal
Domestic power sources – notably coal – are meant to be at the core of Turkey’s new energy mix as the government seeks to reduce the financial burden of importing oil and natural gas. In fact, the use of gas for power generation fell 32.6% to just 21.4 billion kWh in the first quarter of this year, while the coal-burn of local resources rose 2% to produce 20.4 billion kWh over the same period.
Both open-cast and underground mining will be stepped up to maximise the use of Turkey’s energy resources. Mine owners can apply for a ‘special operational license’ provided that they will sell the coal within the borders of that license.
This new coal support framework will issue licenses in alignment with the Natural Gas Market Regulation, allowing the government to determine the share of coal-burn for power generation in relation to gas.