Turkey’s historical commitment to the hydropower sector is well recognised in its decision to press ahead with the development of the Greater (Southeast) Anatolia Project (GAP) as much as anything else. Hydroelectric schemes already contribute about a third of national generating capacity of 37.5GW and provide a large degree of energy security for a country that is becoming increasingly dependent on gas imports. Yet, Ankara’s recent decision to consider signing the Kyoto Protocol has highlighted a genuine commitment to curtailing greenhouse gas (GHG) emissions and could provide more incentive for yet more investment in dam construction.
Two separate government policies are combining to encourage investment in new hydroelectric schemes: the desire to promote low carbon power generation and the need to provide more generating capacity. Slower than expected growth in electricity consumption led to problems with the oversupply of gas feedstock but these difficulties now seem to have been settled, as demand has picked up strongly. The Turkish economy is growing at 7% per year and the country’s growing industrial capacity requires ever greater power supplies. As a result, demand for electricity is currently also rising by about 7% per year. The Government’s ‘Turkish Electric Energy Generation Planning Studies (2005-2020)’ reveals that national generating capacity of 96.3GW must be installed by 2020, of which renewables – principally hydro – must contribute 34GW.
Coal and gas fired power plants will certainly provide part of the solution but the government’s power sector strategy requires the hydro sector to make a considerable contribution. In addition, successive governments have campaigned long and hard to enable their country to join the EU. While membership remains some way off, the accession process requires Ankara to align a great deal of Turkish regulation and legislation with EU standards. Under EU directive 2001/77/EC, candidate states are required to contribute to increasing the proportion of low carbon generating capacity in the EU as a whole. As a result, the Turkey’s Government is encouraging higher investment in wind farms but the country has no nuclear power programme, and so efforts to cut power sector emissions will focus on new hydro generating capacity.
It was against the backdrop of Ankara’s EU ambitions that Turkey’s Prime Minister, Recep Tayyip Erdogan, announced at a UN event in September 2007 that his Government would be prepared to sign the Kyoto Protocol, providing certain conditions were met. Turkey is an Annex I country and so is required to cut its emissions by 5.2% of their 1990 levels by 2012. But Ankara believes that it is unfair that developing countries, such as Turkey, should face the same cuts as economies that have already industrialised. Erdogan argued that all countries should have common but differentiated responsibilities.
He said: “Today, climate change is the greatest environmental threat that humanity faces. It is also a fact that greenhouse gas emissions are the main reason for this global phenomenon. One of the most unfair aspects of climate change is that the countries that are most adversely affected by this problem are the ones bearing the least responsibility for it. Both developing countries and least developed countries should benefit from international mechanisms, funds for adaptation and also new technologies in a more comprehensive manner.”
Although Turkey’s carbon emissions are roughly a third of the average for Annex I countries, the level of emissions from the Turkish power sector have doubled since 1990, so there seems no chance that the country can record any cut in 1990 emission levels by 2012.
Nevertheless, the Islamist Justice and Development Party (AK)-led Government’s support for Kyoto is important because it throws Turkey’s weight behind the EU position as talks on a successor agreement to Kyoto gather steam. Kyoto II is likely to call for more stringent cuts in carbon emissions, both within the power sector and elsewhere. As a result, Turkey can only continue to support EU calls for deep seated cuts – and thereby promote its EU candidature – if a large proportion of the power sector generating capacity that is brought onstream over the next decade is low carbon. While wind power projects will make a contribution, the hydro sector is likely to provide the lion’s share of low carbon generating capacity.
Some opposition politicians argue that a failure to focus on thermal power plants will hit the current strong levels of economic growth. However, the president of the Parliamentary Commission on Environment and Forestry, Haluk Özdalga, responded to such claims by saying Turkey intends to take a position on signing the Protocol before its temporary membership of the UN Security Council comes to the table in a Security Council meeting this year. It is not a totally binding agreement, he added. Requiring use of technology that reduces emissions of GHG, a total of 170 countries have signed the agreement, but the US and Australia have not – although the recent general election in the latter nation looks set to change that position.
“Some 20 countries are deciding whether or not to sign it; Turkey is the largest country among them,” Özdalga said. He added that Turkey’s support for the Kyoto Protocol would aid its application for EU membership.
As Table 1 demonstrates, most of Turkey’s existing hydro schemes were brought onstream during the 1980s and 1990s but there is plenty of untapped hydro potential. The past few years have also seen a large number of new dams developed and 2,722MW of new hydro generating capacity is being brought onstream over 2005-9. The various projects, led by the 670MW Deriner scheme, are listed in Table 2.
According to official figures, the country has gross theoretical hydroelectric generating capacity of 430,000GWh per year, technically viable potential of 216,000GWh per year and economically viable potential of 127,381GWh per year, or around 16% of total European potential. As Table 3 indicates, 20.4GW out of economically viable potential of 36.2GW is not even scheduled for development, so there appears to be more scope for new water power schemes than in most other countries.
A statement from the General Directorate of State Hydraulic Works (DSI) highlights government strategy: “The share of hydroelectric power has dropped while the share of thermal energy has increased in overall energy generation. Nevertheless, the European Union places great emphasis on green power in energy policies (hydroelectric, wind, solar, and biomass energies). Thus, it is important to harmonise the energy policy and relevant legislation in Turkey with European energy policy. Consequently, the weight of hydroelectric power in overall generation needs to be increased.”
DSI already controls all but 2.4GW of hydro generating capacity in the country and will be at the forefront of achieving the increase in hydropower assets. The Electrical Power Resources Survey and Development Administration is responsible for surveying and planning national water resources. A DSI spokesperson highlighted the benefits of promoting hydro within the Turkish generation mix, pointing to it being an environmentally friendly technology with lowest risk potential, able to respond to unexpected demand fluctuations and, therefore, operated as peak power plants. He added that hydroelectric power is clean, involves no fuel cost, is a balancer of energy prices, has a long life span, its cost recovery is short run, its operational costs are low and it is also an indigenous source of energy.
The centrepiece of Turkey’s hydro investment is the well publicised GAP, which will eventually provide 7,474MW of generating capacity from 19 power plants. The latest stage in the GAP is the 1,200MW Ilisu project, which involves the construction of a 135m high dam on the Tigris river, just 45km from the Syrian border by 2014-15 (and is therefore beyond the period of Table 2). A series of contracts were awarded on the project to European companies in 2007. andritz va-tech led the way with a US$315M deal, while alstom, Ed Zublin, Stucky, Colenco and Maggia shared orders worth US$395M. Funding has partly been provided by the national export credit agencies of the countries involved.
A US$1.64B funding package for the entire Ilisu project was announced in August 2006 and construction began one year later. The scheme, which is designed to provide both irrigation water and electricity, should be complete considerably later than the 2010 target that had been set for the entire GAP. While the GAP has been criticised for the undoubted environmental problems involved in its construction, DSI has been increasingly keen to promote the saving in carbon emissions that will be achieved by constructing hydro rather than thermal power generating capacity. For instance, it is estimated that the Ilisu project will save 3M tonnes per year in GHG emissions, which may have helped European export credit agencies to throw their support behind it.
In June 2007, Ankara signed a wide ranging power sector deal with the Iranian government that will promote the construction of new joint hydro schemes in their common borderlands and encourage cross-border trade in electricity. Despite restrictions on private sector investment in Iran, private firms could be invited to help develop the proposed projects. However, the bilateral agreement merely seems to lay down a willingness to cooperate in principle and further talks on the proposals are expected in Tehran this year.
Ankara’s enthusiasm for hydro persuaded US firm AES to purchase a 51% stake in Turkish hydro firm IC ICTAS Energy Group in May 2007. The financial details of the transaction were not released but the remaining equity in the company is being retained by IC Investment Holdings. The Turkish group currently has just 29MW of operational generating capacity but schemes with a further 390MW are at various stages of development. AES indicated that it regarded Turkey as a rapidly growing power market with plenty of scope for new hydro development. The president and chief executive of AES, Paul Hanrahan, commented: “Through this acquisition, AES gains an immediate foothold in one of Europe’s fastest growing economies, which is experiencing significantly increased demand for electricity. This will be an excellent platform for future expansion in Turkey and the adjacent region.”
This was followed in December by an announcement by General Electric Energy Financial Services that it had taken a 50% stake in Turkish firm Gama Enerji AS. As with the AES purchase, GE declined to reveal how much it had paid but added that it planned to invest at least US$3B in new hydro and gas-fired power generation schemes alongside its Turkish partner. Gama Enerji currently operates 1,150MW of generating capacity in Turkey but plans to increase this to 4,000MW over the next decade, with hydro expected to play a key role in the expansion programme.
The managing director of the GE subsidiary, James Burgoyne, closely mirrored the comments of AES’ Hanrahan when he said: “The increase in electricity consumption is a clear indication of Turkey's growth potential”, and added that Gama Enerji was the “ideal platform for GE to grow in Turkey and in neighbouring countries”. According to Gama Enerji’s chairman, Ergil Ersu, some of the required investment could come from an initial public offering (IPO) planned by the company for this year.
A total of 2,536MW will be provided by a series of schemes in the Coruh Basin in north-eastern Turkey. The 115MW Muratli project is already in place, while the Deriner project is approaching completion. The other seven dams and associated power generating infrastructure are at various stages of planning. Most recently, the 300MW Borçka project was brought onstream for DSI in April 2007. It was developed by a consortium of Turkish and Austrian firms and its two Francis turbines were supplied by voith-siemens Hydro.
Support for small hydro
Turkish interest in hydroelectric technology has generally focused on the large hydro sector but the Government hopes that small hydro can also make a contribution to boosting national generating capacity. There are currently 60 micro, mini or small hydro projects in the country with total generating capacity of 129.5 MW. Another 98 schemes with combined capacity of 493 MW are planned, but private sector investment will be required if most of these ventures are to make it past the drawing board.
State funding for small hydro and other forms of renewables was cut as a result of the economic recession in 2001 but resumed in the Law on the Utilisation of Renewable Energy Resources for Electricity Production, which was passed in 2005. The new legislation requires the state-owned Electricity Generating and Transmission Corporation (TEAS) to connect small hydro schemes to the national grid and provides tariff support until at least 2012, probably beyond. Although this is a lower level than in most EU member states, it at least represents a government commitment to renewables.
The Ministry of Energy and Natural Resources (MENR) has provided funding for small hydro research, development and project finance via a variety of programmes, while the World Bank has given the country US$200M to fund 29 small hydro and wind power projects that should jointly provide 1,379MW of new capacity. Yet, although AES has demonstrated its commitment to Turkish hydro, it remains to be seen whether other foreign firms will be equally interested in small hydro. On balance, it seems likely that the level of tariff support will have to be increased before European companies can turn their attentions to smaller Turkish hydro projects.
With less than 50% of GAP yet developed, it is clear that Turkey’s hydro generating capacity will rise over the coming decade. Security concerns and fears over the environmental impact of some GAP dams could slow construction work but Ankara seems keen to complete the strategic plan. EU interest in small hydro could prompt the expansion of micro, mini and small hydro generation but the lion’s share of new generation is likely to come from the hydro schemes that have been identified by the DSI but not yet developed.
As in other developing economies, financial support from foreign investors and multilateral agencies was threatened by negative views of dam projects but is likely to return on the back of even greater concern over climate change. With or without foreign support, Turkey has plenty of untapped hydro to develop.
TablesTable 2: New Turkish hydroelectric generating capacity 2005-09 Table 3: Turkish hydroelectric potential Table 1: Turkey's largest dam and hydroelectric projects