ELECTRIC ENERGY SECTOR IN TURKEY Budak Dilli General

ELECTRIC ENERGY SECTOR IN TURKEY Budak Dilli, General Directorate of Energy Affairs Ministry of Energy and Natural Resources. Turkey

TURKEY: Main Characteristics Of Energy Sector High demand increase rate High investment requirement Import Dependency High Energy Intensity Low Efficiency High efficiency gain potential Considerable potential of renewable sources Emerging Market 2

TURKEY – Primary Energy Demand Projection 51000 61000 25000 31000 24000 80000 3

INCREASING CONSUMPTION 4

Electricity Demand Income Elasticity – European Countries Turkey 2005 2020

TURKEYElectrical Energy Demand Projection (2006 -2020) 7

TURKEY: ELECTRICITY CONSUMPTION COMPARISON (2001 -2006) (Kaynak: IEA) Enerji İşleri Genel Müdürlüğü 8

1994 -2004 % INCREASE IN ELECTRICAL ENERGY CONSUMPTION 1970: app. 2000 MW -TODAY: 43000 MW, 1400 MW / YEAR 9

Electricity New capacity requirement (2020) High scenario • ~ 56. 000 MW additional capacity need Low scenario • ~ 40. 000 MW additional capacity need 10

GAS SECTOR § Natural Gas Consumption in 2007: 35, 5 bcm § tion Forecast for 2008: 37, 5 bcm

Investments in Energy Sector Estimation up to 2020: Power Generation, Transmission, Distribution Billion $ Natural Gas……………. . . 2, 5 Billion $ Coal…………………. 5 Billion $ Petroleum………………. . 16 Billion $ ~100 New Power plants, rehabilitation, Pipelines, Natural gas storage… 12

Prospects for Gas Demand Major Challenge: securıty of supply, sufficient gas suppy

POLICIES Energy security New investments to cope with increasing demand Reduce import dependency, diversification Increase the utilisation of Local Sources Establishing Functioning markets based on competition Environmental sustainability : Renewable Energy: Wind, Hydro, Geothermal, Solar, Biofuels Clean Coal Technologies, Carbon Capture & Storage Efficiency Increase Nuclear Energy (5000 MW until 2020) UNFCC (Turkey became a Party in 2004) 14

MILESTONES OF THE TURKISH ELECTRICITY MARKET REFORM Law No 3096 BOT Law (No 3996) BOO Law (No 4283) Electricity Strategy Market Paper Law (No 4628) Communique BSR regarding the Financial Settlement Establishment of EMRA Market opening 29 % Finalization of generation privatization Cash settlement Start of distribution privatization Market opening 100 %

Electricity Energy Supply Chain under the Liberal Market Conditions Monopoly activities subject to regulations Transmission and system facilities Distribution - TEİAŞ - Regional Distribution Companies Competitive Market Retail Sale Production -EÜAŞ-Hydro -Portfolio Companies - IPP - Autoproducers & Autoproducer groups Retail Sale Market Small Consumers Wholesale Market Major Consumers - TETAŞ - Private Wholesale Companies - Regional Distribution Companies -Autoproducers facilities -Eligible consumers - Consumers directly connected to transmission system - Retail sale companies - Non eligible consumers

Evolution of the Wholesale Market Bilateral contracting supplemented by Balancing and Settlement Regime December 2003 Financial Settlements Communique August 2006 Balancing and Settlement Regulation starting by 2009 Day Ahead Market FBSR Future Financial Markets and Future Contracts

Electricity Market Breakdown of installed capacity by generators (2007) TOTAL 41 GW 40. 755 Ongoing studies for privatisation of distribution and generation

Amendment to the Electricity Market Law Enhancing the Security of Supply Improving the monitoring & evaluation mechanism Further improving the investment climate on generation side Capacity mechanisms Optional tendering

NEW INVESTMENT : LICENCED PROJECTS TOTAL: 23078 MW (MARCH 2008) 20

NEW PROJECTS, EXPECTED COMMISSIONING YEARS 21

Renewables Second largest contributor to the primary production In 2007 11% of TPES was supplied from renewable sources 20% of total electricity production was from renewable sources (43736 GWh) (2006 : 25 %) Aim: to keep and further increase renewable share in energy balance (80 % increase in supply from renewables until 2020 ) Utilization of the remaining hydro resources until 2023 – 37 % being utilized at present, 18% under construction (Total 35000 MW, Today 13000 MW) > 20 000 MW Additional Wind (Today 350 MW, 1000 MW under Construction)) 22

Energy Efficiency Energy conservation potential up to the 30% was defined in end use sectors. Energy Efficiency Law was adopted in the Turkish Grand National Assembly, To increase the energy efficiency awareness through media, training in schools, contest, informative billing etc. To set up administrative structure and mechanism for energy efficiency services To promote the energy services activities in the market To promote renewables and cogeneration for the protection environment (Cogeneration installed capacity: 4476 MW, i. e. 11% of total installed capacity as of April 2007. ) Incentives and obligations to decrease energy intensity Demand side measures , incentives Measures for production & supply 23

Interconnection with UCTE Technical studies approved by UCTE in April 2007. Ongoing studies for “Improvement of Frequency Control Performance”

Oil And Gas Transit 25