Turkish market offers high potential for lucrative energy projects
Over the last ten years Turkey has become one of the fastest growing energy markets. Economic growth, the rising per capita income, positive demographic trends and the high pace of urbanization have been the main drivers of energy demand. Subsidies create additional investment incentives for the Industry.
In order to ensure long-term and reliable energy supply, Turkey offers investors attractive incentives such as secured feed-in tariffs, acceptance guarantees, connection priorities and exemption licenses. The privatization of energy generation plants, coupled with a strategy to prepare for more private investment, has led to an increase in the share of private companies in the energy sector from 32% in 2002 to 75% in 2015. In the future, an energy exchange is intended to promote the liberalization of the market, as well as contribute to transparency and the maintenance of a healthy balance between supply and demand.
In addition to its vast internal market, Turkey is strategically positioned between a number of large energy consumers and producers, and therefore serves as a regional energy hub. The existing and planned petroleum and natural gas pipelines, the critical Turkish mega-genes and the promising discoveries of hydrocarbon reserves in the country leave Turkey greater scope for energy prices and support its role as a regional hub. The market environment offers enormous investment potential for foreign companies. The German energy group E.ON is already investing since 2013 in a project with the Turkish Sabancı Holding.
High potential for Renewables
The possibilities for renewable forms of energy production like water, wind, solar, geothermal energy and others - are abundant in Turkey and it is expected that supporting legislation together with favorable feed-in tariffs will increase their share of the national electricity grid in the coming years. Just as important as renewable energies in the Turkish energy strategy in the coming years are technologies such as waste recycling and the reduction of greenhouse gases. Especially for German companies, which had to invest intensively in renewable energies and options for traditional fossil fuels, can this trend offers opportunities for investments and cooperation.
Even if the current political tensions in Turkey make investors more cautious, Turkey will continue to be an attractive investment location in the future. The total amount of investment required to meet expected Turkish energy demand until 2023 is estimated to be around USD 110 billion, which is more than double the total investment over the last decade. This trend offers business potential for all companies in the value chain of the energy sector.