Primary Energy Outlook of Turkey

Like being in all world economy, the main input of the industry is energy and its demand has been increasing steadily parallel with the development of economy in Turkey.

According to the study results, the most important factors that affect the energy usage are the population growth and income increase. Since the establishment of the Republic both population and economy have been growing steadily even if sometimes there could be fluctuations in economy. In table 17, Turkey’s economic situation and energy demand were given.

Table 22 Population, Economy and Energy Data of Turkey Population

(*1000)

GDP Billion

$

GDP Per Capita $

Energy Demand (MTEP)

Energy Demand Per

Capita

Electricity Demand Per Capita (kWh/Person)

1973 38.072 76 1.994 24.6 646 326

1990 56.098 150 2.674 53.7 957 1.013

1995 62.171 178 2.861 64.6 1.039 1.376

2000 67.804 214 3.158 82.6 1.218 1.892

2010 73.722 732 10.079 109.3 1.483 2.841

2013 76.667 823 10.822 122.79 1.601 3.201 Resource: MENR, Energy Statistics, 2013

68 As it can be seen from the table, the demand of the energy has been increasing parallel with the population and income level developments in Turkey. Between the 1973-1.990 the primary energy demand rose from 24.6 MTEP to 53.7 MTEP and in this period the average energy growth rate is 3.2 % per year (table 17). However, between the 1990-2010 periods, the energy demand increased nearly 2.9-fold. According to the IEA projection, the average annual growth of primary energy supply in Turkey is estimated as 2.48 % in 2013-2023 periods. Between the 2024 and 2034 years, it is expected that the increase rate will decline slightly and will be realized as 2.36 % (WEC, 2013).

While Turkey’s primary energy supply could meet the 48.1 % of its consumption in 1990, it fell to 28.5 % in 2012 (Figure 4). In other words, domestic energy production of Turkey declined at a ratio of 20 % between the 1990 and 2012 periods and its dependency to foreign resources increased with the same ratio. The primary energy supply of Turkey was 121 MTEP and, total domestic primary energy production of the country was 34.47 MTEP in 2012. Nearly 57 % of this domestic production was provided from coal, 14 % from hydraulic, 10 % from renewable. As it can be seen, the domestic production has been decreasing steadily. Since the domestic fossil based resources are very limited, the energy bill, foreign dependency and high import necessity have become a heavy burden for the economy of Turkey. The country’s energy import was 31 MTEP in 1990 and in the mentioned periods it increased 3.2-fold and reached to 98.7 MTEP in 2010 (MENR, 2012).

Figure 4: 1990-2012 Turkey’s Coverage Ratio of the Supply of Primary Energy Production

Resource: MERN, 2012

69 As mentioned above, the primary energy supply of Turkey was 122.79 MTEP in 2013. The share of the resources in the primary energy supply of Turkey between the 1990-2012 periods is shown in table 18. According to this table, while the share of coal in the primary energy supply was 30 % in 1990, it slightly increased and realized as 31 % in 2012.

Although the share of oil declined from 45 % to 25 % in the mentioned period, compared to 1990 the volume of it increased 6.713 MTEP and reached to 30.614 MTEP.

In this period, the largest increase occurred in natural gas consumption. While the share of natural gas was 6 % in 1990, it increased more than 5 times and reached to 32 % in 2012.

Compared to 1990, the volume of natural gas increased 12-fold and reached to 37.373 MTEP. The share of hydraulic power remains stable and realized as 4 %. However, the amount of hydraulic power increased 2.5 times and realized as 4.976. Both the share and volume of bioenergy declined in the last twenty-two years. Due to the widespread of natural gas usage in cities, the needs to traditional bioenergy (wood etc) decreased.

Comparing to 1990 level, the share of bioenergy declined from 14 % to 3 %. In short, Turkey’s primary energy supply distribution on the base of sources was realized as: 31 % coal, 25 % oil, 31 % natural gas, 4 % hydraulic, 3 % bioenergy and 3 % other renewables as of 2012 (MENR, 2012).

Table 18: Amount and Share of Sources in Primary Energy Supply of Turkey

1990 2000 2011 2012

Coal MTEP 16.110 22.928 33.879 37.977

% 30 29 30 31

Oil MTEP 23.901 32.297 30.499 30.614

% 45 40 27 25

Natural gas MTEP 3.110 13.729 36.909 37.373

% 6 17 32 31

Hydro MTEP 1.991 2.656 4.501 4.976

% 4 3 4 4

Bioenergy (wood, waste etc)

MTEP 7.208 6.457 3.537 3.465

% 14 8 3 3

Other Renewables (solar, wind, geothermal etc)

MTEP 461 978 3.096 3.508

% 1 1 3 3

Others MTEP 206 1.456 2.071 3.071

% 1 1 3 3

Total MTEP 52.987 80.500 114.490 120.984

% 100 100 100 100

Resource: General Energy Balance Sheets, MENR, 2012

70 When we analyzed the Turkey’s energy import development by resource, we see that natural gas and oil import increased to 38 MTEP. However, while oil import was increased 62 %, the natural gas increased 13-fold in the same period. Likewise, the hard coal imports increased approximately 5-fold and reached to 19.5 MTEP in the last 22 years. Despite the negative impact of the economic crisis that occurred 4 times (in 1994, 1999, 2001 and 2008 years) in last 21 years, Turkey came after China and India in terms of primary energy growth ratio (MENR, 2012).

Since the growing energy needs cannot be met by the domestic resources, the import of energy has been increasing steadily. Turkey's ratio of net imports of primary energy supply has increased from 52 % to 72.4 % in 1990-2012 periods. This situation creates significant risk not only for the economy but also for the foreign relationship of the country.

In Turkey, 98 % of natural gas and 90 % of oil are imported. 67 % of natural gas is used in electricity production and 52 % of the oil is used in transportation sector. Since Turkey’s import dependency is very high, energy prices and energy security have a vital importance for the economy of the country. Because of high dependency to the foreign energy supply, the competitiveness of Turkey in the global market reduces and this situation undermines its development (Sabır, 2008:3). When the price of the energy increases, it affects all economy and the cost of goods and services increases. This situation reduces the competition power of our country in the global market. Beside these, as a result of high foreign energy dependency, Turkey cannot play active role against the energy exporter countries, especially to Russia and Iran, in the international relationships.

On the other hand, the main risk of Turkey’s economy comes from the high current account deficit ratio. When we look at the macroeconomic balance of Turkey, we see that except for the energy import, our economy nearly does not give current account deficit. In other words, apart from the energy, the export ratio meets the import ratio. The current account deficit creates the fragility on economy and price of the oil and other energy resources accelerate this fragility. In 2012, energy imports beat the record of the republic period and reached to 60.1 billion dollars. The share of energy in the foreign trade of Turkey was 25 % and more than 60 % of the reason of trade deficit was energy import in

71 that year. Although the imports of energy and its share decreased to 55.9 billion dollars and 22.21 % respectively in 2013, energy import constituted more than half of the trade deficit of the country. Turkey paid 385.2 billion dollars to the energy import in last ten years and this number equals nearly half of the gross domestic product of the country.

Today, Turkey’s energy situation has reached to a critical stage not only in terms of price but also for the energy supply security because of its huge dependency to the foreign energy resources. Since the geography of Turkey is extremely sensitive, dependence on foreign energy should be reduced as soon as possible. Due to the fact that energy is the main input of the development and economic growth, it is very important to obtain energy securely and uninterruptedly. To sustain energy security and decrease the negative effects of energy import on economy, energy investment on domestic resources (both renewable and fossil based) should be accelerated.