Adequate levels of energy are critical for Turkey to sustain its economic growth. The country is facing significant challenges in its energy sector. It needs to maintain supply security while transitioning to a competitive domestic energy market, sustain the environment, and become increasingly self-reliant, primarily by using its vast renewable resources.
Turkey’s energy program involves restructuring, liberalization and privatization in energy, introduction of competitive markets, financing of key rehabilitation and expansion works and, thereby, the creation of an enabling environment conducive to private investment. The program is being supported by a number of World Bank investment loans, policy loans and policy advisory work. The Second Energy Community of South East Europe (ECSEE) Adaptable Program Loans (APLs) support the development of the electricity market and also finance key investments in transmission system strengthening and expansion. In addition to the recently completed National Transmission Grid Project (NTGP), the APLs aim to increase market access for consumers and suppliers of electricity. NTGP has also supported the establishment of the regulatory agency, utility restructuring and the setting up of the transmission operator. The Electricity Distribution and Rehabilitation Project is financing the strengthening and rehabilitation of the electricity distribution network in key parts of the country. The World Bank is also assisting in the rehabilitation of the largest lignite-fired power station in Turkey, Afsin-Elbistan A, under the Electricity Generation Restructuring and Rehabilitation Project. The Renewable Energy Project helped establish the framework for private investment in renewable energy and a credible financial intermediation mechanism to create a market for financing renewable energy. The World Bank is also supporting the natural gas sector through advisory work and the Gas Sector Development Project.
The Programmatic Energy Sector Advisory Work includes Energy Policy Notes, Turkey Energy Strategy, and others. A development policy loan supporting the energy sector reforms and a new investment loan for renewable energy and energy efficiency are at advanced stages of preparation. The World Bank is also currently finalizing several pieces of advisory work covering energy efficiency, utility demand side management, and a capacity building program for the electricity market operator.
The strength of the World Bank’s program lies in utilizing a wide range of instruments to advance the strategic institutional goals as well as physical results. Turkey’s Ministry of Energy and Treasury take the lead in determining the overall strategic direction going forward and, jointly with the World Bank, determine the most optimal usage of World Bank instruments in maintaining the direction.
"Two years ago it was difficult to drive past this place because of the noxious smell and the unpleasant view. Today it is an industrial facility that processes the garbage and produces energy from it in a completely environmentally sustainable way. It is hard to believe that the bitter odor is gone, the environment is protected, and on top of this we get energy out of this process. The change is impressive . . ." — Ali Kantur, CEO, ITC Company
"We have a very strong partner in the World Bank, and over the last decade particularly, we have seen a very effective and sincere dialog between Turkey and the Bank. Over the last few years, we have achieved significant results in terms of reforming the sector – an electricity market has been established, distribution companies have been privatized, several important legislations, on the electricity market, renewable energy, and energy efficiency have been enacted are now being implemented. Turkey is facing very significant challenges in the energy sector – the need to maintain supply security, the importance of environmental sustainability, and the desire to be increasingly self-reliant in energy, primarily through use of the country’s vast renewable resources, are all areas of focus for the country at this time. We look forward to continuing to work together with the Bank in this important effort." — Budak Dilli, General Director, Ministry of Energy
Between 2002 and 2008, transmission capacity increased from 102 TWh to 164 TWh. Peak demand served increased and transmission losses fell.
The duration of transmission system outages decreased from 26,675 hours in 2004 to 10,280 hours in 2007.
The competitive electricity market set up in 2006 now accounts for an average of 18-20 percent of total electricity consumption.
Retail competition in the market has increased and about 40 percent of consumers are now eligible to choose their electricity supplier.
Over the past decade, private generation has risen from negligible levels to about 50 percent of total consumption.
Twenty distribution companies have been restructured with a view to privatization; four have been privatized so far.
Private renewable generation capacity has risen by about 600 MW since 2003; this has resulted in a reduction in emissions of about 1 million tons of CO2 per year.
Sustained close partnership and strong government commitment for years, which build trust and are mutually reinforcing, make all the difference.
Short-term and single-instrument approaches do not suffice. Opportune use of investments, policy reforms, technological advances, and international cooperation are required for sustainable energy supply expansion and efficiency gains.
In restructuring and privatizing the energy sector, it is important to assess international experience through the lens of country circumstances. Policy reform should be carefully sequenced. Its success depends on timely use of advice drawn from local and international knowledge.
Shinya Nishimura, Task Team Leader (TTL), Study on Energy Efficiency Potential in Turkey
Kari Nyman, TTL, Programmatic Electricity Sector Development Policy Loan
Gurhan Ozdora, TTL, Renewable Energy Project
Sameer Shukla, TTL, ECSEE APLs, Electricity Generation Rehab, Gas Sector Development, Electricity Distribution Rehab, Second Renewable Energy & Energy Efficiency, Policy Advisory Work
Adequate levels of energy are critical for Turkey to sustain its economic growth. The country is facing significant challenges in its energy sector. It needs to maintain supply security while transitioning to a competitive domestic energy market, sustain the environment, and become increasingly self-reliant, primarily by using its vast renewable resources.
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