TURKEY ENERGY & INFRASTRUCTURE FORECAST 2015: RISKS AND OPPORTUNITIES-2

Wind

Investment appetite in Wind capacity is almost saturated, Environmental concerns will be on the agenda. High voltage transmission lines are missing. Huge investment is needed for those new transmission lines for more aggressive wind power integration. However investments will continue at a moderate level at about 300-500 MW per year.

Solar

Investment in Solar energy is still very little, without making local fabrication of the solar equipment; one cannot go further with expensive electricity generation. Only household small scale electricity generation could be implemented.

Electric cars / buses are in agenda, but we shall all ask who will be paying high cost of new transformers due to additional heavy pulse load.

HEPP

HEPP investment projects receive severe reactions of local people, and reactions will continue on all legal platforms.

Climate change

Nationwide CO2 emissions will increase ever more with the ongoing coal firing investments. It is a great national dilemma difficult to solve in our energy hungry local market. How do we run away the climate change obligations? We shall have low profile participations of the public sector.

Local fabrication

Although there are a number of preliminary meetings in the Ministry, in the local fabrication associations, in various NGO groups, still local design, local fabrication, local engineering for thermal power plants do not exist yet. New public tendering procedures give price advantage to proposals with local fabrication.

Electricity Transmission lines

Construction of Thracian HV AC Submarine transmission crossing Dardanelles Channel will be completed soon. New crossings are planned.

Construction activities for Submarine HVDC cable, gas and water supply pipelines from Turkey to Northern Cyprus will continue.

International relations

Turkey is to return to her historical motto “peace at home, peace in the world”, principle rather than “precious loneliness”. “Precious loneliness” is too costly foreign policy.

No hostility foreseen between democratic countries Greece, Israel and Turkey, however pushing for fair share of nearby natural resources is the rule of the game in international politics.

Democracies do not make war between each other. Public forces/ votes force them to compromise.

Offshore East Med

East Med Cyprus offshore drilling work did not reveal expected results. Offshore Contractor Company is not comfortable with the early results. South Cyprus media and government still push positive expectations, trying to keep the case in agenda, but the situation seems not so promising, the investor does not want to gamble any more, return is not earlier than 10 years in time.

Israel Offshore fields are proven but they have production storage and transmission problems. These problems can not be solved before we have stable peace on East Med waters.

Black Sea Offshore drilling is a never-ending story, everyone is talking about very large reserves, but there is nothing in reality.

Syria

Change of power in Syria is not foreseen in the short term. However influx of refugee number will get increased to 2 million soon. It is too alarming situation. We shall need approximately 10 billion US Dollars in 2015 for the Syrian refugees. This is a great burden on our economy. Our streets are full of desperate Syrian refugees. Street crime is on rise. Drastic changes in the current international relations policies are deemed necessary.

TTIP

We should participate to Transatlantic Trade and Investment Partnership, TTIP. That is vital task in 2015 for all public & private authorities. It is too costly to stay outside.

Restructuring

Not only the Ministry of Environment but also the Government is expected in reshuffle. Change in top posts will not be a surprise prior to general elections in June 2015.

The secondary legislation of the Energy Ministry is still in preparation. Some of new regulations in preliminary nature are released for public review. The Minister may leave his post in the next municipality and general elections due to party restrictions.
We expect reorganization as well as restructuring in Ministry of Energy and Natural Resources in order to reduce staff, to reassess duties and responsibilities.

EMRA needs to be reorganized and restructured, and Agency may be divided into two, maybe three. EMRA licensing will go on with reduced speed, copy / paste applications for license overrun archives. Rejection is still less than 2%. Most projects are on hold.
“Each and every incentive/ every good intention are abused with extreme care”, so political power is reluctant to issue new energy incentives, especially on imported fossil fuel firing new power plants.  Current account deficit (CAD) is in sever situation due to increased spending on imported coal and imported natural gas purchases, at intolerable levels. Increased use of domestic coal / energy sources  should be encouraged.

Transportation

We are happy to see that “High Speed Train” investments are on track. Ankara- Istanbul railway is completed in 2014. Ankara- Izmir, Sivas, Erzurum are in progress. We hope to have more intercity metro line constructions.

Municipality and General Elections

Turkey will enter into a period of nationwide frenzy general elections in year 2015. In new general elections, all of 3-term MPs will leave Parliament and Ministerial posts. Ministries of Energy, Economy, as well as Treasury will miss their strong leadership.  That is a great risk.

Investment Environment

Almost all existing thermal power plants are in privatization, but investment appetite is low because of the ongoing global economic crisis and June 2013 Gezi Park public uprising. The same tendency will continue in the second half of next year.

Western Foreign investors have lost their appetite in our energy markets; domestic investors do not have money. On the other hand investors of oil rich Middle East countries may have increased appetite.

Local real estate bubble may face difficulties and few bankruptcy may appear.

We face project finance difficulties on controversial mega projects. We have growing “current account deficit”. Drastic measures” on public spending will continue in 2015.

In recent popular social media, in tweeter, facebook, whats-up, investors are more or less incorrectly/ but implicitly represented as negative profiles, it is alarmingly too deceptive. That public profile should be corrected.