Now is the time for our traditional annual forecast for our local energy
markets in 2015. Please do note that the economy and business is always shaped
by expectations, and as such market expectations are important in the economic
forecasts. At the beginning of each year, there are many economic forecasts
made by the nationwide daily newspaper columnists, however there are almost no
local forecasts made for the energy markets. Within our professional capacity,
we have tried to outline a draft forecast, albeit maybe somewhat irrational/
unfair for the New Year. Anyhow it is better to have one, rather than none.
Here are our expectations for the New Year 2015:
Electricity
Turkish power generation capacity could have reached to +69K MWs in year
2014, and consumption peak is recorded as +39K in last August. Turkey is still
at very low annual per capita electricity / production / consumption with
approximately +3200 kWh, EU current average is +10K; North American average is
+12K.
Electricity demand growth slowed down in 2014. Slowdown in local demand for
electricity in the first quarter 2015 will continue. Other than early winter
shortages, electricity prices will not increase in throughout 2015.
Privatization of nationwide electricity “Distribution” and “Generation” are
almost completed in 2014. “WholeSale market” and “Unbundling” process are
ongoing. National electricity “Retail” systems will develop in 2015.
Gas
Local Gas consumption is expected to be 48 billion Sm3 in year 2014. In
2015, Iran may not cut-off Natural Gas flow due to excessive needs of during
harsh winter conditions in her own domestic market. In case of any winter
interruption, Russians will increase supply capacity in the Blue Stream for a
substantial premium as usual.
Gas flow from Iran to Turkey will be easier since US sanctions over Iranian
exports are expected to be lifted soon after finalization of Nuclear talks in
Geneva. That may cause more uninterrupted gas from Iran for long term, although
gas price will not be reduced, but stay stable for medium term. Gas is still
too expensive. Western Gas is now approx. 11.00 US Dollars per MMBTU as of
Dec-2014 at our western border. Turkish natural gas demand will begin to fall
due to counter measures taken, probably by the second half of the year.
Accelerated increase in local fuel prices, is expected, after the general
elections which will take place in June 2015.
Pipeline
Part of Western natural gas pipeline supply by Russia’s Gazprom is placed
to local companies. We expect market share wars between them.
TransAnatolian Pipeline Tanap project is in fast-track agenda. Nabucco is
closed.
New “South Stream” underwater pipeline from Russia to Thrace border, was
recently announced. It needs time for full realization.
Northern Iraq oil and gas pipelines are on hold due to civil war in Syria.
Shale gas
It is too early to expect any substantial “Shale Gas” production in our
country. There are two specific regions for exploration, but gas production can
not be realized overnight. On the other hand, “Shale gas” boom in the USA will
reduce gas prices in the spot market for sure. Europeans are reluctant since
cracking process may trigger earthquakes, and huge amount of injection water is
polluted.
Gas fired Combined cycle power plants
We expect less number of investments for new natural gas fired
Combined Cycle power plants due to increasing Current Account Deficiency.
There are still new investments in Kırıkkale, Thrace Çorlu, Adapazarı, Ankara
Kazan, Kırşehir, Bandırma, Mersin, Kırklareli, Izmit on gas fired combined
cycle power plants.
We do not know who will supply the necessary gas for these new gas fired
plants, and at what price.
Iranian Nuclear talks
Iranian Nuclear strike capability makes Israel nervous. Although “G5+ Iran”
has already agreed on nuclear settlement for non-aggressive nuclear use, Israel
may still initiate surprise attack to Iran which may lead to global energy
crises in the world. So we should be on the safe side and we should have
increased underground gas storage capability and fuel storage facilities.
Nuclear
Russians started to outsource all non-critical equipment for Akkuyu Nuclear
Power plant, starting from local civil works, high capacity steam turbines,
instrumentation and controls, due to experience on serious shortage of
available commercial financing. Environmental Impact Assessment (EIA) report
approval is received in late 2014.
Since the ongoing nuclear project is not commercial, but it is now purely
political, political financing for that gigantic figure is not so easy.
Political risks of a nuclear power plant project cannot be properly estimated;
hence non-commercial project has no commercial meaning.
Hot seawater will be a chronic problem for plant cooling system in Akkuyu.
Sinop Nuclear power plant project is awarded to “Japan+ French”
consortium. An Inter-Governmental Agreement (IGA) was signed between Government
of Republic of Turkey, and Government of Japan on 3rd May 2013 for the construction
of Sinop NPP.
We suspect if Japanese commercial companies can secure approx. 22 plus billion
US Dollar project financing. We shall wait and see the outcome. They may face
financing difficulties, although local public company EÜAŞ will get 35% equity
partnership.
Sinop Nuclear Plant site is in the thick forest. Local “Forest Law” and
compensation for demolished “trees” would be a great burden on the project
budget in the long term.
Cold sea water is better for overall efficiency and for nuclear power plant
cooling systems. Therefore the next nuclear power plant sites are expected to
be on the BlackSea coast line, maybe in İğneada on the NorthWest and Hopa on
NorthEast.
New nuclear power plants are expected to be close to metropolitan cities
with heavy demand, so Kırıkkale-Ankara, Aliağa-İzmir, and even Kemerköy-Muğla
are possible new sites in long term consideration. French, Korean, Chinese
Nuclear companies may participate to these new nuclear power plant investment
projects in future.
Privatization
3×210 MWe Yatağan- 2x210MWe Yeniköy- 3x201MWe Kemerköy thermal power plants
in southwest of Turkey are privatized in 2014. After plant sales, renovation,
rehab, re-power or complete demolition is expected by the investor.
Imported coal firing 2×600 MWe new thermal plant could be build at seaside
Kemerköy plant site in the long term. Summer holiday facilities can also be
considered.
Local hard coal firing 2×150 MWe Çatalağzı-B thermal power plant in
Zonguldak county on the BlackSea coast is also sold. Orhaneli 210 MWe,
Tunçbilek 430MWe thermal power plants are also privatized in late 2014.
Due to low investor appetite both local and international, privatization
strategy will be reconsidered in order to increase the ongoing high income
based tendering process.
Coal
We expect new investment initiatives on new found coal mine fields in Konya
Karapınar, Afyon Dinar, Eskişehir-Alpu in order to build new thermal power
plants under locally developed clean coal technologies.
Local coal firing new thermal power plant constructions in Bolu Göynük,
Eskişehir Mihalıccık, Bursa Keles (EIA reactions), Manisa Soma, Adana
Tufanbeyli (two separate plants 700 MWe and 450 MWe) are in construction
progress.
Thermal power plant investments in NorthWest BlackSea coast are expected to
be on hold for a while due to ongoing EIA scheme, and due to high
reaction of local environmentalists.
Local Regulation of foreign personnel employment is changed, so cheap
foreign employment from FarEast countries is not possible any more.
Situation in Soma for new 450 MWe thermal power plant seems on hold due to
local reactions to olive tree demolition. Company should look for nearby empty
land to build new thermal power plant.
Moreover there are a number of imported coal firing new thermal power plant
applications for Bay of Iskenderun, Soma, around Sea of Marmara, Bay of Aliağa
but public authorities are quite reluctant for approval due to high impact on
“Current Account Deficit (CAD)”.
Afşin Elbistan
Due to ongoing high environmental pollution, no sufficient filters, no
desulphurization, no rehab, it is our sincere recommendation that existing Unit
Afşin Elbistan-A group, should be shut down, dismantled and sold as scrap.
However it is now in longterm hand-over process in privatization. New plant
installation is strongly recommended.
Elbistan Çöllolar landslide disaster was forgotten after the event.
Reutilization is enforced after legal procedures are completed. De-watering-
drying of the landslide region is continued. Hurman Creek riverbed is changed,
it will flow from north without passing through the mine field.
Çöllolar coal mine field will be in preparation by the end of next year,
and only after normalization of coal fields in Çöllolar, then AfşinElbistan-B
plant can work at higher capacity factor.
Afşin Elbistan Coal is supplied to the plants at about 1.75-1.80 US Dollars
per MMBTU, which is very competitive. But calorific value is too low. So we
need to have proven coal firing technology for the local coal.
Afşin Elbistan-B plant has proven technology for firing local nearby coal.
However two units are now out of operation. Second unit had fire accident in
boiler dust filters. Third unit had steam turbine break down. Repair works are
recently tendered. It will need at least minimum two years for complete
operation.
New international partners are sought for Afsin Elbistan C-E.
