91685 the world bank Turkey Overall Energy Program Profile Turkey’s Comprehensive Energy Reform Program IBRD Results puts Development on a Sustainable Path Synopsis IBRD support to Turkey’s energy reforms have helped the government turn a monolithic, state-run sec- tor into a competitive energy market that has connected an additional 4.6 million households to a more stable electricity grid. Challenge 2002 to 2007. Some interim results of the energy reform program include: In Turkey, as with any economy, energy is critical to build- Improved electricity supply security, reliability, and safety ing and sustaining economic growth, but like many other ÔÔ Transmission expansion and upgrades have enabled an nations, Turkey is faced with steep challenges in securing estimated additional 4.6 million households to receive a stable, cost-effective, and environmentally sustainable en- improved power supply. ergy system for the future, particularly by drawing upon its ÔÔ Transmission capacity has increased to 172 TWh in own vast renewable resources. Electricity demand grew at an 2008 from 102 TWh in 2002, helping cope with a average 7–8 percent a year though demand has reduced on steep increase in consumption—peak demand served account of the global economic crisis after 2002–2008 and rose from 21 GigaWatts (GW) to 31 GW over the is expected to go back to similar levels after the crisis is over. same period. At the same time, Turkey’s greenhouse gas emissions (a large ÔÔ Efficiency improved, as reflected in a decline of trans- portion of them from energy usage) are among the fastest mission losses to about 2.5 percent fall from 2.7 percent growing in countries in the Organization for Economic over the same six years, a saving of about 350 GigaWatt Cooperation and Development (OECD), rising from hours (GWh) a year. This is despite the large growth in about 170 million tons in 1990 to about 300 million tons the size of the grid and the fast pace of demand growth in 2005. To meet these demands, Turkey is seeking to in- of about 7–8 percent a year. crease its reliance on renewable energy while promoting ÔÔ The duration of faults on the transmission system de- energy efficiency among power consumers. creased to 10,280 hours in 2007 from 26,675 hours in 2004. Further improvements in reliability—reflected in Results a reduction in the number and duration of interruptions faced by consumers in project areas of eight regional companies—is expected as part of an ongoing operation IBRD has supported Turkey’s energy reforms significantly for the rehabilitation of electricity distribution over the last decade by utilizing the full range of World ÔÔ Increased safety is reflected in an overall reduction of Bank lending and technical support in ways that comple- accidents related to overhead transmission lines to 13 ment and reinforce each other, Turkey’s energy reforms in 2007 from 21 in 2004. have played an important role in helping the country sustain ÔÔ An international transmission link has been estab- rapid economic growth of 6.8 percent average throughout lished with Greece, enabling the exchange of electricity. March 2010 2 Turkey OVERALL ENERGY PROGRAM PROFILE Regional projects have contributed to ensuring elec- liberalization, and privatization in energy; introduction of tricity for newly-developing residential areas and com- competitive markets; financing of key rehabilitation and mercial establishments, particularly in Istanbul. expansion works; and a resulting increase in private invest- ment. Improved efficiency of the Turkish electricity market ÔÔ The energy reform program supported by IBRD pol- The government of Turkey, with IBRD support, is trans- icy advisory work introduced retail competition, and forming its energy sector to increase competition, expand now around 40 percent of consumers are “eligible” to private investment, and promote sustainable use of its re- choose their supplier, something that was scarcely avail- newable energy resources. Through the IBRD, Adaptable able in 2002. Program Loans helped create a viable electricity market, ÔÔ A new wholesale market established in 2006 also investment loans strengthened both the regulatory frame- stimulated greater competition at this level, which work and infrastructure, and Development Policy Lending currently accounts for 19–20 percent of total electric- and technical assistance backed key sector reforms. ity consumption. More than 100 private generation companies are registered at the wholesale market. The The Turkey energy program is being supported by a num- market is attracting incremental generation capacity, ber of IBRD investment loans, policy loans and policy including from renewable energy sources, which may advisory work including the National Transmission Grid not have been developed in the absence of the market. Project, Second Energy Community of South East Europe (ECSEE) Adaptable Program Loan (APL), Third ECSEE Increased private sector participation in power distribu- APL, Renewable Energy Project, Investment loan for re- tion and generation newable energy and energy efficiency (RE&EE), as well as ÔÔ Over the last decade, as part of the reform program Programmatic Energy Sector Advisory Work (Energy Poli- supported by the Bank’s policy advisory work, private cy Notes, Turkey Energy Strategy, and others). The strength electricity generation has risen from negligible levels to of the approach draws from the utilization of a wide range about 50 percent of total consumption. of World Bank instruments to advance the strategic insti- ÔÔ Four distribution companies have been privatized so tutional goals as well as physical results. The government’s far, out of a total of 20. Privatization is expected to im- overall reform program, as well as results from individual prove efficiency and quality of supply over time, and is projects and studies and other technical assistance are mon- also expected to help attract investments in new gen- itored by both the Ministry of Energy and Treasury, and eration capacity. IBRD. Where the implementation and results need further ÔÔ The Bank’s work in renewable energy has demonstrated work, discussions are held to determine the relevant mea- the viability of financing private renewable projects, sures or actions. The Ministry takes the lead in determin- which have grown from negligible levels in 2004 to ing the overall strategic direction going forward, and jointly about 1500 MegaWatts (MW) at present. with the Bank, determines the most optimal usage of Bank instruments in maintaining the direction. Improved environmental impact of the energy sector ÔÔ As a result of privately-sourced, renewable energy gen- eration, Turkey has been able to avoid emissions of IBRD Contribution about 1.01 million tons of carbon dioxide a year. [1] National Transmission Grid Project (Board approval, Approach June 1998 Closed: December 2007) (US$ 270 million) [2] Renewable Energy Project (Board approval, March Turkey’s energy program aims to ensure an adequate, un- 2004) (US$ 202 million) interrupted, low-cost energy supply in an environmental- [3] Gas Sector Development Project (Board approval, No- ly sustainable manner. The program includes restructuring, vember 2005) (US$ 325 million) IBRD RESULTS 3 [4] ECSEE APL 2 and 3 (Board approval: April 2005 for “We have a very strong partner in the World APL2; March 2006 for APL3) (US$ 66 million and Bank, and over the last decade particularly, we US$ 150 million) have seen a very effective and sincere dialogue [5] Electricity Generation Restructuring and Rehabilita- between Turkey and the Bank,” says Budak Dilli, tion Project (Board approval June 2006) (US$ 480 million) General Manager of Energy Affairs at the Ministry [6] Electricity Distribution and Rehabilitation Project of Energy. “Over the last few years, we have (Board approval April 2007) (US$ 345 million) achieved significant results in terms of reforming [7] Private Sector Renewable Energy and Energy Effi- the sector: an electricity market has been ciency Project (Board Approval, May 2009) (US$ 600 established; distribution companies have been million) privatized; several important legislations—on the [8] Energy Sector Policy Note (Delivery to client Sep- electricity market, renewable energy, and energy tember 2007) [9] Advisory Experts Panel (ongoing since 2004) efficiency—have been enacted and are now being [10] Technical Assistance activities, including a very suc- implemented. Turkey is facing very significant cessful Wind Energy Workshop in May 2008 challenges in the energy sector. The need to maintain supply security, the importance of environmental sustainability, and the desire to be Partners increasingly self-reliant in energy, primarily through use of the country’s vast renewable resources, are Ministry of Energy, Undersecretariat of Treasury, State Planning Organization, Energy Market Regulatory Board all areas of focus for the country at this time. We (EPDK), Turkey Electricity Distribution Company look forward to continuing to work together with (TEDAS), Electricity Generation Company (EUAS), the Bank in this important effort.” Turkey Electricity Business and Contracting Company (TETAS), Turkey Electricity Transmission Company particularly in renewable resources. Significant new financ- (TEIAS), Petroleum Pipeline Corporation (BOTAS), ing has been brought in to support new investments in gen- Electrical Power Resources Survey and Development Ad- eration, and also in privatized distribution. Based on the ministration (EIE), and Strategic, Technical and Economic country’s priorities, the government and the World Bank Research Center (STEAM) are expected to sustain their important partnership, with IBRD providing policy advice as well as investment financ- ing for renewable energy, energy efficiency, infrastructure, Next Steps climate change, and overall supply security. The Turkey energy program is continuously evolving, and A Development Policy Loan supporting the energy sector IBRD efforts will continue and expand based on Turkey’s reforms and their link to the environment under Environ- needs. Over the last decade, with the support of the Bank, mental Sustainability and Energy Sector (ESES) DPL is at Turkey’s energy sector has transformed from one that was advanced stage of preparation. The Bank is also currently monolithic and state-owned into a commercially-run and finalizing several pieces of advisory work covering energy liberalized market, with private investment and owner- efficiency, utility demand side management, and a capacity ship in several parts of the sector. The market is expected building program for the electricity market operator. to deepen further, with increasing private ownership and investment, and it is expected that the sector will rely more and more on clean, renewable resources. The World Bank’s work has helped in attracting large-scale private investment, 4 Turkey OVERALL ENERGY PROGRAM PROFILE learn more Links to in-depth information about Links to partner websites: each project and detailed documents: –– For more information on the various activities of the –– Turkey National Grid Transmission Project Ministry of Energy in Turkey please visit: http://web.worldbank.org/external/projects/main? www.enerjibakanligi.gov.tr pagePK=64283627&piPK=73230&theSitePK=40 –– For more information on the various activities of 941&menuPK=228424&Projectid=P048852 Turkey Electricity Transmission Company please visit: –– Turkey Renewable Energy Project www.teias.gov.tr http://web.worldbank.org/external/projects/main? –– For more information on the various activities of Petro- pagePK=64283627&piPK=73230&theSitePK=40 leum Pipeline Corporation please visit: www.botas.gov.tr 941&menuPK=228424&Projectid=P072480 –– For more information on the various activities of –– Turkey Gas Dector Development Project: Electrical Power Resources Survey and Development http://web.worldbank.org/external/projects/main? Administration please visit: www.eie.gov.tr pagePK=64283627&piPK=73230&theSitePK=40 –– For more information on the various activities of 941&menuPK=228424&Projectid=P093765 Turkey Electricity Distribution Company please visit –– Turkey Electricity Generation Restructuring and www.tedas.gov.tr Rehabilitation Project –– For more information on the various activities of Energy http://web.worldbank.org/external/projects/main? Market Regulatory Board please visit: www.epdk.gov.tr pagePK=64283627&piPK=73230&theSitePK=40 –– For more information on the Undersecretariat of 941&menuPK=228424&Projectid=P085561 Treasury please visit: www.hazine.gov.tr –– Turkey Electricity Distribution Rehabilitation Project –– For more information on the Undersecretariat of State http://web.worldbank.org/external/projects/main? Planning Organization please visit: www.dpt.gov.tr pagePK=64283627&piPK=73230&theSitePK=40 –– For more information on Strategic, Technical and 941&menuPK=228424&Projectid=P096801 Economic Research Center STEAM Energy Arena –– Turkey Energy Community of South East Europe please visit: www.steam.com.tr/eng (APL #2) –– More on Project/Sector/Country: http://web.worldbank.org/external/projects/main? • Borrowing History pagePK=64283627&piPK=73230&theSitePK=40 • Data & Statistics 941&menuPK=228424&Projectid=P094176 • Research –– Turkey Energy Community of South East Europe • Contact us (APL #3) http://web.worldbank.org/external/projects/main? MULTIMEDIA: pagePK=64283627&piPK=73230&theSitePK=40 The Result Story from Turkey is accompanied by: 941&menuPK=228424&Projectid=P096400) –– Turkey Private Sector Renewable Energy and Energy –– A short movie prepared for the Improving Lives of Efficiency Project People in ECA 2009 Competition: Sustainable http://web.worldbank.org/external/projects/main? Energy, Less Pollution pagePK=64283627&piPK=73230&theSitePK=40 Published: April 2009 941&menuPK=228424&Projectid=P112578 Related Site: http://go.worldbank.org/39TXVADQ70 –– A short movie prepared for the Annual Meetings Link to IBRD work in country/sector: 2009 in Istanbul, Turkey: Making Use of Trash –– Turkey Country Office website of IBRD Published: September 2009 http://www.worldbank.org.tr Related Site: http://lnweb90.worldbank.org/ ECAIM/multimedialib.nsf/country/turkey