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• |Turkey
• |Energy Policy

Energy policy

The Ministry of Energy and Natural Resources (MENR) is responsible for the preparation and implementation of energy policies. It reports directly to the Prime Minister. The MENR has the following tasks:

• To determine and implement national energy policy objectives;
• To coordinate related institutions and other public and private entities;
• To prepare and/or supervise programmes in conformity with the energy policy;
• To supervise and control all exploration, development, production and distribution.

In line with the above tasks, the energy policy of Turkey has the following pillars:

• Reforming and liberalising the energy sector to increase productivity and efficiency and to enhance transparency
• Prioritising energy security activities to cope with the increasing demand and import dependence,
• Taking into account the environmental concerns in all stages of the energy chain within the framework of sustainable development,
• Facilitating projects for the transportation of oil and gas in the context of the Energy Corridor and Terminal concept, and
• Intensifying R&D on energy technologies.

Strategy Paper Concerning Electricity Market Reform and Privatisation

In order to define a transitional period and to accelerate privatisation in the electricity sector, the High Planning Council has adopted a Strategy Paper (17 March 2004) providing a road map for establishing the technical and legal infrastructure for privatisation, and revealing the technical and financial status of the entities to be privatised.

The primary objective of the Strategy Paper is to ensure the delivery of electricity to consumers in an adequate, qualitative, continuous and low-cost manner. In order to reach this prime objective and for the adoption of the relevant EU Acquis, the liberalisation of the electricity sector has to proceed. Following the completion of the necessary sector reforms and the restructuring of state-owned electricity enterprises the electricity generation and distribution assets will be privatised. Timely and successful privatisation of electricity generation and distribution is an essential element of market liberalisation.

The strategy outlines the major steps to be taken during the period up to 2012 and addresses various issues such as privatization of distribution assets and power plants, transitional contracts and security of supply.
According to the Strategy Paper:

• privatization activities will be performed by the privatization administration
• participation of financially strong companies able to achieve the objectives and principles of the programme will be encouraged
• legislation will be modified to accelerate and facilitate privatization of generation and distribution
• privatization will start from the distribution sector where 21 distribution regions have been defined and generation will be privatised after completion of the privatization of distribution
• privatization approach will take existing public liabilities into account and will not permit additional state guarantees

Turkish Electricity Transmission A.S. ("TEIAS"), which is the transmission system and market operator, will remain publicly owned. A tariff equalisation mechanism will be applied during the transitional period. Transitional power purchase agreements for the transitional period are to be signed between state-owned generation, distribution and wholesale companies before privatisation.
The country has taken significant steps for the introduction of a competitive and functioning market in the electricity sector, the public entities operating in the sector have been restructured, market rules have been formulated and introduced in a manner to ensure liberalization. However the primary benefits expected from electricity sector reform and privatisation have not been fully achieved and developments in the energy sector have not reached a satisfactory level. For that very reason, a Draft Strategy Paper was prepared in September 2008, and which is still under discussion. In this document more aggressive targets for the upcoming years have been defined.
The basic objective of the new Draft Strategy is to ensure adequate, high-quality, uninterrupted, low-cost and environmental friendly supply of electricity.In this regard, the efforts to create a competitive liberal market will continue; practices aimed at ensuring that the new generation investments to be commissioned to meet the electricity demand are carried out within the market structure, in harmony with the resource and technology preferences of the energy policy and under sustainable conditions will be streamlined; necessary improvements will be carried out in the transmission and distribution sectors of electricity system; generation and distribution privatizations which are among the instruments for creation of a competitive market will be completed; and a well-functioning and competitive market structure will be established.
Compliance with the following principles will be essential in the structuring and functioning of the sector:

• Market structure and market activities must ensure lasting security of supply;
• Market activities must be executed in a manner that eliminates the existing inefficiencies and reduces the cost of electricity through competition and additional benefits have to be passed to consumers;
• In order to minimize external dependency, resource and technology diversification must be enhanced and a generation sector where local resources are utilized to the maximum must be established;
• Renewable resources must be utilized at the highest level especially in reference to climate change and environmental impacts.
• Local contribution must be maximized through investements

Draft Strategy Paper

This Draft Strategy Paper has defined more aggressive targets, including renewable energy, for the upcoming years. According to the Draft Strategy Paper which is still under discussion; The basic goal will be to ensure that renewable energy resources have a share of minimum 25 percent in electricity generation by the year 2020.

In this context, the following goals will be taken into consideration in the long-term plans and the measures to be taken and the mechanisms to be implemented to achieve this goal will be established and announced by the end of 2009.

• All hydropower potential which can be technically and economically utilized will be used for electricity generation by the year 2023. (In the planning studies, the installed power of hydro energy will be set as minimum 30.000 for the year 2023.)”
• The installed power of wind energy will be targeted as minimum 11,000 MW for the year 2013, 15,000 MW for 2015, and 20,000 MW for 2020.
  Our 600 MW geothermal power potential, which has been found to be appropriate for electricity generation, will be targeted to be commissioned entirely by the year 2020.
• The principles and procedures applicable to incentivizing the generation of electricity from solar power will be determined by the MENR, SPO and EMRA under the coordination of MENR by November 2008, and the necessary legal arrangements will be made. Generation plans will be prepared by taking into consideration the technologic advancements and the developments in solar energy utilization potential depending on legal arrangements, and if the use of solar energy increases, the share of fossil fuels, primarily including the imported resources, will be reduced.
• Generation plans will be prepared by taking into consideration the technologic advancements and the developments in the utilization potential of other renewable resources depending on legal arrangements, and if the use of other renewable resources increases, the share of fossil fuels, primarily including the imported resources, will be reduced.”

Legislative background

The Law No. 5686 on the Law on Geothermal resources and natural mineral waters (June 03, 2007) to set forth the rules and principles for exploring, producing and protecting geothermal and natural mineral water resources this law is enforced.

The Law No. 5710 on to Build and Operate Nuclear Power Plants and Sell the Energy (November 21,2007) is enforced to set the rules for qualifications for companies bidding to build and run nuclear power plants. The law enables the government to grant purchase guarantees to firms for the total energy produced in nuclear power plants. This Law is the basis for the new Turkish nuclear program which envisions building the first Nuclear power plant in Turkey.

The Law No. 5346 on the Use of Renewable Energy Resources for Electricity Production Purposes (May 18, 2005) was enacted. The purpose of this Law is to ensure the widespread use of renewable energy sources for electricity production, and the utilization of these sources in a reliable, economic and qualified manner, furthermore the increase in resource diversification, reduction of greenhouse gas emissions, recovery of wastes, protection of the environment and development of the relevant manufacturing sector to achieve these goals.

With the enactment of the Oil Market Law No. 5015 (December 20, 2003) for oil products and with the Market Law No. 5307 on Amending the Liquefied Petroleum Gas (LPG) ( March 13, 2005), it is provided that EMRA (Energy Market Regulatory Authority) will perform the necessary regulating, directing, monitoring and supervising activities in order to ensure LPG market activities to be carried out in a transparent, equitable, and stable manner.

The new Natural Gas Market Law (Law No. 4646) was adopted in May 2001.The law enacted significant reforms in the gas sector. The objective of the Law is to establish a liberal, financially sound, stable, transparent and competitive national gas market with independent regulation.

In March 3, 2001, the main legislative document that created the current market structure, the Electricity Market Law No. 4628 (EML), was issued as part of efforts to harmonise with the EU aquis and to liberalise the market.

Legislation concerning energy efficiency

The Energy Efficiency Law, (Law No. 5627 May 2, 2007) was primarily issued to increase energy efficiency in the end use sectors.

The Energy Efficiency Law ( EE Law) procedures will be defined in a secondary legislation to be released within the first half of 2009. Thus, Turkey is not able to check the effects of the Law and the sector is still at the stage of pilot project development . The EE Law covers EE in
- industry
- buildings
- tertiary sector.

It reinforces the institutional framework for EE in the country, the development of training and awareness raising, structures the profession of energy efficiency services, imposes large energy consumers (consuming 1000 toe or more) and organized industrial zones to appoint energy managers (as of 2005, 410 industries had appointed certified energy managers ) and report their EE measures to the authority, provides incentives for investment in EE and support to R&D, defines sanctions for non-compliance with the Law and establishes the principle of “Voluntary Agreements”. The EE Law also lists the subsequent by-laws to be developed. This Law suffers from a lack of financial support to energy audits which, moreover, are not mandatory.
The main points of the EE Law can be summarized as follows :

Data collection and analyses
• Assessment of the energy efficiency potential in industry and buildings based on collected information.
• Preparation of EE improvement scenarios.

Energy efficiency measures in industry
• Mandatory appointment of Energy Managers in industrial entities and industrial zones.
• Training to energy management & energy audit.
• Financial support to EE Projects.
• Establishment of Voluntary Agreements to decrease energy intensity in industry.
• Supports to SME’s to define and implement EE measures.

Audits, training and ESCOs
• Definition of the principles and procedures to deliver training and auditing authorizations. In particular, authorization is granted to universities and chambers of engineers to provide energy management trainings and to monitor ESCOs. Authorization is also given to ESCOs to carry out energy management training and energy audits.

Energy efficiency measures in buildings and appliances
• Mandatory appointment of Energy Managers in large scale commercial buildings.
• Development of Energy Performance / Building Codes.
• Definition of energy efficiency measures in public buildings.
• Establishment of Energy Performance Certificates to inform consumers.
• Spread of individual metering for central heating systems.
• Addition of information on energy efficiency of equipments in the user’s guides.
• Definition of minimum EE performance standards for burners, boilers, individual central heating and hot water appliances, air conditioners, electrical appliances, lamps, motors.

Energy efficiency measures in power generation
• Promotion of demand side management.
• Improvement of EE in power generation, transmission, distribution.
• Utilization of waste heat at thermal power plants.
• Utilization of alternative fuels in power generation.
• Incentives and supports for small scale renewable energy sources for energy autoproducers.
• Definition of incentives and supports for cogeneration.
• Improvement of public lighting.

Energy efficiency measures in transport
• Reduction of specific fuel consumption for passenger cars.
• Promotion of public transport.
• Utilization of effective traffic control systems.

Energy efficiency awareness
• Establishment of the “Energy Efficiency Week”.
• Training and awareness programs geared towards the public sector.
• Intrduction of EE training in the curriculum of primary and secondary schools.
• Involvement of TV Channels and media in EE campaigns
• Delivery of information by energy utilities to consumers on their consumption.

R&D for EE
• Support of TUBITAK for R&D projects on energy efficiency and new and renewable energy resources.

Responsibilities and Fines for misconducts
• Confidentiality of the commercial information of industrial entities
• ESCOs are responsible to provide proven energy efficiency recommendations and may incure penalties for misinformation.
• Fines for failing to comply with the compulsory reporting on energy consumption to EIE: The provision of erroneous information is liable to a 10 000 YTL fine; Failure to communicate information on energy consumption to EE is liable to a 50 000 YTL fine.
• Fine of 20 000 YTL for failing to appoint energy managers in industries consuming 1000 toe or more, in big commercial buildings and in industrial zone managements.

Within the scope of this EE Law, the following by-laws are enforced or preparation stage

• By Law on Improving Energy Efficiency for the Utilization of Energy Resources and Energy.
• By Law on Energy Performance of Buildings.
• By Law on Improving Energy Efficiency in Transport.
• By Law on Supporting Energy Efficiency in SMEs through training, audit and consultancy services.
• By Law on Minimum Energy Efficiency Standards for Energy Consuming Equipments such as, electric motors, air conditioning, household equipments, lamps, boilers and burners.
• By Law on Appointment of Energy Managers in Schools.

According to the Draft Strategy Paper which is still at discussion stage; "EFFICIENCY AND SAVING"

"Within the framework of Energy Efficiency Law No. 5627, the work for the “Regulation on Increasing Efficiency in the Use of Energy Resources and Energy” will be completed by 30 September 2008, with an eye to ensuring efficient use of electricity, avoiding the extravagance of electricity, alleviating the burden of energy costs on the economy and reducing environmental impacts.
The principles and procedures applicable to the classification of electrical motors, air-conditioners, electrical home appliances and bulbs as well as the determination of their minimum efficiency levels will be determined by the Ministry of Industry and Trade and regulations will be enacted for not allowing the sales of those that do not meet the minimum limits.

The regulations on increasing energy efficiency at electricity generation facilities and transmission and distribution grids, demand side management, open area enlightening and the spread of high-efficiency cogeneration practices will be prepared by the Ministry by 30 June 2009."