Turkish Forum

Tag: coal power

  • Turkey Excess Power Seen Delaying Projects as Zorlu Prefers Coal

    Turkey Excess Power Seen Delaying Projects as Zorlu Prefers Coal

    Excess electricity capacity threatens investment in Turkey’s power industry and is leading Zorlu Enerji (ZOREN) Elektrik Uretim AS to favor an investment in a more economical coal-fired plant, its chief executive said.

    Central bank policies aimed at slowing inflation and reducing the current-account deficit have sapped electricity demand and created a surplus as new plants are added to the national grid, Sinan Ak, Zorlu’s chief executive, said in an interview at an energy conference in Istanbul yesterday. The Istanbul-based company has interests in Turkey, Russia, Pakistan and Israel.

    Turkey’s electricity surplus was about 4,500 megawatts last year, or 7.8 percent of total capacity, Energy Minister Taner Yildiz said at the same conference yesterday. That figure may double to as much as 10,000 megawatts this year, Ak said.

    “This is causing players in the energy industry to be cautious about making new investment decisions, especially on natural gas-fired power plants,” Ak said. Zorlu has postponed its plans to build a gas-fired plant in the country and will focus on a coal-fired plant instead, he said.

    The company will finalize an investment decision this year for a power plant to burn domestic lignite, or coal, with a maximum capacity of 1,000 megawatts, Ak said. That investment may cost more than $1 billion, he said, and Zorlu is in talks with Japanese and South Korean suppliers of generators and other equipment that can burn local lignite, he said.

    More Economical

    A coal power plant is more economical in an environment of excess capacity because unlike wind, solar or hydro plants, the coal plant produces energy only on demand, Ak said. It’s also less expensive to operate than a gas-fired plant, he said.

    Turkish electricity demand fell 2.4 percent to 60.5 billion kilowatt-hours in the first quarter over the previous quarter, according to data from the state power transmission company Teias’s website. The country had 57,800 megawatts of power capacity at the end of March, the data shows.

    Turkey’s gross domestic product probably expanded 2.4 percent in the first quarter, according to the median estimate of 27 economists surveyed by Bloomberg from April 19 to April 24. The economists reduced their forecast from 4.3 percent in the previous survey.

    “We expect the central bank’s expansionary monetary policy starting from April to speed up economic activity in coming quarters,” Turker Hamzaoglu, an economist at Bank of America Merrill Lynch in London, said by e-mail today. He said the expansion in the first quarter was probably 3 percent. Warmer weather in the first quarter probably also helped to reduce power use, he said.

    Israel Plans

    Zorlu is the third-biggest of five electricity producers listed on the Istanbul Stock Exchange, with revenue of $291 million last year. Aksa Enerji, which is part-owned by Goldman Sachs Group Inc., is the biggest with revenue of $1 billion. Zorlu shares have gained 39 percent this year.

    Zorlu has 770 megawatts of power capacity in Turkey, Russia and Pakistan and gas-fired power plant investments in Israel. It plans to increase capacity to 1,300 megawatts in two years by investing $1 billion, Ak said. The additions to capacity will include 250 megawatts in geothermal energy, 110 megawatts in wind and 150 megawatts in hydropower, he said.

    “We plan to have a serious capacity increase in Israel in solar, wind and gas-fired plants,” he said. The company has a 42 percent stake in three power projects in Israel, one with 800 megawatts capacity that will start operations this year and two others with a total of 175 megawatts of capacity that will be active from 2014, he said.

    Zorlu plans another 50-megawatt wind power plant in Pakistan after the first one starts operations in May, Ak said.

    via Turkey Excess Power Seen Delaying Projects as Zorlu Prefers Coal – Businessweek.

  • Turkish coal faces a revival

    Turkish coal faces a revival

    David O’Byrne in Istanbul

    February 18, 2013

    The recent announcement by Turkish economy minister Ali Babacan that Turkey’s investment incentive scheme is to be expanded to include investment in power plant burning locally produced lignite has re-ignited interest, both foreign and domestic, in Turkey’s sizeable but underused domestic coal reserves.

    Despite reserves of 11.8bn tonnes of lignite and 1.3bn tonnes of hard coal – with new reserves still being discovered, development of coal fired power plant in Turkey has been slow with private developers opting to develop quick to cheaper plants that burn gas.

    Now with Turkey’s gas demand expected to exceed its 51.8bn cubic metres a year (cm/y) gas import portfolio within the next couple of years, Turkey is keen to reverse the trend and make more use of its domestic reserves. Not just because dependence on gas for power generation last year reached a worrying 42%, but also because energy imports are the single biggest contributor to Turkey’s increasingly problematic trade and current account deficits, the main issue which continues to hold down Turkey’s international ratings. “We have no gas and no oil, so it makes sense to develop the coal reserves we have,” says Ankara-based energy analyst Haluk Direskeneli, explaining that while most of Turkey’s coal is poor quality it is still cheaper to burn than imported alternatives.

    “The quality of Turkish coal is low,” echoes Mustafa Karahan head of Turkey’s Energy Traders Association. “But the incentives the government plans to issue will help cut investment costs.”

    The black stuff

    The past year has seen a slate of new initiatives aimed at making the most of these reserves, with Babacan’s announcement of new incentives following closely on the heels of new legislation allowing for the privatisation of the state-owned coalfields along with the 6.7 gigawatts (GW) of plant they supply, and a slate of new tenders for the development of unexploited coal reserves.

    Together this has spawned a surge of interest in new coal plant development, which promises eventually to help re-balance Turkey’s power generating portfolio with 19 plants totalling close to 7 GW already licensed and under development and more projects set to follow.

    Already announced is a plan to develop as much as 8 GW of new capacity burning lignite from the massive Afsin-Elbistan field in southeast Turkey.

    Abu Dhabi power giant Taqa and Turkey’s state power generation company EUAS signed an memorandum of understadning in late December that will see the pair work together on projects to renovate an existing 1.4-GW plant burning coal from the Afsin field and build a new 1.4-GW plant alongside.

    A contract for this first phase is expected to be signed in the next few months, after which work will begin on detailed plans for the remaining 6.6 GW taking the total investment to close on $12bn.

    With reserves of 4.4bn tonnes, Afsin Elbistan holds a third of Turkey’s known coal reserves, while the planned 8-GW development makes it the biggest power project in the country’s history, dwarfing even the 5-GW nuclear plant being developed by Russia’s Rosatom.

    Other state-owned coalfields are also up for development, with state lignite extractor TKI late last year opening tenders for the development of two fields and the construction and operation of two new coal-fired plant totalling 570 MW.

    More tenders are expected to follow with Energy Minister Taner Yildiz recently announcing the discovery of a 1.8bn tonne lignite field near Konya in central Turkey capable of supporting up to 5-GW of coal fired plant, and that plans are underway to open a tender for the development of a separate 510m tonne field in Turkey’s European province of Thrace.

    No less significant was the announcement in early February by Turkey’s Hattat holding that it is talks with Chinese and South Korean companies to develop a 1.32-GW plant burning coal from the group’s mines at Amasra in northern Turkey. Hattat plans to sign a deal on the $3.5bn investment by June with construction work slated to begin by the end of the year.

    International Coal Opportunity

    Turkey’s dash for coal is not limited to domestic reserves. Despite no incentives being offered, interest in constructing plant burning imported coal is high thanks to falling international coal prices. “The discovery of shale gas in major coal exporting countries such as the US, Australia and South Africa means that international coal prices have fallen,” explains Mustafa Karahan.

    A slate of license applications have been made for new plant including one from a consortium led by France’s GDF-Suez for a 1.32-GW plant to be built at Yumurtalik on Turkey’s East Mediterranean coast.

    Another consortium led by Turkey’s Bilgin Enerji is planning to build a plant of similar size in the same area while Turkey’s Alarko group is planning to build a 1.32-GW plant at Biga on the coast of the Sea of Marmara.

    via Turkish coal faces a revival – BUSINESS NEW EUROPE.

  • Turkey’s big thirst for new power

    Turkey’s big thirst for new power

    Turkey’s big thirst for new power

    Florian Neuhof

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    Turkey is in a rush to grow its energy sector. And recent news that the Abu Dhabi National Energy Company, known as Taqa, will invest heavily in Turkish coal-fired power plants shows how serious Ankara is taking this commitment.

    The deal, announced at the start of the year, will see Taqa build and operate a power generation base totalling 7,000 megawatts, or about 10 per cent of Turkey’s electricity needs by the time the plants are completed.

    Turkey’s energy minister, Taner Yildiz, is keen to emphasise that efforts will be taken to minimise the environmental impact of the country’s power sector.

    The plants will be fed with lignite, a soft brown coal reviled by environmentalists for the emissions its use entails. Lignite is found in Turkey’s soil and offers some relief in the complicated task of securing hydrocarbons from abroad.

    Turkey is dependent on imports for 91 per cent of its oil and 98 per cent of its natural gas and it relies heavily on Iran and Russia for its supplies. It is therefore keen to push the share of electricity produced from gas from about 50 per cent to less than 30 per cent in the next decade and to diversify its hydrocarbon sources.

    Turkey has reluctantly complied with United States and European Union demands to reduce imports from Iran as part of a new round of sanctions, but its dependence on Iranian supply has meant it has refused to cut economic ties with the country.

    Nevertheless, Turkey has announced it will import more Saudi Arabian and Libyan crude to counter the effect of the sanctions on Iran and the trend for Arabian Gulf oil to depart to Asia.

    Turkey’s confrontational stance with Syria, Tehran’s long-time ally, could also endanger imports from Iran.

    Iraq’s immense oil and gas reserves are another source of hydrocarbons, and a pipeline already flushes 400,000 barrels per day (bpd) of Iraqi crude across the border to the Turkish harbour of Ceyhan. But, rather than focusing on good relations with Baghdad, Ankara seems intent on carving out its own oil and gas base in Iraq by encouraging the autonomous Kurdish north in its efforts to create an independent energy sector.

    The Kurdish Regional Government (KRG) and Turkey are close to signing a deal under which the Turks will build production and pipeline capacity in Kurdistan, enabling the Kurds to export their hydrocarbons outside the Iraqi infrastructure.

    The KRG’s efforts to take control of its resources is a huge source of irritation to Iraq’s central government. While closer ties with Erbil can serve to secure a great deal of oil and gas supply, the uncertainty of the geopolitics can also undermine future security of supply.

    Turkey pays attention to its gas supply in particular. With electricity use projected to rise dramatically in the coming decades, adding further gas imports is crucial in spite of efforts to reduce its share in power generation.

    But Turkey also has ambitions to establish itself as a gas-trading hub between the Middle East, gas rich Azerbaijan and Europe. Turkey and Azerbaijan have agreed on the Trans-Anatolian Natural Gas Pipeline project that will connect the latter’s Shah Deniz II gasfield development with the Bosphorus.

    Turkish demand for gas stood at about 125,000 cubic metres a day at the end of last year. Before it can think of gaining in status as a transit hub it needs to ensure its own demands are met, experts say.

    “It still needs to facilitate additional gas purchases and encourage new developments such as Shah Deniz Phase II and Kurdistan volumes to meet its own requirements,” says Stephen O’Rourke, a gas supply analyst at Wood Mackenzie.

    Although piped gas plays the biggest part in Turkey’s thinking, Ankara has remained open to all options. This month, Mr Yildiz announced that he was in discussions with Qatar over an import terminal for liquefied natural gas (LNG).

    Another future source of gas could be the Levant Basin, where huge reserves are believed to lie under the deep seabed. But Turkey’s confrontational stance towards Greece and its icy relations with Israel disadvantages Ankara’s position in the Mediterranean, in spite of an exploration agreement with North Cyprus.

    If the Levant Basin fulfils its potential and starts yielding large amounts of gas, it could threaten Turkey’s position as a transit hub, analysts predict, as the most direct route to Europe is via Greece. But gas produced there may not be destined to Europe, anyhow.

    “We expect LNG to be the most likely export monetisation solution for these discoveries, and consequently Europe is not a guaranteed market for this gas,” says Mr O’Rourke.

    Overall, Turkey remains in a strong position to secure the gas necessary for its economic growth and to make it a significant regional hub.

    “Turkey should be able to maintain its long-term energy objectives. However, this will become more complicated, given its increasingly complicated relationships with Syria, Iran, Cyprus, and Israel,” says Daniel Wagner, the chief executive of the consultancy Control Risk Solutions.

    via Turkey’s big thirst for new power – The National.

  • Turkey turns to coal and nuclear power

    Turkey turns to coal and nuclear power

    by Daniel Dombey

    Much of Europe may be moving towards cleaner power but in Turkey it is a different story.

    coal power

    EUAS, the country’s state-owned electricity company, was due on Monday to sign a memorandum of understanding with two South Korean groups on a $2bn coal fired power plant. It is also moving ahead with plans for two nuclear plants.

    The government says that by 2023 it wants to reduce the percentage of electricity generated by gas from 50 per cent to 30 per cent.

    That contrasts with a new study showing that 71 per cent of new power generating capacity in the European Union last year came from renewable energy sources.

    For economic and diplomatic reasons, Ankara is keen to cut its dependence on gas imports from Russia and Iran and to boost its – hitherto insufficient – domestic energy production. About three quarters of the country’s energy comes from abroad.

    Turkey has had price disputes with both Moscow and Tehran, its two biggest gas suppliers. Such considerations are particularly important when you have a current account deficit of $77bn and an energy import bill of more than $40bn.

    Having broken off one contract last year with Russia, by far Turkey’s biggest gas supplier, Ankara recently announced it was taking Iran to arbitration over the prices it charges.

    Announcing the plan to reduce the share of gas in Turkey’s mix to 30 per cent, Taner Yildiz, energy minister, said at the weekend that the government would provide incentives for coal-based projects and impose limits on natural gas projects.

    The memorandum of understanding – which Yonhap News agency said would be between EUAS and SK E&C and Korea South-East Power – fits into that plan and was timed to coincide with President Lee Myung-bak’s current trip to Turkey.

    (Lee has other energy imperatives of his own during his trip to the region; he will later visit Saudi Arabia, Qatar and the United Arab Emirates as discussions intensify about alternatives to Iranian oil.)

    Meanwhile, Turkey’s efforts to reduce its energy dependence also continue, with plans to build two nuclear power plants. One will be built by a Russian consortium on the Mediterranean coast. Lee agreed to revive talks on South Korea involvement in the second.

    via Turkey turns to coal and nuclear power | beyondbrics | News and views on emerging markets from the Financial Times – FT.com.