Thursday, March 11, 2010

Recession slows Turkey's drive for coal-fired power- Reuters

ISTANBUL, March 11 (Reuters) - A rush to build coal-fired power stations in Turkey has stalled, brought low by last year's deep economic recession, environmental concerns and regulation, industry officials say.

Turkey's economy shrank 6 percent in 2009, but cheap imported coal could still drive the power-hungry economy once it returns to the sort of robust growth that saw output rise on average 6 percent a year between 2003 and 2008, they say.

Since 2004, the Turkish Energy Market Regulatory Authority, EPDK has issued 21 licenses for new privately owned coal power projects with a total generation capacity of 10,363 MW -- some 20 percent of the country's power needs.

"There was a huge demand, an 8 percent increase in power demand each year," said Osman Bulent Tor, a senior researcher at Tubitak Uzay, a technology research institute in Ankara.

Turkey had made major investments in natural gas but price rises and supply problems made that option less attractive.

Cheap, easily available high quality coal attracted new players such as Eren Holding, originally a textile company, ICDAS, which began life as a steelmaker, and construction firm Enka.

But with the economic crisis electricity demand stagnated and new power plants were suddenly less attractive. EPDK data shows only one of the planned new facilities -- operated by the conglomerate ICDAS at Canakkale on the Asian shore of the Dardanelles -- is in operation, and then only partially.

"Suddenly this global economic crisis happened, everybody stopped producing," said Robert Yildirim, chief executive of Yildirim Group, a conglomerate with interests in coal. "These projects were suddenly cancelled, put on the shelf."

Administrative hurdles have snared other developments. New coal plants are unpopular with local residents and green groups, and some proposals have run into problems with the environmental authorities.


Bulent Yenal, financial affairs coordinator at Hattat Holding, said his company was awaiting the result of the environmental impact assessment on its power plant at Amasra on the Black Sea.

Others say government control of electricity distribution has discouraged investors.

"You aim to build a new generating plant, but the problem is whether the transmission line is available," said Mohammad Shahidehpour, a U.S. academic at the Illinois Institute of Technology who has studied electricity restructuring in Turkey.

"Both transmission and distribution are completely regulated, in the sense that the government manages all of that," he said.

Despite the problems, analyst Haluk Direskeneli said he thought the plants would be built, driving up demand for thermal coal beyond the 20.37 million tonnes the Turkish Statistical Institute says Turkey imported in 2009.

"Global crises do not slow down investment appetite if there is real demand for more energy consumption, as in the case of Turkey," he said in an e-mail.

"Intelligent companies, such as Koc, Sabanci, Zorlu, Akenerji, Enka, Gama, Oyak, continue to work on strategic planning on energy investments," he said.

Some projects have indeed made headway. Sencer Aras, a project co-ordinator at Eren Holding, says construction was progressing at its 1360 MW project in the Zonguldak region on the Black Sea.

"The first unit we started with, it is almost complete," he added. "The second unit, which is 600 MW, will be ready in June or July. The last unit will be in operation at the end of the year."

(Editing by Sue Thomas)


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