Friday, December 24, 2010

Energy & Infrastructure Forecast for Turkey in 2011

Dear Energy Professional, Dear Colleagues,

In this article, I aim to make forecast in our local energy markets in the New Year 2011. As you know, economy and business are governed by expectations. Market expectations are important in the economic forecasts as well as investments.  At this time, there are many economic forecasts made by the newspaper columnists however as we all see there are almost none in energy markets.  So within my capacity, I tried to outline a draft forecast albeit maybe somewhat irrational/ unfair for the New Year. Here are my predictions and expectations for the New Year 2011;

1.      As year ends, experienced senior GMs of public enterprises will be promoted to upper consultancy posts, and then transferred to upper posts of private enterprise boards. New arrivals to those vacated posts will consume the remaining time rest of the year to get education necessary for the new posts they got; hence they will not take any initiative.
2.      World Bank and IMF delegations will have more visits to our Energy Ministry, Energy Regulatory Board, State Planning Organization, and Business Associations. Smiling faces will appear in the local media.
3.      Ministry of Energy will be looking for new projects to follow without considering that any initiative in energy sector gets its response in 10 year time in future. We all know that there is no fast solution.
4.      Newspaper columnists will continue to write ridiculous articles on energy business and continue to make confusions in Volt/Watt, MWe/ MegaByte.
5.      Electrical Energy Market Law Nr. 4628 will be changed again. Some Clauses will be deleted. Some new Clauses will be inserted before general elections in July 2011.
6.      Akkuyu Nuclear Power plant contract which was a sort of “I did it my way” scheme is signed with the Russians between government to government agreements. Ground breaking ceremony at site will be held soon.
7.      Location search for new nuclear power plants will be moved from hot waters of Mediterranean to Black Sea coast. New options will emerge in İğneada and Hopa since their local reactions would be expected less.
8.      In Sinop, South Koreans are out, new Japanese companies are in.
9.      Nuclear technology education in Hacettepe and Istanbul Technical University will lead the national curriculum with their new MSc and PhD programs. Middle East Technical University will stay behind and continue to say "This subject is not on our agenda".
10.  Local investors have initiated to build new thermal power plants (2x(2x660) MWe) in Amasra firing "indigenous coal" where we all know that there is no sufficient amount of local coal to run the power plants in the long term. They will soon try to switch to imported coal option. People and NGOs of Amasra reacted to thermal power plants in 2010. Amasra CED is cancelled. Project is later moved to Filyos valley which is 25 km towards west.
11.  Natural Gas bill will be completed. Pipeline public company will extend a portion of the contract. Termination of the public natural gas monopoly and market dominance is long-term wishful thinking.
12.  Black Sea offshore drilling is initiated. At least once every month, we shall read "Large quantities of Gas/Petrol found, sufficient for local consumption" in the news media.
13.  Those who know and those who do not know, those who are capable and not capable, will all apply to get investment license to construct new imported coal firing thermal power plants on the shores of Iskenderun Bay. Public will react to such excessive crowd with unconventional opposition methods.  Unconventional egg throwing will be nasty, sad but common reaction nowadays.
14.  People and NGOs of Iskenderun, Payas, Dortyol counties will stand up for serious environmental concerns on new excessive number of imported coal firing thermal power plants. Other than environmental concerns, local people will feel that they have all the legal rights to block through local courts since there will be neither participation of local employment nor any local engineering in the new investments.
15.  In early 2011, Iran will again cut-off the Natural Gas flow again due to excessive needs of her own domestic market for at least 1-month. Russians will increase capacity in the Blue Stream for a premium as usual.
16.  HEPP investments and dam construction actives will be increased on the small beautiful creeks on the highlands of Eastern Black Sea coast. Our high tempered Black Sea coast citizens will not be so pleased with the outcome.
17.  Our local NGO Do not touch my Creek will have rise in public appearance with unconventional opposition/ reaction procedures.
18.  Local TV programs will be increased over the Ilisu Dam. All these programs will have Tigris pasture image in the background accompanied with the sheep and pathetic background music. Everyone will memorize these photographs of sheep and the ruins.
19.  Afsin Elbistan A power plant Units 3-4 rehabilitation will be tendered. There will be not sufficient participation and in the end it will be cancelled again.
20.  Tender for new Afsin Elbistan C-E units will be released. Due to excessive financial risks not bankable, participation will be limited and the tender will be cancelled again because of high prices.
21.  Rapid privatization could be realized. Soma/ CAN/ Hamidabad/ SeyitOmer local lignite/ coal fired thermal power plants will be sold / privatized.
22.  Ladies of Straw Mountain will react to wind power plants in their Samandag region. No one will listen to them. EIA report will not be needed. There will be no land, slope, hill left without wind towers.
23.  Wind power plant investments in Cesme Peninsula will continue till the end of this year. Energy Transmission problems will be of high concern.
24.  Local production of Wind power plants will continue. JV news will increase, for the smallest power generation not less than 3 MW, Prototypes will be displayed with public inaugurations.
25.  Yenikoy / Kangal TPP rehabilitations will be completed. Foreign OEM companies, who got contracts without competitive tendering, will have good earnings compared to the work that they spent. "Black Coal / Black Energy" court investigations/ prosecutions may start.
26.  Antalya 1150 MWe CCPP is in operation. Feasibilities for additional 2600 MWe will be initiated. Since the plant cooling system will consume huge amount of drinking water, there will be extreme water shortage in the region in summer time. Investment expansion is foreseen to triple the capacity. People of the province will understand the seriousness of the situation soon.
27.  New 900 MW CCPP is completed in Bandirma. Preliminary design works for the new gas fired 1000 MWe additional capacity second plant is initiated. 
28.  Bandirma will have domestic / foreign investor invasion for TPP, CCPP, RES, HES, GES investments, and agricultural land will be narrowed.
29.  Local companies that sell their capital equity shares to foreigners will face excessive / unnecessary expenditures in foreign engineering/ foreign equipment. Foreign partners will purchase only from their own home countries with expensive OEM costs. Ultimately, because of excessive unnecessary costs, locals will feel the need reconsideration of the contracts with their JV foreign partners.
30.  The set up for new thermal power plants in unexploited local coal regions in auctions will result in a kind of absence. Only Adana Tufanbeyli 450 MWe TPP is contracted. The search for new solutions on this issue will be in the agenda again in the second half of the year.
31.  CCPP investments will continue in Samsun province based on Natural gas firing due to Blue Stream.
32.  Energy transmission in Samsun province will have overcapacity difficulties.
33.  Since “Each and every incentive/ every good intention are abused with extreme care”, political power is expected to be reluctant to issue incentives to renewable energy.
34.  Solar thermal power plants will appear in inland Anatolia i.e. Konya Plato where agriculture is not so profitable. Local production means will be investigated.
35.  In the end, solar panels from China will dominate the local market since they are cheaper than those that manufactured in local industrial zones.
36.  De-grading due to excessive wear and tear in Chinese made local thermal power plants will emerge. Early rehabilitation requirements will start.
37.  Cheap Chinese companies will get rehab and long-term operation contracts in the local market. Local unemployment will get increased. There will be difficulties in upcoming general election polls.
38.  Distribution Privatizations is now almost complete in 2010. Almost all public distribution systems are privatized.  Privatization Price is pass-through cost item to retail consumers.
39.  Ministry of Environment will approve incoming EIA applications with little worry over local NGO reactions or any scrutiny to the environmental hazards of the new investments due to ever increasing concern over upcoming energy shortage. However upcoming General elections may require policy change.
40.  Local energy markets regulatory agency will continue to release licenses to those who know or don’t know the technology, those who have financial capability or those who do not have, but to all those who complete the necessary forms.
41.  Agency will ask unreasonable number of more new staff due to ever getting work load.  Market scrutiny/auditing will be tendered to private / foreign audit companies.
42.  Public Agency will start to complain that the new building is too small for ever increasing staff. They will investigate new land purchase in Gölbaşı County to move.
43.  Medium age of Board members will be much more reduced in Public Agencies. New university graduates will be assigned as Board members, provided that they have taken top grades in Thermodynamics.
44.  Investors will have investment licenses all expired soon. Renewable energy entrepreneurs will not be able to sell their licenses. The negotiation traffic will get increased in the halls of the Agency.
45.  Since Ministry of Environment accepts all incoming EIA applications without serious scrutiny, local NGO reactions and court applications/ and unconventional opposition methods will be alarmingly increased.
46.  Upcoming General elections will/may require all new energy policy changes.

We were able to predict this much. We shall be too pleased to receive your comments/ contributions in the New Year. Happy and Prosperous New Year to you all !
Haluk Direskeneli, Ankara based Energy Analyst


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