Energy Professional, Dear Colleagues,
is the time for our traditional annual forecast for our local energy
markets in the New Year 2015. Please do note that economy and
business are always shaped by expectations. Market expectations are
important in the economic forecasts. At the beginning of each year,
there are many economic forecasts made by the nationwide daily
newspaper columnists, however as we all see there are almost none
made in energy markets other than this one you are now reading.
Within our professional capacity, we have tried to outline a draft
forecast albeit maybe somewhat irrational/ unfair for the New Year.
anyhow it is better to have one, rather than none. Here are our
expectations for the New Year 2015;
power generation capacity could have reached to +69K MWs in year
2014, and consumption peak is recorded as +39K in last August.
Turkey is still at very low annual per capita electricity /
production / consumption with approximately +3300 kWh, EU current
average is +10K; North American average is +12K.
demand growth slowed down in 2014. Slowdown in local demand for
electricity in the first quarter 2015 will continue. Other than early
winter shortages, electricity prices will not increase in throughout
of nationwide electricity "Distribution" and "Generation"
are almost completed in 2014. "WholeSale market" and
"Unbundling" process are ongoing. National electricity
"Retail" systems will develop in 2015.
consumption is expected to be +50 billion Sm3 in year 2014. In
2015, Iran may not cut-off Natural Gas flow due to excessive needs of
during harsh winter conditions in her own domestic market. In case of
any winter interruption, Russians will increase supply capacity in
the Blue Stream for a substantial premium as usual.
flow from Iran to Turkey will be easier since US sanctions over
Iranian exports are expected to be lifted soon after finalization of
Nuclear talks in Geneva. That may cause more uninterrupted gas from
Iran for long term, although gas price will not be reduced, but stay
stable for medium term. Gas is still too expensive. Western Gas is
now approx. 11.00 US Dollars per MMBTU as of Dec-2014 at our western
border. Turkish natural gas demand will begin to fall due to counter
measures taken, probably by the second half of the year. Accelerated
increase in local fuel prices, is expected, after the general
elections which will take place in June 2015.
of Western natural gas pipeline supply by Russia's Gazprom is placed
to local companies. We expect market share wars between them.
Pipeline Tanap project is in fast-track agenda. Nabucco is closed.
"South Stream" underwater pipeline from Russia to Thrace
border, is recently announced. It needs time for full realization.
Iraq oil and gas pipelines are on hold due to civil war in Syria.
is too early to expect any substantial "Shale Gas"
production in our country. There are two specific regions for
exploration, but gas production can not be realized overnight. On the
other hand, "Shale gas" boom in the USA will reduce gas
prices in the spot market for sure. Europeans are reluctant since
cracking process may trigger earthquakes, and huge amount of
injection water is polluted.
fired Combined cycle power plants
expect less number of investments for new natural gas fired Combined
Cycle power plants due to increasing Current Account Deficiency.
There are still new investments in Kırıkkale, Thrace Çorlu,
Adapazarı, Ankara Kazan, Kırşehir, Bandırma, Mersin, Kırklareli,
Izmit on gas fired combined cycle power plants.
do not know who will supply the necessary gas for these new gas fired
plants, and at what price.
Nuclear strike capability makes Israel nervous. Although "G5+
Iran" has already agreed on nuclear settlement for
non-aggressive nuclear use, Israel may still initiate surprise
attack to Iran which may lead to global energy crises in the world.
So we should be on the safe side and we should have increased
underground gas storage capability and fuel storage facilities.
started to outsource all non-critical equipment for Akkuyu Nuclear
Power plant, starting from local civil works, high capacity steam
turbines, instrumentation and controls, due to experience on serious
shortage of available commercial financing. Environmental Impact
Assessment (EIA) report approval is received in late 2014.
the ongoing nuclear project is not commercial, but purely political,
political financing for that gigantic figure is not so easy.
Political risks of a nuclear power plant project cannot be properly
estimated; hence non-commercial project has no commercial meaning.
seawater will be a chronic problem for plant cooling system in
power plant project is awarded to "Japan+ French"
consortium. An Inter-Governmental Agreement (IGA) was signed between
Government of Republic of Turkey, and Government of Japan on 3rd May
2013 for the construction of Sinop NPP.
suspect if Japanese commercial companies can secure approx. 22 plus
billion US Dollar project financing. We shall wait and see the
outcome. They may face financing difficulties, although local public
company EÜAŞ will get 35% equity partnership.
Nuclear Plant site is in the thick forest. Local "Forest Law"
and compensation for demolished "trees" would be a great
burden on the project budget in the long term.
sea water is better for overall efficiency and for nuclear power
plant cooling systems. Therefore the next nuclear power plant sites
are expected to be on the BlackSea coast line, maybe in İğneada on
the NorthWest and Hopa on NorthEast.
nuclear power plants are expected to be close to metropolitan cities
with heavy demand, so Kırıkkale-Ankara, Aliağa-İzmir, and even
Kemerköy-Muğla are possible new sites in long term consideration.
French, Korean, Chinese Nuclear companies may participate to these
new nuclear power plant investment projects in future.
MWe Yatağan- 2x210MWe Yeniköy- 3x201MWe Kemerköy thermal power
plants in southwest of Turkey are privatized in 2014. After plant
sales, renovation, rehab, re-power or complete demolition are
expected by the investor.
coal firing 2x600 MWe new thermal plant could be build at seaside
Kemerköy plant site in the long term. Summer holiday facilities can
also be considered at the plant site with complete reutilization.
hard coal firing 2x150 MWe Çatalağzı-B thermal power plant in
Zonguldak county on the BlackSea coast is also sold. Orhaneli 210
MWe, Tunçbilek 430MWe thermal power plants are also privatized in
to low investor appetite both local and international, privatization
strategy will be reconsidered in order to increase the ongoing high
income based tendering process.
expect new investment initiatives on new found coal mine fields in
Konya Karapınar, Afyon Dinar, Eskişehir-Alpu in order to build new
thermal power plants under locally developed clean coal technologies.
coal firing new thermal power plant constructions in Bolu Göynük,
Eskişehir Mihalıccık, Bursa Keles (EIA reactions), Manisa Soma,
Adana Tufanbeyli (two separate plants 700 MWe and 450 MWe) are in
power plant investments in NorthWest BlackSea coast are expected to
be on hold for a while due to ongoing EIA scheme, and due to
high reaction of local environmentalists.
of foreign personnel employment is changed, so cheap foreign
employment from FarEast countries is not possible any more.
in Soma for new 510 MWe thermal power plant seems to be on hold due
to local reactions to olive tree deforestation. Investor company
should look for nearby empty land to build new thermal power
there are a number of imported coal firing new thermal power plant
applications for Bay of Iskenderun, Soma, around Sea of Marmara, Bay
of Aliağa but public authorities are quite reluctant for approval
due to high impact of imported coal on "Current Account Deficit
to ongoing high environmental pollution, no sufficient filters, no
desulphurization, no rehab, it is our sincere recommendation that
existing Unit Afşin Elbistan-A group, should be shut down,
dismantled and sold as scrap. However A-group is now in longterm
hand-over process in privatization. After take-over, new plant
installation is strongly recommended.
Çöllolar coal fields landslide disaster was forgotten after the
event. Reutilization will be enforced after legal procedures are
completed. De-watering- drying of the landslide region is continued.
Hurman Creek riverbed is changed, it will flow from north without
passing through the mine field.
coal mine field will be in preparation by the end of next year, and
only after normalization of coal fields in Çöllolar, then
AfşinElbistan-B plant can work at higher capacity factor.
Elbistan Coal is supplied to the plants at about 1.75-1.80 US Dollars
per MMBTU, which is quite competitive. But calorific value is too
low. So we need to have proven coal firing technology for the local
Elbistan-B plant has proven technology for firing local nearby coal.
However two units are now out of operation. Second unit had fire
accident in boiler dust filters. Third unit had steam turbine break
down. Repair works are recently tendered. It will need at least
minimum two years for complete operation.
international partners are sought for Afsin Elbistan C-E. We presume
that the tender activity is a long-term wishful thinking.
appetite in Wind capacity is almost saturated, Environmental concerns
will be on the agenda. High voltage transmission lines are missing.
Huge investment is needed for those new transmission lines for more
aggressive wind power integration. However investments will continue
at a moderate level at about 300-500 MW per year.
in Solar energy is relatively little. Without making local
fabrication of the solar equipment; one cannot go further with
expensive electricity generation. Only household small scale
electricity generation could be implemented.
cars / buses are in agenda, but we shall all ask who will be paying
high cost of new transformers due to additional heavy pulse load.
investment projects receive severe reactions of local people, and
reactions will continue on all legal platforms.
CO2 emissions will increase ever more with the ongoing coal firing
investments. It is a great national dilemma difficult to solve in our
energy hungry local market. How do we run away the climate change
obligations? We shall have low profile participations of
the public sector.
there are a number of preliminary meetings in the Ministry, in the
local fabrication associations, in various NGO groups, still local
design, local fabrication, local engineering for thermal power plants
do not exist yet. New public tendering procedures give price
advantage to proposals with local fabrication.
of Thracian HV AC Submarine transmission crossing Dardanelles Channel
will be completed soon. New crossings are planned.
activities for Submarine HVDC cable, gas and water supply
pipelines from Turkey to Northern Cyprus will continue.
is to return to her historical motto "peace at home, peace in
the world", principle rather than "precious loneliness".
"Precious loneliness" is too costly foreign policy. No
hostility is foreseen between democratic countries Greece, Israel and
Turkey, however pushing for fair share of nearby natural resources is
the rule of the game in international politics. Democracies do not
make war between each other. Public forces/ votes force them to
Med Cyprus offshore drilling work did not reveal expected results.
Offshore Contractor Company is not comfortable with the early
results. South Cyprus media and their government with wishful
thinking still push positive expectations, trying to keep the case in
international investment agenda with high hopes, but the situation
seems not so promising, the investor does not want to gamble any
more, return is not earlier than 10 years in time.
Offshore fields are proven but they have production storage and
transmission problems. These problems can not be solved before we
have stable peace on East Med waters.
Sea Offshore drilling is a never-ending story at our end, everyone is
talking about very large reserves, but there is nothing in reality.
of power in Syria is not foreseen in the short term. However influx
of refugee number will get increased to 2 million soon. It is too
alarming situation. We shall need approximately 10 billion US
Dollars in 2015 for the Syrian refugees. This is a great burden on
our economy. Our streets are full of desperate Syrian refugees.
Street crime is on rise. Drastic changes in the current international
relations policies are deemed necessary.
should participate to Transatlantic Trade and Investment Partnership,
TTIP. That is vital task in 2015 for all public & private
authorities. It is too costly to stay outside.
only the Ministry of Environment but also the Government is expected
in reshuffle. Change in top posts will not be a surprise prior to
general elections in June 2015.
secondary legislation of the Energy Ministry is still in preparation.
Some of new regulations in preliminary nature are released for public
review. The Minister may leave his post in the next municipality and
general elections due to party restrictions.
expect reorganization as well as restructuring in Ministry of Energy
and Natural Resources in order to reduce staff, to reassess duties
EMRA needs to be reorganized and
restructured, and Agency may be divided into two, maybe three. EMRA
licensing will go on with reduced speed, copy / paste applications
for license overrun archives. Rejection is still less than 2%. Most
projects are on hold.
and every incentive/ every good intention are abused with extreme
care”, so political power is reluctant to issue new energy
incentives, especially on imported fossil fuel firing new power
plants. Current account deficit (CAD) is in sever situation due
to increased spending on imported coal and imported natural gas
purchases, at intolerable levels. Increased use of domestic coal /
energy sources should be encouraged.
are happy to see that "High Speed Train" investments are on
track. Ankara- Istanbul railway is completed in 2014. Ankara- Izmir,
Sivas, Erzurum are in progress. We hope to have more intercity metro
will enter into a period of nationwide frenzy general elections in
year 2015. In new general elections, all of 3-term MPs will leave
Parliament and Ministerial posts. Ministries of Energy, Economy, as
well as Treasury will miss their strong leadership. That is a
great risk in macro economy administration.
all existing thermal power plants are in privatization, but
investment appetite is low because of the ongoing global economic
crisis and impact of June 2013 Gezi Park public uprising. The same
tendency may continue in the second half of next year.
investors have lost their appetite in our energy markets; and
domestic investors do not have money. International investors are
looking for simple legal terms in the environment, such as "rule
of law", and "transparency". On the other hand
investors of oil rich Middle East countries may still have increased
real estate bubble may face difficulties and few bankruptcy may
face project finance difficulties on controversial mega projects. We
have growing "current account deficit". Drastic measures"
on public spending will continue in 2015.
recent popular social media, in tweeter, facebook, whats-up,
investors are more or less incorrectly/ but implicitly
represented as negative profiles, it is alarmingly too deceptive.
That public profile should be corrected.
in electricity generation business will increase with M&A's. Few
bankruptcies may take place. In
principle, we would recommend individuals to reduce expenditures,
reduce spending, reduce borrowing, and stay cash, stay liquid.
in business environment says that 2015 will be another difficult
year. We were able to predict this much.
shall be too pleased to receive your comments/ contributions in the
New Year. Happy and Prosperous New Year to you all!
Direskeneli, is a graduate of METU Mechanical Engineering department
(1973). He worked in public, private enterprises, USA Turkish JV
companies (B&W, CSWI, AEP), in fabrication, basic and detail
design, marketing, sales and project management of thermal power
plants. He is currently working as freelance consultant/ energy
analyst with thermal power plants basic/ detail design software
expertise for private engineering companies, investors, universities
and research institutions. He is a member of METU Alumni and
Chamber of Turkish Mechanical Engineers Energy Working Group.