2022

TURKEY: Energy and Infrastructure Forecasts in 2022 At the end of each year, your writer has been making predictions for the next year for energy market professionals since 2013. What is written here is entirely the personal opinion of your author. We, the analysts, are expected to make predictions (forecasts) for the next year at the end of each year. Economists make forecasts, social scientists make political forecasts, we energy analysts make energy forecasts on demand supply and future investments. Some of these predictions hold, most of them do not. There are many things that affect the markets during the year. The political preferences of the political administration change. If the general election is approaching, optimistic economic, financial and political policies come into play before the election, and eventually, domestic and foreign politics inevitably give different directions to economic events. We all need to make short-medium-long-term forecasts in order to run our business and direct investments. Together we draw a forecast for the next year, then we make corrections in our forecasts/forecasts according to the events that developed during the year. Your writer thought a lot about writing this article. It crossed his mind not to write at all. Electricity production-consumption has changed little compared to last year. Fossile fuel consumption remained almost the same. The market prices of fossil fuels have changed tremendously. The prices of fossil fuels almost doubled, sometimes tripled, and prices fluctuated. It was impossible to give long-term prices. While writing, current events have developed so much due to the Covid-19 epidemic that your writer had to renew and correct the article many times. We, those 65+ years old, have been closed indoors for a long time in the spring and autumn of 2020. Protected life away from everyone on the slopes of Büyükada/ Prinkipo island's Kadıyoran slope on Hristos Hill has been a sanctuary for us. In the city, we could not go out. Even if we are protected from corona infection, old age diseases such as heart, diabetes and osteoporosis started to hit us. Mask-hygiene-distance has gained importance. Mutations followed, Delta variant originating from India, and Omicron variant originating from South Africa countries emerged. We got two doses of Sinovak, then two doses of Biontech vaccine. Your author has a sun-drenched back balcony during the day during the winter months. We had long phone conversations with our friends, whom we had not spoken to for a long time, from morning to evening. We have never missed online Zoom meetings of the Energy Commission, METU ME engineering graduates, and other close friends. Istanbul Atatürk Cultural Center was opened in the summer, we watched the opera once, we admired its architecture. Ankara Presidential Symphony Orchestra's new building has been opened, a wonderful Gewandhaus design has been implemented, whereas the audience is around, the orchestra is in the middle, the acoustics are great, the underground garage automatic entrance and exit payment system allows the cars to be evacuated in a short time, we congratulate the architects of both works. We have been at home 24/7 again for a long time, we have no other topic to talk about except the Covid-19 outbreak. All domestic and foreign TV channels, all media, all news only talk about Covid-19. Delta variant is ending, getting lighter, followed by more dangereous Omicron variant news. Even though global unproven policies are implemented, late and incomplete decisions are made, and negative comments are made, we experience formations that coincide with the curve by chance all over the world. The epidemic adjusts every place, every administration, every country, and pushes decision makers in the right direction. The number of people who use public transport is decreasing, people do not leave their homes, they postpone their medical appointments, they go out with their own cars, the roads are in a traffic jam. The hard power of the new generation F35 warplanes, S400 missiles and large aircraft carriers is no longer needed. Payments to the tenders were delayed due to the fear of the epidemic. Limited resources were quickly directed to city hospitals, funds were provided for unfinished hospital constructions, and construction was accelerated. Istanbul Anadolubaşıbuyuk and Basaksehir City Hospitals on the European side were opened rapidly. Ankara Bilkent City Hospital has become a specialist center on the pandemic. Hacettepe- Ankara TIP- İbniSina hospitals specialized in treatment. Domestic production ICU intensive care units, medical ventilator mass production accelerated, health personnel needed by new hospitals were recruited from the young staff of old hospitals, family physicians and provincial physicians were assigned, financial support was given to the construction of "city hospitals" in all provinces. The rate of spread of infection was somewhat slowed down over time, with the absence of going out on the weekends and intensive effective vaccination. The herd immunity advantage of the young population came into play. There are still anti-vaccine opponents, it's probably too early to say right or wrong. The possibilities of further interactions of the vaccine have not yet been clarified. Even manufacturers cannot give any guarantees. Before we get vaccinated, "the risk is mine", we sign the papers. With the Biontech vaccine, the spread of the pandemic has visibly decreased. Cases began to be seen mostly among those who were not vaccinated. Protection, mask, hygiene, distance measures have been effective. *** Land borders were closed in all countries for a while. Travel to and from South African countries is prohibited due to the danger of the Omicron variant. Measures at airports have been increased. The outbreak in migrant receptacles in the south forced migrants to return to Syria voluntarily. Closing our borders was a very important decision. Especially the borders of Iran, Iraq and Syria were very important and sensitive in terms of stopping the epidemic. It was very dangerous for people infected through Iran and the Middle East to enter our country. On the other hand, we hear that the epidemic has increased in our neighbors Russia, Bulgaria, Greece and Georgia. During the summer period, borders and airports were somewhat free, but the pandemic did not slow down. Being outdoors in the summer has activated the distance measure. The USA's unpreparedness for the epidemic shook the whole system. In Britain, Prime Minister Boris Johnson, French President Macron, German Chancellor Angela Merkel, American ex-president Trump, even President Putin, plus our local politicians were quarantined for 14 days from time to time. It is very difficult for politicians to protect themselves from the coronavirus. Russia is just beginning to understand and learn the seriousness of the situation. Corona even defeated the unbreakable stubbornness of the Vatican and other religious institutions. Churches, cathedrals, synagogues and mosques in Germany were closed to worship from time to time. In the winter period, measures to be together again in closed environments will begin. Concert halls and operas are open for now, most of the cinemas are closed. Media like TV Netflix became more popular. Saudis have completely canceled their Hajj and Umrah programs. In 2022, they are not taking anyone to the holy places. Due to the need for more female health personnel, they abolished the requirement for covered veils. Angela Merkel in Germany took the epidemic under control with her academic sensitivity. In Germany, which takes the epidemic forecast report of the German Robert Koch Institute seriously and applies the necessary precautions, the number of casualties is relatively less than in other countries. However, the number of cases there also increased by the end of 2021. Germany, which has made the necessary investments in health issues and has devices with high emergency capacity, hardened the epidemic rules again this New Year's Eve. Oil prices in the world fell to 20 US dollars per barrel before the epidemic, then increased to 80-90 US dollars later days. There was a huge increase in natural gas prices. Coal production conditions have changed. Local coal will no longer be extracted from underground mines so easily. Only to a limited extent mechanized unmanned underground mines can operate. Thermal power plants will be completely idle in the future. Wind, solar, hydro resources, which do not require manpower, will gain more importance. After Covid-19, we will return to completely renewable energy-oriented sources. Investments will quickly flow into renewable power plants. GOP26 Glasgow meetings reaffirmed the turn from fossil fuels. Fossil fueled thermal power plant investments will decrease over time. Renewable energy investments will increase. Global warming will be tried to be limited to +1.5C. The arrival of politicians and celebrities to the GOP26 meetings in their private jets received a lot of criticism. Europeans cut down on holiday bookings, early booking refunds bankrupted hotel airline companies. Restaurants, cafes, bars, indoor spaces were opened under tight control. Even after opening, probably no one will go for a long time. Planes were started to be used only for emergency evacuation and transportation of medical supplies. Intercity passenger transport has decreased, only food trucks operate on the highways. This epidemic will probably last for 3-4 years with repetitive mutations, eventually the "new normal" world will be completely different, we will acquire new habits that are used to living introverted. The Covid-19 epidemic process continues. Lockdown has started all over the world this New Year's Eve. There are optimistic political statements, but realistic academic comments say that this process will continue for a long time, with new waves that have mutated every year, even if it weakens. The 1918 Spanish flu was also more severe in 1919-1920, with recurrent mutations. The 1919 wave mutation took more lives. *** The presence of the epidemic is unlike the power of any conventional war weapon. During the Covid-19 epidemic, America's heavily superior new modern weapon power has no meaning. Italy, Spain, England are not good at all. It will take a long time for them to recover from the epidemic. Luxury cars waiting in the parking lot, private planes that don't take off, unused private villas sitting idle, unnecessary guards, all of this makes no sense. All countries were defeated by the virus without using any weapons, cinemas, concert halls are closed, the streets are empty, there is no one around. It is useful to reconsider the internal and external social policies that have been paralyzed in the global environment during the Covid-19 process. It is necessary to redraw the new normal world relations after Covid-19. The world after Covid-19 will be a brand new order that we cannot foresee. In all western countries, there were decreases in electricity production and consumption in 2020-2021. In our case, it was announced that there was little change in energy production in 2021 compared to the previous year. Our electricity production is still 300+ billion kWh, our installed power is 98+GWe in 2021, and our peak (maximum) energy draw is 52+GWe in August. By the end of 2021, our Natural Gas consumption will be around 50+ BCM (billion Sm3), our lignite production will be 50+ million metric tons, hard coal 2 million metric tons, imported coal imports will be 30 million metric tons. Actual figures will become clear in 2022. The relative decrease in production activities during the Covid-19 process has reduced electricity demand. We did not go on long journeys on the highways - we could not. Most retirees preferred to spend the winter in their summer cottage by the sea or in their country house in their hometown. He installed the stove, started the air conditioner, had a combi boiler connected if there was natural gas. Houses in big cities remained empty. Cars waited for months in parking lots in front of the gate. Petroleum consumption decreased. Due to the economic crisis, gasoline prices have increased steadily. The need for more electricity generation was not seen in the past 2021 due to the Covid-19 pandemic. We observe stagnant electricity generation, investment, and very little renewal and rehab activity. New investments, environmental equipment, ESP-FGD rehab investments are being made in power plants that have been transferred to private companies with privatization, but it seems doubtful how effective they will be. Producers with thermal power plants provided the new 2.5-year exemption to pass the parliament, but they received a great reaction from environmentalists, and the bill was vetoed. As of the end of 2019, thermal power plants that postponed their environmental equipment were sealed. They stopped working for a while. Environmental equipment renewal studies were carried out in 2021, but we have doubts how effective the expenditures were. It is necessary to spend 5-6 million USD for the electrofilter renewal of a thermal power plant unit in the 150-210 MWe range, and at least 20-25 million USD for the construction of a new FGD unit. We look at the expenditures, they do not reach these figures. Renewing effective equipment with low expenditure does not seem very logical to us. In our opinion, it was not right from the very beginning to extend the exemption of thermal power plants in environmental investments. Environmental equipment investments of old thermal power plants should have been made as soon as possible. There is no longer financing for thermal power plants in international markets. There is no possibility to invest in a new thermal power plant, no large-capacity equipment sales, no spare parts production. *** Last year, we have seen serious blockages in project finances. According to the latest reports of International Credit Rating agencies, it is difficult to say that we are in the position of "investment country". Evaluation agencies, instead of making negative evaluations, stop evaluating difficult geographies in such situations altogether. The monetary policies of the new US president, Joe Biden, follow the Trump era almost exactly. The new Treasury Secretary Janet Yellen maintains the same monetary policies of the old period, the US FED interest rates are predicted to rise, when 25bp increases with 3-month renewals are added in 2022, hot money will be absorbed from the whole world and directed to the US market. The price of oil per barrel has fluctuated in the range of 80-90 US$ in the past year. There is Eastern Mediterranean gas, but how it will be transported is still on paper. It takes at least 4-5 years, maybe 10-years for the solution. Russian natural gas is very expensive for us, 1000m3 costs us 310-320 US dollars. TurkishStream natural gas pipeline coming from Russian sources under the Black Sea has been built, but it was later subjected to US sanctions. The 30 billion BCM gas that came to us cannot be resold to Europe. We have neither the money nor the capacity to pay. There were news that natural gas was found in the Black Sea. It has been announced that the proven reserve is 400+ BCM. Eight years is enough for us at the most after starting its use. This figure does not meet the domestic demand for a very long time. Serious investments were made to build a submarine pipeline, to establish production platforms, the money was allocated, and the purchases were made. New combined cycle power plants and power plant renewals were put into operation. But what would happen if, for some reason, Russian gas was cut off completely? We have a serious gas supply risk. Turkish Stream has stepped in, it is not clear what amount will be given to us. In the US, the price is around $2.50 for 1-MMBTU. The increase in the amount of shale gas in the USA and the German renewable energy incentives have a role in this outcome. There is an expectation of a general increase in Russian natural gas due to the high oil price. On our side, there are big fluctuation in price reaching the local end consumer. There is an increase in wholesale prices, but the situation in end-user prices depends on the policies before the 2023 election. Debt restructuring has been done in our energy market, and it will be done. Changes from private to private ownership may occur again in power plant properties. Our growth at the end of 2021 is expected to be stable at most, optimistic public projections indexed to the 2023 elections are higher. Politicians believe that energy investments should increase more than the growth rate. It is not easy to find revenues to cover public expenditures. Ministry and Regulating Authority show understanding in the commissioning of new power generation plants. In the past, test trial and control temporary acceptance procedures were carried out seriously and took long time, but now it has started to be done very quickly. Regulating Authority has long withdrawn money from the energy market under license fees. They bought a new building and made office expenses. However, the market does not have to pay more money to cover the expenses. *** Refractory deterioration, equipment and I&C system, synchronous malfunctions are heard in cheap domestic coal-fired thermal power plants that are in operation. Emre maturity is low. CFB (Alternating Fluidized Bed) designs are not compatible with our domestic lignite. In Konya Ilgın, Tufanbeyli, Elbistan, Kangal region, domestic coal containing a lot of water (too moisture) does not burn in the CFB combustion chamber, it is necessary to use auxiliary liquid fuel constantly in order for it to burn continuously. The coal enters the combustion chamber as ice in the winter and mud in the summer. It is necessary to reduce the water in the domestic coal with pre-heating. Bag filters are not enough ESP (electrostatic precipitator dust collectors) is added. Afşin-B-like "indirect firing pulverized coal combustion" preheated indirect pulverized coal combustion design seems more compatible for our domestic lignite coals. There is a lot of ash in the West Anatolian local lignite coals, preheating is required to reduce the water, too much ash clogs the chimney channels after the combustion chamber, too much ash comes out too much slag, to keep the ash A very big bag filter ESP FGD is needed to hold the sulfur, to carry them to the ash dam It requires large water pumps, a large ash dam. Defective units of Afşin Elbistan-B power plant were repaired and reactivated. The availability of working units is not yet at the desired level. The field of Çöllolar mine is still closed due to landslides. How long will the domestic open-pit coal from the Kışlaköy coal field and other coal fields take this system, mostly by truck transport? There is not much willingness for other new thermal power plant investments in Afşin Elbistan, there are no serious investors. Far East Financing groups are on hold due to the pandemic and high fuel prices, and they are in no hurry for new investments. They are assessing the situation to buy old facilities that have lost a lot of value. Those started in imported coal power plant investment projects will end, but the political will has taken a clear stance on not to use of imported coal, which increases and negatively affects the current account deficit. After that, imported coal investment is not recommended. Price of imported coal in the international spot market (South Africa, Colombia, Australia) per metric ton has risen a lot. There are no new energy investments in the Southeast. The region absorbs and uses energy - electricity, but our people do not pay the bills. There's a lot of lost. Instead of spending more money for security, we say that it would be more rational to explore the possibilities of solving problems through dialogue. With the new renewable regulation application, certain teachings came to the renewable energy market. Companies learned well what to do, hydro, solar, wind investments got in the way. Unit electricity production costs in renewable power plants started to decrease. These are the most pleasing news, domestic manufacturing opportunities are increasing. With the activation of solar specialized regions, three-digit installed power can be reached. We expect wind investments, each with a capacity of 1000 MWe, to become operational. Renewable incentives are unnecessary in our opinion All kinds of coercive incentives are unnecessary and incorrect, because those who really need them cannot get incentives, those who are close to the political decision centers can get them more easily. The news that "Sinop Japanese project was cancelled" for nuclear was published, then it was denied. On-site construction work continues in Akkuyu Long-term high price increases with purchase guarantees in nuclear energy give serious concerns to the markets. More investment will be required in environmental equipment, clean coal technologies. In the near future, there will be a complete escape from coal all over the world and a total cut off financing for fossil fuel power plant investments. While the critical target of energy strategies is essential for economic growth, it is necessary to increase plant efficiency and availability, reduce the increase in demand or keep it constant. We have a relative surplus at the moment, but this situation will not last long. In addition, most of our excess supply comes from solar wind farms that are not continuously produced, these power plants are not available 24/7. Renewable energy sources can only work 2000-3000 hours a year. If there is wind, sun and water, there is energy, otherwise there is no energy. Most of the time there isn't. In other words, the availability of 98 thousand MWe installed power is only 50 thousand MWe. Hard times come and go, always be optimistic. Happy new year and all the best. Prinkipo island in Istanbul, 29 November 2021 Haluk Direskeneli