Demandbase Connect

June 1, 2009

Turkey Opens Electricity Markets as Demand Grows

Pages: 123456

Looking to Clean Coal

Another hope comes from rapidly developing clean coal technologies. A small-sized Turkish technology company, Detes Energy, holds the Turkish license for the British Gas Lurgi technology, which would enable it to convert lignite into a synthetic gas. The company recently signed a contract with German firm Environtherm Gmbh to build a 125-MW plant that would also produce methanol.

Detes Energy senior partner and technical supervisor, Dr. Mustafa Tolay, said, "This technology has the potential to help Turkey generate electricity from its lignite in a much more environmentally friendly way than at present. The technology is proven, and there are worldwide references; it just requires investment."

Tolay also claims that the higher costs of generating electricity using this method, as compared to conventional lignite-fired plants, will be offset by the sale of the chemical by-products produced in the process. Though it remains to be seen how significantly this technology will contribute to Turkish electricity generation, Detes is a good example of the high-technology companies operating in Turkey that are ready to add value to the sector.

O&M Options

Another way that Turkish gas- and coal-fired plants can reduce their environmental impact is by fostering a conscientious operations and maintenance (O&M) culture. Nedim Ergin, general manager of Turkish valve supplier Vastas, explained: "Many people talk about Turkey needing to build new power plants, but they forget that we can produce more electricity by increasing the operating capacity at our existing plants. More efficient plants are also better for the environment."

Vastas supplies valves for the 770-MW combined-cycle Baymina plant located near Ankara. New private ventures like Baymina have high capacity factors, whereas many of the older, government-run plants are operating at much lower efficiencies. Successive governments have cut back nonessential repair work, believing that the plants were soon to be sold to the private sector.

Cemal Yucer, chairman of Ankara-based service and maintenance firm Proterm, said, "I worked for the state generating company for many years, and it had a very high technical competence. However, it is difficult for them to always fund the projects that they want to, and with so many plants to build and maintain, it is not surprising that maintenance was not always allocated the funding it needed."

"This is different with private companies, who value O&M because they see money spent on such services as an investment not a cost. Money spent on O&M will result in less downtime, fewer hours lost through injury and a more controlled plant environment," added Yucer.

Attuning to the difference in culture between state-owned entities and private companies is one of the most important aspects of the privatization process. Hasan Ozdemir, chairman of the Prokon Ekon group of companies, explained: "Public institutions (such as EUAS) have been successful in improving Turkey’s electricity infrastructure, but I feel that the advantage of private companies is that they can respond more quickly to changes in market conditions."

Although the government has pledged to diversify the generation mix, generating power on a macro scale involves a combination of social, economic, and political issues. Just as Turkey has a commitment to cut harmful emissions, it also has an obligation to provide cheap, secure electricity that can power economic growth and improve the lives of its people.

For overwhelming economic and political reasons, Turkey is likely to continue relying on coal and gas to fuel the lion’s share of its electricity generation. The country needs to face up to the challenges created by using fossil fuels. The most effective way it can do that is by applying and developing new technologies. This can range from new combustion techniques to the latest O&M procedures. Indeed, the imminent need for new generating facilities is a timely opportunity for Turkey to secure a cheap, clean baseload power supply for the future.

Hydroelectric Power Potential

With mighty rivers such as the Euphrates and the Tigris, 25 river basins, and a varied topography, it should come as little surprise that Turkey has 16% of Europe’s theoretical hydropower potential and 1% of the world total, according to the General Directorate of State Hydraulic Works (DSI). Furthermore, unlike the other clean energy sources (solar, wind, and geothermal), which Turkey also has in abundance, hydroelectric power is already making a significant contribution to the country’s electricity generation.

The political desire to exploit more of the estimated 433 billion kWh of theoretical hydro potential has been strengthened by volatile gas prices and intermittent service from its two main suppliers, Russia and Iran (Table 1).

Table 1. Turkey’s hydropower potential. Source: DSI

The DSI has set the target of exploiting all technically and economically feasible hydropower potential by 2023 — the 100th anniversary of the much-venerated Mustafa Kemal Ataturk’s founding of the Turkish Republic. This date is especially poignant, as Ataturk, who laid the foundations for the DSI, saw hydropower as a means for Turkey to grow in strength.

Turkey started building its first large-scale hydropower plant 60 years ago, and there are now more than 172 plants in operation with a total installed capacity of 13,700 MW producing an average of 48,000 GWh/year — 19% of the electricity generated annually, according to the DSI.

Although the nameplate capacity of 13,700 MW is considerable, current projects are only using 35% of the country’s economically and technically feasible hydropower potential of approximately 140 billion kWh, according to the DSI. To give some international perspective to that figure, the U.S. utilizes 87%, Japan 78%, Norway 68%, and Canada 56% of their economically feasible hydropower potential.

At present there are an additional 148 hydroelectric projects under construction with a total installed capacity of 8,000 MW and projected annual output of 20,000 GWh. Looking even further ahead, the DSI has marked out another 1,418 projects that would add 22,000 MW of installed capacity and ensure that Turkey was using 100% of its economically and technically viable water potential. Government targets and plans are always nice to look at on paper, but most reading this report will want to know the reality on the ground (Figure 7).

7. A drop in the bucket. The Cindere plant is a good example of Turkey’s many mini-hydropower projects. The plant, located in Denizili, produces electricity from three 8.5-MW turbines. The plant entered service in 2007. Courtesy: Türkiye Müteahhitler Birligi

DSI Deputy Head Tuncer Dincergok explained: "We have been set this target and are working hard to meet it, but obviously it is impossible to say that we will use 100% of the economically viable potential. There is a finite amount of engineers, materials, and finance that can be used to construct these projects. Subsequently, we can direct these resources in the most efficient manner at those projects where it makes most sense. As such, even though we may not reach the 100% figure, we can reach a significant part of it."

Skeptical of New Hydro

Some in the industry are more skeptical. Aldonat Koksal, a managing partner of Ankara-based hydroelectric power plant (HEPP) design and consultancy firm HidroDizayn, said, "There are a number of technical challenges that will prevent that target from being realized. The present energy transmission lines will not be able to carry all the produced power, while the existing construction facilities (equipment and manpower) would not be sufficient to construct all projects within 10 years’ time."

One step that Turkey has taken to boost its hydro construction capability was to involve the private sector to meet the goal of exploiting 100% of the country’s hydropower resources by 2023.

The 2001 Electricity Market Law allowed the DSI to send projects to EMRA, which then issues a tender for licenses. The system also allows companies to plan their own projects and submit them to the DSI and EMRA for approval.

This process took time, however, as secondary legislation was also needed to establish the water use right agreements for electricity production activities. It was not until March 2005 that EMRA, which was also created by the 2001 Electricity Law, began issuing licenses. The length of time that it took for the licensing process to be clarified frustrated many investors, though times have since improved as all parties become more familiar with the procedures.

EMRA has so far granted licenses for 498 hydropower plants to the private sector, 30 of which have been completed. When EMRA began issuing licenses, it found the local private sector champing at the bit. In a March 4 interview, the DSI noted that one reason for this was that the activities of the DSI, which built a total of 55 hydropower plants with 10,783 MW capacity from 1954 until 2009, fostered a wealth of hydropower expertise in Turkey (Figure 8).

8. One of many. The EUAS-operated Gezende hydropower project went online in 1994 and produces electricity from three 53-MW Francis turbines. The dam is 71 feet high. Courtesy: BM Muhendislik ve Insaat AS

"The DSI was like a school for us," said Ibrahim Tugsuz, chairman of Ciltug and Tegtug, companies that produce hydro mechanical equipment and develop and operate HEPPS, respectively. "When I was a mechanical engineer on the Keban Dam project in the 1970s, we needed a large number of foreign consultants as we did not have the engineering expertise. After the success of large projects like the Keban and Ataturk HEPPs, a generation of Turkish engineers has gained invaluable experience and know-how that we can now export to other parts of the world," he added.

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