The electricity system in Turkey faces three challenges. First, demand for electricity is growing as economic growth brings increased energy usage. Second, as the electricity supply expands to keep pace with demand there is the need to ensure that electricity prices remain affordable. Third, as energy and electricity are at the heart of modern economies, energy security is critical for the electricity sector. To balance the competing demands of demand growth, affordability and energy security, policy must seek to create a framework that promotes technologies and projects that meet these needs and deliver sustainable development.
This report is divided into four sections. Section 1 provides a summary of the Turkish energy system. Section 2 describes the electricity sector subsidy policies that have been identified in Turkey and presents estimates for their magnitude where these are available. It then goes on to address externalities of coal use. Section 3 explores the role of subsidies in the energy systems considering the situation in 2013–2014 and projecting to 2030. The section also discusses the three challenges described above and considers the overall costs, including the levelized cost of energy, subsidies and externalities. Section 4 makes a series of policy recommendations based on the findings of the study.
