"Turkey's Energy Transition 2024 Review and 2025 Projection" Meeting Held

SHURA Energy Transformation Center's "Turkey's Energy Transformation 2024 Assessment and 2025 Projection" meeting was held today in Istanbul. 

The opening speech of the meeting was delivered by Selahattin Hakman, Chairman of the SHURA Energy Transformation Center Steering Committee. Assessing global energy transformation, Hakman emphasized that clean energy is on an upward trend globally, stating: "The transition to clean energy and energy transformation have accelerated in recent years thanks to government policies and industrial strategies, and more importantly, the economic and competitive advantages provided by these technologies. However, due to global political, geopolitical and economic turbulence, there is more uncertainty than ever in the near term about how these policies and strategies will develop." 
 
Hakman explained the pace of global energy transformation through the figures he provided: "The global energy sector, which was worth 2 trillion dollars in 2015, reached 3 trillion dollars in 2024, while the share of clean energy within this figure increased from 50 percent to approximately 70 percent. Currently, 85 percent of power plants being built worldwide are based on renewable energy. Solar energy is the driving force in global energy transformation.

Solar panel installations increased by 217 percent over the past three years, with many countries including Turkey contributing to this rise. Electric vehicle sales, which were 2.1 million in 2018, showed an eightfold increase before the end of 2024, rising to 17 million. This year, global demand for batteries reached 685 gigawatt-hours (GWh), representing a 270 percent increase compared to total demand in 2020, which was 185 GWh."

Pointing out that governments representing over 70 percent of global energy demand implemented new or updated energy efficiency policies in 2024, Hakman said: "Last year, governments allocated approximately 60 billion dollars to efficiency measures in buildings and approximately 45 billion dollars to low-emission vehicles. This brought total efficiency financing allocated by governments over the past five years above 1 trillion dollars, but policy implementation will need to be accelerated to speed up progress in energy efficiency and align it with global climate targets." 

Hakman emphasized that global political developments indicate that countries may resort to economic protectionism policies and even lead to trade wars, stating: "This situation will slow global growth, and economies of countries lagging behind in clean energy technologies may suffer greater blows. For this reason, as Turkey, while focusing on rapidly developing these technologies on one hand, we need to accelerate our transition to our own low-carbon energy system on the other and prepare our industry for restrictions such as the European Union's Carbon Border Adjustment Mechanism, our most important export market." 

Strategic Steps Taken in Energy Transformation in 2024

SHURA Energy Transformation Center Director Alkım Bağ Güllü assessed 2024 as a year in which Turkey focused on energy transformation and accelerated renewable energy investments, taking strategic steps in energy security and efficiency with reduced energy imports.

Evaluating Turkey's energy transformation in 2024, Güllü said: "This year stands out as a period when Turkey's energy policies accelerated the renewable energy-focused transformation process. Investments in renewable energy sources and the determined short and medium-term strategic goals show that this transformation is progressing in a planned and determined manner. In particular, ambitious targets set for renewable energy, energy efficiency and grid investments, and the emphasis placed on digitalization, electrification, just transition and green financing demonstrate that energy transformation holds a central place in public policy. In Turkey's energy policy, important additions have been made in recent years to long-standing priority goals such as energy supply security and economic access to energy: the 2053 Net Zero Emissions Target. This target indicates an approach that emphasizes the environmental and climate dimension of energy policies more strongly."

Güllü emphasized that global energy prices began to normalize in 2023 and 2024, but Turkey needs to rapidly increase renewable energy capacity to avoid being affected by fossil fuel price fluctuations in the future. 

Critical Elements for 2025: Transparency, Predictability and Long-term Holistic Approach

Referencing YEKA auctions in her speech, Güllü emphasized that the announcement that new YEKA auctions would be conducted at the beginning of 2025, along with the commitment to conduct at least 2 GW of YEKA auctions annually, was a very important development in terms of presenting a predictable roadmap that investors have long awaited. 

Güllü listed 2025 expectations as follows: "Turkey's electricity sector alone requires an annual investment of 15 billion dollars. To secure this financing, transparency and predictability in markets are vital. While Turkey's ambitious increases in renewable energy targets demonstrate determination in energy transformation, the failure to update projections related to fossil fuels and clarify long-term strategies are notable important gaps. This situation causes some critical elements for comprehensive planning and implementation of transformation in the energy sector to not be fully addressed.

2024 was a year in which Turkey took important steps in energy transformation, but new questions were raised about the scope and impact of current policies and practices. This period brings both opportunities and challenges. The future of Turkey's energy sector is closely related to how it is planned in alignment with reducing import dependency, national development goals and sustainability priorities.

In this context, for the energy sector's transformation process to be successful, it requires a determined, long-term and holistic approach. On the other hand, we are going through a geopolitically difficult period. Developments that could affect the energy sector globally, such as US elections, the Israel-Palestine war, the recent situation in Syria, and the Russia-Ukraine war, will continue to impact Turkey."

Energy Transformation Must Be Addressed Together with Industrial Transformation

Güllü stated that for energy transformation, simply decarbonizing production—that is, increasing the share of renewable energy in energy generation—would not be sufficient, and renewable sources must also be used in end-use sectors that are the largest energy consumers: industry, buildings, transport and agriculture.

Highlighting that the industrial sector comes to the forefront as the trigger of economic growth and the largest energy consumer, Güllü stated: "Turkey's economic growth goals and energy transformation requirements necessitate structural transformation of the industrial sector. While industry is responsible for 50 percent of final energy consumption through activities it triggers, its low value-added and carbon-intensive production composition accelerates the external trade deficit and emission increases.

As international regulations such as the European Green Deal become decisive for the competitiveness of industry, it is critical that Turkey conducts this transformation process in alignment with sustainable development. At this point, beyond sector-specific growth or solely green/twin transition-focused policies, comprehensive policies encompassing industry, energy, transport, finance and trade policies aligned with sustainable development and growth are expected to create strong potential in terms of sustainable economic development and decarbonization, as well as increasing competitiveness in production and ensuring just transition," she said.

ENERGY TRANSFORMATION IN NUMBERS IN 2024 

Installed Capacity Increase
•    Installed capacity reached 115 GW, with 59 percent from renewable energy sources (it was 56 percent in 2023).
•    Of the 6.5 GW of installed capacity commissioned in 2024, 99 percent came from renewable energy sources: 5.4 GW solar, 0.77 GW wind, 0.24 GW hydroelectric. While solar is increasing, wind energy installations fell short of targets this year as well. 
•    Natural gas installed capacity decreased by approximately 1 GW during this period.  
•    With commissioned and decommissioned plants, a net increase of 5.3 GW in installed capacity was achieved. 

Electricity Generation
•    Gross electricity generation was 330 TWh (335 TWh in 2023). 
•    46 percent of generation during this period came from renewable energy sources (it was 42 percent in 2023).
•    The share of wind and solar energy in generation reached 18.3 percent (it was 16 percent in 2023).
•    Despite increases in hydroelectric and solar energy generation, there is a decline in natural gas's generation share. 

Energy Imports
•    According to the National Energy Balance Tables, the share of imported fossil fuels was 79 percent in 2023. By source, 88 percent of crude oil, 98 percent of natural gas and 62 percent of coal were imported.  
•    Dependency on imported fossil fuels plays an important role in Turkey's ongoing external trade and current account deficits. 
•    In the first ten months of 2024, energy imports reached 53 billion dollars. There was a decrease of approximately 5 billion dollars compared to the same period of the previous year. 
•    The energy-related trade deficit decreased by 5 billion dollars to 39 billion dollars compared to the same period of the previous year. 
•    The decline in imports stemmed not from price decreases but from declining domestic demand.  

EXPECTED ENERGY TRANSFORMATION IN 2025

Public targets
o    5 GW increase in solar energy, 2-3 GW in wind installed capacity, 
o    Allocation of 800 MW solar and 1,200 MW wind capacity under new YEKA auctions to be conducted at the beginning of 2025, 
o    Construction of 688 km of new transmission lines in energy transmission infrastructure,
o    Increase of battery energy storage capacity to 1 GW in 2025 and to 10 GW in 2028, 
o    Turkey's electricity sector energy transformation requires annual investment of 15 billion dollars.

Policy Expectations
o    Energy and Climate Policies: Actions regarding the net zero carbon target should be clearly defined. Subsidies and support should be redirected from fossil fuels to clean energy. The National Emissions Trading System should be implemented to support transformation.
o    Economic Policies: Turkey's macroeconomic agenda should focus on structural issues such as value-added production, workforce development and sustainable development.
o    Industrial Policy: Energy transformation should be addressed together with industrial transformation. Comprehensive industry, transport, finance and trade policies that raise technology levels alongside decarbonization and provide structural transformation in key sectors and advanced integration into international value chains should be adopted.
o    Employment Policy: New skills should be developed and employment in new fields should be facilitated. Retraining, compensation, job placement, early retirement and regional development programs in contracting sectors should be activated.
o    Financing Policies: Access to financing should be increased and with public leadership to diversify financial resources, financial structures and funding mechanisms should be created within the scope of a long-term energy transformation strategy with active participation of the private sector, financial institutions and civil society organizations.