Energy market reforms in Turkey and their impact on innovation and R&D expenditures

Abstract

Energy sector is encountering serious problems which can be solved by technological innovations and increasing R&D expenditures. On the other hand, energy market reforms notably the establishment of competitive electricity and natural gas markets have resulted in a decrease of government energy R&D expenditures in most countries. Furthermore, there are rising concerns that private energy R&D expenditures are also declining as a result of energy market reforms, and companies are choosing customer-oriented innovations which may jeopardize the deployment of sustainable and renewable energy technologies. Turkey initiated energy market reforms in 2001, and has been trying to establish competitive electricity and natural gas markets since then. A survey of electricity and natural gas transmission and distribution companies in Turkey showed that nearly all of these companies have refrained R&D expenditures and have made organizational innovations mostly. Moreover, government energy R&D expenditures are very low compared to developed countries and enterprises are still trying to adapt to new market conditions. Nonetheless, energy market reforms may have positive effects on R&D expenditures and innovations as Turkey completes privatization of distribution companies, eliminates uncertainties in electricity and natural gas markets, and take measures to increase collaboration among enterprises, universities and government agencies.