The development of the turkish power market with special respect to renewable power generation in Turkey

Abstract

The Turkish government has adopted a new energy policy to diversify electricity supply through exploitation of the remaining potential of the domestic fossil fuels and the renewable energy resources. The main goal of the new energy policy, so called “energy policy 2023” in this dissertation, is to increase the share of renewable in energy mix to at least 30% of the annual total generation in 2023; whereas to reduce that of natural gas to at least 30%. Accordingly, the target capacity expansion of renewable energy technologies (RETs) is anticipated to bring gains in gross domestic product, reductions in natural gas imports and CO2 emissions. The aforementioned assessments are limited in scope to the analysis of the impacts of substituting combined cycled gas power plants by RETs; although the governmental policies are principally analyzed taking into account their benefits and costs to the society considering alternative utilizations of the scarce resources. Therefore, this dissertation aims to carry out analyses on the energy policy 2023 regarding the development of the investments in RETs and the net social benefit of the proposed capacity expansion targets for the domestic energy resources. The investment analysis is carried out by quantifying the level of full load hours (FLHs) of operation to trigger investment in RETs by utilizing the net present value (NPV) and the real option methods taking into account the revenue streams from the feed-in tariff (FiT) scheme and the wholesale market price of electricity respectively. The results of the analysis are compared with the resource potential related to the FLHs of RETs in Turkey to discuss whether the capacity expansion targets are reachable or not. The novelty of this study lies in the application of the NPV and the real option methods to quantify threshold FLHs for the aforementioned investment analysis. The analyses on the development of the investments in RETs indicate that the targets for biomass, solar PV and geothermal power plants are anticipated to be reachable under the given assumptions; whereas the achievement of the targets for hydropower and wind power plants are considered to be dependent on the decision of the Turkish government whether the corresponding FiT rates should be increased. Indeed, the Turkish government has declared that the rates in FiT scheme can be raised; in order to reach the RET capacity expansion targets for the year 2023. The net social benefit of adopting energy policy 2023 is relatively measured by developing a capacity expansion model to conduct techno-economic analyses on the reference (i.e. energy policy 2023) and the alternative capacity expansion scenarios. Accordingly, the net social benefit of adopting energy policy 2023 indicates the 2015 present value of foregone/gained savings in capital, fuel and external costs in comparison to an alternative capacity expansion scenario. In total, four alternative capacity expansion scenarios are constructed dependent on renewable, imported hard coal and natural gas substituting for…