The global energy sector is undergoing a significant transformation, which is primarily driven by the sector’s responsibility for nearly three-quarters of global greenhouse gas emissions, alongside the urgent need to mitigate climate change. As energy demand rises, the sector’s role in emission reduction becomes increasingly critical.

Recent disruptions in the global energy supply chain, which are triggered by the COVID-19 pandemic and exacerbated by the Russian-Ukrainian conflict, have intensified the ongoing global energy crisis. To ensure energy security, many countries are setting more ambitious and concrete targets to accelerate the energy transition.

Türkiye has made steady progress in the global energy transition. Technological advancements in renewable energy and declining costs have increased investments in this sector. Alongside renewables, investments in energy efficiency are also expanding. In rapidly growing economies like Türkiye, rising energy demand presents a challenge. However, implementing energy efficiency measures across various sectors can help limit energy demand growth, even as the economy expands. This shift also encourages manufacturing higher value-added and less energy-intensive products.

Since 2020, Türkiye has seen a greater reduction in energy intensity compared to the global average. The 1st National Energy Efficiency Action Plan (2017-2023) aimed to cut energy intensity by 20% compared to 2011 levels, and these targets were successfully met. The 2nd National Energy Efficiency Action Plan, launched in early 2024 (2024-2030), aims to reduce overall energy intensity by 15% by 2030, compared to 2023 levels, with a planned investment of $20 billion.

Renewable energy investments

Technological advances have made renewable energy, especially wind and solar, the cheapest energy sources, boosting investments in these areas in Türkiye. As of July 2024, Türkiye’s total installed capacity reached 113 GW, with 58% coming from renewable sources. Between August 2023 and July 2024, renewables accounted for approximately 46% of the total electricity generation in Türkiye. Solar and wind energy installed capacities have reached 17.5 GW and 12 GW, respectively.

The rapid growth in wind and solar energy was largely driven by the initial Renewable Energy Resources Support Mechanism (YEKDEM), which provided incentives when technology costs were still high. Additional support for local production has enabled Türkiye to manufacture most components of solar and wind power plants domestically.

According to the National Energy Plan published in January 2023, Türkiye aims to reach 83 GW of solar and wind energy (53 GW of solar and 30 GW of wind) capacity by 2035. In the recently announced "2035 Renewable Energy Roadmap" of the Ministry of Energy and Natural Resources, these targets were increased by 50%, aiming for 120 GW of wind and solar energy installed capacity. This means quadrupling the existing wind and solar capacity and would necessitate installing approximately 9 GW per annum by 2035. To achieve these targets, it will be important to rapidly implement the 70 GW of wind and solar energy capacity currently in the investment phase, ensure a predictable and transparent market, and secure the projected $108 billion investment.

Since 2017, six YEKA competitions (Renewable Energy Resource Areas) – three for solar and three for wind – have created a renewable energy project pipeline of 5,850 MW. However, only 20% of this capacity has been completed and is operational, consisting of solar projects. To accelerate project integration, it is important to analyze the technical, financial, and administrative barriers faced by investors and develop relevant solutions. It is evident that the 2035 Renewable Energy Roadmap includes regulation improvements aimed at addressing this issue. Incorporating additional criteria in YEKA auctions, such as evaluating the technical and financial capabilities of the bidders alongside bid prices, could also facilitate faster project implementation.

Grid investments

Investing in grid modernization is crucial for achieving wind and solar energy targets, as these sources have variable generation profiles. Integrating them safely into the electricity grid requires enhanced grid flexibility and digitalization. Türkiye has announced plans for $28 billion in grid investments, presenting a long-term approach to energy security through infrastructure planning. These efforts are essential for achieving both net-zero emissions and energy security.

According to recent studies, achieving the necessary transition in Türkiye’s power sector will require an average annual investment of $15 billion until 2053. Most of this funding is allocated to constructing new power plants, with the remainder designated for grid and energy storage investments. Enhancing the investment environment through increased market predictability, streamlined permitting processes, and alternative financing mechanisms will be key to securing the required financing. In light of the recent targets announced by the Ministry of Energy and Natural Resources, efforts are aimed at facilitating permitting processes and accelerating licensing procedures to support a higher level of new renewable capacity installations.

Expanding renewable energy and grid investments offers numerous economic and energy security benefits in addition to reducing power sector emissions. As a domestically sourced and sustainable energy option, renewables can enhance Türkiye’s energy security while reducing costs through lower energy imports. The economic benefits of wind and solar energy are particularly evident on days when their generation causes a price drop in the Turkish electricity market. Furthermore, with incentives for local production, many components of these plants are now manufactured in Türkiye, contributing to employment and industrial growth.

For Türkiye, a developing economy with a growing population and rising income levels, the energy transition presents an opportunity to achieve both sustainable development and net-zero emission targets. Aligning with Türkiye’s development plans, success in this transition will depend on establishing comprehensive policies that encompass all sectors of the economy. Developing short-, medium- and long-term roadmaps backed by robust legal frameworks is crucial for meeting these targets.

In that regard, the steps Türkiye takes toward energy transition are vital not only for ensuring energy security but also for meeting Türkiye’s 2053 net zero emission goal.