The most promising sector in Turkey. Government's
diversified energy policies will pioneer many energy areas.
Electricity market is projected to operate in a healthy balance
in terms of determination of reference prices by establishment of
new stock exchange. Apart of electricity production, electricity
trading will be a prominent part of foreign investments.
Renewable energy resources are available for utilizing with new
legal infrastructure and eased fundraising opportunities.
Strategic and regional incentives are available for energy
investments with many support instruments such as VAT exemption,
corporate tax reduction and land allocation.
Pipeline transportation projects may attract foreign investors
under large scale investment incentives scheme.
Potential Opportunities in Shale Gas in Turkey: New Appetite
for Private Equity Investors
Shale gas has been approved as an alternative energy resources
by many countries. In particular, shale gas revolution has already
changed US energy policies in terms of manufacturing and pricing.
According to Energy Information Agency (EIA) projection, 46% of
total natural gas demand will be met from shale gas by 2035.
Another estimation of EIA delivered very remarkable results
regarding Dadas Shale field and Hamitabat shale field where 6
billion cubic meters of shale gas that may meet ten years of
Turkey's natural gas demand in view of many researchers. In
connection with latest researches, Royal Dutch Shell plc built a
partnership with state owned TPAO (Turkish Petroleum Corporation)
for generating hydraulic fracturing operations in Turkey. In
accordance with this agreement, Shell drilled first well in
Diyarbakır in October 2013. Moreover, international medium
size companies embarked on shale gas investments by local
partnerships and application of new exploration licences. The
latest penetration to Turkish shale gas market has been
substantiated by San Leon Energy which is a Dublin based by 75
share purchase of Alpay Energy.
In parallel with shale gas potential in Turkey, it is highly
expected that Private Equity funds will be intensively acted in
shale gas sector for the purpose of being first market players
regarding shale gas infrastructure expansion in Turkey.
Steady Demand in Energy
As an emerging economy, Turkish energy market has been
performing a growing stage in electricity and gas markets. In line
with the stable economic growth, Turkish electricity demand has
been consistently growing by average 3% annually in last decade. In
parallel with electricity market, natural gas consumption has been
escalating by 4.7 %. As a consequence, foreign investors will
endeavour to benefit from this growing market.
Hottest Energy Regulation: Investors keep an eye on wind
Longstanding government objectives in renewable energy markets
instigated venture capitals and private equities in Turkey. In
compliance with new by-law which takes place in the scope of New
Electricity Market Law Code 6446 Unlicensed electricity production
capacity by renewable energy resources has been increased from
500KW to 1 MW. Ministerial Cabinet will enable to expand up to 2.5
MW regardless of any amendments in law. In the light of this
regulation, market share of wind power production is likely double
up regarding cost benefits. Recent analysis indicated that 30% cost
reduction is estimated on wind power projects owing to new
regulation. Rising internal rate of return on wind power projects
in all likelihood will spark off eased lending policies in Turkey
is mostly lead by EBRD (European Bank of Reconstruction and
Development) and local banks.
Solar Power Plants Emerges over the Turkish Energy Market
Updated law on non-licensing electricity production will also
drive solar PV (photovoltaic) projects in Turkey. New legislation
will enable to produce up to 1MW energy and plugged into national
grid. Afterwards, government's feed in tariff (FIT) is
available with US$ 0.133 per kilowatt hour that may mount up to US$
0.20 per kilowatt hour providing local equipment is used for
construction of PV panels.
All in all, Turkey's desire on becoming significant energy
market player has been proved by revolution of local market
regulations and dimension of bilateral energy agreements in recent
years. By extension, foreign investment funds will reach to
divergent opportunities in terms of their size, target and
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On 6 October 2016, the UK's Secretary of State for Communities and Local Government, Sajid Javid, overruled local councillors on appeal and approved Cuadrilla's plans to explore for shale gas in Lancashire.
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Turkey's energy regulator previously ruled (decision numbered 5709, dated 30 July 2015) that a total capacity of 2,000 MW would be reserved in the period up until 2020 for wind power pre-license applicants to connect to the grid.
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