beyondbrics

Much of Europe may be moving towards cleaner power but in Turkey it is a different story.

EUAS, the country’s state-owned electricity company, was due on Monday to sign a memorandum of understanding with two South Korean groups on a $2bn coal fired power plant. It is also moving ahead with plans for two nuclear plants.

The government says that by 2023 it wants to reduce the percentage of electricity generated by gas from 50 per cent to 30 per cent.

That contrasts with a new study showing that 71 per cent of new power generating capacity in the European Union last year came from renewable energy sources.

For economic and diplomatic reasons, Ankara is keen to cut its dependence on gas imports from Russia and Iran and to boost its – hitherto insufficient – domestic energy production. About three quarters of the country’s energy comes from abroad.

Turkey has had price disputes with both Moscow and Tehran, its two biggest gas suppliers. Such considerations are particularly important when you have a current account deficit of $77bn and an energy import bill of more than $40bn.

Having broken off one contract last year with Russia, by far Turkey’s biggest gas supplier, Ankara recently announced it was taking Iran to arbitration over the prices it charges.

Announcing the plan to reduce the share of gas in Turkey’s mix to 30 per cent, Taner Yildiz, energy minister, said at the weekend that the government would provide incentives for coal-based projects and impose limits on natural gas projects.

The memorandum of understanding – which Yonhap News agency said would be between EUAS and SK E&C and Korea South-East Power – fits into that plan and was timed to coincide with President Lee Myung-bak’s current trip to Turkey.

(Lee has other energy imperatives of his own during his trip to the region; he will later visit Saudi Arabia, Qatar and the United Arab Emirates as discussions intensify about alternatives to Iranian oil.)

Meanwhile, Turkey’s efforts to reduce its energy dependence also continue, with plans to build two nuclear power plants. One will be built by a Russian consortium on the Mediterranean coast.  Lee agreed to revive talks on South Korea involvement in the second.

Related reading:
Russian gas: under pressure, beyondbrics
Turkish inflation: at mercy of the lira, beyondbrics
Turkey’s bank weighs in to defend currency, FT