Rise of renewable energy in Türkiye

The rise of renewable energy in Türkiye is a phenomenon that has garnered significant attention in recent years, particularly with the country’s ambitious targets and substantial investment plans. As of 2024, Türkiye is poised to become a leader in the global renewable energy landscape, presenting numerous opportunities for foreign firms looking to invest in this burgeoning sector.

Türkiye’s energy strategy

Türkiye’s commitment to renewable energy is underscored by its comprehensive National Energy Plan, which outlines a vision for a green transformation of its energy mix. The government aims to more than double wind energy and quadruple solar energy capacity by 2035, as part of an overall target to reach net zero emissions by 2053. This ambitious plan is supported by the country’s abundant natural resources; despite having tapped only 3% of its total solar and 15% of its total onshore wind energy potential, Türkiye is well-positioned to leverage these resources effectively [1].

Investment in infrastructure

A key component of this strategy is the $70 million investment plan endorsed by the Climate Investment Funds (CIF), which is expected to mobilize an additional $1 billion in climate finance [2]. This initiative, developed in collaboration with the European Bank for Reconstruction and Development (EBRD) and the World Bank Group, focuses on transforming Türkiye’s national power transmission system. The plan includes expanding transmission infrastructure, strengthening connections, and investing in smart-grid upgrades, as well as implementing technologies to improve system flexibility, such as decentralized electric charging stations and digitalization of the power distribution grid. These improvements are projected to enable the integration of an additional 60 GW of wind and solar energy capacity by 2035, significantly boosting the country’s renewable energy output.

Massive expansion plans

Türkiye’s large-scale investment plans in renewable energy are further highlighted by the government’s intention to invest $73 billion over the next dozen years. This investment is expected to add 74,353 MW of installed renewable energy capacity by 2035, making a significant leap in total installed capacity [3]. As of April 2024, Türkiye’s total installed capacity of renewable energy has already reached 63,000 MW, accounting for more than 58% of its total power generation. This solid foundation in renewable energy sets a strong stage for future development.

Demand growth and investment incentives

The current renewable energy market in Türkiye is characterized by a growing demand for energy due to the country’s increasing population and economy. As a net energy importer, Türkiye is keen to reduce its reliance on imported energy by increasing its use of renewable sources. By 2035, the aim is to increase the amount of renewable energy to 64.7% of the total energy capacity in Türkiye. This includes targets such as scaling up solar energy to 52.9 GW from the current 9.5 GW and achieving a battery storage target of 7.5 GW [4].

Foreign firms are particularly well-positioned to benefit from these investment trends in Türkiye’s renewable energy sector. The World Bank’s $1 billion program, ‘Accelerating the Market Transition for Distributed Energy,’ is a prime example of international collaboration. This program will support the development of 15 GW of renewable energy capacity across the region by creating and developing new markets for distributed solar energy and battery storage [5]. The program’s innovative use of country systems and results-based financing is designed to attract private investment, making it an attractive opportunity for foreign firms looking to enter the Turkish market.

Regulatory support and YEKA tenders

The Turkish government has also introduced several incentives and regulatory changes to attract investment in renewable energy. For instance, amendments to the Türkiye Electricity Markets Law now allow existing license holders of wind and solar power plants to establish electricity storage units within their generation facilities. Additionally, investors can apply for preliminary licenses to establish new wind and solar power plants with storage units, further incentivizing investment in renewable power generation [6].

The YEKA (Yenilenebilir Enerji Kaynak Alanları, or Renewable Energy Resource Areas) investment tenders have been a significant driver of large-scale renewable energy projects in Türkiye. These tenders have awarded substantial capacities for solar and wind power plants, including ancillary manufacturing facilities with research and development capabilities. The mini-YEKA auctions for wind and solar projects with production capacities between 10 and 100 MW have also provided opportunities for smaller-scale investments, making the market more accessible to a broader range of investors.

Conclusion

In conclusion, the rise of renewable energy in Türkiye presents a compelling opportunity for foreign firms. With its ambitious targets, large-scale investment plans, and favorable regulatory environment, Türkiye is set to become a major player in the global renewable energy landscape. As the country continues to transition towards a green energy future, foreign firms can capitalize on these trends to contribute to and benefit from this transformative journey.

For those looking to invest, it is crucial to stay informed about the latest developments and policy changes. The ongoing collaboration between the Turkish government, international financial institutions, and private sector entities ensures a dynamic and supportive ecosystem for renewable energy investments. As Türkiye continues to make strides towards its green development goals, the opportunities for foreign firms to participate in and contribute to this growth are vast and promising.