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Energy Policies of Turkey During the Period 1923–2003

A. Osman Yılmaz and Tuncay Uslu
aDepartment of Mining Engineering, Karadeniz Technical University, 61080 Trabzon, Turkey

Abstract

Turkey has been developing since the foundation of the Republic of Turkey in 1923. Turkish Government played a leading role in energy production and in energy use, as well as in other fields, and implemented several policies to increase electricity production. By 1950s, thermal power plants were used commonly in electricity production. In the following years, hydroelectric power plants were put into operation in order to use the considerable amount of water resources of the country. Coal-fired power plants using national resources accounted for 70–80% of the thermal electricity production. After 1960s, oil, an imported resource, was replaced with national resources due to two petroleum crises. Therefore, the proportion of use of lignite in the energy field increased. By 1980s, energy production lead by the government went on. Afterwards, applications of liberal economy policies resulted in implementation of different energy production methods, and the country had a increasing tendency to meet energy demand by imports as a result of improvement in international economic relations. Natural gas became prevalent in the country as well as all over the world and accounted for 45% of the electricity production in 2003. In this paper, implemented policies in the energy field during different periods since the foundation of the Republic of Turkey in 1923 was investigated.

Keywords: Energy; Energy policies of Turkey; Energy outlook of Turkey

Energy policies

Turkey's energy policies since 1923, can be discussed under five periods with respect to differences in the policies: Post-independency (1923–1930), first wave of industrialization (1930–1950), post-war mixed economy (1950–1960), planned mixed economy (1960–1980) and privatization and modernization (1980–2003). Implemented policies and their effects on energy production and consumption were investigated below.

The period 1923–1930

Fundamentals of the policies implemented during this period was determined in İzmir Economy Congress, in 1923. Liberal economy system was tried to be set up by making decisions in the congress. Only the government was authorized for petroleum exploration and production by the laws made in 1926. “Privileged companies policy” about electricity, inherited from Ottoman Time, was not changed and went on by 1930

The power plant with the capacity of 2 kW, located in Tarsus, became the first meeting of Turkey with electricity production. During the period 1923–1930, of all power plants, the number of hard coal-fired power plant, diesel-fired power plant, natural gas-fired power plant, steam-engined power plant, and hydroelectric power plant was, 3, 27, 4, 3 and 11, respectively. In 1923, total installed capacity and electricity production was 33 MW and 45 GWh, respectively. In 1930, installed capacity, electricity production, per capita electricity production and per capita electricity consumption were 74.8 MW, 106.3 GWh, 7.36 kWh and 6.2 kWh, respectively. The average installed capacity for the period 1923–1930 was 52 MW, 98% of which was constituted by thermal power plants While national product increased at a rate of 9.7%, growth rate of electricity production and growth rate of installed capacity was 14.2% and 14.1%, respectively. Per capita installed capacity was 14.8 W/person. Economic crisis in Turkey, started in 1926 and intensified in 1929 in parallel with the world economic crisis, increased the inflation and electricity prices significantly

The period 1930–1950

In the first and second industrialization plans prepared for the years 1933–1942 in order to increase the electricity production, to decrease the import dependency of production and to save money, it was reported that the industrialization could be possible by obtaining low-priced energy, and hydraulic and fossil energy resources should be explorated. In the second industrialization plan, the issues such as mining operations, petroleum exploration and production, coal-based synthetic fuel production and electricity power plants were included. The death of Atatürk who is the founder of the Republic of Turkey, and the start of World War II impeded the implementation of the plan. During this period, coal producer foreign companies were nationalized, and public enterprises such as Directorate of mineral research exploration (MTA), Etibank, Petrol Ofisi, and Electricity Surveys Administration (EIEI) were established. In 1940, the first petroleum productive well was drilled in the Raman Oil Field by MTA

After World War II, a new development plan was prepared in 1945, and energy projects of Etibank were started to be carried out. In 1950s, coal-fired power plants constructed and operated by Etibank, hyraulic power plants constructed and operated by İller Bankası, diesel-fired power plants constructed and operated by several industry establishments and municipalities, were used for electricity production. The installed capacity reached 407.8 MW, electricity production reached 789.5 GWh, per capita electricity production reached 38 kWh, and per capita electricity consumption reached 32 kWh. However, the proportion of the population able to use electricity was 23%. Average installed capacity for the period 1930–1950 was 212 MW, 97% of which was constituted by thermal power plants. In this period, growth rate of national product decreased by 2.9%, growth rate of electricity production and growth rate of installed capacity was realized 10.7% and 9%, respectively. Per capita installed capacity reached 11.7 W/person increasing by 143%  

The period 1950–1960

Economic policy of the period 1950–1960 was based on mixed economy and encouragement of private sector and foreign investors. However, the policy could not be implemented successfully. Public sector developed rather than private one. The most important issues in the period were World Energy Conference held in 1949 and First Energy Congress held by Turkish National Committee in 1953. In the First Energy Congress, the following decisions were made

1. Large and regional coal-fired power plants and hydroelectric power plants would be constructed rather than small and domestic diesel-fired power plants.

2. All country would be able to use electricity by regional power plants to be constructed and connected to the electricity network extending into all regions.

3. Electricity production and distribution works would be monopolized and run by Turkey Electricity Authority (TEK).

During the period 1950–1960, electricity production and consumption in Turkey increased in parallel with economic development and industrialization. Tuncbilek and Soma coal-fired power plants were constructed and started operation in 1956 and 1957, respectively. Turkish Coal Enterprises (TKİ), established in 1957, took over the coal mining operations from Etibank. In 1960, hard coal and lignite production reached 3.6×106 and 4.1×106 tons, respectively. The share of the private sector in lignite production increased from 17% in 1950 to 40% in 1960. In 1954, state monopoly in petroleum exploration and production was abandoned. In 1960, national petroleum production was 363×103 tons, 97% of which belonged to National Oil and Gas Company of Turkey (TPAO). The important property of this period is the constitution of private sector corporations excluding foreign capital in electricity operations. Besides thermal power plants, hydroelectric power plants were concentrated on in electricity production. In 1953, General Directory of State Hydraulic Works (DSI) was established in order to construct large dams. Thermal installed capacity, 389.9 MW in 1950, reached 860.5 MW in 1960 increasing by 120%, hydraulic installed capacity, 17.9 MW in 1950, reached 411.9 MW in 1960. Total installed capacity reached 1272.4 MW, the share of thermal power plants in installed capacity reduced to 82% In 1960, electricity production and per capita annual consumption reached 2815.1 GWh and 86 kWh, respectively. The proportion of the population able to use electricity reached 31.6%. Economic growth, growth rate of electricity production and growth rate of installed capacity realized 6.4%, 13.6% and 12.6%, respectively. Per capita installed capacity reached 31.2 W/person increasing 2.6-fold when compared with the previous period  

The period 1960–1980

In accordance with the Turkish Constitution, the period 1960–1980 became a period in which mixed economy policy dominated by the state was implemented, planned development was started and improved. In 1963, Turkey underwent the planned development period. In the first planned period (1963–1967) and second planned period (1968–1972) it was aimed that efficient use of the power plants would be increased and hydraulic energy resources would be evaluated. In the third planning period (1973–1977), state-control energy policy was adopted. Seyitomer and Hopa thermal power plants started operation in 1973. Keban hydroelectric power plant and Aliağa thermal power plant started operation in 1974 and in 1975, respectively. However, energy demand could not be met sufficiently in the third planning period. Primary energy resources such as coal and water could not be evaluated as much as required and, petroleum production could not be increased. Therefore, the country faced difficult situations in the energy field. In the fourth planned period, it was aimed that 53% of total energy consumption would be met by primary energy resources. However, during the planned periods, growth rate of energy production decreased despite the increase in energy consumption. At the end of 1977, import dependency in energy was 50% 

Energy investments which require high capital and profits in the long term, were realized by the state. Accordingly, the share of the private sector remained limited. Since energy investments, important income for manufacturing industry, could not catch up with the manufacturing industry investments, the country had difficulties in meeting the energy demand

Economic growth, growth rate of primary energy production and growth rate of primary energy consumption during planned periods in the years 1963–2005 are given in As seen from, the growth in primary energy consumption has been greater than the growth in primary energy production leading to a widening energy shortage. In addition, especially in the second and in the third planned periods, delayed energy investments made the energy shortage larger despite rapid growth in the manufacturing industry investments

The period 1980–2003

The period after 1980 can be seen as the time in which state-controlled economy was replaced with liberal economy Compatible with a liberal policies followed by the governments, public investments, including electricity investments, have been gradually cut down to decrease the public share in the economy. In addition, the government initiated some legal arrangements to attract the private investors to the economy. Electricity production and distribution works, defined as strategic and fundamental public services by Turkish Constitution Court, were included in the scope of privatization. While present public enterprises and plants were tried to be transferred to private sector by using different methods such as “Transfer of Operation Rights” and “Sale of Property”, new investments were aimed to be realized by private sector under the models “build–operate” and “build–operate–transfer” Although, the fledgling private sector eventually developed muscle, state-owned enterprises still accounted for a substantial portion of assets in Turkey, in the electric power sector. In common with many other countries, however, these enterprises—referred to collectively below as the public domain or the public sector—were prone to mismanagement and eventually ceased to be economically viable. Efforts at privatization have so far proved insufficient. The enormous investments demanded by the electricity sector leave the state little choice but to continue financing power system expansions, creating a vicious circle that cannot be broken, since the whole point of privatization was to move away from state funding and/or participation in the economy. Therefore, the solution has been to bring in foreign investments through the “build–operate” and “build–operate–transfer” models

After the second half of the 1980s, it was observed that the country had an increasing tendency to meet energy demand from imported resources. After 1987, the policy of realization of thermal power plants projects by private sector began to be implemented. Therefore, public sector investments decreased, new projects of lignite-fired power plants were cancelled, the share of imported resources in meeting energy demand increased The running of hard coal production works was taken away from TEK. In 1983, new “Petroleum Law” was made in order to encourage the petroleum exploration. In 1984, the monopoly of Turkish Electricity Authority came to an end by a law. In 1993 Turkish Electricity Authority was divided into two public companies named Turkish Electricity Generation and Transmission Company (TEDAS) and Turkish Electricity Distribution Company (TEAS) by decision of Coincil of Ministers 

During the period 1980–2003, electricity production reached 73,665 GWh and installed capacity reached 18 246 MW. Average increase in gross national product, in electricity production and in installed capacity was 4%, 8.2%, and 9%, respectively. Per capita installed capacity reached 300 W/person. While thermal power plants had a primary share of 57% in total installed capacity, hydroelectric and other power plants had a share of 43%. After 1998, the share of thermal power plants increased significantly

The share of lignite-fired power plants in electricity production, 42% in 1985, decreased to 16.8% in 2003. In the same period, the share of natural gas-fired power plants constructed by private sector under “build–operate” model, increased from 17% to 45.2%. The share of electricity produced by hydroelectric power plants reduced from 35% to 25.1%. Turkey became a country 60% of whose electricity was produced by using natural gas Since 1987 natural gas started to acquire a share in the energy resources Natural gas consumption has been the fastest growing primary energy source in the country. Turkey's natural gas consumption has started with 0.5 bcm (billion cubic meters) in 1987 and rapidly reached 16 bcm, by increasing 31.24 times in 2001. It is expected for this quantity to reach 43 bcm in 2005, 55 bcm in 2010 and 82 bcm in 2020. Turkey has several projects about natural gas usage in Turkey, and its transport to Europe  

In 2003, almost whole country has been connected to electricity. Nevertheless, the demand could not be met completely. Total primary energy production and energy consumption were 23.8 and 83.8 mtoe, respectively. The ratio of production to consumption reduced to 28%. Turkey has become a country which heavily depends on other countries in the energy field Total installed capacity was 35,587 MW, the share of resources was 35% by hydraulic, 55% by thermal and 9% by others. Total electricity production was 140 TWh, per capita net electricity consumption was 1581 KWh that is equivalent to 67% of the world average.

Conclusion

Energy policies of Turkey as of 1923–2003 changed continuously and showed contradictions from time to time. At first, hard coal as a national resource had a major role in energy production, then petroleum, an imported resource, came to the fore. Petroleum crises experienced between 1973 and 1979 brought about the perception of the importance of national energy sources. Therefore, lignite having large reserves in Turkey became primary resource. After 1990s, the country turned to imported resources again, natural gas took place with increasing proportion in energy production.

Recently, Turkey has not taken notice of the importance of energy based on national resources. Undervaluing of energy supply reliability threats the fundamentals of sustainable development of the country seriously. It is obvious that Turkey will face problems in meeting energy demand in the future. In order to meet the demand reliably, significant increases will be needed both in energy production and in supply in coming years. It is necessary for Turkey to meet energy demand with national resources. Exploration of new coal and petroleum deposits in the country should be increased, new technologies should be used for efficient energy production, special importance should be given for utilization of renewable energy resources and construction plans of nuclear power plants should be realized as soon as possible

 

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