THE DEVELOPMENT OF COGENERATION SYSTEMS IN TURKEY AND ITS FUTURE TREND

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THE DEVELOPMENT OF COGENERATION SYSTEMS IN TURKEY
AND ITS FUTURE TREND

• Presented by
• OZKAN AGIS
• Chairman
• Türkiye Cogen Association
• A Regional Chapter of WADE Coordinated by COGENA,
  Italian Cogeneration Association
• March 20,2009-Rome-Italy

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Introduction

• According to the World Sustainable Energy
  Summit held on 2002, the countries can reach to
  their targets in the developments, if they could
  provide accessible, economical, reliable and
  sustainable energy for their citizens and for
  their industry.

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• International Energy Agency (IAE) states that, up
  to 2030, 26 trillion USD is estimated to be spent
  to maintain the security of supply in the
  electricity needed. 25 of this amount is to be
  used for the transmission and distribution
  related investments.
• We need to reduce this figure by designing and
  building new power generating plants as close as
  to the electricity consumers.
• The World Alliance for Decentralized Energy
  (Wade) has devoted its efforts on the
  Decentralized Energy Production since many years.
  
• Thanks to these valuable efforts today,
  Decentralized Energy has reached to 10 of global
  energy production.

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• Countries are developing in accordance with the
  importance they give on strategies and projects,
  which are in tune with the countrys geographic
  and geostrategic situation.
• Turkey, with its 780 000 km2 territory and with a
  73 million population, ( 70 percent of which
  living in Marmara and Aegean Regions), is a
  country that should take maximum benefit from
  Decentralized Energy Systems.

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• Up until 1990, the planning of electricity and
  the building and operation of its systems were
  undertaken by TEK later known as TEAS which
  is a public enterprise.
• TEK has perceived its mission to be connecting
  the electricity that was produced in the East
  (since most of the lignite reserves, and
  hydraulic potential are in the Eastern part of
  Turkey, and whilst 70 percent of the consumers
  are in the Western part ) to the West by a 380 KW
  energy transmission line, which is 1000 1500 km
  long.
• The misinterpretation of our geographical
  situation and the common understanding that any
  sort of regulation with regard to electricity
  must be of public enterprises, has continued
  until 1984, when private sector has been finally
  authorized to build their own facilities to
  produce electricity.

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• Although the law (No 3089) enabled private
  sector to build and operate plants and sell the
  surplus electric produced to the grid, up until
  1990 that the private sector started building its
  own plants since the advantages that the law
  brings to the private sector, have been very
  well understood.

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• After 1990, there were shortages, and
  fluctuations in frequency and voltage of
  electricity.
• With the frequent electricity blackouts, added to
  the above mentioned problems, the industrial
  consumers (so called Autoproducers) had to build
  and operate their own plants, which produce high
  quality electricity.
• Since so many years, industrial consumers were
  purchasing their electricity from TEK, which is a
  public enterprise and generating heat from
  separate boilers.

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• However industrial entrepreneurs got to the
  understanding that they would earn more money if
  they were to produce electricity and heat at the
  same time.
• Therefore Cogeneration Technology was started to
  be implemented.
• In Turkey at first, Cogeneration technologies
  were interpreted and executed as Industrial
  Cogeneration.

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THERE ARE OTHER REASONS FOR DECENTRALISED
PRODUCTION

• Although there are rich lignite reserves and a
  great hydro potential in the Eastern Turkey,
  these only meet 25 percent of the need, we have
  to import the rest being 75 percent.
• In other words we have to import 83 million tones
  of energy sources, out of the 110 million ton,
  which is the whole demand. Since we are
  importing such a great amount of energy from
  outside, if we were to direct our purchases to
  the Marmara and Aegean region, where the energy
  consumption is high, we would have great energy
  savings by consuming energy where its being
  produced.
• This is inevitability directing us to
  Decentralized Energy Systems and as a country, we
  save a lot by deploying decentralized energy.

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• As we know all, the most important fuel for
  cogeneration systems and combined cycled power
  plants is natural gas.
• Turkey started to import natural gas from Russia
  in 1987 for the first time via the Trans Balkan
  route, and the first decentralized energy plant
  has been deployed in Hamitabat Power Plant near
  the Bulgarian border.

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• As seen from the map, natural gas has been
  transported to places like Istanbul, Izmir, Bursa
  and Eskisehir, which are densely populated and
  the energy consumption high, from Hamitabat power
  plant, and caused to the establishment of
  approximately 200 Cogeneration Plants.
• The capacity of decentralized energy in Turkey
  increased by 100 times, to 6000 MW in 2006,
  starting from 1992, due to the advantages that
  the natural gas provide to the cogeneration
  plants, with its high efficiency and short
  payback duration.

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LEGAL STRUCTURE OF TURKISH ELECTRICITY MARKET

• The regulatory framework and structure of the
  electricity market are in the process of
  significant changes.
• In 2001 Electricity Market Liberalisation Law
  (No 4628) was enacted.
• The aim of this law was fully liberalized the
  Electricity Market.
• Market is regulated according to EMRA
  regulations and decisions.
• Since 5 years of operation, the market share of
  private operators reached to 20. The remaining
  80 is controlled by public companies, TEDAS and
  TETAS.
• The following sorts of licences can be obtained
  from EMRA
• a. Generation
• b. Autoproducers
• c. Autoproducers Group
• d. Transmission
• e. Distribution
• f. Wholesale
• g. Retail
• The Board of EMRA determines the licence fee.
  However, it seems reasonable.
• The import and/or export of electricity, can be
  conducted by wholesale licensees or retail
  licensees.

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THE DEVELOPMENT OF COGENERATION CAPACITY IN TURKEY

• The number of these plants has reached up to 300
  by 2009, meaning that, the average plant capacity
  has become 20 MW.
• They are all industrial cogeneration. Türkiye
  Cogeneration Association, which I am the
  president of, has greatly affected these positive
  developments by organizing seminars, conferences
  and symposiums in the potential industrial zones
  of Turkey.

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• The biggest and the most famous of these are the
  ICCI International Cogeneration Conference of
  Istanbul conferences, being the biggest
  cogeneration conference in Europe.
• The 15th of ICCI conferences will be held in
  Istanbul on 13- 14-15 May in Istanbul, at WOW
  Convention Center.
• As a result of these endeavours, Türkiye
  Cogeneration Association has been granted The
  Cogen Europe Award in 2000.

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WHY DID THE DEVELOPMENTS IN COGENERATION SLOW
DOWN?

• As I have previously mentioned, from 1994 to 2004
  there was a rather rapid development in
  cogeneration.
• However after the year 2004, natural gas prices
  were increased sky high. The price rises in
  natural gas, caused an increase in the
  electricity production cost and a decrease in
  profitability of electricity sales.

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• Under these circumstances, some cogeneration
  plants sized down their electricity generation to
  only meet their own need in the factories.
• This situation created shortages in electricity
  in Turkey. In August 1st 2006, the government
  deployed a new regulation to operate the Liberal
  Electric Market and thus free electricity market
  started operating.
• Today, as a result, there are 2 prices in the
  sector. One is the official price from TEDAS (
  11.0 US cent/kwh) and the other is the prices
  melted down in the pot of free market for day,
  night and peak hours.

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• Free Market Prices are approximately 10 20
  percent higher than the official price.
• Given this situation, there is a new hope for
  cogeneration plants (especially in the summer) to
  restart operating full capacity, and therefore
  new investments will be accelerated.

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• Below, we may see the correlation between the
  natural gas prices and the electricity prices in
  Turkey since 2004.
• Gas prices have increased sky high however the
  electricity prices stayed almost stable.
• During conferences and symposiums Türkiye Cogen
  Association has taken attention of the Minister
  of Energy to the fact that, the cogeneration
  plants in Turkey must be survived with the
  measures to be taken by the Government..
• As a result of our pressure, the price of
  electricity has been increased by 22 percent,
  where as that of the natural gas has been
  decreased by 17 percent.

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• After these fundamental measures were operated,
  there have been new license applications for
  cogeneration investment. Today, approximately
  with a total of 4000 MW capacity of new
  Cogeneration Plant have got their licenses from
  EMRA ( Energy Market Regulatory Authority)

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WHAT IS THE SHARE OF COGENERATION CAPACITY AND
PRODUCTION IN TURKEY?

• First of all lets take a look at Turkeys
  balance of power supply and demand.
• Since 5 years Power Plant Investments have not
  been performed in line with growing power demand
  in Turkey.
• Table 1. shows electricity supply / demand
  balance between 2006 - 2010.
• That means in 2007 and 2008 Turkey is not
  importer of electricity. But, if measures are not
  taken in 2007 and 2008, as of 2009 it becomes a
  net importer of electricity next years.

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• As far as cogeneration capacity is concerned , by
  the end of year 2008, it has been recorded that
  there is 6605 MW total installed capacity in
  cogeneration sector. This figure corresponds to
  15 percent of Turkeys total capacity, which is
  41748 MW.
• In terms of electricity production, the share of
  cogeneration plants has been 36353 Gwh the total
  of 198329 Gwh in Turkey by the year 2008. ( 18.3
  percent) I would like to get your attention to
  the fact that this performance has been reached
  despite the high gas prices and the global
  crisis.
• Despite very high price of natural gas, (45.0 US
  cent / m3), we believe that, the share of cogen
  production in total, will keep its steady
  increase of 0.5 percent per year and its share in
  total is estimated to reach to 24 percent in 2015.

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WHAT ARE THE OTHER OBSTACLES WHICH ARE SLOWING
DOWN THE COGENERATION DEVELOPMENT?

• The obstacles in front of the development of
  cogeneration systems are as follows
• The reluctance of TEDAS (Electricity Distribution
  Authority) to facilitate Cogeneration plants to
  connect to the grid
• The slow progress in the legislative operations,
  which regulate implementation of residential
  cogeneration
• High taxes and funds on natural gas and other
  fuels used for cogeneration plants.
• In order to overcome these obstacles, our
  Association has been working in cooperation with
  Sister Associations and organizing meetings with
  the Ministry of Energy.

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MICRO COGENERATION

• Thanks to the intensive follow up of Türkiye
  Cogen Association the micro-cogeneration has
  been a part of the Energy Efficiency law numbered
  5627, which has passed in the year 2007.
• This law came into force on 02 May 2007. It is
  almost similar to EU Energy Saving Directive.

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• Similarly, our Association has been intensely
  lobbying for the EU Cogeneration Directive to
  be recognized under Turkish Law since 2004.
• We are pleased to see that the draft of the law
  is being finalized, and to be submit to the
  Parliament nowadays.
• If the above mentioned draft were to be
  legalized, the Cogeneration Plants would be given
  incentives in accordance with their efficiencies
  and this would in return cause the cogeneration
  technologies to further spread.

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THE FUTURE OF COGENERATION

• The demand for electricity rose annually with the
  average 8 percent in Turkey in the past 10 years.
  
• Only in the year 2008, with the effect of the
  global crises, the rise in the demand stayed at 4
  percent.
• In the past years, the governments have taken
  some measures to increase the electricity
  production from our indigenous resources such as
  hydro, wind, geothermal and lignite.
• Moreover the law that enables the deployment of
  certain incentives for electricity production
  from renewable resources has been passed.

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• However depending on the forecast for the
  upcoming 20 25 years, it can be seen that, our
  own renewable energy resources will not suffice.
• One of the calculations is derived from a
  scenario with the assumption that the average
  rise in the demand of energy would be 6 percent
  until the year 2030 annually.
• According to this scenario, by the year 2030, the
  demand in electricity in Turkey, will be 650 000
  GWH, and even if all the renewable energy
  resources such as wind, hydraulic, geothermal and
  biomass were put into operation, these all would
  only meet 30 percent of all the demand. ( 195
  000 Gwh)

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• If we were to use all our indigenous lignite
  reserves in electricity production, we would be
  creating a capacity worth 18 000 MW, which
  translates to 110 000 Gwh worth electric energy.
• All these calculations show us that, even if all
  the renewable energy and lignite resources were
  made use of there would still be need for
  imported coal and natural gas.
• Turkey has been authorized by the parliament to
  sign the Kyoto Protocol, and starting from 2012,
  certain sanctions will be imposed.
• This means that, the deployment of coal plants
  will not be as economic as it used to be, and the
  production cost of electricity will be higher.

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• This all means that the Natural gas plants will
  continue to have their privileged status due to
  their advanced technology, relatively low
  investment cost, being relatively more
  environment friendly, and requiring relatively
  shorter time for constructing.
• These all will affect cogeneration plants.
  Cogeneration technology will continue to attract
  the Turkish investors and will continue to have
  its privileged status as a preferred energy
  production model.

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Since the presentation time of my paper is
limited, you can send your questions to Türkiye
Cogen Association via following email.
info_at_kojenerasyon.com

• THANK YOU!