An easy win for Turkey: leaving behind imported coal
New wind and solar power now cheaper in Turkey than running existing coal plants relying on imports
Available in: Türkçe
Highlights
-50%
Change in new solar power plant cost in the last five years
-32%
Change in new wind power plant cost in the last ten years
+200%
Change in hard coal prices in a year
About
This analysis calculates variable generation costs of hard coal power plants with varying efficiencies and compares them with the lifetime per unit generation costs of new wind and solar power plants to be constructed in Turkey.
Executive summary
Key findings
Rising coal prices in the world now make it cheaper to build a new wind or solar park for power generation in Turkey than running even the most efficient hard coal power plant that relies on coal imports.
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01
Coal prices are on the rise
International hard coal prices are 3 times higher than a year ago. Coal prices are doubled in less than four months and have reached the highest price in the last decade. This has also affected the prices of coal Turkey mainly imports from Colombia.
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02
Wind and solar power costs are declining
In Turkey, new wind power installation costs are 32% lower than five years ago, and new solar power installation costs are 50% lower. Hence new wind and solar power are now cheaper than existing imported coal power generation costs, even without a carbon price.
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03
Turkey imports billions of dollars coal
Turkey has 9 GW of coal power installed capacity that relies on coal imports, which makes up 45% of its total coal power capacity. If hard coal power plants continue running at high capacities, coal import bill in 2021 can set a new record by reaching 5 billion US dollars, 3 billion of which is estimated to be burned by coal power plants. Turkey can dramatically lower its multi billion dollars coal import bill and potential carbon border levy by switching to cheaper green alternative.
A short history of costs
Wind and solar getting cheaper, while coal prices are skyrocketing
In this chapter:
Turkey has 9 GW imported coal power installed capacity, which makes up 45% of its total coal power capacity. However, Turkey’s reliance on imported coal is relatively recent. In 2010, the country generated only 7% of its power from imported hard coal. Since then, the electricity demand has increased by 50%, much of which was met by imported coal, which rose to a 21% share in 2020.
This reliance comes with a cost. When the coal price reached its previous peak in 2018, coal imports cost 4.7 billion USD to Turkey over the course of the year, of which an estimated 2.85 billion USD was imported for power generation. This represents a more than a sevenfold rise between 2014-2018, since in 2014 coal imports for power generation cost an estimated 400 million USD. In the first half of 2021, Turkey delivered 9.5 million tonnes of hard coal to the coal power plants, close to the volume in 2018-H1. Under current coal price levels, if imported coal plants continue running at high capacities, the coal import costs may set a new record by reaching almost 5 billion USD in 2021, 3 billion of which is estimated to be burned for power generation.
A milestone in costs
Wind and solar are now cheaper than hard coal
In this chapter:
Conclusion
Low hanging fruit: Imported Coal
In this chapter:
Turkey could see several advantages from switching from imported fossil sources to local alternatives for power generation. It will not decrease the import bills only, but decrease the carbon intensity of power generation as well. A possible implementation of a carbon border tax including indirect emissions from the goods imported by the EU from Turkey may cause an economic loss between 2.7-3.6% of Turkey’s GDP by 2030. A switch into wind and solar from imported coal is not only economically more viable and keeps a huge amount of money inside Turkey, but it will also reduce air pollution. Despite their young ages, some imported coal power plants in Turkey rank highly for air pollution among all European coal power plants.
The transition from imported coal to domestic wind and solar is also in line with the energy strategy of Turkey established on using local and renewable energy sources in electricity production. The feed-in tariff appears to have accelerated the energy transition recently by enabling it to reach 13% wind and solar share in power generation. However, now the country enters into a new era without generous subsidies. The fate of this new era will depend on Turkey’s level of ambition to curb its import bill.
