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THE DEVELOPMENT OF COGENERATION SYSTEMS IN TURKEY AND ITS FUTURE TREND

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. Introduction.

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THE DEVELOPMENT OF COGENERATION SYSTEMS IN TURKEY AND ITS FUTURE TREND

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  1. THE DEVELOPMENT OF COGENERATION SYSTEMS IN TURKEYANDITS 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

  2. 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.

  3. 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.

  4. Countries are developing in accordance with the importance they give on strategies and projects, which are in tune with the country’s 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.

  5. Up until 1990, the planning of electricity and the building and operation of its systems were undertaken by TEK –later known as TEAŞ – 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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 it’s being produced. • This is inevitability directing us to Decentralized Energy Systems and as a country, we save a lot by deploying decentralized energy.

  10. 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.

  11. As seen from the map, natural gas has been transported to places like İstanbul, İzmir, 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.

  12. 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.

  13. 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.

  14. 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”.

  15. 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.

  16. 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 TEDAŞ ( 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.

  17. 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.

  18. 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.

  19. 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)

  20. WHAT IS THE SHARE OF COGENERATION CAPACITY AND PRODUCTION IN TURKEY? • First of all let’s take a look at Turkey’s 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.

  21. 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 Turkey’s 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.

  22. 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.

  23. 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.

  24. 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.

  25. 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.

  26. 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)

  27. 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.

  28. 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.

  29. Since the presentation time of my paper is limited, you can send your questions to Türkiye Cogen Association via following e–mail. info@kojenerasyon.com THANK YOU!

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