THE TREASURE BENEATH

Turkey 2013 | ENERGY & MINING | FOCUS: COAL POWER

Turkey's growing coal reserves have attracted increased attention from international companies, with government incentives being used to jump start a sector bursting with potential.

Over the past decade, Turkey's dependence on imported natural gas to fire its growing demand for electricity has expanded. Now, the country is taking steps to promote its vast coal reserves to foreign companies working in the energy sector and incentivize the development of coal as a power source.

At the beginning of 2013, Abu Dhabi's national energy company, TAQA, signed a $12 billion cooperation deal with EÜAŞ for a joint venture electricity generation project in southeastern Turkey, mainly using recently discovered lignite reserves in the region. “About 40% of Turkey's lignite potential is located in the Afşin-Elbistan lignite field," Halil Aliş, General Manager of EÜAŞ, said to TBY. “The potential installed capacity from a thermal power plant in that field is approximately 8,200 MW."

In early May 2013, Turkish Hattat Holding and China's Harbin Electric International also agreed to build a new coal-fired power plant in the Black Sea city of Amasra. The plant is projected to have a capacity of 2,640 MW and approximately $2.4 billion in investment is required to complete its construction. The deal marked the growing importance of coal as an energy source for a country that is experiencing exponential increases in demand. Of the 56,132 MW of installed energy capacity in the country, 8,140 MW is currently produced by domestic coal-powered generation.

In the first stage of the development in Amasra, 5 million tons of coal will be extracted on a yearly basis, Vice-Chairman of Hattat Holding, İbrahim Hattat, told the press. This amount will then be doubled to 10 million tons in coming years. After the facility and plant are constructed, coal extraction will begin at some point in 2014. Hattat Holding is already producing 1,000 tons of coal per day in nearby Zonguldak, and has been working with the resource for seven years in Bartın province.

In a recent push to take advantage of Turkey's diverse resources, local exploration activities have led to the discovery of more than 14 billion tons in coals reserves. Up until recently, analysts believed that there was only around 8 billion tons of the resource. “Since 2005, new databases were opened for common usage, and there were new exploration studies," Mustafa Aktaş, General Manager and Chairman of the Board of Turkish Coal Enterprises (TKİ), told TBY. “We have only explored 40% of Turkey for coal." Current exploration is being carried out by the General Directorate of Mineral Research and Exploration (MTA), which is part of the Ministry of Energy and Natural Resources. Of the total discovered coal reserves, TKİ owns approximately 2.6 billion tons.

Throwing its support behind the diversification of Turkey's energy mix, the Ministry of Energy and Natural Resources has spearheaded incentives and support for the coal industry. As part of the government's larger Vision 2023, the authorities are aiming for 30% of targeted energy production—from a total of 100 billion MWh per year—to be from coal. With the present-day share of coal at 17%, activity in the sector is expected to double over the next decade. According to legislation approved in June 2013, investments for coal extraction in manufacturing, energy, and mining are eligible to benefit from incentives in both high- and low-calorie coal. In the wake of new discoveries of lignite resources, the Ministry of Energy and Natural Resources is also encouraging the fueling of thermal power plants with coal. “Coal is one of the most important domestic resources for Turkey," Taner Yıldız, Minister of Energy and Natural Resources, explained to TBY, adding “The potential of domestic resources that can be used from lignite power in electricity generation is 120 billion kWh/year, and 44% of that potential has been evaluated." In line with the latest findings, the government has developed a new model to produce power from coal. With activity in the sector accelerating, investors interested in the project will have until the end of 2013 to prove their commitment. Turkey is aiming to generate about 18,000 MW of electricity using coal, and the Ministry has agreed to support any serious investors for a period of 30 years.