energy policies of iea countries turkey 2016 in-depth ......iea europe average energy intensity has...
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© OECD/IEA 2016 © OECD/IEA 2015
Energy Policies of IEA Countries Turkey 2016 In-depth Review
Gas markets
Sylvia Beyer
Desk officer, International Energy Agency
Istanbul, 10 October 2016
© OECD/IEA 2016
Turkey’s energy policy in the global context
China & developing Asia drive global demand: China’s transition to a more
diversified & less energy-intensive growth model impacts energy markets
The natural gas landscape is changing: Ample low cost LNG supplies available
for gas consumer markets – opportunity for competition and diversification
Low oil prices bring gains to consumers, but can also sow the seeds of future
risks to energy security and energy transition
Paris Agreement: the energy transition is underway, but not on track and
governments need to ring-fence policies against market swings
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China drives increase in global gas demand, as the United States takes a back seat
US gas demand growth slows sharply, driven by stagnation in the power sector;EU gas demand gradually recovers on coal & nuclear power plant retirements
-100
-50
0
50
100
150
China Middle East UnitedStates
India EU Korea andJapan
bc
m
Change in natural gas demand by region (bcm)
2009-15 2015-21
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Global LNG export capacity increases
LNG capacity additions will be led by the US & Australia over the next five years.Growing opportunities for Europe, including Turkey to benefit from competitive prices.
Liquefaction capacity additions
0
40
80
120
160
200
2009-15 2015-21
bcm
Others
U.S.
Qatar
Australia
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Greater competition is coming to the European gas market
US LNG is competitive in Europe
Oversupply in global LNG markets will intensify competition; flexible US LNG volumes are well-placed to compete in Europe
Nb: Based on cash costs and on forward curves as of June 7th 2016
0
2
4
6
8
10
12
2013 2015 2017
USD/
Mbtu
European hub prices (TTF) Henry Hub indexed LNG delivered to Europe
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Ample opportunities for diversification
Total energy supply, 1973-2015
Energy demand is growing rapidly and is dominated by fossil fuels (88%), signaling significant scope to improve efficiency and boost renewables
0
20
40
60
80
100
120
140
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Mto
e
Oil
Coal
Natural gas
Biofuels andwasteHydro
Geothermal
Solar*
Wind*
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Huge opportunities for energy efficiency
IEA Europe average energy intensity has decreased since 2005 (-16%). Turkey’s energy intensity has increased over the period (+7%).
Total energy supply per GDP in selected IEA countries
0
20
40
60
80
100
120
140
160
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
toe
/USD
GD
P (
ind
ex 1
97
3)
Spain
Italy
IEA Europe
Germany
Poland
Turkey
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Turkey’s gas demand reaches record levels
Gas demand skyrocketed from 20 bcm in 2003 to 48 bcm in 2015.Import dependency has risen and network capacity lags behind peak demand.
Gas demand (primary energy) per sector
0
5
10
15
20
25
30
35
40
45
50
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
bcm
Powergeneration
Industry
Transport
Residential
Commercial
Other
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Renewables deployment is taking off
Renewables make up 32% of the power mix, with wind & solar growing fast. Focus now needed on long-term targets, one-stop-shop permits & system & grid integration.
Share of renewables in electricity generation, 2015
0%
20%
40%
60%
80%
100%
Biofuels and waste Solar Geothermal Wind Hydro
TurkeyTurkey
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Turkey has an ambitious coal development plan; Cleaner coal technologies and refurbishments will be critical. Gas growth will not be in power generation.
CO2 emissions from fuel combustion by sector
Turkey’s power sector can play a key role on the road from Paris COP21
0
50
100
150
200
250
300
350
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
MtC
O₂
Powergeneration
Industry
Transport
Residential
Commercial**
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Gas versus coal
0
20
40
60
80
100
Turkey China United States World
%
Others
Residential
Cement
Iron and steel
Power
Turkey consumes large shares of coal in the residential and industry sectors, a rare case by international comparison (power generation).
Coal consumption by sector in selected economies (in %)
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Regional integration & energy security
Increasing regional integration: electricity system is synchronisedwith ENTSO-E Continental Europe, and TANAP will open the Southern Gas Corridor by 2018/20
Natural gas: High import dependency (58% Russia, and 87% gas pipeline imports) and interruptions as well as low N-1 resilience
Electricity: Good capacity margins, but actual power availability differs from installed capacity during demand peaks, low hydro basins and gas interruptions.
Historic blackout March 2015: east-west transmission corridor and power system management need to cope with large imbalances of load (west) and hydro production (east)
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IEA’s key recommendations to Turkey
Energy market reform: Promote competitive wholesale markets for gas and electricity with independent system operators and regulators
Energy security: Ensure investment in resilient gas and electricity infrastructure and nuclear safety/security. Diversification is key!
Energy efficiency: Implement a government-led EE plan focusing on buildings, industry, transport, cleaner coal, and air quality
Renewables: Adopt longer term targets, one-stop-shop permitting, promote network investment & grid integration rules
Long-term energy agenda: Building on Vision 2023, set out an energy strategy for 2030, consistent with climate and energy security goals
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Diversified gas supplies
- 10
0
10
20
30
40
50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
bcm
Nigeria
Algeria
Azerbaijan
Russia
Iran
other
Greece
Net imports
Net exports
Rising import dependency, as domestic gas production falls, increases single supplier dependency (Russia makes up 55% of imports). Diversification is key.
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Robust gas infrastructure
Insufficient network capacity margin (195 mcm/d over 230 mcm/d demand), but new gas storages are coming online but not enough (10%)
Investment in gas storage and LNG: The regulatory framework also plays a key role - LNG activities are not regulated but treated as gas storage
Low gas demand scenario: gasification and tender for gas regions have increased residential demand but coal to dominate the power sector in absence of carbon pricing
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Gas market institutional governance
Non-competitive market Deregulated/developing market Functioning market
Hands-off attitude
Wholesale price deregulation
Third-party access
Sufficient network capacity
Competitive suppliers
Link with financials
Spot market
Future market
GOVERNMENT
REGULATOR
COMPETITION AUTHORITYMARKET AUTHORITY
Building a market place requires independent system operators, regulators and strong role of the competition authority.
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Gas market design
Independent system operator as market facilitator with separate trade and transportation (full unbundling), transparent congestion management and capacity allocation, no transit
Gas and electricity sectors are closely interlinked – market design needs to be liberalised in both to build wholesale markets
Trading platform in Turkey: virtual hub with one entry exit zone, basis for regional collaboration, moving from long-term contracts to spot trading and new LNG trades
Transparent network planning
An action plan to deepen and complete the gas market reforms is critical!
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IEA recommendations – Gas
• Diversification of gas supplies: Continue bringing diversified gassupplies to Turkey by stepping up negotiations with international partners.
• Robust gas infrastructure: Speed up the expansion of the gastransportation network, gas storage and LNG facilities, and develop acomprehensive gas network plan.
• Complete the gas market reform: Set out an action plan towards a fullycompetitive and transparent gas wholesale market with an independenttransmission system operator, compliance with third-party access totransmission network and fully separate trade and transmission activities.
• Domestic production: Explore all opportunities for the development ofTurkey’s unconventional resources, using international experience andstandards.
• Consolidate security of gas supply: Run risk assessments andpreventive actions and emergency plans; evaluate policies with regard tocritical infrastructure and related electricity security issues; and considerthe benefits of increased energy efficiency and renewable energy use.