Despite the fact that several of Turkey's economic challenges - including a significant current account deficit, elevated inflation and high cost of credit - have not dissipated yet, various macro and sector-specific indicators signal that Turkey is undergoing a gradual rebalancing of its economy. While a sharp decline in economic activity in 2012 has taken its toll on power consumption, we remain optimistic about the power industry's growth potential. However, we highlight that plans to increase coal-fired generation appear to reflect a political move, rather than any long-term energy strategy.
With our view for a sharp decline in economic activity in 2012 having played out, we have downwardly revised our growth estimate for the country's power sector for the year. We believe that electricity consumption saw real growth of 6.89% year-on-year (y-o-y), down from a previous forecast of 7.90%.
We believe that generation growth came as close in growth terms, reaching 6.87%.
As highlighted in previous analysis, though not out of the woods yet, the Turkish economy seems to have turned a corner. The Turkish authorities have thus far successfully steered the domestic economy away from a hard landing, with evidence of a rebalancing away from an overreliance on domestic demand towards a greater focus on exports and a more welcoming monetary policy. Coupled with diminishing demand-side inflationary pressures, these factors support not only a brighter short-term outlook for the country's power market, but also reinforce our relatively bullish view on the power industry's growth potential- especially when compared to expectations for power markets in Central and Eastern Europe (CEE).
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With this in mind, we highlight that decisions regarding the country's capacity expansion plans and the future shape of its energy mix will be key in defining opportunities, most notably:
The government's decision to approve natural gas and electricity price increases in October 2012creates upside and downside risks to our outlook. Designed to support public finances, the move could also incentivise investment into the sector, improving the stance of power generators. Yet, we note that the hike is set to have an impact on inflation and could also have negative effects on power demand.
A certain degree of confusion has emerged in the thermal segment, following repeated announcements by the government that tenders for five to six gigawatts (GW) of new coal-fired plants could be opened soon. However, we judge this to be a political move rather than a longterm energy strategy and question the viability of this push.
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Table Of Contents
BMI Industry View
Turkey Power SWOT
Industry Forecast Scenario
Turkey Macroeconomic Snapshot
Table: Country Snapshot: Economic and Demographic Data
Table: Country Snapshot: Power Sector
Turkey Forecast Scenario
Electricity Generation And Power Generating Capacity
Table: Turkey Total Electricity Generation Data And Forecasts, 2010-2017
Table: Turkey Total Electricity Generation Long Term Forecasts, 2014-2021
Table: Turkey Electricity Generating Capacity Data And Forecasts, 2010-2017
Table: Turkey Electricity Generating Capacity Long Term Forecasts, 2014-2021
Table: Turkey Total Electricity Consumption Data And Forecasts, 2010-2017
Table: Turkey Total Electricity Consumption Long-Term Forecasts, 2014- 2021
Transmission, Distribution, Imports And Exports
Table: Turkey Electric Power Transmission And Distribution Losses Data And Forecasts, 2010 - 2017
Table: Turkey Electric Power Transmission And Distribution Losses Long-Term Forecasts, 2014 -2021
Table: Turkey Trade Data And Forecasts, 2010-2017
Table: Turkey Trade Long-Term Forecasts, 2014- 2021
Key Policies/Market Structure
Regulation And Competition
Sustainable Energy Policies
Key Projects Database
Table: Key Projects - Power
Central And Eastern Europe Regional Power Risk/Reward Ratings
Table: Central and Eastern Europe Power Risk/Reward Ratings
Turkey's Power Risk/Reward Ratings
Competitive Landscape/Company Monitor
Glossary of Terms
Table: Glossary of Terms
Methodology And Sources
Power Industry - Data Methodology
Generation And Consumption Data
Electricity Generation Capacity Data
Power Risk/Reward Ratings Methodology
Table: Power Risk/Reward Indicators