Economical Sustainability and Social Stability Analysis of Renewable Energy Resources in Turkey

03/01/2018    Yazarlarımız English   

Economical Sustainability and Social Stability Analysis of Renewable Energy Resources in Turkey

Energy is one of the fundamental inputs of the economic and social development of the societies. Its consumption has been increasing parallel with the population and economic growth.

Since the establishment of the Republic, population, GDP and energy consumption of Turkey have been growing steadily. In table 1 energy, population and economic situation of Turkey between 1973-2013 were summarized.
 
 Table 1: Population, Economy and Energy Situation of Turkey Between 1973-2013
  Population  (*1000) GDP Billion $ (1990 Prices) GDP Per Capita $ Energy Demand (MTEP) Electricity Consumption (TWh) Energy Demand Per Capita Electricity Demand Per Capita (kWh/Person
1973 38.072 76 1,994 24.6 12.4 646 326
1990 56.098 150 2,674 53.7 56.8 957 1,013
1995 62.171 178 2,861 64.6 85.6 1,039 1,376
2000 67.804 214 3,158 82.6 128.3 1,218 1,892
2005 71.000 212 2,986 90.1 132.7 1,254 1,849
2010 73.722 732 10.079 105.13 211.21 1,426 2,864
2013 76.667 823 10.807 122.79 245.48 1.601 3.201
Resource: TurkStat and MENR

As it can be seen from above table, the population of Turkey was 38 million in 1973, and it increased more than 2-fold and reached to 76.7 million at the end of the 2013. However, the primary energy and electricity consumption increased 5 times and 20 times respectively in last 40 years. In other words, energy and electricity consumption increase ratio of Turkey is higher than its GDP and population increase. Since Turkey does not have enough domestic resources, energy demand has been met by the import of fossil based energy resources. As a result, while the economy and population were growing, the energy consumption also grew and the balance of payment was deteriorated. Because nearly 91 % of oil and 98.5 % natural gas and 12 % of coal, which is used in coal thermal plants, were imported in Turkey.
 
As of 2013, Turkey exported 151.8 billion dollars commodity and imported 251.66 billion dollars goods and services. The trade deficit was realized as 99.8 billion dollars. However, with the help of the tourism and other service sector’s revenues, the current account deficit realized as 65.1 billion dollars. In the same year, Turkey's energy import was 55.9 billion dollars and the share of energy in the total import was 22.2 %. With this level, energy import constitutes the 85.9 % of the current account deficit and 56 % of trade deficit. In other words, when the energy import was excluded, Turkeys’ current account balance can be sustainable without meeting any problem. Therefore, in order to decrease the current account deficit, it is necessary to find an urgent solution to the energy dependency of Turkey. In table 53, last eleven years current account balance and energy imports and their share were given.
 
Table 2: Energy Import and Its Share in Total Import and Current Account Deficit
Years Energy Import (Billion $) Total Import The Share of Energy Import in Total İmport (%) Current Account Deficit (Billion $) The Share of Energy Import in Current Account Deficit % Current Account Balance Excluding Energy Costs (Billion $)
2003 11.528 69.340 16,6 7.554 152.6 3.974,00
2004 14.384 97.540 14,7 14.198 101.3 186,00
2005 21.226 116.774 18,2 21.449 99 -223,00
2006 28.828 139.576 20,7 31.836 90.5 -3.008,00
2007 33.846 170.063 19,9 37.781 89.5 -3.935,00
2008 48.252 201.964 23,9 40.372 119.5 7.880,00
2009 29.889 140.928 21,2 12.124 246.5 17.765,00
2010 38.467 185.544 20,7 45.420 84.6 -6.953,00
2011 53.999 240.842 22,4 75.082 71.9 -21.083,00
2012 60.117 236.537 25,3 48.497 124 11.620,00
2013 55.915 251.661 22.2 65.066 85.9 -9.151,00
Resource: TurkStat, Ministry of Finance.
 
Since the establishment of the Republic, Turkey has been confronting with current account balance and energy deficit problems. When we examine the current account balance outlook of Turkey in above table, we see that except for the energy import, Turkeys’ current account balance can be sustainable and even sometimes it gives surplus. Apart from energy import, current account balance of our country can be positive five times, (in 2003, 2004, 2008, 2009 and 2012), with the contribution of the tourism revenues in last eleven years.
 
As mentioned in above chapters, there is a very strong correlation between the current account deficit, economic crisis and social stability of Turkey. Throughout the history of the Republic, Turkey experienced 15 economic crises and without any exception, all of the crises ended with the devaluation of the currency. In other words, nearly all of the economic crises are directly or indirectly related with current account deficit in the Republic history. As a result of these economic crises, lots of people lost their jobs, social stability was deteriorated and some of them ended with the military intervention. In table 54 the reasons, effects and results of the economic crises in Republic periods are summarized.
  
Table 3: Reasons, Effects and Result of the Economic Crises in Turkey
  Economic Crises Reason of Crises Effects of the Crises Results of the Crises
1 1929 Great depression, high current account deficit. TL was devaluated Statism was implemented and production structure of the economy changed.
2 1948 High budget and current account deficit TL was devaluated The government changed in the first election.
3 1954 High budget, current account deficit and high foreign debts TL was devaluated Some social turbulence was lived.
4 1958 High budget and current account deficit and high foreign debts TL was devaluated Some social turbulence was lived in Turkey and the first coup of the Turkish republic was done by Turkish Armed Forces in 1960.
5 1969 High budget and current account deficit TL was devaluated Some social turbulence was lived in Turkey and the second coup of the Turkish Republic was done by Turkish Armed Forces in 1971.
6 1974 Energy prices shocks, high current account and budget deficit. TL was devaluated Some social turbulence was lived and political instability was experienced.
7 1978 Populist public expenditures, public debts and high imports. TL was devaluated Some social turbulence was lived and political instability was experienced.
8 1979-1980 Oil crisis and high current account and budget deficit. TL was devaluated Some social turbulence was lived in Turkey and the third coup of Turkish Republic was done by Turkish Armed Forces in 1980. With the 24 January decision the import substitution policy was given up.
9 1986 High current account deficit and budget deficit. TL was devaluated There was no clear effect of the crisis on social or political life.
10 1989 High current account deficit and budget deficit. TL was devaluated There was no clear effect of the crisis on social or political life, however Turkish capital market was liberalized in 1989.
11 1991 High current account deficit and budget deficit. TL was devaluated The government changed the coalition periods were lived in Turkey.
12 1994 High current account deficit and budget deficit. TL was devaluated There was no clear effect of the crisis on social or political life but nearly 500.000 persons lost their jobs. Turkey was governed by coalitions for years
13 1999 Asian and Russian economic crisis and earthquake. TL was devaluated Because of the crisis and earthquake the social life was affected deeply.
14 2001 High current account deficit and budget deficit. Wrong prescription of IMF TL was devaluated The government changed in the first election and all of the coalition partners collapsed.
15 2008 Global economic crisis and decrease in demand in foreign markets. Economic growth realized as (-4.7 %) There was no clear effect of the crisis on social or political life.
Resource: Prepared by us by examining the economic crises of Turkey.
 
When we examine the table 3, we see that apart from 2008 crises, all of the crises are related with the economic structure of our country. Three of the economic crises, 1958, 1969 and 1979, ended with military intervention and 7 of them caused serious social turbulence and 2 of them, 1929 and 1979-80, changed the economic structure of the country. In the multiparty period, with the effect of the economic crisis, political parties, which were governing the country until the election, were pushed to the background in political life, like being in 2001 crisis. In short, economic crises affect the Turkish economy deeply and cause serious social and political changes in the country. Therefore, it can be said that there is a direct correlation between the economic crises and social and political stability in Turkey.
 
Economic structure of the country, however, depends on the foreign resources. Because of the lack of capital accumulation and high energy needs, Turkey has to borrow to finance its investment and energy expenditure by attracting foreign resources. Since the production structure of Turkey depended on imported input, today, the contribution of export is very limited compared to previous periods. As a result of the globalization and internationalization of the production process, the dependency of the countries in manufacturing sector was increased enormously. In order to produce and export their goods, the companies have to import at least some part of the final product from other countries, in which needed intermediate goods can be obtained at a cheapest price. Otherwise, the companies cannot compete in the international market.
 
Compared to developed countries, population of Turkey is very young, and the domestic demand of our country is higher than those countries. Therefore, even if the companies work on export sector, when they sell their goods inside the country, the current account deficit are affected negatively from this situation. Because foreign dependency of the manufacturing sector is more than 75 % and when the companies sell more than 25 % of their goods inside the country, the current account balance gives deficit.
 
The situation of energy trade is worse than other commodity trade, because the energy import is the net import of the country due to the lack of domestic fossil based resources. In other words, while some of the other produced goods can be exported, the energy import is largely consumed inside the country and creates the rigidity in current account deficit. Nearly all of the energy import is the “net import” of the country. However, since the energy is indispensable source of economic development, Turkey has to find a way to obtain its energy needs reliable and at an affordable price. In order to do this, domestic resources, both renewable and non-renewables, must be evaluated as soon as possible.
 
Turkey does not have enough oil and natural gas reserves but its coal and renewable energy potential is at a satisfactory amount. Nonetheless, Turkey cannot evaluate its domestic resources effectively. Today, nearly 65 % of hydraulic power, 7.25 % of wind energy, 59.7 % of geothermal energy and very small part of solar energy have been evaluating for the electricity production in Turkey. These ratio are the only economically potential of Turkey. In the technical side, the share of hydraulic decreased to 37 % in hydraulic, 4 % in wind 17 % in geothermal.  
 
Turkey consumed 245 billion kWh electricity in 2013. 239.497 GWh of this consumption was produced in Turkey from different kinds of resources, 7.425 GWh electricity was imported and 1.235 GWh electricity was exported. The share of natural gas is nearly 44 % in 2013 and with the effect of the drought, this share rose to the 48 % as of September. Beside this, the share of imported coal was nearly 12 % in electricity production needs and 3 % of electricity was directly imported from abroad. Today nearly 75 % of primary energy and 59 % of electricity needs are met by imported energy inputs or direct electricity import in Turkey.
 
Sustainability comprises the economic, environmental and social development of the countries. Sustainable energy, which is the sub branch of sustainable development, includes provision of energy in a secure way, at an affordable price and in an uninterrupted manner. To maintain security, the country should meet their energy needs by using domestic resources or by diversifying the energy supply. Although Turkey cannot meet its oil needs from domestic resources, our country’s oil import is relatively diversified compared to natural gas. Turkey has been buying oil more than six different countries and neither of these countries have a dominant share in the oil import.
 
However, today, nearly 48 % of electricity was produced by using the natural gas. Turkeys’ natural gas import composition was also very unbalanced because it is largely depended on Russia (nearly 58 %). Iran came in the second place in natural gas import and these two countries meet the 75 % of natural gas needs of our country. Due to the high dependency to these two countries, especially to Russia, natural gas supply of Turkey is under the risk. In case of any political dispute, like being in Ukraine and Syria, or technical problem, as experienced with Iran in recent years, natural gas supply can be interrupted by directly supplier countries or transition countries. In addition, the supplier countries may use the energy as a weapon against our country and this situation may threat the national security and international benefits of our country. Turkey experienced to these two risks with Russia in the Russia-Ukraine crisis and at the civil war Syria with Iran. Therefore, to increase sustainability in terms of security of energy supply and to decrease the high dependency to one energy resource and one country’s energy supply, Turkey has to take precautions in natural gas energy field.
 
As it can be understood from above mentioned situation, the current economic situation of Turkey mainly depends on the foreign inputs and foreign energy resources. The distribution of primary and secondary energy supply is not balanced and this situation directly threats the economic independence and energy security of the country. High dependency to foreign inputs and foreign energy resources increase the current account deficit of the country.   Since all of the economic crises lived in republic era are directly or indirectly related with the current account deficit, the structure of the country makes it vulnerable against the energy and economic crises. As seen in table 54, the economic crises cause serious social and political changes in the country. Therefore, renewable energy investment can contribute both economic and social stability of country by maintaining energy security and decreasing the foreign dependency and current account deficit in the economic structure.
 
The government understood the importance of the domestic resources in energy area and prepared a new strategic plan to decrease the dependency to foreign energy resources. According to this plan the share of natural gas in electricity production will be decreased to 30 % by the year 2023. At the same time, the share of renewables will be increased at least 30 % at the same year. If this target can be succeeded, the energy security can be maintained, dependency to foreign resources can be decreased and current account deficit can be limited at a sustainable level. As a result, the economy will become more reliable against external shocks and social stability can be provided easily.
 
                                                                Sincerely...
                                                    Ömer DEMİRDAŞ


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