TURKEY COUNTRY ENVIRONMENT and RENEWABLE ENERGY MARKET

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1 TURKEY COUNTRY ENVIRONMENT and RENEWABLE ENERGY MARKET

2 WHY TURKEY? STRATEGIC IMPORTANCE Turkey has borders with 8 countries and commonly considered to abridge Europe and Asia. Its transcontinental location makes Turkey a strategically important country.

3 WHY TURKEY? GROWING MARKET Dynamic and growing market. Growing middle class. Youngest and fastest growing population in Europe Population: 78.7 million (2015) The average age is 30 compared to the EU average of 45. There is a strong existing business relationship between the UK and Turkey, backed by a longstanding political partnership, which includes UK support for Turkey's ambition to join the European Union. In 2010 the two Prime Ministers committed to doubling the bilateral trade between us by That trade volume grew by over 60% by Turkey is continuing to invest strongly in the future as they approach the centenary of the foundation of the Turkish Republic in 2023, with a wide range of pipelined projects.

4 ECONOMY Turkey is Europe s 2 nd fastest growing economy after Poland. Turkey s economy grew by 2.4% in 2014 after 4% in Q growth: 2.6%. Turkey is the world s 18 th economy and ranks 7 th among European countries. Turkey has shown an impressive level of economic development over the last decade, tripling GDP per capita. Currency Turkish Lira (TL) GDP USD 800 billion (2014-Current Prices) GDP Per Capita USD 10,515 (2014) Income Level Upper middle income Inflation Rate 8.17% (CPI-2014) Exchange Rate 1 GBP = 4.11 TL ( ) Financial Centre Istanbul

5 TRADE & INVESTMENT TRADE The UK is Turkey s 3 rd largest export market and 11 th largest import market. Turkey s major import markets are Russia, China, Germany, US and Italy. UK trade with Turkey has increased over the last 5 years to USD$5.9 billion in INVESTMENT There are around 100 Turkish companies established in the UK in sectors such as food & drink, household goods, mining, healthcare, retail, ceramics, software and technology. UK is also keen to support Turkish businesses which are growing internationally and offers an attractive location for those seeking a base in the European Union.

6 POLITICAL LANDSCAPE Government President Prime Minister Parliamentary Democracy Recep Tayyip Erdogan Ahmet Davutoglu Justice and Development Party (AKP), which has been described as a conservative democratic party has been in power since winning a landslide victory in the 2002 general election. Turkish general elections in 2015: - The first was held on 7 June 2015 coalition negotiations failed. - Last election was held on 1 November 2015 AKP won the majority of the vote (~50%) which is enough to form a government on its own.

7 DOING BUSINESS IN TURKEY European business ethics and modern management practices Highly (often foreign) educated managers, growing skills base Increasing use of English for business, but fluency varies People are very internationallyminded and have good regional awareness

8 Energy Sector Overview Turkey is a highly energy dependant country. It is importing 72% of its energy. Its dependency on energy imports to satisfy the rapidly increasing electricity demand (currently growing at 6% per year) is having a negative impact on the current account balance, which makes the economy s more vulnerable. Turkey s energy bill was over $60 billion in Turkey is increasingly more receptive to developing new kinds of energy (especially nuclear, hydro, wind) investment. It plans to make energy investments worth of $130bn through to 2030 and the government is keen that this will largely be carried out by the private sector. The private sector share of energy production has grown to over 60% by The Government would like to diversify energy resources and renewable energy is an area of focus to answer the increasing demand. The government has set a target for the share of renewable energy to reach 30% of total energy consumption by Turkey's renewable energy resource potential is estimated around 136,600MW (excluding hydropower and geothermal).

9 Renewable Energy Renewable energy has been one of the hot topics on Turkey s energy agenda. Significant progress has been made in the field of renewable energy starting from 2005, after the enactment of the Law on Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy (Renewable Energy Law, REL). Investments in renewable energy technologies remained limited between 2005 and 2010 due to the lack of secondary legislation and relatively low feed-in tariff prices. Nevertheless, the REL amendment in December 2010 introduced higher feed-in tariff rates for separate technologies, and various other monetary and non-monetary incentives.

10 Renewable Energy Targets by Increasing installed capacity of wind energy to 20,000 MW by Utilizing all economical and possible 36,000 MW hydroelectricity potential by Utilizing 600 MW of potential geothermal energy by Popularizing the use of solar energy in electricity generation and achieving 3,000 MW installed capacity. Feed-in Tariff Rates Technology Solar Wind (on-shore) Hydropower Biomass Tariff rate $/kwh $0.133/kWh $0.073/kWh $0.073/kWh $0.133/kWh

11 Such tariffs replace previous rates ranging from EUR 0.05 to EUR 0.055/kWh that used to apply to all renewable technologies. Tariffs apply for a ten-year period to power generators. Renewable producers will also benefit from a 85% discount on transmission costs for 10 years. The 2010 RE Law also includes bonus payments for hardware components made in Turkey to support and boost the national manufacturing sector. Companies the facilities of which rely on locally produced equipment/components receive a bonus to their feed-in tariff.

12 Key Opportunities - Solar Farms, project plans for 4-5 GW of solar farms in 3-4 different regions - There is still 9GW additional licence application waiting for wind energy until A total of 10GW offshore wind capacity offers investors a good potential in the area which is started to be considered recently by the government - Waste (Biomass) to energy is another field of great potential. Only 9 cities in Turkey have waste to energy facilities and the government is open to the idea of building more of these facilities - Ministry of Environment and Urbanisation is working on a zero waste project currently - Smart cities provide a huge area of opportunity

13 THANK YOU! Umay Uysal, Trade Manager