Gas takes bigger share in Turkey's power as drought lowers hydro output

ISTANBUL-Anadolu Agency

Drought in Turkey changed electricity generation dynamics since the fourth quarter of last year with the increased share of natural gas plants out of total generation replacing falling output from hydropower plants, data compiled by Anadolu Agency showed.

Hydropower capacity in Turkey has shown an increase of 80 percent over the last 10 years, representing the largest capacity among clean energy sources at over 31,000 megawatts, and accounting for almost one-third of the country's total installed capacity.

However, as the share of hydropower out of total electricity generation varies depending on rainfall, the average share of hydropower plants over the last 10 years has been 23.2 percent.

A hard drought in 2014 saw the water level reach the lowest at 29.6 billion cubic meters (bcm), in contrast to the highest in 2019 at 81.6 bcm, according to data of the Hydroelectric Power Plants Industry Businessmen’s Association.

The share of hydropower plants out of total electricity generation in 2014 amounted to 16 percent and in 2019 jumped to 29.2 percent, data from investment and consultancy company, APLUS Energy, showed.

In 2014, natural gas plants compensated for lower output from hydropower plants, generating 48 percent out of the total, but with heavy rainfall in 2019 when hydropower generation was at its highest, this share dropped to 18 percent.

Volkan Yiğit, a partner at APLUS Energy, told Anadolu Agency that the average share of coal plants in Turkey's total electricity generation was 31.9 percent in the last decade, with natural gas plants reaching 35.2 percent, hydropower plants at 23.2 percent, and other renewables generating 9.7 percent.

He noted that the continuous increase in renewables capacity has ensured a drop in the share of natural gas plants in electricity generation.

This has been evident in wind power, which has seen the biggest increase in electricity generation in the past ten years, he said.

"Wind accounted for 2 percent of total electricity generation in 2011 and reached 9 percent last year. Solar, which has no share in electricity generation 10 years ago, met 3.7 percent of the total electricity output in 2020," Yiğit said.

"The share of renewables, except for hydropower, climbed to over 16.8 percent to 42.4 percent together with hydropower plants in 2020," Yiğit said.

'Gas replacing hydropower' trend ongoing due to drought

The amount of water in Turkey’s main dams has fallen by 27 percent last year compared to the previous year.

Last year the share of hydropower plants in total electricity generation was 25.6 percent, while the share for natural gas power plants was 22.7 percent, marking a 26.1 percent increase from the lows of 18 percent for natural gas in 2019.

Imported coal and lignite power plants accounted for 34.8 percent of total generation last year.

In the first five months of this year, the amount of water in the main dams dropped by 50 percent to 24.3 bcm compared to the same period of last year.

The share of hydropower plants during this period was 21.7 percent while natural gas power plants generated 27.3 percent of the total electricity output. Imported coal and lignite plants had a share of 31.9 percent in the January-May 2021 period.

Electricity market prices up due to drought

Yiğit explained that despite renewables lowering electricity prices, natural gas is still an important factor in determining electricity prices.

This was evident during the drought when greater gas plant output had more impact on electricity market prices.

"Just as electricity market prices fell in 2019 during the rainy season, prices climbed during the times of drought. This year, we have seen the impact of drought on electricity prices since April but we should also keep in mind the lower demand in the same month of last year due to the pandemic," Yiğit said.

The average rate price for one megawatt-hour of electricity in Turkey's day-ahead spot market was 260.3 Turkish liras in 2019 but surged to 278.7 liras last year.

The average price for one megawatt-hour in the first five months of this year was 314.3 liras.

The monthly average price in April 2021 was up by 72.3 percent to 312 liras and by 77 percent in May 2021 to 360 liras compared to the same months of last year. However, due to lockdown measures against the pandemic, both demand and prices were relatively lower during these months.

Turkey's electricity demand dropped by 15 percent and 16.7 percent in April and May 2020, respectively.

"However, since the second half of last month, a number of factors combined with drought and growing demand because of increasing temperatures triggered price increases," Yiğit said.

He said among these factors are natural gas power plants that are currently down, lower stock of imported coal plants, some technical constraints at lignite plants and lower wind power output.

The monthly average price for one megawatt-hour in June 2021 increased by 38 percent compared to the same month of last year to 402 liras.

The average price for one-megawatt hour climbed to 571 liras in the first week of this month.

"With the return of natural gas plants, increases in wind generation and lower temperatures, electricity demand will fall and the system will find its balance," Yiğit concluded.