Renewable energy has a key role to play in powering the future. BP estimates that renewables will provide 30 percent of the world’s power by 2040. The cost of producing energy from renewables is falling rapidly, making renewables an increasingly good commercial investment.
A 2017 report by the International Renewable Energy Agency – an intergovernmental body with more than 150 member countries – found that the cost of renewables will be competitive with fossil fuels by 2020. The report spelled out the obvious direction of progress in terms of the cost of green energy. Since 2010, the cost of onshore wind energy has dropped by 23 percent and the cost of solar has plummeted by 73 percent. As green technologies develop, and economies of scale increase, the costs are likely to fall further.
We are now seeing a worldwide shift in public opinion on the climate change issue. The rise of the green parties in the recent European Parliamentary elections is just the latest manifestation of this global trend.
People are increasingly willing to pay extra for green power. Businesses want to be seen as green, and they will seek renewable power sources. These factors, and the rise of electric cars, imply strong future demand for renewable power. Many leading fossil fuel companies are now themselves developing significant renewable energy businesses.
The direction of progress in terms of government policy is also clear, as governments around the world compete to set ambitious targets for renewable energy. More than 190 countries have signed both the Paris and Kyoto agreements on climate change. Nations are submitting their emission reduction targets to the UN. For example, in 2015, Turkey submitted a climate pledge to cut emissions by up to 21 percent by 2030, compared to a business-as-usual scenario.
Governments across the world are each pursuing their own strategies to reduce emissions and increase renewable energy. As a Turkish energy lawyer with experience of large renewable and fossil fuel projects in Turkey, I have seen, first hand, the effect of Turkish government policy in encouraging the development of renewables. Turkey has achieved remarkable progress in a short time.
A quarter of Turkey’s energy already comes from renewable sources. Yet the government plans to aggressively increase this proportion to 30 percent by 2023. As an open economy, keen to attract investment in renewable energy, Turkey provides significant opportunities for investors in the sector.
Strategic focus on renewables
Even as new oil and gas fields are discovered in the Black Sea and Anatolia, the Turkish government has maintained its strategic focus on developing renewables as a crucial component of Turkey’s energy mix. Turkey has abundant sunshine and wind, so it makes sense to look to these natural resources when building power capacity for a growing economy. Along with wind, solar and geothermal, Turkey also boasts significant existing hydroelectric generation capacity. Hydroelectric plants already generate over one-third of Turkey’s electricity.
One major economic benefit of the switch to renewables comes in terms of employment. Building power generation capacity through renewables creates more jobs than creating the same capacity through fossil fuel generation. It is estimated that meeting Turkey’s 2023 renewable targets will result in up to 545,000 new jobs in the energy sector.
In 2016, the Turkish government introduced ‘renewable energy zones’, dedicated to renewable energy power generation. The plan is to develop 10,000 MW of solar and wind power in the coming decade through an open tender process. In 2018, for example, the government sought tenders to build a 1,200 MW offshore wind plant, which will be one of the biggest in the world.
In 2018, the Turkish government announced two ‘100-day plans’ to rapidly increase renewable capacity. The first of these, announced in August 2018, attracted some US$7 billion in investment for 340 renewable projects through a series of tenders. $4.8 billion was invested in solar power plants alone, with the aim of creating an additional 3 gigawatts of solar power. The second 100-day plan, announced in December 2018, sought to attract US$4.5 billion for 454 renewable projects. The government is also implementing feed-in tariffs and developing new investment incentives for renewables.
As well as boosting jobs, switching to renewables can make countries energy independent. As a net importer of energy, over half of Turkey’s balance of payments deficit is relates to energy imports. The economic benefits to becoming more self-sufficient in energy are clear: by increasing domestic production, Turkey reduces its exposure to currency fluctuations and volatile oil and gas prices.
Given the political, economic and environmental benefits of renewables, it seems to be clear that the renewable energy sector is set for significant growth in the years ahead. As green technologies develop, political support grows, costs come down, and consumer concern increases, investment in renewable energy now makes both economic and environmental sense.