Industry Trend Analysis - Target Realisation To Boost Geothermal Ambitions - JAN 2018

BMI View: We expect Turkey to upgrade its geothermal ambitions upon prematurely hitting its 2023 target, particularly as pollution becomes more of a pressure point in line with Turkey's growing use of lignite-fired coal. The capital intensiveness of geothermal, coupled with increasing uncertainty over the future access to EU-funding, leads us to be cautious on growth beyond the initial 1GW target.

We believe Turkey will surpass its target to install 1 gigawatt (GW) of geothermal capacity by 2023 as early as 2020. This will be the result of growth driven by the country's existing pipeline of geothermal power projects - most notably the 165MW Kizildere III geothermal power plant that will come online over in stages over 2017/18.

We expect this to result in the Turkish government upgrading its target for the sector, with future expansion set to be aided by the country's feed-in-tariff system. These ambitions will increase as pollution is poised to become a more pertinent issue as Turkey's reliance on coal-fired power increases. As is evident in the chart above, the role of geothermal in the power mix, whilst currently on an upwards trajectory, is set to slip substantially over the coming decade. This is the result of the country's rapidly expanding power mix, with coal set to generate about 30% of all Turkish power over the coming decade.

2023 Target To Be Met, Ambitions Will Increase
Turkey - Geothermal Capacity, MW (LHS) And Share Of Total Power Generation (RHS)
e/f = estimate/forecast. Source: EIA, TEIAS, BMI

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