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Turkey and Germany to Cooperate on New Energy Projects

Turkey and Germany to Cooperate on New Energy Projects

At the end of 2018, Germany and Turkey agreed on closer cooperation in new energy projects. Both countries jointly targeted renewable energy sources, energy storage, and energy efficiency. For this purpose, Turkey and Germany jointly made four bilateral working groups.
In fact, renewable energy has a great impact on Turkish and German economy ties and in the relationship between two countries, in the last 15 years, German companies had invested approximately €25 billion in the Turkish energy sector. Possibly already active German companies will be able to get the advantages more easily but for other foreign investors, it’s a chance as the energy sector has high potential.

Turkey: The Nation with the High Demand for Energy

As a developed and newly industrialized nation, Turkey has a great demand for energy resources. With the rapid economic development and population growth, the demand for energy in Turkey increased since 2002. From then with the growing economic performance, the need for energy increased proportionally. The energy sector has seen an average growth of 5.5% since 2002 and the demand will increase in the upcoming years. To satisfy this increasing need Turkey planned to use renewable energy resources. Presently Turkey comes in 5th position both in energy consumption and electric market in Europe.
With this current growth of energy, by 2023 a minimum 110GW will be needed. To generate this amount of energy, Turkey uses all-natural and renewable sources for energy production from the last decade. Turkey and Germany’s cooperation on new energy projects is just a step of that.

Investment Opportunities in the Energy Sector

To fulfill such high demand, Turkey opened all public and private investments since 2002. With such a positive approach from government private investments attracted to the energy sector that resulted in an 85% share of private entities in electricity generation in 2018. To manage and operate energy markets, including power and gas commodities The Energy Exchange Istanbul (EXIST) was established in 2013. In 2018, through M&A transaction investors carried out USD 400 million in the energy industry. Still, Turkey is a net energy importer country, so to generate energy the government created a favorable investment environment that will give strength to the renewable energy sector. There are various investment models, unlicensed (small-scale), licensed (medium scale), and YEKA (large-scale) models for different kinds of investors and to encourage investors there are many lucrative incentive instruments. So, for foreign investors, it can really be a good option to invest in renewable energy projects. There is already a demand in the market and investors need to capture it.

Easy Opportunities for Foreign Investors

With government policies, Turkey is aiming to achieve approximately USD 11 billion of the investment amount in the energy sector for energy efficiency. Recently in February 2020, the World Bank approved an additional fund of US$ 325 million for Turkey’s Renewable Energy Integration Project, but a hefty amount is needed, and foreign investors can easily use this opportunity.