Turkey's Path to Energy Independence

Turkey stands at a critical crossroads in its energy and economic development. As one of the fastest-growing energy markets among OECD countries with electricity demand growing significantly over the past two decades, the nation faces a fundamental challenge: balancing rapid economic growth with high energy import dependency that threatens its economic stability. This strategic predicament has made energy transition not merely an environmental aspiration but an economic imperative for Turkey's future prosperity and security.

The Import Dependency Dilemma

Turkey's energy dependency presents one of its most significant economic vulnerabilities. The country currently imports approximately 75% of its total energy needs, creating a structural burden on the economy and exposing it to geopolitical risks. This dependency costs Turkey between $65-90 billion annually representing roughly 20% of its total import bill and contributes significantly to its persistent current account deficit.

The stark reality is that Turkey imports 99% of its natural gas and 93% of its petroleum products, making it highly vulnerable to global energy price fluctuations and supply disruptions. According to the Centre for Economics and Foreign Policy Studies, in the 2010s, fossil fuel imports were "probably the largest structural vulnerability of the country's economy" and were a large part of Turkey's debt problems. This vulnerability was starkly demonstrated during recent global energy crises, when price spikes severely impacted the Turkish economy and contributed to inflationary pressures.

Diagram by Turkonomics

The Renewable Revolution: Progress and Potential

Against this challenging backdrop, Turkey has made remarkable strides in renewable energy development. As of 2024, renewables represent 54% of Turkey's installed electricity generation capacity, with 40% of actual electricity produced from renewable sources in 2023. The country has particularly excelled in hydropower development but is now rapidly expanding its wind and solar capacity.

Turkey's solar capacity has grown impressively, doubling from 9.7 GW in July 2022 to exceed 19 GW by the end of 2024, surpassing its 2025 target ahead of schedule. This acceleration demonstrates the country's ability to rapidly scale renewable infrastructure when policy and investment conditions align. Wind power, currently at about 12 GW, generates approximately 10.5% of Turkey's electricity, with ambitious plans to reach 30 GW by 2035, including 5 GW offshore.

Diagram by Turkonomics

The economic case for this transition is compelling. New wind and solar installations are now more economical than running existing coal plants dependent on imported fuel. The LCOE (Levelized Cost of Energy) for solar and wind has fallen dramatically, making renewable energy not just environmentally preferable but economically advantageous. According to industry analyses, every gigawatt of solar power installed saves Turkey approximately $100 million on gas import costs.

Coal Dependency: A Transitional Challenge

Despite progress in renewables, Turkey faces challenges in reducing its coal dependency. In a surprising development, Turkey overtook Germany in early 2024 to become Europe's largest producer of coal-fired electricity. Coal currently accounts for approximately 35.2% of Turkey's electricity generation, with a concerning trend showing increased reliance on imported coal.

This coal dependency complicates Turkey's energy transition and climate commitments. Coal-fired power stations are the largest source of greenhouse gas emissions in Turkey, producing about one tonne of CO2 per person annually. To achieve its 2053 carbon neutrality target, experts suggest Turkey would need to phase out coal power by the mid-2030s.

However, the first half of 2024 has shown promising signs. Turkey increased its clean electricity generation by more than 25% compared to the first half of 2023, while cutting fossil fuel-fired output by 9%. Clean power also registered its highest-ever share of Turkey's generation mix during this period, supplying 53% of all electricity, demonstrating that progress is possible with the right policy frameworks and investments.

Policy Framework and Investment Landscape

Turkey has established several policy mechanisms to accelerate its energy transition. The government has implemented feed-in tariffs, procurement auctions, and subsidies for rooftop solar installations. The National Energy Plan (NEP) sets ambitious targets, aiming for renewable energy to reach 50% of total energy supply by 2030 and 80% by 2053.

To meet these targets, Turkey needs to invest approximately $100-110 billion by 2035. According to October 2024 announcements by Energy Minister Alparslan Bayraktar, Turkey is committing to invest $80 billion in renewable energy capacity expansion and an additional $30 billion in grid infrastructure improvements. Recent clean energy investments have shown significant growth, with $4.9 billion invested in 2023, representing a 69% increase from 2022.

The current investment climate is increasingly favorable for clean energy, with the government offering attractive incentive packages for renewable energy development. Recent amendments to regulations have been made to complement the government's targets, including measures to encourage domestic renewable energy equipment manufacturing.

The Green Industry Project, a government-led initiative, promotes energy and water efficiency in Turkish industries by providing financial incentives to businesses that invest in energy-efficient technologies. This holistic approach recognizes that energy transition extends beyond power generation to encompass industrial transformation and efficiency improvements.

Economic Impacts and Future Trajectory

The economic benefits of Turkey's energy transition extend far beyond reducing import dependency. Studies suggest that an accelerated transition to renewable energy could generate net socioeconomic benefits estimated at 1% of GDP by 2030. These positive impacts include reduced health and climate change externalities, and wage income growth driven by higher-skilled, better-paid jobs in the clean energy sector.

A comprehensive energy transition could potentially reduce Turkey's energy import dependency from 75% to 25%, dramatically improving the country's trade balance and economic resilience. The shift would also position Turkey favorably in relation to carbon border adjustment mechanisms being implemented by trading partners, particularly the European Union.

Looking ahead, several factors will determine Turkey's success in this transformation:

1. Grid Modernization: Studies indicate Turkey could double its planned solar and wind capacity to 40 GW by 2026 with minimal changes to grid operations, though integration of up to 60 GW would require additional investment in transmission infrastructure and system flexibility.

2. Storage and Integration: The intermittent nature of renewable sources requires investment in energy storage solutions. Turkey has already agreed with Electricity of France (EDF) to develop battery storage systems to help balance grid variations.

3. Financing Mechanisms: Innovative financial instruments, including green bonds and specialized clean energy funds, will be essential to mobilize the capital needed for this transition.

4. Regulatory Reform: Continued refinement of energy market regulations, carbon pricing mechanisms, and subsidy structures will be necessary to create a level playing field for renewable energy.

   
   
   
   

   Against this backdrop, Turkonomics proposes the following ten-point policy package to accelerate the march toward true energy independence

   
   

   • Launch the Turkish Emissions-Trading System (TR-ETS) by 2026. Finalise the Climate Law and set a ₺450 /tCO₂e floor price, recycling 70 % of auction revenue into a Clean Energy Fund for grid and storage projects.

     
     

   • Stage annual 5 GW “storage-first” YEKA auctions. From 2025 onward, every winning solar or wind bid must pair at least 20 % of capacity with four-hour batteries, targeting 5 GW of storage online by 2030.

     
     

   • Set a transparent coal-exit date of 2040. Publish a binding retirement schedule and create a ₺20 billion Just Transition Fund for mining regions (Zonguldak, Manisa).

     
     

   • Turbo-charge rooftop solar. Lift the net-metering cap from 25 kW to 250 kW, grant instant VAT refunds on PV components, and issue a smart-inverter standard by 2026.

     
     

   • Mandate near-zero-energy building codes from 2028. All new urban buildings must hit ≤ 45 kWh /m²-year; retrofit 250 000 homes a year using EBRD-backed green mortgages.

     
     

   • Green industrial export corridor. Offer 24/7 clean-power contracts to steel, aluminium, and fertiliser exporters so they avoid EU CBAM charges, anchored by Sakarya gas and offshore wind.

     
     

   • Build 3 GW of pumped-storage hydro and 300 MW of synchronous condensers. These assets stabilise frequency and absorb surplus solar/wind power.

     
     

   • Double cross-border interconnectors to 6 GW by 2035. Fast-track HVDC links to Bulgaria and Greece to monetise surplus renewables and balance peaks.

     
     

   • Scale green-hydrogen clusters to 2 GW of electrolysers. Prioritise petrochemicals in Ceyhan and steel in İskenderun; grant a 10-year ₺1.2 /kg H₂ production credit.

     
     

   • Electrify transport: 30 % EV share by 2030. Extend the TOGG rebate to imported EVs under €30 000, roll out 120 000 public chargers, and cap fleet averages below 50 g CO₂/km from 2029.

   
   
   
   
   
   
   
   

The Path Forward

Turkey's energy transition represents both a challenge and an opportunity of historic proportions. By accelerating the deployment of domestic renewable resources, especially solar and wind power, Turkey can simultaneously address its energy security concerns, reduce its carbon footprint, create high-value jobs, and improve its economic competitiveness.

The progress already achieved tripling renewable electricity generation over the past decade and reaching new clean energy generation records in 2024 demonstrates that this transition is not just possible but already underway. However, the persistence of coal dependency and ongoing investments in fossil fuel infrastructure suggest that the path will not be linear.

For Turkey to fully realize the benefits of energy transition, a clear roadmap with binding interim targets, consistent policy support, and substantial public and private investment will be required. The stakes are high: success would mean not just a transformed energy system but a more resilient, independent, and prosperous Turkish economy for generations to come.

As Turkey continues to navigate this transition, the government's commitment to renewable energy targets, coupled with favorable economics for clean technologies, provides reason for optimism. The coming decade will be decisive in determining whether Turkey can transform its energy dependency challenge into an opportunity for sustainable economic development and leadership in the clean energy economy.