BORUSAN HOLDING AND GERMAN ENBW’S joint venture Borusan EnBW Enerji, one of the players in electricity generation investments based on renewable resources, is aiming to expand its generation portfolio with a project that will convert wind and solar power plants into hybrid power plants. Enis Amasyali, General Manager of Borusan EnBW Enerji, fielded questions about developments in the energy industry, what they mean for Turkey and the company’s operations.
HOW DO YOU READ THE DEVELOPMENTS IN OIL, COAL AND NATURAL GAS PRICES?
We are experiencing extremely dynamic days. We see a price scale changing from day to day in Europe. Brent crude, which was sold at USD 18 per barrel in 2020, has exceeded USD 80. Natural gas prices also rapidly surged. Coal, which was priced at USD 40 per tonne in 2020, continues to stand at above USD 230.
WHAT’S THE REASON BEHIND THIS?
The demand increase from the end of pandemic restrictions is an important part of the story, but this isn’t the only reason. Europe experienced a long winter last year. Then Asia experienced a hot summer such that supply was impacted in Europe, too. On the supply side, a fire at the facility in Siberia affected gas flows through pipelines from Russia delivering natural gas to Europe. There were also developments and speculation about the North Stream 2 pipeline. These issues impacted the natural gas supply. In addition, capacity at natural gas storage facilities has fallen to some 25%. Moreover, electricity generation expected from wind can’t be provided in many areas in Europe. Additionally, some regions also experienced drought.
WHAT HAPPENED IN COAL?
Coal prices are impacted by price increases on the natural gas side. In addition, there is a serious demand increase in China for coal and electricity generation from coal is experiencing troubled days because of carbon pricing. All this contributes to the current prices in energy markets.
WHAT’S THE SITUATION IN CHINA?
Power outages have started in certain regions in China. The central government gave instructions to coal power plants to generate no matter what happens. The problem has started to reflect on various branches of industry. As a result of restrictions imposed and power cuts polysilicon prices have increased by around 9% in recent days, which impacts renewable energy.
Increases in silicon prices may lead to a 2% price surge in photovoltaic modules. Prices for these products rose by 25% following other commodity price increases in recent periods. Fluctuations in other branches of industry continue as a result of restrictions triggered by the tightness in main commodities.
IS THERE ANY SITUATION THAT MAY HIT SOLAR AND WIND INVESTMENTS?
In my opinion, a short-term impact is in the cards. Developments point to some rise in unit costs. We consider them as short-term. We think that the downward trend in prices of renewable energy resources and the upward trend in efficiency will continue in the medium and long term. However, the sector is experiencing some short-term pain, and we expect that to continue for a while.
HOW DO YOU EVALUATE RESOURCE DISTRIBUTION IN POWER GENERATION IN TURKEY?
Considering the year-end figures in 2020, renewables made up over 50% of total installed power. On the generation side, the share of renewable resources exceeded 40%. We expect the share of renewable energy to increase in the medium and long term though the share of natural gas has recently increased as hydroelectric power generation has decreased due to drought.
ARE THE PROBLEMS EXPERIENCED BY HPPS DUE TO DROUGHT TEMPORARY?
There are many projections on the future of hydroelectric power plants (HPPs). Climate change will certainly have an impact on them. Some forecasts have started to become clear, especially in southern latitudes on the Mediterranean basin. Scientists estimate its effect to be lower in northern latitudes. This will certainly have an impact.
TO WHAT EXTENT IS IT POSSIBLE TO MAKE HEALTHY PRODUCTION PREDICTIONS ON RENEWABLES?
Predictability of wind is quite low. I leave aside solar energy. Production from solar is relatively clear. But we talk about an extremely volatile energy resource when we say wind. Specific to hydroelectricity, impacts of climate change will definitely be in the cards.
HOW WILL HYDROLOGIC DROUGHT IMPACT THE FUTURE?
All of us, all market players, prepare the budget for the next year with some predictions. We make estimations but it’s not crystal clear from today. Climate change is a fact, so it has impacts. We can’t make estimations by bringing the process down to a few months.
WHAT’S THE ROLE AND POSITION OF BORUSAN ENBW ENERJI IN THE TURKISH ELECTRICITY MARKET?
Both Borusan Group and Germany’s third largest firm, EnBW, are fifty-fifty shareholders of the company. We’ve reached 720 megawatts (MW) of installed power, 661 MW of which is generated by wind power plants (WPP). We are the largest wind energy company in Turkey. Development our one WPP field continues.
DO YOU HAVE A HYBRID POWER PLANT INVESTMENT PLAN?
We are on the verge of a major hybrid power plant investment. We foresee an investment of 94MW. There will be a very big solar power plant (SPP) on a very large field. The WPP in which we’ll additionally build an SPP, has installed power of 138 MW. This SPP is at the development stage. Our current portfolio mostly consists of Renewable Energy Resources Support Mechanism (YEKDEM) projects. We’ll become more active in this field that will gradually come out of YEKDEM.
“Technology to transform renewable energy plants into baseload plants”
The prediction that current renewable energy power plants will transform into base load electricity power plants with the support of technological developments and hybrid projects, is correct, according to Enis Amasyali, General Manager of Borusan EnBW. “But we say this assuming the missing link: storage. The picture will become clearer after storage is added,” he said.
“Nuclear should be in our energy basket”
Nuclear power plants are climbing to the top of the global energy agenda, according to Enis Amasyali, General Manager of Borusan EnBW. “Specific to Turkey, nuclear energy is a resource that should be in our basket,” Amasyali said. The first 1,200MW unit of Turkey’s first nuclear power plant is expected to be operational by 2023. “A 4,800MW base load plant is on the table in the following years,” he noted. “Nuclear is also an issue that attracts attention within the scope of the green transformation. I think that nuclear will play an important role in production diversification.”