Dr. Öztürk SELVITOP Deputy Director General September 12, 2018

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1 GENERAL OVERVIEW OF TURKISH ENERGY SECTOR - Coal Policy Dr. Öztürk SELVITOP Deputy Director General September 12,

2 OUTLINE 1. General Energy Overview 2. National Energy & Mining Strategy Security of Supply Localization Predictability 3. Coal Policy 1

3 Robust Economy: Track record growth & bright future with proven resilience 2

4 TWh GDP vs. Electricity Demand Growth ,00% 10,00% 8,00% 6,00% 4,00% 2,00% 0,00% -2,00% -4,00% -6,00% -8,00% Electricity consumption (TWh) GDP growth Electricity Demand growth Ref: MENR, WorldBank 3

5 INSTALLED CAPACITY Private Public 68% 23% 32% 77% ELECTRICITY GENERATION 60% 40% Private Public 16% 84% % 41% 25% 8% Natural Gas 2. Hydro 3. Coal 4. Liquid Fuels Generation TWh TWh Installed Capacity 31.5 GW 85.2 GW 19,8% 9,9% ,7% 1. Natural Gas 2. Coal 3. Hydro 4. Other Renewables 5. Liquid Fuels Ref: TEİAŞ, EMRA 36,9% 0,7% 4

6 NATIONAL ENERGY & MINING STRATEGY Security of Supply Localization Predictability 5

7 ENSURING SECURITY OF SUPPLY - GAS Improving gas infrastructure Increasing gas entry capacity (10 bcf/d) Increasing the number of LNG terminals 2 onshore terminals total daily send out capacity of 2.71 bcf 2 FSRUs total daily send out capacity of 1.5 bcf Increasing the gas storage capacity currently 1.4 bcf, target 5.5 bcf 6

8 ENSURING SECURITY OF SUPPLY GAS Gas Interconnections TANAP - Inauguration Ceremony in June 2018 TurkStream - Under Construction ITG, BTE, Blue Stream, West Line, East Line - Operational 7

9 By its strategic geographical location, Turkey is located at the crossroads of natural gas producer countries and large consumer countries Security of supply of EU

10 NATIONAL ENERGY & MINING STRATEGY Localization Renewables Wind Solar Clean Coal Technologies Nuclear Energy Projects 9

11 RENEWABLE TARGETS FOR 2023 The whole economically feasible hydropower potential of Turkey will be provided for generating electrical energy, 20,000 MW capacity of wind power plant will be in operation Minimum 5000 MW of solar energy capacity will be reached Localization by Renewable Energy Zone Approach ~ 2000 MWe geothermal will be implemented 10

12 LOCALIZATION RENEWABLE ENERGY 11

13 LOCALIZATION NUCLEAR ENERGY Nuclear Energy Projects AKKUYU NPP May 12, 2010 Agreement was signed with Russian Federation 4 Unit Total MW Ground-breaking Ceremony has been held for the Akkuyu Power Plant. SİNOP NPP May 3, 2013 Agreement was signed with Japanese Government 4 Unit Totaly MW 12

14 NATIONAL ENERGY & MINING STRATEGY Predictable market conditions Liberalization & Privatization Energy Exchange EPIAS Transparency Restructuring Energy State Owned Enterprises 13

15 LOCALIZATION DOMESTIC COAL TRAKYA Reserve: 0,9 billion tonnes ANKARA ÇAYIRHAN Reserve : 0,4 billion tonnes ESKİŞEHİR ALPU Reserve : 1,5 billion tonnes AFYON DİNAR Reserve: 0,9 billion tonnes KONYA KARAPINAR Reserve : 1,8 billion tonnes K.MARAŞ ELBİSTAN Reserve : 4,8 billion tonnes Current lignite based capacity: ~ 10 GW Potential additional lignite based capacity: ~ 12 GW 14

16 INVESTMENT MODEL FOR DOMESTIC COAL Power Purchase Agreement for 15 years (including the construction period) Transfer of Operating Rights of the coal site for 35 years Completion of all field studies (Expropriation, EIA, etc) by state owned enterprise (EUAS) Preparation of Source and Reserve Report in JORC Standards The investor is obligated to use 1% of the total capital expenditure related to making the Power Plant and Coal Mining Area operational for local and national social responsibility projects. Providing regional incentive system Environmental legislation in compliance with EU Acquis 15

17 DOMESTIC COAL TENDERS Result of tender for ANKARA-CAYIRHAN coal site for 800 MW plant 6,04 UScents/kWh Deadline for tender ESKISEHIR ALPU coal site October 17, 2018 ALPU - MINE PROPERTIES PLANT PROPERTIES LICENCE OWNER EUAS PLANNED INSTALLED CAPACITY 900-1,100 Mwe METHOD OF MINING Underground Mining POWER PLANT TECHNOLOGY Flexible (Investor Decision) RESERVE AREA 1,787 ha UNIT NUMBER Flexible (Investor Decision) RESOURCE 568 m ton DISTANCE TO RESERVE AREA ~7 km NET CALORIFIC VALUE 1,937 (kcal/kg) POWER PLANT AREA 740 ha SEAM DEPTHS m MOISTURE CONTENT 32.1% ASH CONTENT 31.0% VOLATILE MATTER CONTENT 21.6% SULPHUR CONTENT 1.21% 16

18 LOCALIZATION DOMESTIC COAL PRIVATIZED ~ MW total capacity of state owned domestic coal power plant By the end of 2019 all necessary environmental installations should be completed Half of generation of domestic coal based generation will be purchased until the end of 2024 Price decided quarterly (currently ~ 3.5 UScents/kWh) 17

19 Thank you Dr.Öztürk SELVITOP Deputy Director General DG Foreign Relations and International Projects Ministry of Energy and Natural Resources Republic of TURKEY 18