Türkiye

Türkiye aims to renovate 40% of existing residential buildings by 2033. More than 31% of households reside in residential buildings built before 2000 and over three‑quarters were built before the adoption of building codes. Large areas of Türkiye are earthquake-prone, including Istanbul, which accounts for the largest number of buildings. A significant share of buildings in the country is not earthquake-proof, and the latest major earthquake (2023), in addition to its devastating human impact, damaged almost 40 000 buildings.

To achieve the ambitious urban renovation and transformation, the government should include residential buildings in efficiency programmes. Country-specific circumstances such as the age structure of the building stock, the high share of multi‑family dwellings and the shared ownership of these buildings should be taken into account in the design of target-oriented schemes to enhance the building renovation rate. Furthermore, the current decision-making requirements in multi‑apartment buildings present a barrier to energy efficiency renovations. It is important to ensure that vulnerable and less well-off householders are part of the energy transition. Incentive schemes should help low-income families reduce energy consumption, improve comfort, and lower heating and cooling costs while also contributing to energy efficiency and reducing carbon emissions. In high-risk seismic zones, Türkiye should fast-track the renovation of buildings at risk and provide incentives for owners to demolish and rebuild unsafe structures under safer, modern standards. Where possible, earthquake proofing should accompany building retrofits.

Türkiye should address a policy gap by providing a coherent set of incentives to promote renewable heating, cooling and co-generated power, adding dispatchable capacity to the grid in the most resource-efficient way. It should build on existing efforts to map out geothermal resources and heating and cooling needs; engage with municipalities, promoters and the banking sector to identify and promote adequate business and financing models; and promote innovation to sustain Türkiye’s technological leadership. The IEA estimates that geothermal energy could provide up to 15% of global electricity demand growth to 2050. Boosting this sector in Türkiye could spur economic growth and reduce dependencies through the creation of new jobs in the manufacturing, installation and maintenance of geothermal energy systems for the domestic market and potentially for export markets over time.

Retail gas and electricity prices in Türkiye are protected by regulatory measures to prevent significant tariff increases owing to fluctuations in international energy markets and exchange rate variations. In early 2022, EMRA introduced tiered tariffs for residential and commercial consumers with the upper limit for low-tier residential consumers increased to benefit a greater number of consumers. While wholesale power prices returned to near normal after the crisis, retail tariffs remained at a lower level. These low tariffs, while beneficial to Turkish consumers in the short term, pose longer term challenges to the energy sector and hinder efforts to reduce energy consumption and energy imports.

Artificially low gas and electricity prices offer consumers little financial motivation to reduce their consumption. As a result, energy efficiency measures, such as investing in energy-efficient appliances or retrofitting homes, become less attractive. Artificially low energy prices drive up energy demand and place a further strain on scarce resources and domestic energy security. To achieve its energy efficiency and climate goals, a balanced approach to tariff setting is essential, where prices reflect the cost of energy and encourage responsible energy use. The gradual implementation of a tariff reform will need to be carefully communicated and managed to support public acceptance and must be accompanied by complementary measures to protect less well-off and vulnerable households from energy poverty.

Nuclear power is seen as a cornerstone of Türkiye’s future decarbonised electricity system: it will provide dispatchable, carbon-free power and enhance system stability and flexibility, thereby supporting and complementing the expected large-scale deployment of wind and solar. In addition to the Akkuyu nuclear power plant, the government is planning to build two more nuclear power plants. Security of supply, reducing dependencies, localising technology transfer and a viable financing framework should be a central focus for Türkiye in negotiations to build and finance these plants.

Small modular reactors (SMRs) offer a potential flexible and modular solution for decarbonising hard-to-abate industrial sectors. These reactors could provide both low-carbon electricity and potentially high-temperature heat to energy-intensive industries such as steel, cement, chemicals and fertilisers. This would help achieve national decarbonisation goals for these key economic sectors while ensuring they remain competitive on export markets where carbon content is increasingly factored in. While several SMR concepts are moving toward demonstration, Türkiye should finalise its legal and administrative framework for SMRs to include a transparent, time‑bound process for technology selection and project development.

To enable private sector-led deployment, the government should work with key industrial stakeholders to assess demand, define viable project structures and develop an appropriate risk-sharing mechanism that provides predictability to investors without relying on direct public financing. Early engagement with potential end users, long-term visibility (on energy strategy and the regulatory environment), and a co-ordinated policy framework can help make SMRs a strong element of Türkiye’s industrial decarbonisation and clean growth strategy.

The coal industry brought considerable benefits to Türkiye’s economic development, but its influence is likely to decline in the coming years owing to sustainability and competitiveness pressures. Türkiye’s speed in securing its energy supply will depend on how well it integrates variable renewable energy and nuclear power. While the energy transition will benefit the economy, the process needs to be carefully steered to ensure that local communities that rely on coal industries are not left behind.

The policy framework should include indicative time frames for the decommissioning of a first set of older coal-fired power plants and local governance mechanisms involving relevant stakeholder groups. It should ensure that communities are adequately prepared, promote innovation and offer reskilling opportunities to the workforce according to the potential of new economic activities in each region, in the energy sector and beyond. The framework should incorporate mechanisms for direct participation of workers, youth, women and local communities in policy design, drawing on local knowledge to tailor solutions for each region. The expected implementation of a domestic emissions trading system, paired with electricity market reforms, is likely to push out older inefficient power plants.

Evidence from other countries’ transitions demonstrates that coal-producing regions can suffer long-term effects if the transition is not anticipated. Measures to help manage the transition include support for workers and companies; the development of alternative industries; and investment in local infrastructure and public services, including digital connectivity, healthcare and education. Early engagement with private sector partners and local entrepreneurs is essential for accelerating new business opportunities and broadening the range of quality employment options beyond the energy sector.

To manage the energy transition with rapid growth in variable renewable generation, distributed renewable resources and significant electrification of end-use sectors, the existing grid infrastructure needs to be used as efficiently as possible. Concerns over integration challenges, such as grid connection queues and congestion management, can deter investment in solar PV and wind capacity. These factors cause delays and uncertainty, making it difficult for projects to connect, and negatively impacting their business case. Regulations that outline the technical and operational requirements of all stakeholders involved in the transmission system, including generators, distributors and consumers, should ensure that new grid connections are in places that support efficient grid operation now and, in the future, and avoid unnecessary delays. Other measures such as the introduction of efficient seasonal and locational tariffs and flexible grid connection agreements that reflect the cost of connection and latest grid stability procedures would facilitate the integration of new sources of variable renewable energy.

Future scenarios in Türkiye will involve periods when renewables satisfy most system demand. To maintain system stability during these times, inverter-connected generation such as wind and solar PV must also contribute. Allowing wind and solar PV to actively participate in balancing and ancillary services markets could be beneficial. These markets may require adjustments, such as lower minimum bid volumes, to accommodate these resources. Furthermore, developing requirements for adding converter-based power sources could be advantageous. Extending current requirements to include unlicensed production is one way to do so. The updated EU Requirements for Generation Regulation which will be decided in 2025 could provide a point of reference. As the Regulation will apply in many IEA European Member countries, manufacturers are expected to adapt their products, resulting in equipment compliant with the Regulation becoming available on the market.

Türkiye should streamline its different support mechanisms and reform the existing market design to meet the needs of its energy transition (e.g. rather than starting a new market/tender for demand-side response, allow these resources to participate in the existing balancing market). A system with a large share of renewables also needs system flexibility. It is not necessarily the flexibility of individual installations that is important but rather the collective flexibility of the system. One means to integrate large amounts of renewables is to ensure that other resources that offer flexibility services have the correct incentive to do so. Türkiye will need to find a way to encourage new sources of flexibility (both on the generation and the demand side) and meet its targets for battery storage installations. Producers should react to transparent price signals but at the same time have a “firm” income stream to be able to finance investment. Consumers should be able to adjust load according to available power (react to price signals) but without worrying too much about electricity bills.

Lighter industries such as textiles and food and beverages are seeing rapidly increasing energy use but may not have access to efficiency programmes because they consist of smaller energy users who typically lack the capacity to take part independently. Smaller industrial consumers may moreover not fall under the scope of the existing Energy Efficiency Obligation Scheme, which has an annual energy consumption threshold of 1 000 toe per year (about 12 million kWh/year). This is a large amount of energy: a regular small- to medium-sized textile manufacturer consumes typically around 1‑5 million kWh/year; a large producer with dyeing operations would likely use over 12 million kWh/year. Some energy efficiency support mechanisms are already available to smaller businesses with annual energy consumption below 1 000 toe. For example, industrial enterprises with an annual energy consumption of 500 toe or more are eligible to apply for support from the Efficiency Increasing Projects. In addition, the SME Energy Efficiency Support Program, administered by the Small and Medium Enterprises Development and Support Administration, is a support mechanism specifically aimed at small and medium-sized enterprises.

Nonetheless, many smaller enterprises may not be able to measure and manage energy consumption and access the government incentive schemes which are focused on larger energy consumers. Organised industrial zones are highly effective at providing co-ordination between enterprises in the zone and can act as one-stop shops for implementing energy efficiency measures and opening the available offer of energy efficiency support schemes to a wider group of enterprises. They would thereby leverage the extensive energy improvement potential of the less energy-intensive sector.

This approach can complement Türkiye’s existing Energy Efficiency Obligation Scheme, which has already established a regulatory framework for monitoring and managing energy consumption and carbon emissions. By targeting large energy consumers in sectors such as iron and steel, cement, aluminium, and hydrogen, compliance costs can be reduced while aligning with the requirements of the European Union’s Carbon Border Adjustment Mechanism, which also prioritises power generation. Focusing the emissions trading system (ETS) on a smaller number of the largest energy users, who account for most of the energy consumption and CO₂ emissions, can further minimise the administrative and compliance burden while still achieving significant impact. A low-level carbon tax or charge on fuel consumption could be an important element to complement the scheme as the threshold for inclusion in the ETS is high and will only apply to a small group of consumers. This will also generate a revenue stream that can be reinvested to support efficiency or other measures to support the energy transition.

As Türkiye moves forward with its new Climate Law, it should develop an integrated energy and climate governance system and a strategy grounded in analysis of future energy demand, including planned industrial zones, and aligned with designated priority areas for renewables, electricity, gas, hydrogen and CO₂ infrastructure. Building on its existing gas and electricity networks, such a strategy would enhance efficiency, resilience and sustainability by enabling co-ordinated planning at the national and local levels for both current and future needs. This approach should be supported by institutional arrangements that promote policy coherence across energy, climate and economic objectives. Organised industrial zones can play a central role in this framework by facilitating energy efficiency investments, electrification, and the use of renewable and recovered energy, leveraging their advantages of shared infrastructure and industrial clustering.