Energy Intensity rate of Natural Gas Fired Power Plants in Turkey

Sustainable Development has three pillars, as the literature says; Social, Economic, and Environment ones (1). Therefore, maintaining sustainable development has always been part of Economic agenda of countries in order to create realistic welfare for its citizens. Yet, economic development is totally dependent on the natural resources that are transformed to produce goods. In that sense, the most important inputs as natural resource are energy ones. That all being said, in this blog I am going to analyze how energy intensity rate of natural gas fired plants on both resource and economic base are tied to economic development data in Turkey.

Turkey has started to meet its electricity need from Natural Gas starting from 1985 at a growing rate, and as of 2011 installed capacity ratio of Natural Gas fired plants to total is 48.47%, while ratio of electricity supplied from these plants to total amounts to 45.36%. With these high ratios, analyzing energy intensity rate of these power plants would make sense in order to get a sip of sustainable development projections in Turkey. 

Source: TEİAŞ (Turkish Electricity Transmission Co.), www.teias.gov.tr

With regard to these graphs, important data that we will focus on later is as follows;

Year	∆ Installed Capacity	∆ Production
2005	7.66%	7.47%
2006	6.46%	8.86%
2007	-0.87%	8.65%
2008	-4.86%	3.58%
2009	6.49%	-1.82%
2010	11.37%	8.42%
2011	0.62%	8.61%

At this point, focusing on energy intensities of these power plants on resource base, which is natural gas, will let us contemplate how efficiently these plants are functioning. When we analyze natural gas use in cubic meters in electricity sector with regard to total electricity produced in GWh from natural gas, resource based energy intensity ratio will look as in the following graph;

Data Source: Energy Balance Tables, ETKB (Ministry of Energy and Natural Resources), www.enerji.gov.tr

 

By using average energy intensity ratio, one can easily calculate how much natural gas will be used by one power plant on average as long as projected production is given for that plan in a year. Yet, while such an intensity ratio makes sense investment and financial wise for a corporation, tying this resource based energy intensity to Economic agenda is the crucial one. That is to say, when we can adapt such an intensity measure to GDP development and further to GDP per capita in Turkey, we will be able to recommend policies in energy sector to maintain sustainable development. In that sense, what we do here is to compare these figures with economic data, mainly GDP per capita with current USD. The following graph shows the relationship between the two:

Data Source: World Bank databank.worldbank.org

 

What is striking here is that the correlation of resource based energy intensity with regard to GDP (Current USD) per Capita goes on a line from 2005 to 2011, except years 2009 and 2010! What makes these two outlier years is that there had been economic contraction in 2009 with a ratio of -4.83%. That is why, contemplating -4.83% GDP decrease for the former one and 9.16% increase for the latter one, crisis year 2009 and post-crisis year 2010 have been outliers. Once we eliminate these crisis-related years from the analysis, the picture becomes obvious; as the welfare increases for the citizens in terms of GDP per Capita, energy intensity for Natural Gas fired plants increase on a straight line. That should attract those who deal with economic agenda since more of natural resource will be consumed to maintain sustainable development.

Now it is time to conclude these data analyses and bring up some policy recommendations:

• During a crisis year, energy intensity of NG fired plants increases, which means efficiency of the plants is lowered. In that sense, although crisis cannot be eliminated and thus inefficiency for plants, one can at least closely monitor post-crisis period when there can happen a boom in order to curb energy intensity for some efficiency gains.

• When we look at the data that show the change in both Installed capacity and Electricity produced, this is the conclusion;

o   When ∆ Production < ∆ Installed Capacity, energy intensity increases and thus efficiency decreases – 2009 & 2010 cases

o   When ∆ Installed Capacity < ∆ Production, energy intensity decreases and thus efficiency increases – 2005, 2006, 2007, 2008 & 2011 cases

Simply said:

	∆ P > ∆ IC	∆ P < ∆ IC
Energy Intensity	↓	↑

  
Therefore, authorities should make sure that electricity production by NG fired plants is tied to investment in capacity so as to gain efficiency.

• In order to maintain sustainable development, innovation and efficiency for these power plants are of utmost importance in such a country with resource constraints as Turkey, which is energy dependent one. Therefore, policy tools to encourage efficiency in these plants as economic development takes place will curb energy intensity and thus current deficit, and will pave the way for economic welfare without monetary stress for these resources. To further understand this issue, the following illustration will better explain it graphically:

After year 2011, we assume that 16,000 USD/Capita welfare standard will be achieved in another 6-7 years. In business as usual scenario, correlation of energy intensity and GDP/capita will walk on the straight line and more energy will be needed to achieve higher standard of welfare. At the end, on welfare point 16,000 USD/Capita, around 0.000226 Billion m3 of Natural Gas should be consumed to produce 1 GWh of Energy under base scenario. However, when incentive programs are applied in two successive periods to improve efficiency, around 0.000223 Billion m3 of Natural Gas should be consumed to produce 1 GWh of Energy. Thus, less of total energy will be consumed in successive years.