Turkey’s energy trade relations with Europe: The role of institutions and energy market

Introduction and background

The literature on the energy policy of the European Union (EU) and the role of Turkey therein mostly focuses on hydrocarbons as the primary energy source and their transport towards the EU through pipelines,1–4 and more recently, on the natural gas reserves in the Eastern Mediterranean.5,6 The existing and planned pipelines are sources of concern for the EU decision-makers since they increase the energy-dependency of Europe, mostly on Russia.7–12 Rather less attention was paid in the literature to Turkey’s renewable energy relations and their impacts on regional environment in Europe.2,13–18 Based on the existing knowledge on energy, water, and environment nexus,19,20 this paper aims to contribute to the literature by focusing on the electricity trade relations of Turkey with the European neighbors, and by exploring the impacts of this trade on the environment and the management of transboundary rivers.

The growing literature on the geopolitics of renewable energy questions how geographic and technical features of renewable energy influence international or bilateral energy relations.21–24 Because of its geographical position, Turkey shares electricity interconnections and river basins both with the EU member and non-member European countries. And in the renewable energy relations with its European neighbors, Turkey’s electricity production, demand, and interconnections with Europe play significant roles,25 given the increased importance attributed to this subject by the EU.26 This paper analyzes the impacts of the electricity trade of Turkey with its European neighbors on the regional environmental policy and the management of transboundary river basins.

The “geopolitics of renewable energy” and the “water-energy-environment nexus” are the main theoretical frameworks embraced in this work. Focusing on the role of the institutions and an integrated energy market, the main research question here is how the institutional and strategic aspects of Turkey’s relations with the EU member countries and with non-member European countries affect its renewable energy trade and how these, in turn, affect Turkey’s transboundary water management and environment policies. This paper aspires to contribute to the newly emerging literature on the geopolitics of renewable energy. It aims to compare and analyze the level of Turkey’s electricity trade integrity with its European neighbors and discuss Turkey’s role in the renewable energy geopolitics of the EU both as a source and transit country for renewable energy resources.

The primary materials used in this paper are the electricity data, domestic and EU regulations on water, electricity, and environment, and international agreements. The electricity generation, transfer, and trade data in this paper are obtained from the European Network of Transmission System Operators for Electricity (ENTSO-E), Energy Exchange İstanbul (EXIST, or EPİAŞ in Turkish acronym), the Turkish Electricity Transmission Corporation (in Turkish acronym, TEİAŞ), Turkish Statistical Institute (TurkStat), and personal written communications by the author.

The paper is organized as follows: To provide a broader framework, the next section reviews significant power trade schemes in the world and their impacts on the environment. The renewable energy policies of the EU section analyzes the renewable energy policies of the EU and the role of electricity and water management in Turkey’s EU accession process. The Turkey’s shared river basins and interconnections with Europe section explores Turkey’s electricity sector, its renewable electricity trade potential, and the role of the EU’s regional electricity integration scheme, the ENTSO-E. The role of an integrated energy market on the regional environment section discusses the role of the regional institutions and the role of an integrated electricity market on the use of renewable energy, and thus, on the environment. The final section concludes.

The role of the institutions and international agreements in regional electricity trade: selected examples from the world

The integration of renewable energy on a global scale has long been subject to discussion in the literature.27,28 Yet, the literature mostly focuses on the regional integration of electricity markets and renewable energy policies in the industrialized countries, such as the US, the EU member states (Germany, Italy, France, Spain), China, Brazil, or India.29 The integration of renewable sources of electricity and cross-border electricity trade are multi-stakeholder complex issues requiring policy coordination and regional cooperation.

Many researchers emphasize the benefits of integrated electricity grids and cross-border power trade between jurisdictions in different parts of the world.30,31 In contrast, some researchers focus on the negative impacts of integrated electricity grids on the environment.32,33 Based on the economic benefits as accentuated in the literature, some well-established regional cooperation frameworks, regional agreements, and institutions encourage regional electricity trade schemes. This section discovers some of these schemes and tries to compare and contrast them with Turkey’s electricity trade ties with Europe.

Regional institutions assume varying roles and responsibilities in different cross-border electricity trade schemes. These institutions may operate independently or under a single, integrated governance framework. The model of operation depends on the bilateral or regional agreements on electricity trade. The “independent and harmonized” operation mode, for instance, gives the authority and the responsibility for important energy policies to the local bodies.34 The ENTSO-E, with which Turkey’s energy grid operated by TEİAŞ is in synchronous mode, is an example of harmonized operation of interconnected but independent operators within the legal framework of the EU. Although the transfer of electricity between political jurisdictions is a predominantly technical process, political support and decision-making mechanisms, as well as simple or sophisticated market structures are crucial for the electricity trade to take place and continue efficiently. A simple market mechanism is usually based on bilateral contracts between the governments, while a complex market mechanism consists of a regional power market, such as the ENTSO-E.34 Turkey’s electricity trade with the EU-member countries takes place under a single regional electricity market regulated by the ENTSO-E. On the other hand, Turkey’s electricity trade in the South Caucasus is enabled merely by bilateral agreements and depends on long-term system planning.

To better understand Turkey's electricity trade relations with its European neighbors and to compare them with the examples from the world, the following sub-sections explore different models and cross-border electricity trade schemes from the US, China, Central Asia, and Caucasus regions, in respective order.

The US

Globally, the US ranks second after China as the largest electricity-producing and consuming country. On the other hand, in the 5 years between 2016–2020, the US has been the world’s largest importer of electricity. Electricity imports of the US are mostly from Canada, and the already low-volume US electricity trade with its southern neighbor, Mexico,35 is usually in balance in the long term (Figure 1). As Figure 1 shows, the electricity trade balance of the US with Canada is always negative. The imports of the US slightly increased in the second half of 2020 and exceeded 200 GWh per day, on average, since then.

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Figure 1.

Electricity trade of the US with Canada and Mexico.

The high level of grid integration36 and the high volume of trade between the US and Canada have had various benefits37,38 and a positive impact on the increased use of renewables39,40 in electricity generation. The hydropower plants in Canada generate excess electricity,41 which is transferred towards the US via high-voltage transmission lines. As a result, the world’s highest volume of bilateral power trade takes place between the US and Canada.

Some researchers showed that the renewable energy interconnections between the North American countries would be cost-effective41 and environment-friendly.35,36,43 They also contend that expanding the existing interconnected grid would further decrease the need for excess electricity generation and storage.44 Therefore, numerous studies in the relevant literature suggest increasing the level of electricity integration between Canada and the US.35,40,45 Researchers and policy-makers from Canada, the US, and Mexico are working on projects that would increase the level of interconnection between the three countries in North America.46–48 The existing regional trade institutions, such as the North American Free Trade Agreement (NAFTA), are suggested to be viable platforms that would help to boost the volume of electricity trade between the US and Mexico.49 Yet, despite the presence of the NAFTA since 1994, the regional electricity integration between the US and Mexico remained low.50

On the other hand, the transboundary rivers between the US and Mexico are often subject to political dispute, while there has been no significant shared water issues between Canada and the US. The high level of water stress has been a major reason for occasional disputes with regards to transboundary rivers between the US and Mexico.51–53 As the upstream riparian, the US exploits the scarce water resources of the Colorado and the Rio Grande river basins for irrigation and electricity generation, while the level of benefit sharing54 between the US and Mexico remains low. A similar situation can be observed in Southeast Asia, where China shares river basins with its neighbors as the dominant upstream riparian.

The renewable energy policies of the EU

Instead of insisting on energy self-sufficiency through the increased use of conventional resources, the EU decision-makers have long been focusing on increasing energy efficiency and the use of renewable energy.89,90 The renewable energy policies of the EU have been through various phases since the 1990s when the implementation of renewable energy projects began to accelerate91 with the publication of the policy papers on renewable sources of energy by the European Commission. In its 1995 White Paper on the energy policy, the European Commission drafted an energy outlook for the year 2020 and set the major and challenging aims of achieving an integrated and competitive energy market, securing the supply of energy for the EU, and protecting the environment.89,92

As for renewable energy, the EU policies and targets were well-defined in the 1996 Green Paper, which was the second in a series of green papers published by the European Commission.89 In accordance, for the year 2010, the EU aimed to achieve the “non-binding” target of 12% in renewable energy consumption, strengthen cooperation for the implementation of this policy, reduce the costs of exploiting renewables, as well as establish assessment and monitoring mechanisms.93 Other priority areas of the EU policy on renewables were lowering carbon emissions and diversification of energy sources. With this policy, the EU also aspired to decrease its dependency on hydrocarbon imports and to create new jobs and business opportunities.17 The third Green Paper of the European Commission was issued in 2000.94 The strong emphasis of the Commission on reducing the dependence on imported hydrocarbons was the main focus of this document, which reiterates the call for a strategy of securing the supply of energy.89 The fourth Green Paper published in 2005 particularly focused on “energy efficiency.”95

In 2007, the European Commission found out that the EU would not achieve the target set in the 1996 Green Paper by the year 2010. Hence, the Commission revised the renewable energy targets for the EU, and set a renewed target for the year 2020, which increased the share of renewables in total final energy consumption in the EU to 20%.96 The role of the neighbors of the EU for achieving renewable energy targets was clearly emphasized in this document under the title of “European Neighborhood Policy,” in which Turkey has a specific role.89,96 The renewable energy targets for the year 2020 were published in the 2009 Renewable Energy Directive of the European Parliament and of the Council,97 which was amended several times. In 2018, a new Renewable Energy Directive, popularly known as the RED II, was accepted. With the RED II, the share of renewable energy in the final energy consumption in the EU was set at 32% by 2030, as a binding overall target for the EU.98

Cross-border electricity access has been one of the basic issues since the foundation of the EU and was emphasized several times in various policy documents. The 1996 Electricity Directive of the European Parliament and Council was one of the most specific among them, which was updated twice in 2003 and 2009.99,100 This directive emphasizes the importance of cross-border electricity access and trade among the members. Even before the publication of this directive, the founding Maastricht Treaty of 1992 gave reference to the trans-European networks (TENs) that are intended to connect the various regions within the EU. The TENs included the networks of transportation, energy, and telecommunications.101 Among them, the electricity networks were the focus of the 1996 Decision (revised in 1999) of the European Parliament and of the Council on the Trans-European Energy Networks (TEN-E). This decision applies to all high-voltage transmission lines and prioritizes “the development of interconnections with the third countries in Europe and the Mediterranean region which contribute to improving the reliability and security of the Community’s electricity networks.”102 The Greece-Turkey interconnection was emphasized in this document among many infrastructure projects to be developed.102 In 2006, the EU position on TEN-E was updated. In accordance, the sources of energy were to be diversified by focusing on the EU neighborhood. In other words, the EU leadership sought local trade partners for electricity in the Mediterranean Sea, the Black Sea, and Caspian Sea basins, as well as in the Middle East and the Persian Gulf regions. In that respect, Turkey became a key partner for the EU electricity trade and was involved in both the Mediterranean Electricity Ring and the Black Sea Electricity Ring schemes of the EU.103

The EU countries have made considerable progress104 toward reaching climate change and renewable energy goals as of 2020 and, as mentioned above, have now updated goals for renewable energy consumption by 2030. Also, there is some degree of convergence and harmonization among the member countries in their support mechanisms for renewable energy.105 Yet, the process of renewable energy decision-making was very contentious, and serious discrepancy occurred among the EU member states and the stakeholders involved. Some transmission system operators in Europe were especially dissatisfied with the subsidies for renewable sources of electricity generation. They emphasized the crowding-out effect of the subsidies on conventional sources of electricity generation, the increased risk of balancing, and the increased intermittent cross-border flows that necessitate further investments in larger capacity high-voltage transmission lines. For the customers, on the other hand, the subsidized renewable sources meant higher prices for electricity consumption.106,107 Not surprisingly, as a result, the abovementioned most recent Renewable Energy Directive of 2018 (RED II) was accepted with no clear consensus among the member states.90 Despite all this criticism and lack of consensus, the EU leadership insists on giving priority to environmental protection and the use of renewables in its energy policies and decision-making processes. As discussed above, the role of the EU neighborhood is crucial in this process for many reasons, including greater common and competitive electricity market, higher integration of renewable resources, and reduced stress on the environment.

Turkey is an integral part of the EU neighborhood. To understand the position of Turkey in this regional geopolitical setting, the following section first describes Turkey’s shared river basins and cross-border transmission lines with European countries, then it analyzes Turkey’s renewable energy and trade potential, and finally, it explores the strategic and legal frameworks of Turkey’s environment and energy relations with Europe.

Turkey’s shared river basins and interconnections with Europe

This section presents and discusses the geopolitical features of Turkey's electricity connections with Europe. Turkey shares river basins and power transmission lines in Europe both with the members of the EU and the non-member states. Located at the southeastern edge of the European Peninsula, Turkey borders the EU member countries Bulgaria and Greece in the west, and in the northeast, the former Soviet states of Armenia, Azerbaijan, and Georgia. Of Turkey’s five transboundary river basins, three are in Europe. These are the Meriç (the Maritsa, the Evros) river basin in the Balkans (Figure 2), and the Çoruh (the Chorokhi), and the Kura-Araks river basins in the South Caucasus (Figure 3). In the South Caucasus, Turkey is located at the upstream of the Çoruh and the Kura-Araks river basins, while in the Balkans, it is located downstream of the Meriç river basin.

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Figure 2.

Map of the Maritsa river basin shared by Turkey, Greece, and Bulgaria.

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Figure 3.

Map of Turkey’s transboundary river basins in the northeast.

Most of the Meriç river basin remains in Bulgaria (about 35 thousand km²), while Turkey has around 14 thousand and Greece has around 3 thousand km² of land area within this basin.111,112 The four major tributaries of the mainstream Meriç river in Turkey are the Arda, the Tunca (the Tundzha), the Ergene, and the Kızıl rivers.113 The climatic and geographic features of the Meriç river basin often lead to floods, variability in water flow between years, high erosion, and sediment load.114 The shared river basins of Turkey with the Caucasian countries are the Çoruh and the Kura-Araks river basins. The latter, the Kura-Araks river basin, is shared by five countries: Turkey, Georgia, Armenia, Iran, and Azerbaijan, in respective order from upstream to downstream. Turkey has about 29 thousand km² of land area within the basin, which covers about 191 thousand km² in total. The Çoruh river basin is relatively smaller with its 22 thousand km² of land area, of which 20 thousand km² remains within Turkey’s territory (Figure 3).111

Turkey has cross-border transmission lines in both Meriç and the Kura-Araks river basins in the west and the east. Table 1 shows the current and planned interconnections of Turkey in these river basins. In the Balkans region, Turkey has two high capacity (400 kV) transmission lines shared with Bulgaria. As shown in the following sections, Turkey’s electricity trade volume with Bulgaria is highest among its neighbors. Turkey and Greece are connected via a 400 kV transmission line between Babaeski and Nea Santa.

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Table 1.

Turkey’s interconnections in the Maritsa and the Kura-Araks river basins.

Interconnection	Capacity	Length
Hamitabat (Turkey) – Maritsa East (Bulgaria)	400 kV	158 km
Hamitabat (Turkey) – Maritsa East (Bulgaria)	400 kV	149 km
Babaeski (Turkey) – Nea Santa (Greece)	400 kV	128 km
Hopa (Turkey) – Batumi (Georgia)*	220 kV	28 km
Borçka (Turkey) – Akhaltsikhe (Georgia)	400 kV	155 km
Tortum (Turkey) – Akhaltsike (Georgia)**	400 kV	–
Kars (Turkey) – Gumri (Armenia)	220 kV	81 km
Başkale (Turkey) – Khoy (Iran)	400 kV	100 km
Doğu Beyazit (Turkey) – Bazargan (Iran)	154 kV	40 km
Iğdır (Turkey) – Babek (Azerbaijan)	154 kV	87 km

Sources: Ministry of Energy and Natural Resources of Turkey,116 TEİAŞ.117

*For use in emergencies only. **Planned.

In the Caucasus region, the 220 kV interconnection between Hopa in Turkey and Batumi in Georgia is used in emergencies only. The 400 kV Borçka-Akhaltsikhe interconnection, which was on the agenda of the energy authorities of Georgia and Turkey since 2007, became operational in 2012 after the bilateral agreement signed in January 2012 between the governments of both countries.115 The other 400 kV interconnection between Turkey and Georgia, the planned Tortum-Akhaltsike line, was subject to another bilateral agreement signed in April 2015 between the governments.88 The capacity of the interconnections between Turkey and Armenia, Iran, and Azerbaijan are lower. There is no electricity trade taking place with these countries or the volume of electricity trade with these countries is negligable.

In the following sub-sections, the regional electricity trade data of Turkey with the EU member countries and non-members will be comparatively analyzed to show the impacts of a regulated and integrated electricity market on integrated river basin management and other environmental indicators. Also, the international, regional, and domestic regulations of Turkey are scrutinized from the perspective of Turkey’s electricity trade with its European neighbors and the impacts of these regulations on the environment are analyzed.

Turkey’s electricity sector and electricity trade potential

Turkey’s growing economy is the main driver of an incessant increase in electricity supply and demand.118,119 The electricity demand growth in Turkey has a positive trend in the long term as well (Figure 4 and Table 2). As the data in Table 2 show, Turkey is a net importer of electricity between 2010 and 2017. On the other hand, electricity production and consumption has grown steadily, with an average annual growth rate of 5.2% between 2004 and 2018.120

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Figure 4.

Turkey’s electricity production and consumption, 365-days aggregate.

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Table 2.

Turkey’s electricity production, consumption, and trade (GWh).

	Total gross production	Total imports	Total exports	Total gross consumption
2004	150,698	463	1,144	150,017
2005	161,956	636	1,798	160,794
2006	176,299	573	2,236	174,636
2007	191,558	864	2,422	190,000
2008	198,418	789	1,122	198,085
2009	194,812	812	1,546	194,078
2010	211,208	1,144	1,918	210,434
2011	229,393	4,556	3,645	230,304
2012	239,496	5,827	2,954	242,369
2013	240,154	7,429	1,227	246,356
2014	251,963	7,953	2,696	257,220
2015	261,783	7,136	3,195	265,724
2016	274,408	6,330	1,452	279,286
2017	297,278	2,728	3,304	296,702
2018	304,802	2,477	3,112	304,167

Source: EUROSTAT SHARES.120

As the data from EUROSTAT covers the period between 2004 and 2018, more detailed electricity production and consumption data of Turkey are presented in Figure 4. According to this figure, the production and consumption of electricity flattened since the third quarter of 2018, and the Covid-19 pandemic since the beginning of 2020 caused a decrease in the electricity production and consumption in Turkey due to the slowdown in the economic activity. On the other hand, it is estimated that the growth in electricity demand would continue in the future. The base scenario long-term demand projections prepared by TEİAŞ indicate to an average annual growth of 4% between 2019 and 2028.121

In parallel, increasing the domestic generation capacity has long been a priority for the governments of Turkey.123 In line with this policy, since the 1980s, the government of Turkey has endeavored to include the private sector into the energy industry. In 2001, the energy market structure of Turkey has undergone an extensive change. With the introduction of the new Electricity Market Law to comply with the EU acquis,124 the government assumed the regulatory role, and the new generator installations are expected to be undergone by the private sector.125

Turkey’s renewable energy potential and its importance for the EU

After 2005, important milestones were reached in Turkey’s renewable electricity roadmap with the introduction of the Law on the Use of Renewable Energy Sources in Electricity Generation and with the amendment of this law in 2011. In 2013, a new Electricity Market Law was introduced. These new laws aim at achieving competitive electricity price levels in the European market by the private electricity generators in Turkey following the EU acquis and are in line with the directives of the European Commission.126 According to the new Electricity Market Law of Turkey, the firms that generate electricity from renewable resources may get a document that proofs the source of electricity from the Ministry of Energy and Natural Resources of Turkey.

The new regulations per the EU acquis increased the share of renewable energy in total electricity generation in Turkey. Figure 5 shows the share of renewables in total electricity generation. This share has been increasing since 2014 and exceeded the 40% level as of mid-2019.

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Figure 5.

The share of renewables in total electricity generation in Turkey, 365-days aggregate.

The institutional structure of Turkey’s relations with the EU has some further and direct impacts on regional environmental and water management regulations in the Balkans. Turkey’s water and environment relations with the EU member countries are more regulated than its relations with the non-member European states in the Caucasus region, i.e. Georgia, Armenia, and Azerbaijan. On the other hand, as compared to its energy policy, Turkey’s water and environment policies are less compatible with the EU policies. As the river basins Turkey shares with the EU are parts of the Union and are subject to the EU Water Framework Directive,127 Turkey’s position on shared rivers are relevant for the EU. Also, Turkey’s energy policy, especially its policy on hydropower and electricity trade, directly concerns the EU energy policy. These points will be discussed in detail in the next section.

Turkey possesses an important small hydropower generation potential,118,128 in particular in the northeastern part of the country. The average capital cost of the small HPPs in Turkey is lower than the world average, which makes Turkey an advantageous spot for small hydropower development.129,130 In parallel, the government has intensified efforts to increase the small HPP installed capacity, especially in the northeast of the country, where the small HPPs are most feasible to construct.130–132

Turkey’s renewable energy installed capacity has been increasing since the 2000s. As part of the EU directives and climate change goals,97,98 the renewable energy imported from Turkey will be included in the calculations of the EU renewable energy consumption after the completion of the legal framework compatible with the EU’s “Guarantees of Origin” system, which will be explained in some detail in the following section.

Energy is the title of a chapter in the accession negotiations of Turkey with the EU. As of 2020, the chapter is not open for negotiations but Turkey’s compliance with the Energy chapter is already high.133 On the other hand, Turkey’s renewable energy relations with the EU have repercussions on Turkey’s renewable energy relations with the non-EU European countries. There are at least two reasons of this.

First, Turkey has a single integrated electricity grid. This means that the electricity generated anywhere in Turkey could be transferred to distant demand centers without additional effort. Turkey has an important potential for small hydropower development in the northeast of the country . In this region, there are two transboundary river basins (the Çoruh and the Kura-Araks) Turkey shares with the South Caucasian countries. The new and planned HPPs in the Çoruh and Kura-Araks river basins have impacts on the water stress134 indicators, especially in the Kura-Araks river basin,111 the largest and the most important river basin in the South Caucasus. As mentioned, Turkey’s transboundary river basins in the northeast are not as regulated by international agreements and institutions as they are in the northwest. This sometimes leads to unilateral acts from the side of the Turkish government, which is often subject to criticism by the regional opposition parties, and the local NGOs.135

Second, the government of Turkey has targets for its renewable energy generation set for the year 2023. The government of Turkey aims at increasing the share of renewable sources in electricity production from 32.5% in 2018 to 38.8% in 2023.136 The solar energy installed capacity is planned to be increased to 10,000 megawatts, the wind energy installed capacity to 11,883 megawatts, the hydropower installed capacity to 32,037 megawatts, and the geothermal and biomass capacity to 2,884 megawatts in 2023.137 Under this policy, the government of Turkey plans to increase domestic electricity generation and aims at increasing the share of domestic and renewable resources in the electricity generation to 65% by 2023.137 This would reduce Turkey’s need for energy imports. At the same time, the integration of Turkey’s grid into the ENTSO-E network facilitates electricity exports from Turkey towards the EU. As the data in this study show, beginning from mid-2017, Turkey became a net exporter of electricity to the EU.138 This indicates that Turkey’s renewable energy policy in harmony with the EU institutions and regulations has both direct and indirect positive impacts on EU environmental policy and renewable energy goals.

The role of an integrated energy market on the regional environment

As mentioned in the previous section, among the main strategic objectives of ENTSO-E are increasing the share of renewables in European electricity production, achieving full interconnectedness between the EU members, and facilitate electricity trade across the EU.156 Based on Turkey’s geopolitical features in terms of renewable energy generation and trade, this section analyzes the role of the ENTSO-E in Turkey’s energy and environment relations with its European neighbors.

The EU directives reviewed above oblige the EU members to increase the share of renewables in their energy consumption.97,98 Turkey’s involvement in the ENTSO-E system is a very important step in achieving climate change goals for the EU. As the 2009 and 2018 directives of the EU on the promotion of the use of energy from renewable sources imply, the EU member states could import renewable electricity from outside of the EU to increase their shares in renewable energy consumption. As mentioned in the 2018 directive, “[i]n order to guarantee an adequate effect of renewable energy replacing non-renewable energy in the Union as well as in third countries, it is appropriate to ensure that [the] imports [of renewable energy] can be tracked and accounted for in a reliable way.”98 These regulations pushed Turkey to integrate its electricity market with the EU. Also, for the EU members Greece and Bulgaria, importing electricity produced from renewable resources became a viable policy option to reach the goals defined in the relevant EU directives.

It is currently not possible to prove that electricity imported by the EU from Turkey is generated from renewable sources. For now, one may estimate that approximately 50% of exported electricity is renewable.160 As shown in Figure 5, the source of produced electricity is tracked in real-time by the EPİAŞ (EXIST) and published online.122 Based on this technical data, the Energy Market Regulatory Authority (EMRA) of Turkey is preparing a bylaw that enables the issuing of a tradable “Renewable Energy Source Guarantee Document” known in Turkish with the acronym YEK-G.160,161 One YEK-G will be issued per MWh of electricity produced from renewable resources. After this process is completed, it will be possible for a firm that complies with the rules set by TEİAŞ to buy these YEK-G documents and prove the source of the electricity that is subject to cross-border trade. The YEK-G system, prepared in harmony with the EU Guarantees of Origin system,162 is expected to be in force in mid-2021.160

The integration of Turkey's electricity grid with the EU was completed in several phases. After the introduction of the 2009 EU directive on increasing the share of renewables in energy consumption,97 the initial works for the integration of Turkey’s network to the ENTSO-E system began in September 2010. In a three-phase trial period, the reliability and performance of the synchronous system were observed by the “Regional Group Continental Europe” operating under the ENTSO-E network. In the first phase, the stability was tested with no real electricity transfers taking place. In the second phase, which was completed in March 2011, non-commercial electricity transfers of Turkey took place with Greece and Bulgaria. After these tests were completed successfully, limited capacity transfers between the ENTSO-E and the electricity grid of Turkey were permitted beginning from June 2011. These limits were increased after April 2013: Turkey’s import capacity from the ENTSO-E system was set to 650 megawatts while its export capacity was set to 500 megawatts.163 In April 2015, a long-term agreement was signed between the TEİAŞ and the ENTSO-E Regional Group Continental Europe. As of January 2016, the TEİAŞ joined the group of ENTSO-E member countries as an observer member.163 Since then, the electricity trade capacity of Turkey with the EU has increased significantly (Figure 6).

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Figure 6.

Net transfer capacity between Turkey and the EU countries (total exports and import capacity in megawatts, 12-months moving average).

Figure 6 shows the 12-month moving average net transfer capacity between Turkey and Bulgaria, and between Turkey and Greece. The net transfer capacity in this figure is shown as the sum of Turkey’s export capacity towards Greece and Bulgaria and Turkey’s import capacity from Greece and Bulgaria. The higher the net transfer capacity between Turkey and the EU, the higher is the total volume of bilateral electricity trade between the jurisdictions. The average net transfer capacity between Turkey and Bulgaria is higher than the net transfer capacity between Turkey and Greece. Between January 2017 and June 2020, the net transfer capacity between Turkey and the two EU countries increased significantly, although there has been a decrease since the beginning of 2020 due to the Covid-19 pandemic (Figure 6). This can also be observed in the electricity energy trade data between Turkey and the EU countries (Figure 7). It is important to note here that there is a significant difference between Turkey’s electricity trade with Georgia in comparison to its electricity trade with the EU member countries Bulgaria and Georgia.

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Figure 7.

Total net electricity exports of Turkey (12-months moving average).

As Figure 7 shows, Turkey’s total net electricity trade is much higher with Bulgaria than with Greece and Georgia. Until October 2017, Turkey was a net importer of electricity from Bulgaria, and since that date, Turkey became a net exporter of electricity. Turkey exported electricity to both Greece and Bulgaria since October 2017. On the other hand, Turkey’s relatively small amount of electricity imports from Georgia continues since 2014.

These figures indicate that Turkey’s total electricity trade volume with the EU countries is higher than its trade with the non-EU countries. On the other hand, Turkey’s imports from Bulgaria are decreasing for a while and its exports to Greece are increasing. Another point to note here is that according to the ENTSO-E regulations, Turkey’s electricity trade with the non-EU countries is subject to the permission of the ENTSO-E.165 As shown in Table 2 and Figure 7, and as discussed above, Turkey became a net exporter as of 2017. Given the data in Figure 5, the share of renewable sources in Turkey's total electricity generation increased significantly. Here, one can conclude that the share of renewables in the exported electricity to the EU has increased. One can calculate the exact share of renewables in the exported electricity to the EU once the YEK-G system is launched.

A comparison is in order here to show the role of institutions in the geopolitics of renewable energy. As described in the previous section (Table 1), the electricity network of Turkey is connected to the system of Bulgaria with two 400 kV lines and the system of Greece by one 400 kV line. These systems are operated in synchronous parallel operation mode. There are two interconnections between Turkey and Georgia. One is a 220 kV transmission line used in emergencies and the other is a 400 kV line, which is operated in asynchronous parallel operation mode.165 As the power grids of Turkey and Georgia are not synchronous, a back-to-back direct current interconnection is used. On the other hand, the electricity trade between Turkey and Armenia is currently not possible through the existing interconnection because of a lack of infrastructure.165 This shows the low level of capacity and low volume trade of electricity between Turkey and the South Caucasus countries in contrast to Turkey’s high trade volume with its EU members.

As the energy trade volume and capacity between Turkey and the EU are considerably higher than its trade with the Caucasian neighbors (Figure 6), this paper argues that the role of ENTSO-E is crucial here. Enabled by its integration with the EU electricity market, Turkey is permitted to exchange commercial electricity in the region with Greece, Montenegro, Croatia, Bosnia and Herzegovina, Albania, and Kosovo.165 On the other hand, this full interconnection does not exist in the South Caucasus, within the basin of the Kura and the Araks rivers. Turkey has to deal with individual countries and with various transmission service operators for electricity trade in the South Caucasus. This is a major setback to increased commercial power trade in the South Caucasus. More importantly, this may hinder solutions for transboundary water management problems within the wider Kura-Araks river basin, such as pollution, inundation, and other related issues.

The difference in the electricity trade volume of Turkey between EU and non-EU European countries affects Turkey’s domestic and regional environmental policies. A significant number of new HPP installations are under construction or in operation in northeast Turkey, where Turkey shares river basins with Georgia and Armenia. These shared river basins are indivisible parts of the regional environment of the South Caucasus region. Turkey’s domestic energy policy, therefore, affects the water and environment in the South Caucasus.

An important international initiative since 2009 aims at establishing the institutional framework of the regional energy trade in the Kura-Araks river basin. This initiative, known as the “Azerbaijan-Georgia-Turkey (AGT) Power Bridge Project,” is supported by the United States Agency for International Development (USAID) and the United States Energy Association.166 The assumption that the excess electricity of Georgia and Azerbaijan could be a major source for Turkey’s increasing demand for electricity is the main motivation of this project. Turkey’s synchronous operation with the ENTSO-E network expands the potential market towards the EU for the electricity generated in Georgia and Azerbaijan.166

The strategic and institutional aspects of Turkey's renewable energy relations with Europe

As stated in the “Introduction and background” section, the politics of renewable energy differs from traditional geopolitics of energy. This difference has its sources mainly in the spatial and technical characteristics of renewable energy, which are different from traditional sources of energy, i.e. hydrocarbons. As the sources of renewable energy (for example, the source of wind and solar energy) could be in various spots on earth, the location of wind farms, solar energy farms, or small hydropower plants can differ from the location of the facilities where energy from fossil fuels are turned into commodities. Even more importantly, the distribution and transfer of renewable energy are dissimilar to those of hydrocarbons. Mostly in the form of electricity, renewable energy is usually not stored because of higher storage costs. It is transferred and traded via overhead power lines. The trade of electricity, therefore, is an important aspect of regional political and trade relations between countries, strategic concerns of consumers, producers, and the governments.

In the case of Turkey’s renewable energy relations with Europe, not only the geographic and technical features of renewable energy are relevant, but also, as this paper intends to show, the international and regional institutions play a decisive role (Table 3). First of all, in terms of regional and international environmental regulations, Turkey’s legal responsibilities are at an early stage as analyzed in the previous section. Turkey is a non-signatory of major international agreements that regulate shared river basins due to political concerns over sovereignty. On the other hand, the government of Turkey follows a strict agenda in harmony with the EU acquis. This means that Turkey is or will be bound with the regulations from the EU side in terms of its shared river basins, reducing carbon emissions, and protecting the environment. Because water, energy, and environment establish a nexus,19,20 Turkey’s energy policies inevitably influence and are influenced by its environmental policies and water policies. As Turkey is a part of the European ENTSO-E system, the government of Turkey will consider the directives of the European Commission, that set clear goals for energy efficiency and the share of renewable energy in the final consumption.

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Table 3.

Water-electricity matrix for Turkey – institutional aspects.

	Water and environment relations	Energy relations
Relations with the EU member neighbors	Turkey is bound with the EU regulations and directives in terms of renewable energyLow compliance with the EU Water Framework Directive	Highly integrated energy marketHigh level of trade of electricityRules set by ENTSO-E system
Relations with the non-EU member neighbors	Turkey is bound with bilateral treaties dating to the Soviet era No regional framework for integrated water resources and environment management	Moderately integrated energy market, only with Georgia No trade takes place with ArmeniaMedium level of trade, rules set bilaterally

Source: Author.

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Table 4.

Water-electricity matrix for Turkey – strategic aspects.

	Water and environment relations	Energy relations
EU member neighbors	Turkey is downstream in the shared river basinsThe EU has low interests in Turkey’s transboundary river basin management policiesThe EU has low interests in Turkey’s compliance with the EU Water Framework Directive	For the climate change and energy goals of the EU, Turkey is a crucial partnerThe EU has high interest in Turkey’s renewable energy policy and transboundary electricity tradeTurkey’s involvement in the ENTSO-e is critical
Non-EU member neighbors	Turkey is upstream in the shared river basinsThe Caucasian countries have high interests in Turkey’s transboundary water management and environment policies	There is no regulated/integrated market. The energy trade leans on bilateral agreementsTurkey has a high interest in the Caucasian countries’ energy and electricity trade policies b/c of its increasing energy demand

Source: Author.

The role of the institutions could be presented more clearly through a comparative analysis of Turkey’s renewable energy relations with its European neighbors in the South Caucasus. Here the regional institutions are less developed than they are in the sphere of the EU. As mentioned in the “Introduction and background” section, the water and energy relations between the states in the South Caucasus, i.e. Turkey, Georgia, Armenia, and Azerbaijan, lean on bilateral agreements, most of which date back to the Soviet era. This sometimes leads to political conflicts that are closely related to the renewable energy policies of Turkey.167 Under circumstances where there is no regional framework, countries are more likely to act unilaterally and aim at complying with the regulations, to which they are bound to. In Turkey’s case, the regulations that Turkey is bound to stems from the EU acquis and the rules of the ENTSO-E system. In harmony to the EU goals, Turkey increases its renewable electricity generation capacity, which is a “win-win” solution for Turkey’s regional energy relations with the EU, as Turkey intends to increase domestic supply for domestic electricity demand and at the same time to export electricity to the EU by adding more renewable electricity generators to its portfolio. This is compatible with EU renewable energy goals.

This connects institutions to geopolitics, in which the strategic realities, policy considerations, and energy-related cooperation and conflict patterns between the countries play significant roles (Table 4).21–24 As discussed in this paper, Turkey’s strategic realities about energy necessitate the government of Turkey to increase its domestic electricity generation preferably from renewable sources. Large amounts of funds were allocated for this purpose in the state budget.137 This is in connection to Turkey’s high trade deficit that creates a burden on the macroeconomic policies. An important share of Turkey’s trade deficit belongs to its energy (mostly hydrocarbons) imports. Therefore, Turkey may not afford to increase the imports of electricity given its status of the current account.21 Turkey’s ENTSO-E membership is an opportunity for Turkey to make its energy market more competitive and export excess electricity to the EU.

Increased investments in renewable electricity have at least three tangible benefits for Turkey. First, the need for importing electricity decreases as the domestic generators respond to the increasing domestic demand. Second, the new investments in renewable energy build less stress on the regional environment. Third, as the EU directives allow the EU member countries to import electricity from outside of the Union to meet their renewable energy targets, Turkey can export excess electricity to the EU grid without any restrictions. As Chatzivasileiadis and Ernst put forward, the integrated renewable energy generators increase the reliability of supply.25 Also, as the renewable energy sources and demand centers are unevenly distributed across Europe, transboundary electricity trade is the only reasonable way to reach the environmental goals of the EU.26

As compared to Turkey’s energy and environment relations with the Caucasian countries, the ENTSO-E membership of Turkey could also have negative consequences for the regional water management and environment. First, the new hydropower plants in the Kura-Araks and the Çoruh river basins that Turkey shares with Georgia, Armenia, Azerbaijan, and Iran could increase the already high water stress134 level in the river basins in the South Caucasus. Second, as Turkey’s electricity market integration with the South Caucasus is low, and there are serious bilateral political problems in the region (i.e. between Armenia and Azerbaijan), the excess electricity generated by the HPPs on the Kura-Araks and the Çoruh river basins are more likely to be exported to EU countries, not to the South Caucasus countries. Third, Turkey’s need for importing electricity decreases as more domestic generators generate more electricity. This tends to decrease the electricity trade volume and capacity between Turkey and Georgia. This means that the countries in the South Caucasus will have to build more non-integrated electricity generators25 to meet the domestic supply and could not benefit from the advantages of an integrated grid.168 As discussed earlier by Arbell and Rausch, electricity infrastructure plays a “central role” for environmental outcomes.26

Conclusions

Globally, regional electricity trade schemes are supported by regional and international organizations such as the NAFTA, the ADB, the ICWC, or the EU. There are many reasons for these institutions to encourage regional electricity trade. The efficient use of electricity generators and transmission infrastructure, competitive prices for the customers, a larger electricity market, and the reduced environmental impacts are among these. This paper particularly emphasizes the environmental benefits of regional electricity trade with a focus on the water resources in the shared river basins. As the examples of electricity trade taking place in North America and Southeast Asia show, the integration of the renewable resources in larger grids can both reduce the environmental impacts and increase the intention of cooperation on the shared river basins between the countries. The example of the currently inefficiently-functioning regional trade scheme, the CAPS, in Central Asia shows that the lack of regional electricity trade based on the functioning of the HPPs may increase regional environmental tensions and the stress on the water resources.

The EU is among the most prominent supporters of renewable energy, cross-border electricity trade, and an integrated regional energy market. Since the Maastricht Treaty, the trans-European networks (TENs) are strongly emphasized by the EU leaders and since the 2000s, the policies on renewable energy have gained importance in harmony with the EU climate change goals. In the mid-2000s, Turkey’s key role as an electricity trade partner with the EU increased, particularly after the introduction of the “European Neighborhood Policy.” With its high and exploitable renewable energy capacity and increasing investments in new renewable energy generators, Turkey is strategically important for the EU to reach its climate change goals, and the goals of an extended and integrated electricity grid, and a large electricity market. This necessitates the cooperation of the EU countries in regional electricity trade, particularly the neighbors in the Balkans region, with Turkey. Following the EU policy on renewable energy, Turkey and its electricity market were included in the ENTSO-E system. In the initial years of the ENTSO-E integration, Turkey was a net importer of electricity but over time, it became a net exporter. After the accomplishment of the legal and physical infrastructure known as the YEK-G in Turkey, energy generated by a guaranteed renewable source will be exported to the EU. This imported electricity will be included in the EU’s calculations of the share of renewable energy in the total final consumption, based on the SHARES methodology.

This paper argues that the cooperation and high level of integration in the field of electricity has positive impacts on transboundary water management and the regional environment in Europe. As electricity generation, water management, and environment policies are interdependent, in other words, water and electricity establish a nexus in the shared river basins of Turkey, the cooperation in one policy area (i.e. electricity) has positive impacts on the others (i.e. water management, environment). As the geopolitics of renewable energy literature emphasizes, spatiality with regards to renewable energy is important. Turkey is downstream in the Maritsa river basin shared with the EU members, while it is upstream in the South Caucasus. Turkey’s downstream location in the Maritsa basin does not undermine the importance of its transboundary water management policies for the EU. On the other hand, Turkey’s renewable energy relations with the EU have an impact on its environmental relations in the South Caucasus. Therefore, Turkey’s upstream position in the South Caucasus is more important and critical for the riparians in the Kura-Araks river basin, which is already under water stress.

The idea behind this paper is that a cooperation mechanism similar to Turkey’s integration with the ENTSO-E network could be established in the South Caucasus. This would decrease the current and future stress on the water resources in the Kura-Araks river basin. Besides, such a cooperation mechanism would further extend the integrated electricity market of the EU and increase the efficiency of the generators and transmission infrastructure in the region. Since the 2010s, the cooperation mechanisms and bilateral agreements in the field of electricity trade between Turkey and Georgia aim at integrating Georgia’s grid into the ENTSO-E network through Turkey. On the other hand, for a comprehensive and long-lasting positive impact on the transboundary water resources in the South Caucasus, all riparians in the Kura-Araks river basin should be included in this potential regional electricity trade cooperation.

The paper also shows that the higher level of electricity trade between Turkey and its EU-member neighbors is facilitated by Turkey’s EU accession process and its membership to the ENTSO-E. The higher level of electricity interconnection leads to a higher level of cooperation in water and environment issues in the shared river basins between Turkey and Europe through the facilitating role of established institutions. The argument in this paper is a contribution to the literature on Turkey’s electricity trade with its European neighbors. As Turkey borders with the EU and non-EU countries in the west and east, respectively, the role of the EU as a regional institution 1) in the increased volume of electricity trade between Turkey and the EU, 2) in the increased share of renewable sources in energy generation and electricity trade between Turkey and the EU, and 3) in the increase or decrease of water stress on the transboundary rivers Turkey shares in the west and east with its European neighbors can be traced with the help of a comparative approach embraced in this paper.

Based on the framework provided by the newly emerging literature on the geopolitics of renewable energy, the analysis in this paper confirms the key role Turkey plays in the regional renewable energy generation and trade, both as a source and as a transit country. Turkey possesses a high potential for renewable energy, and its proximity to the South Caucasian renewable energy sources (especially the hydropower sources in Georgia) is a crucial aspect of Turkey here. Given the ambitious environment targets of the EU, Turkey’s EU accession process, the legal and institutional changes undergone by the government of Turkey in line with the EU acquis, Turkey’s increasing investments in the renewable energy sector, highly-integrated energy market with the EU, synchronous mode of operation of Turkey’s grid with the ENTSO-E system, and the high capacity transmission lines between Turkey and the EU are the main features of Turkey in terms of the regional geopolitics of renewable energy in Europe.

One last point to note here is that Turkey’s increased investments in the renewable energy, especially its investments to increase the level of exploitation of the high hydropower potential in the shared river basins in the northeast (the Çoruh and the Kura-Araks river basins) may increase the current and future water stress and hydropolitical risk in the South Caucasus. Therefore, it could be a viable policy option for the policymakers in Turkey to focus more on alternative sources of renewable energy (i.e. wind, solar, or geothermal) for encouraging new investments in the renewable energy sector.