Turkey’s power demand grows as normalization begins

Turkey’s power demand grows as normalization begins

Turkey’s power demand grows as normalization begins

Turkey’s power demand has started to normalize with the country’s easing of restrictions to prevent the spread of COVID-19 over the last three months, Alvaro Ortiz, head economist for Big Data at BBVA Research, told Anadolu Agency on June 22. 

Demand increased 1% by June 17 compared to the same period last year, Ortiz said.

Turkey took many precautions to fight against the COVID-19 since the first reported case on March 11. From this date onwards, schools, shopping malls, restaurants and cafes closed while a curfew was put in place for weekends while restrictions were placed on the elderly and children going out. 
These restrictions had a dramatic impact on the country’s power demand with the share of demand decline in April by

16% and May by 17%. But as normalization gradually returned in on June 1 across the country with the lifting of restrictions not only in Turkey but also worldwide, growth figures turned into positive territory.

“… The first 17 days of June have been near +1% in year-on-year terms. This is consistent with our Big Data information on both consumer transactions and corporate investment which have already returned to positive nominal growth rates in June after sharp declines in April and May which were around 40% of nominal contractions,” Ortiz said

Share of source generation changes 

Volkan Yiğit, a partner at APLUS Enerji investment and consultancy company, said decrease in demand had a huge impact on the share of resources used for power generation. 

“The share of natural gas in electricity generation fell to historic levels while renewable energy increased its share in the generation mix,” he said. 

Yiğit noted that with the start of normalization in Turkey came a surge in power demand as seen especially in the week between June 15 and 20. 

“In this period, the generation from thermal plants including natural gas, imported coal and lignite significantly increased,” he said, detailing that the average hourly generation from imported coal rose from 6,500 megawatts to 8,000 megawatts while it hit 5,200 megawatts from 4,300 megawatts in lignite plants. 

Yiğit also said that the average hourly generation from natural gas plants mounted to 5,300 megawatts from 4,200 megawatts level.

2020 forecast

However, Ortiz holds a cautious growth outlook for 2020. “Our forecast for consumption for this year is mildly positive around 0.7% in line with the 2019 growth rate. Consumption has the biggest share in GDP so the evolution of both should be similar.”

He added that taking into account the differences between Turkey and the rest of the world, he forecasts that its GDP growth will be near zero, between +2% and -2%.

“We think that Turkey will avoid more negative forecasts of sharp declines around -5% for several reasons,” he said.
One of these reasons is in Turkey’s growth rate of 4.5% year on year during the first quarter of 2020 compared to most developed economies that posted negative growth rates.

But he warned that despite Turkey’s important buffer for the first quarter, the growth rate would be assessed on an average of the four quarters of the year.

Consequently, he said they expect the Turkish economy will post a significant decline due to the COVID-19 in the second quarter, which is forecast to be between -5% and -8% year on year. 

“In annualized growth rates, this is consistent with declines of near -30% to -40% which would be a huge hit in the economy. However, it will recover during the third and the fourth quarter given the particular nature of this crisis to compensate for the first half of the year. Thus we expect a near-zero growth this year to recover faster next year,” he said warning that COVID-19 remains the main risk, the recovery from which is a delicate balance between health and the economy. 

Yiğit observed that tourism would be one of the main factors for power demand for the rest of the year but would still not return demand to levels seen in 2019.

“In our main scenario, we expect Turkey’s consumption to stand between 296-297 billion kilowatt-hours for 2020. This is around 2% and 2.5% drop compared to the 2019 consumption,” he noted. 

Burak Kuyan, the head of the Turkish Energy Traders Association (ETD) also agreed that lower electricity demand in April and May would impact trade volumes. 

“As of the beginning of June with the normalization process, expectations focused on a rise in demand and this affected the upward trend in trade volumes,” he said.