Over the past decade, the installation cost of wind power plants has fallen by 40%, while the installation cost of solar power plants has fallen by 77%. This decline has reduced the cost of electricity generation from solar energy by 69%, making solar energy Türkiye’s cheapest source of electricity generation. Despite falling renewable costs, Türkiye has decided to provide incentives in USD for domestic coal power plants, despite their expenses being in TRY.
The $75 USD/MWh incentive price is 12% above the average sales price ($67 USD/MWh) over the past year and 36% above electricity generation cost of domestic coal power plants ($55 USD/MWh). With this incentive, domestic coal power plants, whose costs are subsidized under the capacity mechanism even if they do not generate electricity, will receive a total of at least $8.7 billion over a four-year period. This amount is 53% higher than the five-year grid renewal budget, which has become an obstacle to new power plant investments due to limited capacity.
The report “$8.7 billion coal subsidy contradicts Türkiye’s renewable goals” by EMBER summarises that Türkiye could remove the barrier to new power plant investments by allocating the budget planned for coal subsidies, to grid modernisation and the construction of new substations. Furthermore, by removing bureaucratic barriers to the integration of rooftop, floating, hybrid, and storage-integrated solar projects into the system, Türkiye could accelerate the energy transition and achieve its target of reaching 77 GW of installed solar capacity by 2035.
Access the report here