Interview with Adonai Herrera-Martinez
European Bank for Reconstruction and Develepmont
(Avrupa İmar ve Kalkınma Bankası)
|♦ MBA: INSEAD 2009.|
|♦ PhD: Nuclear Engineering, University of Cambridge 2004.|
|♦ Energy Efficiency and Climate Change Senior Manager at the European Bank for Reconstruction and Development (EBRD) 2009-2017.|
Simge Mutlu: Can you please introduce yourself to us?
My name is Adonai Herrera-Martinez and I am a manager of sustainable energy activities in European Bank for Reconstruction and Development (EBRD). I am here for 6 years so I am a little bit Turkish now. What I do is coordinating the activities of renewable energy, energy efficiency, resource efficiency in the country.
Simge Mutlu: We know that in our century energy means power so what do you think about Turkey’s process of growing in that kind of power?
In April 2015, Turkey also became a part of the European Electricity Transmission Network ENTSO-E, which includes 41 transmission system operators from 34 countries. This is a great opportunity for Turkey to increase its electricity trading with its neighbour countries in the near future with new transmission lines underway and to its secure electricity supply.
An important component of Turkey’s official energy strategy is to enhance the country’s role in the Eurasian axis by becoming an energy hub. Hence, Turkey already hosts major pipelines and is eager to plan more pipeline projects linking the Caucasus and Central Asia to Europe.
In order for Turkey to act as a transit state for natural gas, it must be able to re-export the excess capacity of natural gas through its pipelines. Nonetheless, it currently uses most of its pipeline capacity to meet domestic demand.
In 2012, the share of natural gas in the country’s TPES was 32%, oil was at 27% and coal was at 30%. It is important to note the drastic increase in natural gas demand in Turkey in the past 20 years, due to the general increase in energy demand (2X primary energy supply and 4X electricity generation). Since Turkey doesn’t have significant natural gas and oil reserves, more than 70% of its total primary energy is imported.
A significant part of Turkey’s account deficit is due to its energy imports, which accounted for 7% of Turkey’s nominal GDP in 2012. The decrease in oil prices has helped lower Turkey’s CA. “Turkey saves $4 billion in energy costs with every $10 drop in oil prices.” However, it doesn’t mean that Turkey’s ever increasing energy imports costs are reasonable and sustainable. The government is also aware of this issue, therefore is aiming to increase energy efficiency and use of national energy resources such as renewables and coal.
Simge Mutlu: What kind of studies in the field of enhancing renewable energy resources in Turkey that your bank gave financial support?
EBRD provides financing, technical assistance and regulatory support. Euro 3 billion in SEI financing, market assessments in wide range of fields from geothermal to waste to energy; regulatory improvements; NREAP, support in devising post 2020 RE support mechanism + streamlining of licensing regime
Simge Mutlu: And what are your suggestions for enhancing these sources and using them in the most correct way?
Implementation of the NREAP, streamlining of licensing, FiT bidding system, access to finance, EPC contracting; specific support to bio-energy and geothermal (baseload untapped sources)
Simge Mutlu: If we want to compare other countries with Turkey how do you evaluate the using and producing the energy in Turkey?
Since Turkey is a developing country, energy demand increase in Turkey has been one of the largest in the world since 2010.
Turkey still has significant room to apply best practices, compared to most Western Europe countries. During this transitional period, it is very important for Turkey take solid steps to properly manage its energy needs and secure its energy supply by promoting renewable energy and energy efficiency.
Active government support is necessary (need to enhance the current regulatory framework). While Turkey’s current energy policy strictly focuses on energy security (promoting coal + renewables + nuclear), it should combine environmental concerns as well for a more comprehensive approach. Environmental implications, carbon pricing (taxing or trade market)
Simge Mutlu: We want to know your ideas about the climate changing and global warming and also about how they are going to affect us in the future. Can you tell us about this subject?
That is to be seen. If above 2 C, water stress, energy demand increase and food prices. Impact of migratory flows and conflicts;
According to the IPCCC, the Mediterranean region is going to be severely affected by climate change. For Turkey in particular; temperature increase, precipitation change, drought, heat waves, and wildfires are the major hazards that will affect the resources and sectors in Turkey in the future.
Simge Mutlu: What do you think about the usage of nuclear energy?
It is certainly a controversial topic, with multiple pros and cons. Pros: baseload, near zero GHG emissions, high energy density hence less fuel needs to be used. Cons: spent fuel problems, high decommissioning costs, highly controversial/political due to accidents in the past
If waste management and decommissioning costs are taken into consideration, the LCOE does not seem as appealing and certainly will be challenged in the near future by accelerating RE learning curves and drop in LCOE. It is noticeable that RE technology have steadily become cheaper over time (which suggests that costs will continue to decrease as RE becomes more mainstream); however this is not the same for nuclear energy overnight costs.
Simge Mutlu: Can you give us some information on the financial side like how do you estimate or calculate the cost of a project? And usually what is the expenditure space (highest-lowest)?
Overnight capital cost is a term typically used in the power generation industry to describe the cost of building a power plant overnight (neglecting financing cost). Costs range from equipment to civil works to engineering to permitting. Each technology presents a different cost structure. See slides as a reference.
The LCOE is the total cost of installing and operating a project expressed in dollars per unit of electricity generated by the system over its life.
The importance of the factors varies among the technologies. For technologies such as solar and wind generation that have no fuel costs and relatively small variable O&M costs, LCOE changes in rough proportion to the estimated capital cost of generation capacity. For technologies with significant fuel cost, both fuel cost and overnight cost estimates significantly affect LCOE.
The availability of various incentives including tax credits, grants and financing terms can significantly alter the calculation of more detailed LCOE calculations used for making investment decisions. As with any projection, there is uncertainty about all of these factors and their values can vary regionally and across time as technologies evolve and fuel prices change.
Simge Mutlu: What was the most successful project ever that your bank has given support or what was your favourite project so far?
In Turkey, MidSEFF credit line (EUR 1.5 billion for mid-size renewables), launched in 2011 for € 5–50 million sub-investments in RE, EE and waste-to-energy.
Favourite, Şişecam glass recycling; which provided financing for various EE measures, including waste heat recovery and energy management systems in Turkish plants.
Simge Mutlu: What do you think about Turkey’s energy efficiency goal? Is it reachable? If it is how is it going to affect the locals in your opinion?
20% reduction in energy intensity. Achievable. Together with the MoENR, we are preparing the NEEAP to achieve the target. Achieving the energy efficiency target will help lower Turkey’s energy imports and current account deficit while promoting sustainable/reasonable use of energy. By decoupling energy consumption and economic growth, we expect Turkey’s economy to become more resource efficient in the coming years.
Simge Mutlu: And at last what are your suggestion about renewable energy and the way we see and use it for the students that are going to read this interview?
I personally spend my career working with the renewable energy not only I believe in it but also it is right thing to do. Energy for the present and the future; good personal investment, both professionally and socially.
Simge Mutlu and Sena Gülhan