3 QUESTIONS - Challenges, expectations in energy field in 2023

By Sirri Uyanik

- The author is an energy expert and working as an academician for Karatay University

ISTANBUL (AA) - Challenges and expectations in the energy field are discussed in three questions.

- How was the energy industry in 2022?

2022 had been an extremely turbulent year for the global energy industry.

Supply chain problems, which emerged during COVID-19 lockdowns, as well as the Russia-Ukraine war also drove the price hikes. The rise in energy prices was one of the most critical factors that fueled global inflation.

With a rise in the prices of natural gas, oil, coal, and electricity, which increased especially in the spring, combined with the concerns about access to energy, the world witnessed the biggest energy crisis in history.

Energy geopolitics has become quite decisive in international relations. After waging a war on Ukraine and using energy as a weapon, Russia reminded this by saying: "Energy is never just energy." The war and the following sanctions, new energy policies, and conjecture led to the division of energy markets with the redistribution of resources across the globe.

These political developments have made governments the biggest players in all markets and economies, not just in energy markets. Energy security concerns partially blocked efforts to combat climate change or caused a delay to reach some goals in the fight against the climate crisis. Some countries in Europe reopened coal plants and the world returned to coal. Over the last two months, the carbon intensity of electricity generation has exceeded 700 grams of carbon dioxide (gCO₂eq/kWh) in many countries.

Meanwhile, the positive results from the studies on nuclear fusion technology in the US gave some hope for the future of energy.

- What were the most important developments in the energy field in Türkiye in 2022?

Türkiye saw growth both in the economy and energy industry in 2022. On the electricity side, the installed power exceeded 100,000 megawatts, and the majority of the newly added capacity is obtained from renewable energies. Türkiye estimates it will source 55% of its energy from thermal (33% coal, 22% natural gas), and 45% of energy from renewable resources (20% hydro, 10% wind, 8% solar, and 6-7% geothermal).

The most important developments in the electricity markets were the regulations of the public sector that made efforts to both protect the consumer and ensure supply and demand security.

The government's goal and support for electricity and especially natural gas continued to increase; The number of supported households exceeded 4 million. In the oil and natural gas sector, the most talked about issues were global effects and price levels.

The government increased energy assistance (electricity and gas) for households, reaching 4 million.

Türkiye discovers oil reserves in Gabar Mountain and natural gas reserves in the offshore Sakarya. Istanbul’s Silivri underground gas storage facility started work at full capacity, which is also very important for energy security. Those were remarkable developments that left their mark on the country’s energy agenda in the previous year.

- What should we expect in 2023?

The role of the state in energy policies is more likely to continue. Indeed, the trend of globalization is inverting. Thus, governments and public policies will remain decisive with new incentives and market interventions. The EU's "Border Carbon Tax" and the US clean energy technology move could increase competition and tension between the two actors. The Inflation Reduction Act in the US essentially aims to turn America back into a manufacturing hub.

The relationship between OPEC and Russia, as well as quotas and sanctions, will continue to be a hot topic in the oil industry. The recession may be another factor that will affect the oil market.

European countries will continue to implement record amounts of energy support packages to support their citizens against higher electricity and gas prices. Germany has announced €265 billion ($280 billion) worth of relief package, which corresponds to 7% of its total national income.

In the meantime, the search for alternative LNG (US, Qatar, Africa) to Russian gas, on which Europe's dependence is high, and feasibility research for green hydrogen production will be among the important developments in the coming years.

In short, it seems that regional developments and the decisions taken by the governments in line with risk assessments will be critical for 2023.

Geopolitical developments will be decisive for the usage of fossil fuels and the number of emissions. Despite all the support of governments and public and financial circles, the most important obstacles to energy transformation will be global energy security concerns, difficulties with project permits and licenses, and infrastructure (especially transmission networks) inadequacies.

On the 100th anniversary of the Turkish Republic, energy could be one of the most important topics that would dominate politics. The energy prices, Akkuyu Nuclear Power Plant, natural gas reserves in the offshore Sakarya, and Russia’s proposal on establishing the natural gas hub in Türkiye will be on the energy agenda of Turkiye in 2023.

*Opinions expressed in this article are the author's own and do not necessarily reflect the editorial policy of Anadolu Agency.