Modelling the Potential Impacts of Nuclear Energy and Renewables in the Turkish Energy System

Abstract

With heightening global concerns about the impacts of climate change, the debate around different carbon mitigation options is gaining momentum. A widespread argument is between those for and against utilizing nuclear energy as a low-carbon energy source. This debate is also relevant for Turkey, a country that is set to introduce nuclear energy to its electricity generation mix over the coming years. The purpose of the study is to assess the potential merits and drawbacks of the utilization of nuclear energy in the country versus the increased utilization of renewable energy sources. A fundamental merit order model is used for modeling the Turkish electricity market until 2025 under three scenarios. The comparative effects of renewable energy sources and nuclear energy are evaluated in terms of their impact on electricity generation costs, CO₂ emissions and energy security. The results of the study show that the increased utilization of renewable energy has a more effective role in achieving the country’s energy targets in comparison to nuclear energy.

1. Introduction and Background

1.1. Introduction

The Turkish energy market experienced rapid growth and underwent a significant reform process in the past two decades following the liberalization of the market with the adoption of the Electricity Market Law No. 4628 in 2001. As a result of this process, the total installed capacity in the country increased to almost 96 GW by the end of 2020 up from 27 GW in 2000 and the sources of electricity generation became greatly diversified [1].

The electricity supply in the country will need to be further expanded to meet the electricity demand, which is expected to increase significantly over the coming years. The electricity consumption in the country rose rapidly from 128 TWh in 2000 to almost 306 TWh in 2020 [1]. Despite the recent slow-down in the electricity demand growth mostly because of the COVID-19 pandemic, the data from the first half of 2021 point to a significant recovery and the demand growth rate is expected to pick up following the end of the pandemic.

Significant investments have been made into the energy sector over the last decades to account for this rising demand and more investments will need to be realized to ensure energy security and efficient operation of the market. On the other hand, the increase of the electricity demand in the country has also exacerbated the dependence on imported fuel sources due to the lack of significant domestic fossil fuel reserves apart from some lignite reserves with relatively low thermal quality. Another trend observed in the energy market is the rising GHG emissions caused by the electricity generation sector.

With these considerations in mind, the main energy policy targets of the country include providing affordable electricity to its citizens, ensuring energy security, reducing the dependence on imported fuel sources, and reducing the GHG emissions in the country. In this regard, two important components of the Turkish energy policy have been an increased emphasis on the promotion of local lignite reserves and the utilization of the renewable energy potential in the country consisting mostly of solar and wind. The introduction of nuclear energy into the energy mix has for long been perceived as a third pillar in achieving the policy objectives of the country. Based on this view, the efforts to introduce nuclear energy to the generation mix have been ongoing since the 1970s.

After several failed attempts, the nuclear energy ambitions of the country took tangible shape following the international agreement signed between Russia and Turkey in 2010 concerning the construction of the Akkuyu Nuclear Power Plant through a Build-Operate-Own (BOO) model. The engineering and survey work on the site began in 2011 and the main construction work began in 2018. When finished, the power plant will be comprised of 4 units of 1200 MW installed capacity for a total of 4800 MW. The official target for the commissioning of the first unit of the power plant is 2023 with the power plant expected to be fully commissioned by 2025. Even though there are still questions regarding the achievability of these deadlines, the construction of the power plant is well underway.

The proponents for nuclear energy in Turkey point to its potential role in providing energy security and climate change mitigation. On the other hand, the main objections against the energy source involve around the potential safety risks and the exorbitant costs. The main argument against nuclear energy in Turkey claims that the expected benefits from nuclear energy can be achieved at a much lower cost through increased emphasis on the renewable energy investments in the country. Despite the successful development of wind and solar energy over the last decade, a significant potential remains in the country. Coupled with the declining capital costs of renewable sources, this underutilized potential signifies that nuclear energy is not the only option for Turkey to achieve its energy targets.

The aim of this study is to quantitatively assess the different energy policy pathways for Turkey and evaluate the arguments for and against nuclear energy by modeling the energy market in the country through a fundamental market equilibrium model. The modeling period includes the years between 2021 and 2025. Three scenarios are established for this reason including:

• As-is Scenario: Under the scenario, the generally expected demand increase and capacity additions forecasts in the market are used. All the current policies employed in the market are assumed to continue. Akkuyu NPP is not projected to come online within the simulation period.
• Nuclear Energy Scenario: The first unit of Akkuyu NPP is assumed to be commissioned in 2023, the second unit is assumed to be commissioned in 2024 and the final two units are assumed to be commissioned in 2025. All the other parameters under the scenario are the same as the As-is scenario.
• Renewable Energy Scenario: The introduction of a new feed-in tariff scheme applicable for wind and solar power plants is assumed under the scenario which results in increased capacity additions. All the other parameters under the scenario are the same as the As-is scenario.

Each of the three scenarios are modelled under the market equilibrium model on an hourly basis to forecast generation by source type, market prices, GHG emissions from the electricity generation sector and overall system prices. In doing so, it is possible to compare the benefits of nuclear energy in the generation mix versus the benefits that would be acquired through increased utilization of renewable energy sources. This modeling study thus aims to evaluate the different policy options in the market to inform future policies and contribute to a better planned energy policy architecture. Assessing the safety concerns related to the use of nuclear energy lies outside the scope of the study.

The results of the study show that it is possible to obtain similar benefits from the further promotion of renewable energy sources in the country with much less cost in comparison to the introduction of nuclear energy. The results of the modeling study show that:

• The reducing impact of nuclear energy on the day-ahead market prices seems to be significantly greater in comparison to the renewable energy option. Despite this, the overall costs of nuclear energy on the energy system are greater due to the high capital costs of nuclear and the purchase guarantee provided to cover these costs. These costs are likely to be reflected on the end-users of electricity, significantly increasing the electricity tariffs and harming the competitiveness of the economy. With their falling costs, renewables can provide a much more affordable way of providing energy and reduce the overall electricity cost to the system.
• Energy security of the country can be maintained through the promotion of renewable sources as there is sufficient base-load capacity and flexibility in the energy system for the next five years to handle the added intermittency from new renewable energy investments.
• Comparable reductions in the country’s GHG emissions can be achieved through promoting renewable energy sources instead of the introduction of nuclear energy.

The remainder of the paper is organized as follows: in the next section, a brief overview is provided on the evolution of the nuclear energy and renewable energy policies in Turkey. The following section provides a brief literature review on the studies carried out on the potential impacts of nuclear energy on the energy systems in the world and in Turkey. This section is followed by the methodology section, which explains the methodology behind the fundamental model and lays out the rationale behind the main assumptions used in the forecasting study. The results of the modeling are analyzed in the next section and the scenarios are compared by different parameters. A discussion of the key takeaways of the study is made in the final section.

1.2. Nuclear Energy in Turkey

Introduction of nuclear energy into the energy mix has been one of the central aims of the Turkish energy policy in the last decades. After the failure of several attempts at launching a nuclear power plant since the 1970s, the process was restarted in 2006. “The Law on the Construction and Operation of Nuclear Power Plants and Energy Sale” was enacted in 2007 and companies were invited to submit bids for building a nuclear power plant in the Akkuyu region.

After the tender was cancelled due to lack of competition, the government decided to engage in direct talks with the Russian government. As a result of these talks, the intergovernmental agreement for the construction of a 4800 MW nuclear power plant in Akkuyu was signed between the two countries in 2010 (Official Gazette dated October 6, 2010).

According to the international agreement between Turkey and Russia, the state-owned generation and wholesale company EÜAŞ (Electricity Generation Company) is set to buy 70% of the generation from the first two units and 30% of the generation of the third and fourth units of the Akkuyu Power Plant at a price of 123.5 USD/MWh for a period of 15 years following the commissioning of each unit. The remainder generation is to be sold in the competitive power market. The construction of the power plant began in 2018 and the official target for the commissioning of the first unit is set for 2023.

It is currently unclear how the purchase guarantee for the Akkuyu NPP will be financed. One option is for EÜAŞ to purchase the electricity and bear the costs of the guarantee directly under its finances. The second option would be to reflect the costs of the purchase guarantee to all actors in the market via a calculated unit cost similar to how the renewable energy feed-in tariff is currently financed. Both options would lead to an increase in end-consumer electricity prices albeit through different means.

1.3. Renewable Energy in Turkey

Turkey holds a favorable geographical location in terms of the potential for the development of renewable energy sources such as wind and solar energy. A significant increase in the utilization of these sources has been achieved in the last decade owing to the support mechanism employed in the market. The evolution of solar and wind installed capacity in the country over the last decade is shown in Figure 1 below.

Between 2010 and 2020, the solar energy capacity in the country increased to 6.6 GW from non-existent installed capacity while the wind energy capacity of the country increased to 8.4 GW from 1.3 GW. Despite the achievements of the last decade, significant potential remains unused. According to recent estimates, the economic potential for wind energy installed capacity in Turkey stands at 48 GW [2] while the economically achievable amount of solar energy generation stands at 380 TWh [3].

Turkey has introduced the Renewable Energy Resources Support Mechanism (YEKDEM) in 2011, which has since been the key regulatory support in the country for the utilization of renewable energy sources. The feed-in tariff applied in the scope of this support mechanism provides different levels of purchase guarantees based on the type of renewable energy source on a USD per MWh basis. The price levels available for different types of power plants can be seen in

Table 1. Feed-in tariff levels applicable per type of source (Previous YEKDEM).

Renewable Energy Source	Applicable Price (USD/MWh)
Hydroelectric	73
Wind	73
Geothermal	105
Biomass	133
Solar	133

.

The prices within the feed-in tariff are applicable for the first 10 years of operation for power plants commissioned before July 2021. Even though the original deadline was 2020, this was extended by 6 months due to the COVID-19 force majeure.

The expiring feed-in tariff mechanism is going to be replaced with a new feed-in tariff mechanism after 2021. The details regarding the scope of the YEKDEM to be implemented after 1 July 2021, have been declared in the Official Gazette dated 30 January 2021. The guaranteed purchase prices will be applied for the electricity generated in power plants holding a RES certificate which are commissioned between 1 July 2021, to 31 December 2025. The purchase guarantees announced for each source type are determined in TL, as opposed to the previous USD-based support. However, these values are set to be revised every three months based on indexation of PPI, CPI and exchange rates of dollar and euro against the Turkish Lira.

The purchase guarantees announced for each source type are provided in

Table 2. Feed-in tariff levels applicable per type of source (New YEKDEM).

Renewable Energy Source	Applicable Price (TL/MWh) *
Hydroelectric	400 (~55 USD/MWh based on the exchange rate on 30 January 2021)
Wind	320 (~44 USD/MWh based on the exchange rate on 30 January 2021)
Geothermal	540 (~74 USD/MWh based on the exchange rate on 30 January 2021)
Biomass	540/500/320 (~74/68/44 USD/MWh based on the exchange rate on 30 January 2021)
Solar	320 (~44 USD/MWh based on the exchange rate on 30 January 2021)

* The purchase guarantee levels for the new YEKDEM scheme were announced on 30 January 2021. The feed-in tariff level in USD terms changes based on the escalation formula and the exchange rate at any given date.

. The new purchase guarantee prices point to a significant decline in comparison to the earlier YEKDEM and the new TL-based mechanism is expected to complicate the financing prospects for new projects due to exchange rate risks. As a result, the capacity increases in solar and especially wind energy is expected to slow down over the next few years.

Turkey has also introduced an auction-based support model (YEKA, or REDA in English) for large scale renewable power investments. Under the model, regions with specified installed capacities are allocated to the potential investors through tenders with an obligation to build power plants with predetermined specifications. The YEKA mechanism brings advantages to the investors in the development process and targets to benefit from economies of scale to decrease the level of incentives. The first solar YEKA project has begun commissioning as of 2020 and will be completed to reach 1 GW. The first wind YEKA project is also expected to be commissioned over the next few years.

Additional projects and new auctions are expected to follow. The results of the recent YEKA-3 solar tender held in May 2021 are especially striking. The winning bids for some regions as low as around 22 USD/MWh (185 TL/MWh) demonstrate the falling costs of solar energy and the rich potential of the country in terms of solar energy. However, access to finance and feasibility for these projects remain doubtful under the current circumstances. The outlook for these projects will become clear based on the level of progress in the coming years.

Aside from the new YEKDEM mechanism and the YEKA projects, a significant increase in renewable energy installed capacity is expected to come from new unlicensed projects. Most of the current solar energy capacity of the country consists of unlicensed applications. Further investments are expected in this segment due to the monthly net metering scheme allowed under the unlicensed regulation which makes these applications very attractive for self-consumption purposes, especially for large industrial and commercial consumers.

Several steps have been taken for the utilization of renewables over the last decade which led to significant increases in the installed capacity. Despite this, there is still significant underdeveloped potential in the country. This potential is set to be utilized soon with the falling costs of renewable energy generation. The pace of this utilization can potentially be accelerated with the adoption of new policies.

2. Literature Review

The potential impacts of nuclear energy in the Turkish energy system have been analyzed in various studies. Some of these studies also include a comparison with the potential effects of increased renewable energy utilization.

One study conducted in 2010 makes a case for the introduction of nuclear energy into the Turkish electricity generation mix based on the dependency of the energy system on imported sources and the expected growth of the electricity demand in the country [4].

Another study concluded in the following year makes a similar case in support of nuclear energy in Turkey stating that it is necessary for the country to adopt nuclear energy from both a strategical, operative and tactical point of view. The arguments stated in the study are mainly based on geopolitical and energy security concerns [5].

The advantages and disadvantages of nuclear energy utilization in Turkey from a broader perspective are analyzed in a study conducted in 2014. In this context, the main advantages pointed out in the study include decreased dependence on imported sources, energy security, high fuel density and potential GHG emission reductions. On the other hand, the main disadvantages are listed as problems with nuclear wastes, lack of a comprehensive nuclear energy policy in the country, seismic risks, and public opposition [6].

The main developments in the country’s quest to introduce nuclear energy and the main motivations of the policymakers in making such a decision are underlined in another article from 2015. The paper places Turkey’s efforts to utilize nuclear energy in the global context and presents a comparative view including examples from similar countries [7].

Several studies aim to compare different prospective energy sources to be used in the future energy system of the country. One such study investigates the main sources of electricity generation that will be needed for the energy system in the country with a special emphasis on nuclear energy, wind and solar. These three sources are identified as sources with a significant potential for growth [8].

Nuclear energy as a low carbon option is emphasized in several studies made over the last decade. One such example in 2016 analyzes nuclear energy as an option for Turkey that can be employed for a low-carbon energy system. In this context, the focus of the paper is to provide a view on how public perspective can be shifted in favor of nuclear energy utilization [9].

14 different electricity generation scenarios for Turkey up to 2050 are modeled in another study. These scenarios are assessed in terms of different indicators such as economic, environmental, and social sustainability. A comparison between nuclear energy and renewables is a major component of these scenarios. The conclusion is that nuclear and renewable energy-driven scenarios are more sustainable but also significantly more costly [10].

The advantages and disadvantages of nuclear energy in terms of public perception were investigated in a study made in 2017. A series of interviews have been conducted within the study for these purposes. According to the results, the main advantages of nuclear energy are seen as cheap electricity, low carbon dioxide and reliability while the disadvantages are seen as the issue of nuclear waste and safety risks [11].

Nuclear energy is also mentioned as a possible solution to the import dependency problem of the country. One such study includes a projection of the electricity generation shares of the country. The conclusion of the paper is that the introduction of nuclear energy will be a positive development in Turkey due to several reasons such as curbing import dependency and reducing electricity costs [12].

Another study carried out in 2019 presents an argument for the adoption of nuclear energy from the viewpoint of GHG emissions and decarbonization [13].

A similar argument is made in another study in 2020 and nuclear energy is presented as a stable and reliable energy source which should be preferred for Turkey’s energy future [14].

A discourse analysis laying out the main arguments and parties that have participated in the nuclear energy debate in the country is included in a different article from the same year [15].

Another recent study includes an analysis of the potential electricity generation sources that can be utilized in Turkey up to 2030. Different options are compared in this regard based on several criteria such as carbon emissions and energy security [16].

Another study in 2020 aims to forecast carbon emissions caused by the electricity generation sector in the country by utilizing deep learning, support vector machine and artificial neural network algorithms. The success of the models is compared under five metrics [17].

Seven different electricity generation sources in the country are compared and ranked by using twelve indicators across four criteria groups in a recently concluded study. The study finds the reservoir hydropower option as the most sustainable option for Turkey [18].

A further study examines the potential impacts of an increased renewable energy share in the generation mix for Turkey by 2023 using a reference and an increased renewables scenario. The analyzed parameters include carbon emissions, the share of renewables and costs [19].

Finally, another study forecasts the pathways for energy-related GHG emissions in the country for 2023 and 2030 based on existing energy policies and targets. The results indicate that the introduction of nuclear energy is set to have a central impact on decreasing emissions until 2030 [20].

It can be observed that most of the studies presented in this section make an argument for the adoption of nuclear energy based on its perceived merits such as GHG mitigation, energy security and cheap electricity generation. However, there is currently a lack of a comprehensive quantitative benchmarking study aimed at testing these hypotheses. This study aims to fill this gap by providing a model by which some of the main arguments used for and against nuclear energy adoption in Turkey can be tested.

In this regard, the three common claims that will be tested within this study include:

• The introduction of nuclear energy would lead to cheaper electricity prices
• The adoption of nuclear energy would increase energy security and reduce the need for energy imports
• Significant GHG emission reductions can be achieved through the utilization of nuclear energy

On the other hand, the recent international literature regarding the effects of nuclear energy in energy systems focuses more on the potential impacts of a phase-out of nuclear energy. There are several countries that are currently considering a phase-out of nuclear energy which has influenced several studies to be carried out in this regard. Some of the main literature that has been produced with such an outlook include the following:

The potential effects of phasing out nuclear power for the Swedish market are investigated in a study from 1997. The results of the study show that phasing out nuclear power would significantly increase the power prices and lead to a loss of welfare [21].

A similar study carried out for Germany in 1998 compares two scenarios involving ongoing utilization of hard coal in electricity generation versus the utilization of nuclear energy in Germany [22].

Another similar article examines the impacts of phasing out nuclear energy in Japan on the energy system and greenhouse gas emissions. The results of the study indicate that phasing out nuclear power would lead to 8% higher CO₂ emissions by 2040 unless new measures are taken [23].

The relationship between a German nuclear phase-out and electricity prices across Europe is investigated by a study from 2009. The modeling results conclude that the reduced generation from Germany’s nuclear power plants is likely to cause increases in CO₂ emissions and electricity prices in Europe [24].

The main effects of a nuclear phase-out on the German electricity market were analyzed in 2012. A detailed optimization model is used in the study to simulate two scenarios, one with a quick nuclear phase-out and one with prolonged nuclear electricity generation. The results of the study indicate that a phase-out from nuclear would only be possible by increased investments in natural gas-fired generation and increased coal utilization, electricity exports would have to be reduced, the overall system costs without nuclear would be higher and climate goals would still be able to achieve even without nuclear [25].

The effects of the German nuclear phase-out on several parameters were also assessed in a separate study conducted in 2012, with the main parameters including wholesale electricity prices, emission prices, conventional power plant investments and electricity trade in Europe [26].

Another study looking at the German market in the same year examining the effects of nuclear energy utilization on power prices concludes that the commissioning of new nuclear reactors is unlikely to lead to reductions in future prices [27].

An article published in 2013 aims to calculate the effects of a German nuclear phase-out on the electricity generation mix in Europe. The scenario analysis in the study shows that the electricity generation from nuclear would largely be replaced by lignite and hard coal-based generation [28].

One study finalized in 2016 examines the potential effects of the nuclear phase-out in Germany in terms of a dilemma between the concept of environmental justice and energy security. The study concludes that Germany has opted for environmental justice in contrast to concerns over energy security [29].

Finally, a study undertaken in the same year assesses the economic and environmental impacts of different nuclear policy scenarios for the Japanese electricity market. Three scenarios are established for this reason and different impacts of nuclear policies are investigated [30].

As is apparent from the studies mentioned above, many of the modeling efforts regarding the effects of nuclear energy have been focused on examining the impacts of a potential phase-out of nuclear energy for markets where nuclear energy is already being utilized. In that sense, the simulation undertaken in this study does the opposite and tries to assess the effects of the introduction of nuclear energy into the energy system instead of other pathways such as the increased utilization of renewable energy sources. There are also several studies made recently that aim to comparably assess the effects of renewables and nuclear energy on power systems. Examples to these studies are provided below.

One comprehensive study carried out in 2018 summarizes the German energy transition process and argues that significant CO₂ reductions in the country were not achieved as a result of the phase out of nuclear power despite the significant expansions in renew-able energy capacity [31].

Another study in 2018 compares the effects of nuclear and renewable energy sources in mitigating CO₂ emissions. The article examines data from countries using nuclear energy spanning the period 1990–2014. The conclusion of the study points to renewables as a more effective policy option for climate change mitigation [32].

An inquiry of the CO₂ emissions reductions caused by nuclear and renewable energy sources is made in a study concluded in 2018. The paper compares different approaches in quantifying the CO₂ reductions from different sources and puts forward index decom-position analysis as the most favorable methodology [33].

The potential storage costs induced by a large substitution of nuclear by intermittent renewable energy sources is investigated in a study examining the French case in 2019 [34].

A study in 2019 argues for a reconsideration of the German nuclear energy policy stating that phasing out of nuclear power would not be a feasible option for the country in terms of decarbonization [35].

A study carried out for Spain investigates the comparative impacts of renewables and nuclear energy utilization on carbon emissions and economic growth using the Granger causality and non-linear impulse response function. The results indicate that there is a higher correlation between decreasing emissions and nuclear energy utilization compared to an increased usage of renewable energy [36].

Poland poses an interesting parallel to Turkey with similarly high coal-based generation and the impending introduction of nuclear energy to its generation mix. A study made in 2020 analyzes the potential impacts of nuclear energy introduction in Poland based on a comparative approach between four different potential regions for the construction of a nuclear power plant [37].

A study conducted in 2020 aims to examine the potential role of nuclear energy in reaching the United Kingdom’s target to reach net-zero carbon emissions by 2050 [38].

The situation in Sweden is analyzed in a study finished in 2020 which examines different policy options for the country for de-carbonization. The study concludes that wind energy stands as a preferable option compared to nuclear energy [39].

The GHG emissions reduction role of nuclear energy for BRICS countries is examined in a study in 2020. The study includes the analysis of data from the period from 1993 to 2017 and draws the conclusion that renewable energy sources have a greater impact in realizing emission reductions compared to nuclear energy [40].

In contrast, another study conducted in 2020 comparatively assesses the impact of nuclear energy and renewables on the emissions from OECD countries. The results of the study indicate that the two options should be used in a combined approach to achieve the best results [41].

A study investigating the case for Italy argues for a reintroduction of nuclear energy in the country to accelerate the process of decarbonization [42].

A recent study on Poland examines the different policy choices for Poland for de-carbonization and concludes that it will not be possible for the country to achieve its targets based on the current conditions [43].

One study finalized in 2021 looks at the French power sector and compares the prospective roles of nuclear energy, renewable energy and carbon capture and storage in the country’s energy future [44].

A separate study conducted for Poland investigates the potential role of nuclear energy in the country’s energy transition and concludes that nuclear energy is a rational choice for the country to adopt going forward [45].

The merit order model used in this study is well-established and has been used over the years for a range of different markets and time frames. The methodology has also been applied and is widely recognized in the Turkish market. Some examples of such studies are given below:

The fundamental merit order curve is applied in a study made in 2013 to model the day-ahead market price formation in Germany. The application of the model enables the impacts of several aspects in price formation to be evaluated such as fuel costs, CO₂ prices and renewable energy generation and provides an insight into negative price formation in the market [46].

Another merit order model has been developed in 2014 to pinpoint the effect of renewable energy sources on the EEX day-ahead electricity prices. The results show that the increasing share of renewable energy sources was influential in bringing down the day-ahead market prices while the final consumer prices of electricity increased due to the utilized feed-in tariff [47].

In a study from 2016, the authors aim to analyze the reasons behind the falling German electricity prices between 2007 and 2014 by using a fundamental merit order model. The results of the study indicate that the falling prices were more influenced by emission costs compared to the increase in renewable energy generation [48].

Another study utilizes a parsimonious fundamental model in order to calculate the effects of different renewable energy sources on price formation in Czech electricity market for the period between 2010 to 2015. The results of the study indicate that solar energy should not be preferred over other renewable sources in the Czech market based on its impact on electricity generation costs [49].

The drop in European electricity prices between 2008 and 2015 was also examined with the help of a merit order model in 2018. The conclusion is that the main factor behind the reducing prices across different European countries has been the expansion of renewable energy capacity while several other factors played important roles in different countries such as electricity demand and fuel prices [50].

A new structural model is proposed in another study from 2018 which aims to calculate the electricity prices in two coupled markets with limited interconnection and several fuel sources. In this respect, the German and French markets are used as case studies [51].

A study from 2018 analyzes the cross-border effects on Swiss wholesale price formation using a fundamental model. The results of the study show that Switzerland has been importing lower-priced electricity from abroad largely owing to the green energy transition process in Germany [52].

The potential impacts of renewable energy increases in the nuclear energy-dominated French electricity market are examined under a merit order approach in a study from 2018. The conclusion of the study indicates that integrating renewables with nuclear energy may not be an easy task and increased flexibility options would have to be utilized especially after the share of variable renewable energy sources in the system exceeds 30% [53].

A study from 2019 utilizes the merit order approach to analyze the price setting generation sources for different European electricity markets in 2020. According to the results of the study, coal and natural gas account for only 40% of all hours in the year, contrary to the conventional line of thought [54].

A parsimonious fundamental model is developed in a study from 2019 for use in the German electricity market The model is tested against historical data and is shown to be able to produce accurate results [55].

The fundamental merit order model is utilized on the Greek wholesale electricity market in a study finalized in 2019. The results of the study are used to inform the policy makers in the formation of more effective policies into the future [56].

A fundamental market model is used in a study to quantify the effects of a coal phase-out in Germany. The study provides an insight into the changing electricity prices, renewable energy generation and thermal generation under a coal phase-out scenario [57].

The potential effects of a coal phase-out in Finland are examined in a study from 2020 under a fundamental model. The conclusion of the study show that the energy system may become strained in winter months in case of a coal phase-out but this can be managed with an increase in nuclear and wind energy capacity [58].

Finally, a study conducted in the United States uses a fundamental model to determine the reasons behind the fall in electricity prices in the country between 2008 and 2017 across seven organized electricity markets in the country. The conclusion of the study is that the reduction observed in prices is more of a result of falling natural gas costs than the expansion of renewable energy capacity [59].

3. Materials and Methods

3.1. Methodology

The forecasting methodology is based on the market equilibrium model, which assumes that in competitive markets price formation occurs at the interception of supply and demand curves [60]. The fundamentals that affect price formation are modeled independently and then combined under the market equilibrium model to form the day-ahead market price.

This is done by using the merit order curve. The curve is assembled by sorting all the generators in the market according to their short-run marginal costs and available capacities. It is assumed that the marginal costs of the last generation unit activated to meet the demand for each hour should equal the market price for that hour. Under perfect market conditions, such a situation would arise as a result of all the actors in the market acting to maximize their profits.

A representation of the current merit order structure in the market is shown in Figure 2. The main sources of electricity generation in Turkey are natural gas, local and imported coal, hydropower, and other renewables such as solar and wind. Renewable sources have the lowest marginal costs and therefore are situated on the left side of the merit order. After renewables, local coal power plants have the cheapest marginal costs due to low fuel costs. These power plants are largely operated as base load. Imported coal power plants have higher fuel costs and are dispatched after local coal power plants. Under usual circumstances, these power plants are also operated largely as base load. The two sources that are most susceptible to changes in demand are natural gas and peak hydropower plants. This is due to the high marginal costs of natural gas power plants and the storage capabilities of reservoir hydropower plants which urge them to operate at high-priced hours in a bid to maximize the value of water. However, the order of natural gas and imported coal power plants in the merit order can change in certain time periods based on the comparative price levels of natural gas and imported coal. In times of such shifts, imported coal power plants can replace natural gas plants as the price setters in the market.

Since electricity demand is assumed to be inelastic, it is modeled separately and used in the simulation of price as an input, rather than being determined by it. A flat annual demand growth of 2.5% was assumed for the simulation period. The hourly profiles for 2019 are used to break down the total annual demand into hourly data. The 2020 values are not used due to the COVID-19 pandemic and restrictions which had a distorting effect on demand profiles.

After the total electricity demand for the forecast period is obtained on an hourly basis, the generation from intermittent renewable sources is obtained for each hour by using the hourly generation profiles for 2020 and adjusting for the anticipated capacity increases between 2022 and 2025. The duration curve for run-of-river, wind and solar generation obtained for 2022 is provided in Figure 3.

This sum is then subtracted from the total demand for each hour. This is reasonable since the renewable energy sources have no fuel costs thus having only minimal marginal generation costs which can be assumed as zero [48]. It is assumed that generation from these sources will be used as must run with priority as they need to be consumed immediately in the absence of significant storage capabilities. The capacity factors and hourly generation profiles for wind, solar, run-of river, geothermal and biomass sources in 2020 are used for forecasting the hourly generation of these sources in the forecast period. The capacity factor values for 2020 are compiled from the monthly installed capacity and hourly generation figures for each source respectively provided the TEİAŞ (Turkish Electricity Transmission Company—the state-owned transmission grid operator) and EPİAŞ (Istanbul Energy Exchange—official operator for spot electricity markets in Turkey) statistics [1,61].The remaining demand or “price-sensitive demand” after non-reservoir renewables are deducted is the demand that will need to be supplied with reservoir hydro and thermal sources. The total demand and price-sensitive demand for 2022 is provided in Figure 4, along with the duration curve for price-sensitive demand.

All the reservoir hydro plants are grouped into a single unit and area assumed to be operating primarily in peak hours when the day-ahead prices are at the highest levels. However, a portion of the generation from reservoir hydro plants is generated independently from price considerations due to a number of restrictions imposed on them such as requirements related to irrigation and the supply of drinking water and obligations involving the release of water across international borders. This portion of reservoir hydro generation can be referred to as base load hydro generation. On the other hand, the remaining generation from these power plants can be referred to as peak hydro generation. Even though the marginal generation costs of reservoir hydro plants are near-zero, since these plants have electricity storage capabilities, they tend to operate in hours with the highest prices in order to maximize the value of the water they are able to hold. The hours with peak prices also generally coincide with the hours with the highest price-sensitive demand.

The base hydro portion of the generation of the reservoir power plants is deducted from the hourly base demand with a similar approach to other renewable sources. The minimum hourly reservoir hydro generation in 2020 is accepted to be the base hydro generation for the simulation period and is taken as the hourly base hydro generation for all hours.

A benchmarking approach is used to determine the remaining hourly peak reservoir hydro generation for each hour. Drawing from past years’ capacity factor data, the yearly reservoir hydro capacity factor for the simulation period is assumed to be 26%. Firstly, a theoretical maximum hourly peak hydro generation is determined for each year considering the maximum generation from reservoir hydropower plants and base hydro generation. For this, the difference between the maximum and minimum generation values for 2020 is used for the simulation period and adjusted with the anticipated installed capacity increase in 2022–2025. The resulting peak hydro generation capacity is distributed to the hours of each year using the constraints of maximum peak hydro generation and total reservoir capacity factor of 26%. Peak hydro generation is distributed in accordance with the price-sensitive demand that enters the merit order (the residual demand after renewable must-run capacity is deducted).

It is assumed that the owners of reservoir hydro plants are willing to operate their plants during peak hours in a bid to maximize their profits. This means that the forecasted reservoir generation must be allocated to the peak hours of the price-sensitive demand with the exception of the base load portion. This is done through the allocation of peak reservoir hydro generation. This peak shaving mode of operation is also useful for reducing the overall supply costs in the system as is shown in various studies [62,63].

One constraint is that at no hour can the capacity allocated to the reservoir hydropower plants exceed the determined hourly maximum generation capacity for each year. As shown in Figure 5, the peak shaving process must remain between the unconstrained and constrained load duration curves.

The aim of the hydro allocation process is to find a constant capacity value for which the area above this value and below the unconstrained load duration is equal to the forecasted hydropower generation for the year. To find this constant capacity, the running sum between the unconstrained and constrained load duration curves should be calculated. This can be achieved by calculating two separate integrals and finding the difference. The capacity for which the difference running sum equals the forecasted annual reservoir generation is the determined peak shaving capacity. A residual demand level is determined for each year to arrive at this outcome. For hours with higher demand than the determined level, a peak shaving occurs which is aimed at reducing the merit order capacity to the determined level. The level of peak hydro generation in this process is capped by the theoretical peak hydro generation capacity. For hours with the residual demand lower than the targeted level, no peak hydro generation occurs.

Thus, high peak hydro generation occurs in hours with high residual demand and low or no peak hydro generation occurs in hours with low residual demand similar to the actual situation in the market. This process allows us to arrive at new series of residual demand for each hour which needs to be met solely by thermal sources.

The resulting merit input calculated for 2022 is shown in Figure 6. Here, the price sensitive demand refers to the residual demand that would need to be met the combination of thermal sources and peak reservoir generation. The merit input series shows the hourly figures of residual demand after the peak shaving occurs which depicts the demand that needs to be met only by thermal energy. The duration curve regarding the merit input figures calculated for 2022 is provided in Figure 7.

In reality, the generation level for peak hydro power plants is based on their bid levels in the market which can change according to several factors including political considerations since the majority of these power plants in the Turkish market continue to be state-owned. Therefore, the approach used in the study may not yield the best results in terms of price forecasting. However, the benchmarking approach provides a suitable level ground for the purposes of this study which is to compare the effects of renewable energy sources versus nuclear energy in the market.

The resulting equation after all steps are completed can be stated as shown in Equation (1):

$${\left[D\left(t\right)\right]}_h={\left[D\left(T\right)\right]}_h-{\left[G\left(r\right)\right]}_h-{\left[G\left(b\right)\right]}_h-{\left[G\left(h\right)\right]}_h$$

(1)

where

${\left[D\left(t\right)\right]}_h$ = Hourly demand supplied from thermal generation

${\left[D\left(T\right)\right]}_h$ = Total hourly demand

${\left[G\left(r\right)\right]}_h$ = Hourly must run renewable energy generation

${\left[G\left(b\right)\right]}_h$ = Hourly base load hydropower generation

${\left[G\left(h\right)\right]}_h$ = Hourly peak reservoir hydropower generation

Carrying out this process for each hour of the year gives us the hourly demand that will be supplied by electricity generation from thermal sources for the year. The merit order curve is then generated as the marginal costs of different types of thermal power plants are assembled in an increasing order to match demand. The marginal cost of the last power plant that will be needed to match the demand makes up the day-ahead electricity price estimate for each hour.

The hourly electricity imports and exports is ignored in this calculation since the interconnection capacity between Turkey and the neighboring markets is quite limited. The country’s interconnection capacity has only a negligible impact on the formation of market prices.

A detailed account of all the active and prospective thermal power plants in the market is required for effective utilization of this methodology. Therefore, a comprehensive market database has been established which includes all the existing and potentially available power plants in the Turkish market. A range of sources has been used for this purpose including public sources such as EMRA and EÜAŞ reports and consultation with market actors. The database includes data on all thermal power plants in the market including:

• Installed capacity and efficiency
• Fuel type and secondary fuel type
• Technology type
• Planned and unplanned outage ratios, long-term maintenance plans by power plant
• Internal consumption
• Capacity degradation and efficiency degradation curves
• Capacity deration and efficiency deration curves
• Royalty fees
• Estimated Decommissioning of Plants

The market database also includes information on the prospective power plants that are estimated to come online during the simulation period. For the period between 2021 and 2025, these include the EMBA Hunutlu TPP, Akkuyu NPP and Yusufeli HPP. The data from the market database and forecasted fuel prices are used to generate a merit order with marginal costs calculated for each generation unit for satisfying the calculated residual demand on an hourly basis

A sample merit order for 2025 is shown in Figure 8. Different types of power plants are shown under different colors in the graph. The installed capacities of power plants are represented by the size of each circle and the power plants are ordered based on their calculated short run marginal costs. The generation units with less than 100 MW are not shown in the provided figure. A total capacity of around 2.5 GW of smaller generation units is also included under the database.

The marginal cost for each power plant is calculated according to Equation (2):

Fuel Price (USD/MWh)/Net Efficiency + Variable OPEX + Variable Trans-mission Tariff + Royalty Fees,

(2)

The individual technical specifications and forecasted natural gas and imported coal prices for 2025 are used in the calculation of the marginal cost for each power plant. Other variable costs that can be applicable for thermal power plants such as startup and shutdown costs which can affect the hourly dispatch of these power plants is omitted in the calculation. The inclusion of such factors into the calculation would necessitate the formulation of a more complex model which is not required for the purposes of this study. The current model provides a sufficient complexity for benchmarking in order to comparatively assess the potential merits of nuclear and renewable energy sources for the Turkish electricity market.

The merit order structure provided in the figure shows the nuclear energy power plants in the leftmost corner. This is due to the low fuel costs of these power plants. Being fueled mostly by on-site coal, local coal power plants have the second-lowest marginal costs followed by imported coal and natural gas power plants based on the inputs accepted for 2025. However, there may be overlaps between different sources based on the specific characteristics of each power plant and the ordering of fuel types are susceptible to change based on the prices of different fuels.

This merit order structure in the market which is imitated by the fundamental simulation model is used in this study on an hourly basis. It can be argued that the main structure of the merit order is not expected to fundamentally change under the As-is scenario. However, the changes in the Renewable Energy and Nuclear Energy scenario’s are likely to significantly impact this structure.

Sample hourly merit orders for 2025 are shown comparatively for the Renewable and Nuclear Energy scenarios in Figure 9.

Under the Renewable Energy scenario, an extended amount of available capacity for renewables occurs due to increased solar and wind capacities. This situation shifts the merit order to the right and decreases the residual demand which will cause the day-ahead prices to be reduced.

A similar effect is also expected from the Nuclear Energy Scenario. In this instance, the reductions in day-ahead market price are due to the inclusion of nuclear energy in the left side of the merit order. Nuclear energy is situated on the leftmost side of the merit order due to the low fuel cost and the purchase guarantee that it will enjoy based on the agreement between Turkey and Rosatom.

3.2. Assumptions

The main assumptions used in the study include electricity demand growth, the price of fuels (including natural gas and imported coal) and installed capacity increases. The electricity demand and fuel prices across the three scenarios are taken as the same, the only variable being the installed capacity increases in renewables and nuclear energy. A summary of the main assumptions used in the study is provided in

Table 3. Main assumptions used in the study.

Scenario	Annual Demand Growth between 2021 and 2025 (%)	Electricity Demand in 2025 (GWh)	Average Natural Gas Tariff (USD/tcm)	Average Imported Coal Cost (USD/ton)	Solar Capacity Increases (MW)	Wind Capacity Increases (MW)	Nuclear Capacity Increases (MW)
As-is scenario	2.5%	361,881	265.5	92.9	4200	3500	-
Nuclear Energy scenario	2.5%	361,881	265.5	92.9	19,200	8500	-
Renewable Energy scenario	2.5%	361,881	265.5	92.9	4400	3500	4800

.

Electricity demand in the country is expected to increase to almost 362 TWh in 2025 up from nearly 306 TWh in 2020 based on the anticipated annual demand growth of 2.5% following 2021 in line with the recent demand growth rates observed in the market for recent years. The forecast results from the model are obtained on an hourly level drawing from the hourly demand profile for the past years based on different day types such as weekdays, weekends and official holidays for the past and future years’ data.

Natural gas and imported coal are two main sources of fossil fuels used in the country for electricity generation that are sensitive to international price formation. Brent Oil prices are also important in the market since the natural gas import prices between BOTAŞ and Gazprom are linked to the Brent Oil prices from the past 9-month as per the natural gas import contracts signed between the two institutions.

Thus, Brent Oil prices are an important input to forecast the natural gas tariffs in Turkey. The assumptions are based ICE futures contracts dated 24 August 2021, until 2023 and on the Commodity Price Outlook published by the World Bank in April 2021 in 2024 and 2025 [64,65].

The natural gas import prices from Gazprom and the forecasted LNG prices are used to arrive at the natural gas tariff forecast to be used in the simulation. For this purpose, the weighted average of the existing and new natural gas contracts in Turkey are used. Existing contract prices are based on the Gazprom import costs while new contracts costs are assumed to be in line with ICE Futures contracts (dated 24 August 2021) for the TTF market until 2023 and the recent European LNG price forecasts made by the World Bank after 2023 [64,65].

The price of imported coal is relatively less effective in price formation since the marginal costs of these power plants are much lower than natural gas power plants and thus their generation is less impactful on price formation. ICE Futures contracts are used for forecasting the price of imported coal until 2023 and the World Bank coal price forecasts are used for 2024 and 2023 [64,65].

The wind and solar capacity additions under the As-is and Nuclear Energy scenarios represent the current expectations in the market and are taken as the same. On the other hand, the Renewable Energy scenario includes a higher installed capacity growth that can be achieved by more ambitious renewable energy policies. As given in Table 3, the overall solar capacity increases under the Renewable Energy scenario are 15,000 MW higher compared to the other two scenarios and he wind capacity is 5000 MW higher compared to the other scenarios.

Under the Renewable Energy scenario, the additional capacity increases are based on a new feed-in tariff assumption to be provided to new solar and wind power plants starting from 2022. Based on the latest cost reductions in wind and solar, the levelized cost of electricity generation from these sources has dropped to below 50 USD/MWh. For some regions with high potential, the levelized cost of electricity generation from solar is much lower as evidenced from the latest YEKA auctions concluded in the country in May 2021. According to the results, the winning bids for some regions were as low as 182 TL/MWh (around 22 USD/MWh according to the exchange rate during the auction).

A conservative feed-in tariff amount of 50 USD/MWh for both wind and solar energy was assumed under the Renewable Energy Scenario which would be sufficient to realize the additional capacity increases assumed under the scenario. The new feed-in tariff is made active starting from 2022. All of the incremental wind capacity under the scenario is assumed to benefit from the new feed-in tariff while around half of the new solar energy capacity is assumed to benefit from the guaranteed price and the other half is assumed to come from unlicensed applications.

Under the Nuclear Energy scenario, the first unit of Akkuyu NPP is assumed to come online in 2023, the second unit is assumed to become online in 2024 and the last two units are assumed to be commissioned in 2025, with the power plant reaching its full capacity at 4800 MW. The power plant is not commissioned in the other two scenarios.

The expectation regarding the commissioning of other large-scale power plants in all scenarios is that the projects with significant progress already made will be commissioned but no new major power plant investments will be realized in the next few years.

These power plants only include the Yusufeli Reservoir Hydropower project (540 MW) which is assumed to be commissioned at the beginning of 2022 and the EMBA Hunutlu imported coal power plant assumed to be partially commissioned between January and April of 2022. The Akkuyu power plant is assumed to be commissioned between 2023 and 2025 in the Nuclear Energy scenario. The power plant is not commissioned under the two remaining scenarios.

4. Results

According to the As-is scenario results, the total share of wind and solar in total electricity generation is 16% (56.3 TWh) by 2025. The share of hydro generation in the same year is 21% (75.2 TWh). On the other hand, around 33% of the total generation (120.2 TWh) is fueled by coal and a further 26% (95.3 TWh) is fueled by natural gas.

The generation mix of the country under the Nuclear Energy scenario starts to change after 2023 with the commissioning of the first unit of the Akkuyu NPP. By 2025, the share of nuclear energy reaches almost 11% (39.5 TWh). As a result, the share of natural gas decreases to 16% (59.5 TWh) and the share of coal decreases to 32% (116.5 TWh). The shares for renewable energy sources are very much unchanged in relation to the As-is scenario.

On the other hand, the total share of wind and solar energy under the Renewable Energy scenario is significantly higher at nearly 26% (93.8 TWh) in 2025. The additional generation from solar and wind on this year is 38 TWh in comparison to the 39 TWh additional nuclear energy generation under the Nuclear Energy scenario. As a result of this additional renewable energy generation, the share of natural gas in 2025 was forecasted as 17% (63.1 TWh) and the share of coal-fired generation was forecasted as 32% (114.9 TWh). A summary of the main results of the study are shown in

Table 4. Comparison of simulation results.

Scenario	Average Day-Ahead Market Price (USD/MWh)	Average YEKDEM Price (USD/MWh)	Average System Costs (USD/MWh)	Share of Local Sources in Generation for 2025 (%)	CO2 Emissions in 2025 (Million Tons CO2)
As-is scenario	54.6	8.8	63.4	55%	171.5
Nuclear Energy scenario	52.6	11.3	64.0	55%	154.8
Renewable Energy scenario	53.2	9.1	62.3	66%	154.6

.

5. Discussion

The day-ahead market prices under the As-is scenario show a decreasing trend after a slight increase in 2022 in response to the increasing natural gas costs. The average annual price starts to increase again in 2025, reaching 52.9 USD/MWh. The average day ahead market price between 2021 and 2025 is forecasted as 54.6 USD/MWh.

The average forecasted day-ahead market prices under the Renewable Energy scenario are significantly lower in comparison to the As-is scenario. The difference tends to increase as more renewable energy capacity comes online after 2022 and 2023. On average, the annual prices are around 53.2 USD/MWh, around 1.4 USD/MWh lower than the As-is scenario. The price difference in 2025 is 3.9 USD/MWh.

The forecasted prices under the Nuclear Energy scenario are the lowest between the three scenarios due to the effect of nuclear energy generation. On average, the annual prices are 52.7 USD/MWh. The drop in prices is the steepest in 2025 with the two last units of the Akkuyu NPP coming online. The average day-ahead market price in 2025 is 46.4 USD/MWh.

Looking at the day-ahead market price forecasts, the effect of nuclear energy in reducing the electricity costs seem to be apparent. However, when considering the costs of generating electricity, all system costs should be considered including the costs generated from purchase guarantees which are not reflected in day-ahead market price formation. One such cost currently applied in the market is the YEKDEM cost which consists of the feed-in tariff costs paid to renewable energy generators in the market. This cost is currently reflected to all consumers in the market as the YEKDEM unit cost and calculated based on the difference between the day-ahead market prices and the tariff level indicated under the purchase guarantee. Therefore, any forecasts into the future that aim to calculate electricity generation costs in the country should also take these costs into consideration.

Currently, it is not decided how the Akkuyu NPP purchase guarantee will be financed. As previously mentioned, one option would be for the state-owned company EÜAŞ to directly purchase the generated electricity through its own finances. Another option would be for the purchase guarantee to be included under the current YEKDEM mechanism or under another similar financing scheme. Both options would lead to a similar outcome and would lead to an increase in the regulated electricity tariffs for final consumers. For the purposes of this study, we have included the nuclear energy purchase guarantee costs under the current YEKDEM mechanism to be better able to compare the generation costs across the scenarios. On the other hand, the new feed-in tariff application assumed under the Renewable Energy scenario is also included under the total YEKDEM unit cost. As a result, the total YEKDEM unit cost includes the costs from the continuing purchase guarantees from the earlier YEKDEM mechanism, the costs borne from the purchase guarantees provided under the ongoing YEKA projects, the costs borne from the new renewable energy incentives and the nuclear energy purchase costs.

The total YEKDEM unit costs calculated under the three scenarios are given in Figure 10. It can be seen that the YEKDEM cost forecasted under the Nuclear Energy Scenario is significantly higher than the other two scenarios owing to the high purchase guarantees provided for the Akkuyu NPP. The YEKDEM costs under the scenario rises to 13.5 USD/MWh in 2025 while the same figure is 8.0 USD/MWh for the Renewable Energy scenario and 7.0 USD/MWh for the As-is scenario.

It must be added that the purchase guarantee costs have been calculated based on the 123.5 USD/MWh amount agreed in the bilateral agreement between Russia and Turkey [66]. However, the same agreement also states the possibility of raising the price to 153 USD/MWh given that the project company is able to demonstrate a need to cover its investment costs. Therefore, the YEKDEM costs calculated under the Nuclear Energy scenario must be regarded as a minimum amount while the actual figure may be considerably higher. Another factor leading to the high YEKDEM cost under the scenario is the lower day-ahead market cost which increases the gap between the feed-in tariff and the day-ahead market price and leads to higher costs owed to renewable energy generators.

Figure 11 demonstrates the share of nuclear energy purchases under the total YEKDEM costs forecasted for the Nuclear Energy scenario. The increasing burden of nuclear energy purchases can be seen after 2023 as more units of the Akkuyu NPP are commissioned.

Meanwhile, the difference between the YEKDEM costs under the As-is scenario and the Renewable Energy scenario is not as considerable. The difference is only 1.0 USD/MWh in 2025. This is due to the new feed-in tariff applied at 50 USD/MWh not being significantly higher than the day-ahead market prices. This demonstrates that with the falling capital costs of renewable energy sources, their generation can be increased at a minimum cost to the consumers.

A useful measuring stick to compare the electricity generation costs is the sum of the YEKDEM cost and the day-ahead market price. These two items constitute the bulk of the electricity generation costs in the country and are inevitably reflected in the final electricity tariffs. Figure 12 includes a comparison of this figure for the three scenarios. The costs between the As-is scenario and the Nuclear Energy scenario are seen to be comparable despite a drop in costs under the Nuclear Energy scenario in 2025 due to rapidly falling day-ahead market prices. However, it is evident that the Renewable Energy scenario offers the most cost-effective solution with the overall costs being consistently lower in comparison to the other two scenarios.

The results show that the common argument advocating the utilization of nuclear energy for cheap electricity generation does not hold up to scrutiny. With their falling costs, renewable energy sources like solar and wind energy can provide a cheaper source of electricity generation for a country like Turkey with abundant potential for both sources.

As discussed, another main argument posed for nuclear energy is its potential role in increasing energy security and decreasing the country’s dependence on imported energy sources. However, nuclear energy cannot be regarded as a local energy source for Turkey with very low reserves for nuclear fuel. The results of the study indicate that with increased support for solar and wind energy, it is possible to provide around 66% of the electricity generation in Turkey through domestic sources. The same figure for the As-is scenario and the Nuclear Energy scenario is at 55%.

Another argument that is posed for nuclear energy utilization points to its role as a base-load generator in contrast to the intermittent generation from wind and solar energy. This argument may indeed hold some merit in the future when a total coal or carbon phase-out in the country can be considered. However, at its current state, this is not a relevant argument for the Turkish market. The penetration from intermittent renewable energy sources is still relatively low in the market and the simulations show that there will not be a baseload problem for Turkey even with increased intermittency in the market since the country currently has a more than adequate dispatchable installed capacity consisting of coal, natural gas and reservoir hydropower plants.

Therefore, it can be argued that the case for nuclear energy for Turkey cannot be defended on the grounds of energy security and independence. Turkey has a great potential to develop wind and solar energy sources which can in the future be used in synergy with other developing technologies in the market such as battery storage and green hydrogen applications.

On the other hand, the results from the study indicate that there is considerable merit to the claim regarding the potential role of nuclear energy in climate change mitigation. Rapid reductions in carbon emissions can be achieved through nuclear energy utilization. However, the results from the modeling study indicate that similar results can also be achieved through the utilization of renewable energy sources at a cheaper cost.

A comparison of the CO₂ emissions caused by electricity generation under the scenarios is provided in Figure 13. The results from both the Nuclear Energy and Renewable Energy scenarios show a significant level of mitigation over the years. The average annual emissions from the two scenarios are close at 160.3 million tons of CO₂ for the Nuclear Energy scenario and 158.5 million tons of CO₂ for the Renewable Energy scenario.

By 2025, a CO₂ mitigation of 9.6% is achieved both under the Renewable Energy scenario and the Nuclear Energy scenario in comparison to the As-is. These results indicate that a similar degree of mitigation can be achieved through nuclear energy and through the use of renewables. However, it must be kept in mind that the mitigation under the Renewable Energy scenario was achieved at a considerably lower cost in comparison to the Nuclear Energy scenario. Another thing to keep in mind is that the capital costs of sources like wind and solar energy are set to keep decreasing into the future while significant reductions in the cost of nuclear energy generation are not expected.

6. Conclusions

The study aimed to investigate the potential effects of nuclear energy introduction in Turkey’s energy system against a policy that favors increased renewable energy utilization. Earlier studies have highlighted various expected effects of future energy policies to be adopted in Turkey and several international studies have included an analysis of the comparative effectiveness of nuclear and renewable energy strategies in achieving key policy targets. This study is important as the first merit order-based model that aims to quantify the impact of different policy options for the Turkish electricity market with a focus on nuclear energy and renewables. The results indicate that many of the main claims put forward by the proponents of nuclear energy do not rest on solid foundations.

In terms of overall system costs, it has been shown that nuclear energy is set to increase the costs of electricity generation in the country instead of reducing it, in line with the conclusions from some studies [32,40] and in contrast to others [12]. This is especially true under the purchase guarantee terms agreed upon with regard to the Akkuyu NPP project. With declining costs for renewable energy sources and rapidly developing technological prospects such as battery storage, investing in renewables seems like the better option from a cost standpoint.

Unlike the conclusions drawn in several studies [5,6,7], renewable energy sources are also found to be the better option for Turkey in terms of energy security and increasing generation from domestic energy sources. While the country lacks significant nuclear fuel reserves, Turkey is geographically blessed in terms of solar and wind energy with abundant potential. Base-load generation can potentially be an issue in the future that may threaten energy security. However, there is currently sufficient baseload generation capacity in the country. In the latter stages of energy transition, any potential baseload requirements can also be solved by new technological options with rapidly declining costs.

As multiple earlier studies point out [7,13,36], nuclear energy can potentially play a role in climate change mitigation. The results from the study attest that significant reductions in carbon emissions can be achieved through nuclear energy utilization. However, the results from the Renewable Energy scenario show a similar amount of carbon mitigation that was possible with a lower cost. Therefore, despite acknowledging the viability of nuclear energy in the struggle against climate change, it should also be pointed out that renewable energy options currently provide a more cost-effective way of tackling the climate change problem.

Turkey is currently close to commissioning its first nuclear energy power plant after many years of different attempts. However, the results from this study indicate that under the current conditions, the introduction of nuclear energy may not have been the most optimal option for the Turkish energy system. While the Akkuyu NPP is likely to be commissioned over the coming years, studies such as this one can form a basis from where more informed policy choices can be made in terms of the future energy system in the country.