$8.7 billion coal subsidy contradicts Türkiye's renewable goals

Methodology

The unit cost of electricity generation from domestic coal power plants

For the calorific value of the coal used in the power plants, data were obtained from the 2024 annual report of the Turkish Coal Enterprises (TKI), the “Provincial Mineral Potentials” dataset published by the General Directorate of Mineral Research and Exploration (MTA), the official websites of the power plants, and the annual reports of publicly listed companies. For the efficiency values used in the calculations, sources included the 2009 report published by an eight-member research team that included Prof. Dr. Hasan Hüseyin Erdem, data from the official websites and investor presentations of the plants, as well as the 2011 article prepared by Muzaffer Başaran, former Deputy General Manager of EÜAŞ and Board Member of the World Energy Council.

The average calorific value of the coal used in electricity generation by domestic coal power plants and the average plant efficiency were calculated using data from Turkish Electricity Transmission Corporation’s (TEİAŞ) Electricity Statistics. Within this scope, the fuel consumption and calorific value data of lignite power plants were obtained to calculate the average kcal/kg value.

The annual total electricity generation (MWh) of lignite power plants was converted to kilocalories using a coefficient of 860,421; then, the calculated total kcal value was divided by the total fuel calorific value listed in the TEİAŞ data for the power plants to determine the average efficiency.

To calculate the coal price used in coal power plants, the total sales revenue to power plants reported in the 2024 Annual Report of the Turkish Coal Enterprises (TKI) was divided by the total sales quantity stated in the same report, yielding the unit sales price. This value was then updated to September 2025 prices by multiplying it with the inflation rate calculated for coal and lignite production based on the Producer Price Index (PPI) data by industry, as published by the Turkish Statistical Institute (TURKSTAT).

In calculating the unit cost of coal power plants, the system usage fee (including annual value), along with the fixed and system operation fees applied by TEİAŞ for 2025, were divided by the average USD/TRY exchange rate for 2025 and taken as $4.19 USD/MWh. The operation and maintenance cost was derived from the 2024 report of the Turkish Coal Producers Association (KOMURDER) and assumed to be $4.71 USD/MWh.

The total purchase guarantee amount to be provided for domestic coal over the four-year period

In calculating the amount of subsidy to be provided to coal power plants, the electricity generation of plants using domestic coal between 2020 and 2024 was multiplied by 60%, and a purchase guarantee price of $75 USD/MWh was applied to this amount.

Levelised Cost of Electricity (LCOE) Calculations

The changes in installation costs of wind and solar power plants over the past decade were derived from the report published by the International Renewable Energy Agency (IRENA).

In the LCOE calculation, for solar power plants, an investment cost of $420,000 USD per MW, including operation and maintenance expenses, a DC/AC ratio of 1.2, and a capacity factor of 18% were assumed. For wind power plants, an investment cost of 1.4 million USD per MW and a capacity factor of 33% were used. For both sources, a plant lifetime of 25 years, an exchange rate of $41.2 USD/TRY, and a WACC of 8% were assumed. The annual degradation rate was taken as 0.5% for both power plants.

In the LCOE calculation of a new 1.5 GW coal power plant, it was assumed that the plant would consist of five units of 300 MW each. The unit cost was calculated by applying a correction factor of 1.4 to the unit price of a 1,100 MW plant reported by KOMURDER; in addition, as recommended in the same report, a 12.5% discount was applied for the remaining four units. The plant’s efficiency was assumed to be 42%, self-consumption rate 10%, capacity factor 80%, calorific value 1,100 kcal/kg, coal price $28 USD/ton, and annual degradation rate 0.3%. The USD/TRY exchange rate (41.2) and WACC (8%) were kept consistent with those used for other sources.

Acknowledgement

Contributors

Thanks to Ufuk Alparslan, Bahadır Sercan Gümüş, Burcu Ünal Kurban, Pawel Czyzak and Ardhi Arsala Rahmani for reviewing the report, and to Chelsea Bruce-Lockhart for providing the data visualisations.