The second Belt and Road Forum for International Cooperation that will take place next week in Beijing, China, will draw attention to how increased regional cooperation and an interconnected energy system can help accelerate Turkey's energy transition.
Germany in Europe and China in Asia have been among the key forces of the global energy transition driven by the low-cost availability of renewable power generation. China currently hosts the largest renewable energy capacity worldwide, equal to 30 percent of the total global installed capacity, including large hydropower capactity. Of the 94 gigawatts (GW) of solar photovoltaic capacity being added each year to the global system over the past two years, China alone accounted for around half of all installations. Thanks to these developments, China has already exceeded its renewable energy capacity targets for both solar and wind by 2017 that was set in its 13th Five Year Plan for 2020.
China is also looking to the longer term to make more use of its abundant renewable energy resources. The country recognizes that electricity currently represents only part of its energy system and only a small percentages of that is covered by solar and wind. Indeed, renewables will remain vital to China's energy system, but its focus goes beyond that. Electrification of energy services like transportation and heating that are traditionally being powered by fossil fuels is being prioritized: Currently, China's vehicle stock has the largest number of electric vehicles being driven worldwide. In 2018, around 1.3 million electric vehicles (including plug-in hybrids) were sold, up from around 800,000 the year before. The country has spent billions of dollars to create the world's largest electric vehicle industry as it once did for developing the world's largest local renewable energy industry. Many innovative policies help to expand this market even further.
Besides for offering a clean form of urban transportation, electric vehicles also allow the means for coupling transportation with the power sector to integrate solar and wind to the system. For example, aligning the charging of electric vehicles during high shares of cheap solar and wind in the systems helps to utilize the renewable energy output that may otherwise be curtailed. This idea is very similar to what energy storage like batteries and pumped hydro do, one other strategy China prioritizes. There is much countries can learn from China's experiences in the energy transition.
The advanced energy system China has built positions itself at the center of the modern concept of the Silk Road it is now developing, the so-called Belt and Road Initiative (BRI), which is a revival of this ancient route where once ideas, technologies, goods and livestock were traded between the nations of the east and the west. China's new initiative will include one-third of the global gross domestic product and nearly two-thirds of the global population across sixty countries. The scale of the BRI is impressive: It aims at improving regional cooperation and the connectivity of nations and this is where it becomes crucial for the energy sector. Renewable energy benefits from interconnected markets. For instance, cross-border trade is a means of achieving a greater renewable energy share, just like using battery storage. A neighboring grid absorbs the unused wind and solar power that cannot be consumed locally.
Such a massive regional undertaking will indeed have implications for the global trajectory of the energy transition and for those nations that are part of it. But what does it imply for Turkey? To understand that, let's turn to where Turkey is heading in its energy system. With the solar and capacity additions it has made, Turkey has also joined the global energy transition trend. In 2017, Turkey ranked first in both Europe and the Middle East with the solar photovoltaic capacity it has added to its system. In 2018, it ranked second as the country with the largest installations right after Germany. The country's demand for energy is expected to grow in the future and so will its need for new sources to meet this growth. There is no feasible alternative at hand to local resources like renewable energy and energy efficiency in order to overcome the current import dependency, which occupies a three-quarters share of the total. Renewable energy sources must continue to play a crucial role, given Turkey's significant resources and the continuing decline in the costs of energy production from renewables. What makes Turkey's energy policy like that of China is the strong link with its national industrial policy, which is being used to empower its economy, create new employment and reduce its dependency on imported equipment and energy sources.
China's BRI can be an important platform for Turkey if it strategically aligns its national strategy and priorities, concentrating on technologies where Turkey has the potential of being globally competitive. The trans-continental scale of the BRI offers Turkey to access new markets to export its locally produced energy and the equipment across the supply chain, thereby integrating its economy more strongly with its regional neighbors. The BRI also opens a new window of opportunities to Turkey for accelerating technology transfer, another priority outlined in its national energy policy. Turkey can also learn from other countries' experiences in its energy transition; for example China's successes in creating markets for renewable energy and electric vehicles. Likewise, other countries can learn from the successes of Turkey in the energy transition. Indeed, the BRI submits a prominent list of options and benefits to Turkey for creating regional cooperation in advancing a transition to a more secure, clean and affordable energy system through the accelerated uptake of renewable energy and energy efficiency, which will lead to a stronger economy.
The next step will be to prioritize the areas for action in developing a strategy for regional cooperation in the energy transition, and it is here that the SHURA Energy Transition Center can play an important role in facilitating this through its fact-based analysis and knowledge on energy transition. As SHURA's studies already show, Turkey is currently on a path to transition its energy system through the local and cheap resources of renewable energy and energy efficiency. It can do more, given its abundant resources, while also fostering its economic growth. For such an undertaking, Turkey will need to plan long term and can utilize the technology, financing and interconnectivity benefits of China's Belt and Road Initiative.
* Director of the SHURA Energy Transition Center, based in Istanbul; holds Ph.D. from Utrecht University