A growing number of developing and developed countries have set a goal of phasing out coal in the power sector within the next few years. In Europe, only four countries (Bosnia and Herzegovina, Kosovo, Poland and Serbia), along with Turkey, have not yet established a timeline for the phase-out of coal-fired electricity generation. As a result of the decision by numerous banks and financial institutions to cease supporting coal-related investments, access to finance for new coal investments has become increasingly difficult. In advance of the 26th Meeting of the Parties (COP26) in Glasgow, the G20 countries, following China, South Korea and Japan, announced that they would no longer provide financial support for international coal projects. As a result of these developments, the growth of coal-based electricity generation was expected to slow down or decline worldwide.
In the second half of 2020, the spot market price of coal fell below $50 per tonne. The economic recovery following the outbreak of the coronavirus, issues with transportation and increased demand for coal in China led to a significant increase in prices. The economic crisis, which was further exacerbated by the invasion of Ukraine, also led to a significant increase in energy prices. In June 2022, the price exceeded $400, reaching the highest level in history. By early 2026, the price of coal had risen to around $110, but this increased further to around $140 following the attack on Iran. Like other fossil fuels, coal, which is in limited supply and concentrated in the reserves of certain countries, also experiences sudden price surges during times of crisis.
According to Lazard’s analysis, dated 28 October 2021, the levelled cost of electricity generation from coal-fired power stations was found to range from 6.5 to 15.2 US cents per kilowatt-hour (kWh). In their subsequent analysis, dated June 2025, this price range remained between 7.1 and 17.3 US cents per kWh. This suggests that the cost of generating electricity from coal has increased over the past four years. In the same 2025 analysis, the production cost for solar power plants was estimated to be between 3.8 and 7.8 US cents per kWh and between 3.7 and 8.6 US cents for wind power. Even for a battery-backed solar power plant, the generation cost starts at 5 US cents per kWh. Although solar energy costs are rising too, coal has little chance of c Although solar energy costs are rising too, coal has little chance of competing against renewable energy.
Coal prices in Turkey also follow global trends. In the 2017 tender for the Çayırhan B Thermal Power Plant project, the Kolin-Kalyon Enerji-Çelikler consortium submitted the lowest bid of 6.04 cents per kWh — the price at which they would sell the electricity they generate to the grid — and won the tender. The project was subsequently cancelled. In the Renewable Energy Resource Areas (YEKA) GES-4 tender held in June 2022, a solar power plant project to be established in Niğde won with a bid of 37.5 kuruş per kWh. In the YEKA GES tenders held at the end of 2025, the firm that won the 100 MWe G25-Erzurum-1 solar power plant project submitted a bid of 3.75 euro cents per kWh and a contribution of 100,000 euros per MW of installed capacity (totalling 10 million euros). In the YEKA RES (wind power plant) competitions organised using a similar method, the electricity sale price was 3.5 euro cents per kWh (3.78 US cents at the 29 May 2026 exchange rate), despite the substantial contribution fees paid to EPİAŞ to win the competition.
IEA projections for the share of coal in energy and electricity generation in 2030 and 2040.
Conversely, the difficulty in finding cost-effective alternatives to replace coal in meeting industrial energy needs, particularly in the iron, steel and cement sectors, suggests that coal will remain a significant source of energy for these sectors for the foreseeable future.
As is the case worldwide, coal in Turkey is primarily used for generating electricity and heat. In 2023, coal’s share of electricity and heat generation declined, approaching post pandemic levels. There was also a decline in the consumption of both lignite and hard coal in the production of textiles and leather goods.
Distribution of hard coal, lignite and asphaltite utilisation by sectors, 1990 – 2020. Source: Ministry of Energy and Natural Resources Energy Balance Tables
In 2023, 74% of lignite and 59% of hard coal were used in thermal power stations to generate electricity and heat. Meanwhile, 15% of hard coal was consumed in the production of coke for use in steel production.
Sectoral distribution of lignite utilisation (1000 TOE) Source: Ministry of Energy and Natural Resources Energy Balance Tables
Sectoral distribution of hard coal utilisation (1000 TOE) Source: Ministry of Energy and Natural Resources Energy Balance Tables
Sectoral distribution of asphaltite use (1000 TOE) Source: Ministry of Energy and Natural Resources Energy Balance Tables
In 2023, 8.6% of Turkey’s lignite and 5% of its hard coal were used for residential heating. In 2000, over 10% of hard coal was used in residential buildings. In order to combat air pollution, gas began to be used predominantly in the residential and services sectors. By 2020, almost half of the energy used in residential buildings was natural gas. Hard coal and lignite still play an important role in cement and iron and steel production. However, the use of lignite in the iron and steel sector is very limited, while almost all coking coal is used in this sector. In 2023, the amount of hard coal used in these two sectors exceeded that used in residential households.
Coal utilisation due to steel production
Turkey was the second biggest steel producer in Europe and the eight largest in the world in 2024. Steel production all over the world is based on coal. 70 per cent of steel is produced using coal. In Turkey, 75% of the energy used in iron and steel production facilities equipped with Basic Oxygen Furnaces (BOF) is derived from coal.
Distribution of energy consumption in iron and steel production by energy source, 2018. Source: Ministry of Energy and Natural Resources Energy Balance Tables
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