Renewable Energy and the Economy

Renewable energy sources can be used to produce both heat and electricity. Contrary to common belief, some renewable energy sources—such as geothermal and biogas—also have the capability to supply uninterrupted energy. Their flexibility, and the fact that they can operate even at small scale, has greatly broadened their fields of use. They produce heat and electricity across a wide spectrum—from the solar panels used on spacecraft to geothermal resources used for district heating. In global final energy consumption, heat’s share, at 50%, is higher than that of transport (30%) and electricity (20%). In an energy sector where heat production is so important, the share of modern renewables in global heat production reached 13% in 2022.

Electricity and heat are produced from solar, geothermal, and biomass resources, while wind, hydropower, and wave energy are used to generate electricity. As electrification increases worldwide, the use of energy generated by electricity-producing renewables will rise—for example, vehicles in transport switching from oil to electricity, or households replacing gas or coal with heat pumps that convert electricity into heat.

Renewable energy sources in energy production

As of 2023, the share of renewable energy sources in Türkiye’s primary energy supply reached 18.1%. Because geothermal energy produces heat as well as electricity, it holds the lead with a 7.8% share. Hydroelectric power plants account for 3.47%, while bioenergy and waste account for 3.2%. In a primary energy supply exceeding 158 million toe (tonnes of oil equivalent), the share of all renewable energy sources surpassed 18% in 2023. The remainder—82%—was supplied by fossil fuels. Seventy-five percent of primary energy supply was met through imports, representing a six-percentage-point increase over the previous year.

Renewable energy sources in electricity generation

The share of renewables in electricity generation is increasing in Türkiye as it is worldwide. In 2024, 40.23% of the electricity generated in Türkiye came from renewable energy sources. Excluding hydropower, the combined share of solar, wind, geothermal, and biomass in total electricity generation was 24.06%. In 2023, the share of renewables in electricity generation was 41.86%.

We observe a similar trend globally. In 2024, global renewable energy capacity increased by 585 GW. In 2024, 92.5% of the capacity additions installed worldwide were from renewable energy sources. In 2014, this ratio was only 54%.

In 2024, 452 GW of solar and 113 GW of wind capacity were added to the grid; these two sources once again took the leading role in the rise of renewables. Over the past 10 years, renewables have rapidly increased their share, and in 2024 more than nine out of every ten new power-generation investments were in these sources.

Within the current global installed renewable capacity, solar ranks first with a 42% share. It is followed by hydropower at 29% and wind at 25%.

Behind the rapid rise of renewables is not only their crucial role in stopping the climate crisis but also their swiftly declining costs. Lazard’s latest Levelized Cost of Energy (LCOE) analysis, published in June 2024, shows that the lowest electricity generation costs can be achieved with grid-connected onshore wind and solar power plants. For onshore wind, the cost of generating 1 kilowatt-hour of electricity is as low as 2.7 US cents, while for grid-connected solar power plants it rises to 2.9 cents. Among conventional sources, gas plants are the closest to these figures at 4.5 cents. The lowest electricity cost for coal-fired thermal power plants is 6.9 cents, and for nuclear power plants it is 14.2 cents.

Because solar and wind may not be able to produce electricity continuously 24/7, the analysis also looks at electricity costs for wind and solar plants paired with battery storage. With storage, costs are calculated to be at least 4.5 cents for onshore wind and 6 cents for solar.Prices emerging from Türkiye’s latest wind and solar tenders also give us an idea of the cost advantage of renewables. In the Renewable Energy Resource Areas RES-2024 tenders announced in January 2025, all five competitions ended with the contract awarded at the floor price of 3.5 cents. In addition to agreeing to sell the electricity they generate at 3.5 cents, the companies also undertook to pay a contribution fee based on the capacity they obtained.

Results of YEKA RES-2024 competitions

Tender nameCapacity (MW)Winning companyWinning price (US dollar cents per kWh)Committed contribution fee (USD per MW)
R24-EDİRNE410 Enerjisa Üretim3.560.000
R24-BALKAYA340Enerjisa Üretim3.592.000
R24-SERGEN200RT Enerji3.5140.000
R24-YELLİCE160Efor Holding3.5140.000
R24-GÜRÜN90 ADY Akdeniz3.5148.000

In the tenders for solar power plants to be built across six different regions with a total of 800 MW, the bidders offering the floor prices again won the competitions. In the solar YEKA tenders, the floor price was set at 3.25 US cents.

Results of YEKA GES-2024 competitions

Tender nameCapacity (MWe)Winning companyWinning price (US dollar cents per kWh)Committed contribution fee (USD per MW)
G24-Kütahya GES40Çumra Güneş Enerjisi ve Üretim A.Ş.3.25162000
G24-Antalya GES40Erdem Soft Tekstil A.Ş.3.25122000
G24-Van GES60Chen Güneş Enerjisi Sanayi ve Ticaret Ltd.Şti.3.25270000
G24-Malatya GES75Özerka Enerji Elektrik Üretim Sanayi ve Ticaret A.Ş.3.25232000
G24-Karaman GES200Temmuz Güneş Enerji Üretim Sanayi ve Ticaret A.Ş.3.25150000
G24-Karapınar GES385Kalyon YEKA GES 5 Elektrik Üretim A.Ş.3.2567000

Renewable energy sources in Türkiye have long been supported under YEKDEM (the Renewable Energy Support Mechanism). Under this mechanism, renewables receive support above the market price for a certain period. There have been very frequent changes to YEKDEM in recent years. When it was launched in 2011, only 20 plants received support under YEKDEM; by 2024, this number had risen to 784.

With the latest regulation published in the Official Gazette on 1 May 2023, base tariffs applicable to plants commissioned between 1 July 2021 and 31 December 2030 were updated. YEKDEM unit costs began to be calculated monthly and announced via EPIAS. Although tariffs are set in Turkish lira, monthly price updates started to be calculated using a formula based on changes in the PPI, CPI, and the US dollar and euro exchange rates. While prices are variable, the floor and ceiling tariffs you will see in the table below are set in US dollars. The duration of these supports, as well as of the local-content bonus, varies by energy source between 5 and 10 years. Only pumped-storage hydropower plants receive 15 years of YEKDEM support.

Floor and ceiling tariffs under YEKDEM

YEKDEM Floor Tariff (US dollar cents per kWh)YEKDEM Ceiling Tariff (US dollar cents per kWh)
HydropowerReservoir-type6.758.25
Run-of-river6.307.70
WindOnshore4.956.95
Offshore6.758.25
Geothermal9.4511.45
BiomassLandfill gas / Waste4.956.05
Biomethanization8.109.90
Agricultural waste5.758.00
Solar4.956.05
Wind + Solar (hybrid)5.857.15
Pumped-storage hydropower (PHES)9.4511.45
Wave / Current6.307.70

Uses of renewable energy

Renewable energy sources are used not only for electricity but also for heat production. Geothermal, solar, and biomass energy have been used for heat production for many years. Although in some cases their use may harm human and environmental health, resources such as wood and animal dung are categorized in the literature as “traditional biomass” within the class of renewables. Traditional biomass use is widespread worldwide, especially in regions without modern energy production. It is estimated that 750 million people globally lack access to electricity. In global primary energy consumption, traditional biomass used for heat has a 6.76% share; nuclear energy has 1.67%, and wind energy 1.41%. The mystery behind this surprising data actually lies in our energy consumption patterns. Heat accounts for 48% of global final energy consumption; unless electric heating increases, the share of energy sources that produce only electricity will remain low in total energy consumption. Since some renewable sources can also produce heat in addition to electricity, they can meet different needs.

One non-electric use of renewables in Türkiye is meeting hot-water demand by heating with solar collectors, which we generally see on rooftops. Although there is no precise figure, as of the end of 2017 the total installed solar-collector area is estimated to have reached approximately 20 million m², producing 823 thousand toe (tonnes of oil equivalent) of heat energy. In solar-collector capacity used for water heating, Türkiye has for many years ranked second in the world after China.

Türkiye also ranks fourth in the world in geothermal energy capacity after the USA, Indonesia, and the Philippines. However, particularly in certain regions, complaints about geothermal energy have been increasing—primarily due to its impacts on agricultural production. Of Türkiye’s geothermal potential, 78% is in Western Anatolia, 9% in Central Anatolia, 7% in the Marmara Region, 5% in Eastern Anatolia, and 1% in other regions. About 90% of Türkiye’s geothermal resources are of low and medium temperature suitable for heating, thermal tourism, and industrial applications, while 10% are of high temperature suitable for electricity generation.

In Türkiye, which uses geothermal energy not only for electricity generation but also for heating greenhouses and residences, as of 2024 the heating needs of the equivalent of 158,000 residences and 10,400 decares (≈1,040 hectares) of greenhouses are met by this energy source. Geothermal energy is also used in hundreds of thermal spas and in processes such as drying fruits and vegetables.

Biomass energy is another source that has increased its share in electricity generation in recent years. A wide variety of energy pathways fall under the biomass heading. These include biofuels, municipal and animal waste, and biomass resources derived from plants and forests.

Renewable energy and employment

Renewable energy sources employ 16.2 million people worldwide. Nearly half of this employment (7.4 million, 46%) is in China. Of the 16.2 million jobs in renewables, solar energy has the largest share with 7.1 million. Solar is followed by biofuels with 2.8 million, hydropower with 2.3 million, and wind energy with 1.5 million.

In terms of job-creation potential, renewables are also more advantageous than thermal and nuclear power plants. According to an analysis covering construction and maintenance phases, solar (photovoltaic), biomass, and small hydropower plants create on average between 15,000 and 18,000 jobs per GW (gigawatt) of installed capacity. According to the same study, gas power plants have the lowest figure with 2,500 jobs per GW. While nuclear plants can provide 10,000 or more jobs per GW during the construction phase, once operational they are run by very few people—like gas plants—which leaves their job-creation potential behind that of renewables. Coal-fired plants, on the other hand, are more advantageous than gas and nuclear during operations; they can still employ more than 5,000 workers at this stage. It is noteworthy that small hydro, solar, and wind plants provide more jobs during maintenance than coal, gas, and nuclear plants.

In 2023, 118,000 people were employed in the renewable energy sector in Türkiye. Solar (photovoltaic) and hydropower each provided jobs for 41,000 people, together making up roughly two-thirds of the total. Although it often goes unnoticed, the production and installation of solar collectors for water heating create a significant area of employment in renewables, with 21,000 people. Geothermal and wind energy created jobs for 6,000 and 5,000 people, respectively.The renewable energy sector is also increasing the number of women employees in the energy sector, where men are in the majority. GÜNDER Secretary General Esen Erkan Yıldız states that women account for 40% of employment in the solar sector globally, and that there are about 14,800 women employees in this sector in Türkiye. The Gender Equality in the Turkish Energy Sector study, which examined data from 25 companies, found that the employment rate of white-collar women employees in these companies was 34%, while that of blue-collar women employees was 12%.