Envıronment We Operate In

Türkiye’s electricity market is entering a new phase shaped by demand growth, rapid renewable expansion, tightening reserve margins, grid investment requirements and a fast-developing climate regulation architecture. As electrification accelerates across industry, transport, buildings and digital infrastructure, electricity is becoming central to Türkiye’s economic competitiveness, energy security and decarbonization agenda.

Demand growth remains the primary anchor of the market. Electricity consumption reached 361 TWh in 2025 (TEİAŞ, Electricity Statistics) and is projected to rise to 455 TWh by 2030 and 510 TWh by 2035 (MENR, National Energy Plan 2022), reflecting sustained electrification, economic growth and rising system demand. Türkiye’s electricity demand is projected to grow faster than that of any G20 economy in the OECD, driven by industrial activity, urbanization and rising cooling needs (IEA, Electricity 2026). Demand has compounded at approximately 3.7% per year since 2010, well above the European average, with the highest hourly system load of the year recorded on 28 July 2025 at approximately 59.2 GW, and the highest daily generation reaching approximately 1,250 GWh on 29 July 2025, both marking all-time national records. At the same time, reserve margins have tightened in recent years as demand growth increasingly outpaces system expansion, reinforcing the value of available, flexible and dispatchable generation, particularly during peak demand periods.

While installed renewable capacity continues to grow rapidly, system adequacy increasingly depends on the availability of dispatchable and flexible capacity, particularly during peak demand, low renewable output and hydrological stress periods. Limited appetite for new firm-capacity investment, driven by regulatory uncertainty and constrained merchant returns, is tightening reserve margins and reinforcing the strategic value of existing flexible generation assets capable of responding to system stress.

Türkiye is also among the largest electricity markets in Europe byinstalled capacity. Total installed capacity reached 122.5 GW as of December 2025, with renewables representing approximately 62% of the system (76.3 GW), according to the Ministry of Energy and Natural Resources. Solar has become the fastest-growing technology, reaching 25.1 GW, while wind reached 14.8 GW and hydropower remained the largest renewable category at 32.3 GW. Capacity has more than tripled since 2010, with renewable growth increasingly reshaping the structure of the generation mix and system operations.

This transformation is occurring alongside a continued need for system adequacy and flexibility. Türkiye’s reliance on imported fuels, particularly natural gas, remains a structural feature of the market, exposing electricity generation costs to global commodity prices and foreign exchange movements. However, compared with more structurally constrained import-dependent markets, Türkiye benefits from a diversified supply structure supported by multiple pipeline connections, LNG import capacity, FSRU terminals, underground storage facilities and a portfolio of long-term and spot-indexed contracts. In this context, supply diversification, domestic renewable expansion and disciplined risk management remain critical to mitigating supply shocks and external price volatility. The natural gas pricing framework adds a further layer of complexity. BOTAŞ, as Türkiye’s dominant wholesale gas supplier, applies differentiated tariffs to power producers and industrial consumers, with regulated gas prices for power plants adjusted multiple times since 2023. Several major pipeline import contracts, including supply from Russia and Iran, are expiring between late 2025 and mid-2027, while new LNG supply agreements and the ramp-up of domestic production from the Sakarya offshore gas field are expected to reshape the supply mix and moderate import dependency over the medium term (OIES, 2025).

The interaction between regulated gas tariffs and administered wholesale price caps introduces an additional margin dynamic. Where fuel-cost increases are not fully reflected in power price ceilings, flexible gas-fired assets face compressed spark spreads, shifting value capture toward balancing markets, ancillary services and intraday optimization rather than baseload dispatch, creating differentiated value pools for operators with advanced trading and portfolio management capabilities.

As renewable penetration increases, flexibility, balancing capability and grid resilience are becoming critical. Hybrid capacities, energy storage systems, aggregation models and advanced forecasting capabilities are moving closer to the center of market design and operational planning.

EMRA has allocated 33.1 GW of pre-licensed storage-integrated generation capacity across 676 projects as of March 2025, comprising

18.4 GW wind and 14.7 GW solar (EPDK, March 2025), while the Aggregator Regulation, effective from January 2025, enables aggregation of distributed generation and demand-side resources in balancing and ancillary services markets. In parallel, recent amendments to the Balancing and Settlement Regulation have restructured Balancing Responsible Group (DSG) operations by capping hourly imbalance synergy allocations at 10% of market volume per participant, materially reducing synergy revenues across the sector and increasing the importance of portfolio-level forecasting accuracy and real-time optimization capability.

At the same time, Türkiye’s renewable ambitions are increasing the need for significant grid modernization and balancing investments. The National Energy Plan initially targeted 90 GW of variable renewable energy by 2035, with grid investment needs estimated at approximately USD 28 billion, nearly quadruple TEİAŞ’s historical average annual investment budget (CIF, Transforming Power Transmission System Project, 2025). The subsequent Renewable Energy Roadmap raised this target to approximately 120 GW, implying even greater transmission and grid integration requirements. In August 2025, the World Bank approved a USD 748 million financing package for the first phase of this program, supporting new high-voltage substations, grid digitalization and Türkiye’s first HVDC corridors. Increasing renewable penetration without proportional grid expansion raises curtailment risk and reduces realized capacity factors, directly affecting generation economics and the bankability of new renewable projects. Transmission bottlenecks and connection queue delays are becoming binding constraints on deployment velocity, reinforcing the importance of grid investment as a prerequisite for, not a consequence of, renewable capacity growth, while creating opportunities for operators able to optimize location, connection strategy and portfolio flexibility.

The cost structure of new renewable entry has shifted fundamentally. Utility-scale solar LCOE has declined by approximately 90% since 2010, reaching USD 0.043/kWh globally in 2024, while onshore wind reached USD 0.034/kWh (IRENA, Renewable Power Generation Costs in 2024) in both cases below the cost of new fossil fuel generation. In Türkiye, this cost compression is reinforcing the economic case for renewable expansion alongside its energy security and decarbonization benefits.

At the same time, project delivery timelines remain constrained by permitting complexity. Before the 2025 reform establishing a consolidated permitting framework, utility-scale projects routinely required approval from more than twelve separate authorities, extending timelines to 36–48 months. The reform is expected to reduce approval periods to approximately 18 months for both wind and solar, though grid connection availability and the conversion rate of pre-licensed capacity into commissioned projects remain binding constraints on deployment velocity.

These structural changes are also reshaping price formation and market behavior. Electricity prices are increasingly influenced not only by traditional drivers such as fuel costs and hydrology, but also by renewable generation profiles, demand variability, grid constraints and balancing market conditions. As a result, market dynamics are becoming more volatile and multi-dimensional, elevating the importance of commercial optimization, dispatch capability and disciplined risk management.

As solar penetration increases, intraday price formation is becoming more volatile, with lower or negative prices during solar-heavy hours and sharper price signals during post-solar evening ramps. In parallel, growing overlap between solar and hydro output during the same hours is compressing midday revenues for both technologies, reinforcing the case for storage, time-shifting capability and flexible dispatch. This pattern increases the value of reservoir hydro optimization, battery storage, flexible thermal assets and integrated trading capabilities.

In parallel, Türkiye’s regulatory architecture is evolving rapidly toward a more climate-aligned market structure. The Climate Law (Law No. 7552, 2 July 2025) established the legal basis for a national ETS, the Carbon Markets Board, the Climate Change Directorate and a Green Taxonomy framework, though the taxonomy itself has not yet been published as secondary legislation, while also creating the foundation for a CBAM equivalent domestic mechanism.

The Türkiye ETS pilot phase is expected to begin in 2027, with power generation, cement, iron and steel, aluminum and fertilizers among the in-scope sectors — though all allowances will be allocated free of charge during the pilot period, with full compliance obligations beginning from 2028 (Law No. 7552, ETS Draft Regulation, July 2025).

EPDK decisions introduced the operational pricing infrastructure for ETS allowance trading and accelerated hybrid renewable configurations through new capacity allocations. Together with the EU CBAM definitive phase beginning in 2026 and taxonomy requirements expected to become mandatory for TSRS scoped entities from 2027 onward, these developments are moving the market from a largely voluntary sustainability framework toward a more formalized structure integrating carbon pricing, taxonomy alignment, flexibility and transition finance considerations.

This transition also carries direct economic implications for industry and capital allocation. A joint study conducted by EBRD and Climate Focus (2023) estimates annual CBAM-related costs for Turkish industry at approximately EUR 138 million in 2027 under a €75/tCO₂e carbon price scenario, rising to around EUR 2.5 billion by 2032 under a €150/tCO₂e scenario.

The cost gap is directing investment toward verified low-carbon electricity supply, renewable capacity and transition-aligned financing structures. Türkiye’s corporate PPA market remains at an early stage but is gaining structural momentum. The expiry of initial YEKDEM purchase guarantee periods is creating a growing incentive for renewable developers to seek contracted revenue through bilateral offtake agreements with industrial consumers, while CBAM-exposed exporters increasingly require verified low-carbon electricity supply as part of their compliance and competitiveness strategies. However, Türkiye’s corporate PPA framework remains less developed than those in the US and EU, where standardized contract structures, established intermediation platforms and deeper secondary markets support bankability and counterparty confidence. The absence of comparable mechanisms in Türkiye increases transaction complexity and limits the pace at which bilateral offtake agreements can scale, even as underlying demand grows. Further regulatory and market development in this area would unlock significant value for both renewable developers and industrial consumers seeking long-term price visibility and verified low-carbon supply. At the same time, renewable energy certificates, voluntary carbon credits and carbon-data-backed customer solutions are becoming increasingly relevant commercial tools as CBAM-exposed industrial exporters and multinational corporates seek verified Scope 2 traceability and transition-aligned electricity supply.

Looking ahead, Türkiye’s long-term pathway points toward approximately 120 GW of solar and wind capacity by 2035, alongside around 5 GW of offshore wind ambition and the staged commissioning of the Akkuyu nuclear plant, with the first 1,200 MW unit expected in 2026 and full 4,800 MW capacity targeted by approximately 2029–2030 according to the current revised schedule. COP31, to be hosted in Antalya in 2026, will further place Türkiye’s climate and transition pathway under direct international visibility. In this market, the operators best positioned are those that can combine renewable growth with system balancing, demonstrate execution under volatile market conditions and maintain credibility with both lenders and regulators.

Enerjisa Üretim operates at the intersection of a rapidly transforming global energy system and Türkiye’s evolving regulatory and market environment. As decarbonization, electrification and flexibility needs reshape power systems, Türkiye continues to reflect strong demand growth, rising renewable penetration, increasing grid investment needs and continued import-fuel exposure. Enerjisa Üretim translates these dynamics into an integrated generation, trading and digital platform that combines renewable growth with dispatchable capacity, storage, advanced commercial optimization and data-driven asset management – enabling the conversion of system dynamics into reliable and monetizable output.

Our approach is anchored in a disciplined capital allocation and a renewable-led growth strategy aligned with both global transition trends and Türkiye’s evolving regulatory landscape. We prioritize projects that provide long-term revenue visibility, cost competitiveness and strategic system contribution, while maintaining financial resilience and strategic positioning. Within this framework, YEKA projects represent a cornerstone of our growth model. YEKA-2 wind projects, with a total committed capacity of 1,000 MW, significantly expand our renewable footprint, while YEKA-2024 wind projects, with 750 MW secured capacity, further reinforce a selective and scalable investment approach under evolving market conditions. These projects provide contracted and predictable revenue capacity through regulated mechanisms while supporting domestic renewable capacity growth and reducing exposure to import-driven cost volatility. Delivery is underpinned by a landmark turbine procurement agreement with Nordex Group, covering YEKA-2 and YEKA-2024 wind projects, representing one of the largest OEM contracts in Türkiye’s renewable energy sector. In February 2026, Enerjisa Üretim became the first company in Türkiye to exceed 1,000 MW of installed wind power capacity through 16 wind power plants*, reflecting the scale and execution pace of its renewable-led growth strategy, and now ranks among Europe’s top ten private sector wind energy operators by installed capacity.

Scale and diversification remain central to our ability to operate effectively in a complex and fast-evolving market environment. We manage a diversified generation portfolio of approximately 4,333 MW and contribute around 4-5% of Türkiye’s total electricity generation, with approximately 63% of our installed capacity based on domestic and renewable resources. This diversified structure provides a natural hedge against external shocks, including fuel price volatility and foreign exchange risk, while supporting consistent system contribution and financial resilience across varying market conditions.

A balanced portfolio structure underpins this approach. Our 1,587 MW natural gas fleet provides fast ramping capability and operational responsiveness, supporting dispatchability, balancing capability and system flexibility as renewable penetration increases. While flexible assets support short-term balancing requirements and demand fluctuations, baseload assets contribute continuity and system adequacy across the generation mix, and renewable assets, primarily hydro, wind and solar, form the backbone of our long-term decarbonization pathway. This integrated portfolio structure enables us to respond effectively to evolving system needs and volatile market dynamics.

Beyond conventional generation, we continue to strengthen our flexibility capabilities in line with the increasing complexity of the power system. We are actively developing hybrid configurations and energy storage solutions designed to enhance dispatchability and optimize asset utilization. Since 2022, we have added approximately 90 MW of solar-based hybrid capacity across existing generation sites. These investments are additional to the reported installed capacity base and enable incremental renewable generation through more efficient use of existing infrastructure and grid connections. We continue to evaluate further hybrid opportunities across our portfolio. In parallel, we are building a scalable storage pipeline aligned with Türkiye’s evolving regulatory framework through storage-linked pre-licenses corresponding to 500 MW wind capacity paired with 500 MWh battery storage. This is complemented by operational learning initiatives, including our 2 MW / 4 MWh battery energy storage system at Bandırma Energy Base, one of the first utility-scale battery systems to receive acceptance certification in Türkiye, where installation and initial commissioning tests were completed in early 2025. These initiatives build practical capability in storage and hybrid operations, positioning Enerjisa Üretim to capture value as flexibility becomes an increasingly priced market attribute.

Our integrated platform structure is further supported by advanced operational, digital and commercial capabilities. As electricity markets are now shaped by renewable intermittency, balancing conditions and demand variability, operational optimization and market responsiveness become more critical. Through Enerjisa Commodities, we reached a total electricity trading volume of approximately 110 TWh in 2025, including approximately 32 TWh in Türkiye, corresponding to around one-third of forward contracts in the Turkish electricity market.* We strengthen our capabilities across electricity, gas, carbon and risk management activities, building expertise in evolving carbon markets, cross-border electricity and gas trading with active commercial presence across 18 countries and trading access reaching approximately 30 countries in power, gas and environmental products, supporting customer carbon-compliance and traceability requirements. In parallel, Senkron Digital supports predictive maintenance, real-time monitoring, operational analytics and infrastructure resilience across both owned and third-party assets, strengthening our ability to manage fast-moving market conditions through integrated operational, digital and commercial decision-making.

At the same time, we are positioning our portfolio to respond to evolving electricity demand patterns associated with digital infrastructure, industrial electrification and AI-driven operations that require continuous, reliable and lower-carbon electricity supply. This reinforces the strategic importance of flexibility, operational reliability and diversified generation capability within the broader energy system.

Sustainability considerations are fully embedded into our strategy, governance and financing approach. We align our operations with key international frameworks, including the managed transformation of the Tufanbeyli Energy Base, aligned with our Climate Transition Plan’s 2040 net-zero pathway, through the Tufanbeyli Just Transition Roadmap supported by a dedicated EBRD technical assistance program for workforce reskilling, regional economic diversification and women’s participation in the energy transition, integrating environmental and social considerations directly into investment and operational decisions. The result is a structured transition pathway balancing decarbonization, system reliability and social impact.

Biodiversity considerations are integrated into project design and operations, including on-demand turbine shutdown protocols at Akköy WPP based on real-time wildlife monitoring, post-construction fatality monitoring across all operational YEKA-2 WPP sites, and proactive turbine repositioning and project layout adjustments in Muğla and Balkaya to avoid cultural heritage and ecologically sensitive areas.

In parallel, sustainable finance instruments and renewables-backed financing structures support our long-term growth pipeline and transition investments. In 2024, we signed an approximately USD 1 billion Green Loan with a consortium led by J.P. Morgan, including DFC, HSBC, KfW IPEX-Bank, DEG, Proparco and Akbank, for 750 MW of YEKA-2 wind projects, followed in 2025 by a USD 200 million EBRD financing package, the first EBRD financing dedicated to a YEKA wind project in Türkiye, supporting 250 MW of new onshore wind capacity in Muğla, expected to generate approximately 630 GWh of renewable electricity annually and avoid around 393,000 tons of CO₂ emissions.**

This approach strengthens the link between financial strategy, disciplined transition execution and long-term sustainability objectives while maintaining alignment with evolving regulatory and stakeholder expectations.

Through our diversified, increasingly renewable, flexible and technology-enabled generation platform, supported by advanced operational, commercial and digital capabilities, we contribute to a more reliable, increasingly flexible and lower carbon energy system. By translating global energy transition dynamics and Türkiye’s evolving market environment into disciplined investments, diversified portfolio management and targeted flexibility solutions, we strengthen our financial resilience against market volatility while supporting long-term system transformation.

In an environment defined by volatility, regulatory evolution and technological change, competitive advantage is increasingly determined by disciplined capital allocation, adaptability, execution capability and the ability to optimize at scale across integrated portfolios. Enerjisa Üretim is positioned to capture value across these dimensions through its scale, flexibility and integrated operating model.