The geothermal sector in Türkiye needs a better pricing mechanism to attract investment
Geothermal Energy Association (JED) Chairman of the Board Ali Kindap (Source: JED)
Carlo Cariaga
25 Aug 2025
The current pricing mechanism for geothermal power plants in Türkiye needs to be improved to draw more investment, according to JED Chairman Ali Kindap.
Domestic and foreign investors are ready to enter the Turkish geothermal sector, but the current pricing mechanism does not encourage an investment environment. This is according to a statement by Ali Kindap, Chairman of the Board of Directors of the Geothermal Energy Association (JED) of Türkiye, who also appealed for a base price of at least 8 cents per kWh for geothermal power plant that fall outside the scope of the 10-year Renewable Energy Resources Support Mechanism (YEKDEM).
Türkiye has been a very strong contributor to geothermal power development in the last decade or so, increasing its installed capacity by more than a hundredfold between 2010 and 2020. By the end of 2024, the country holds a steady position in the top 10 countries for geothermal power with an installed capacity of 1734 MWe.
Condemned to float alone in the ocean
Despite the success of Türkiye and its position of importance in the global geothermal sector, geothermal power plants that have completed the 10-year YEKDEM period are “condemned to float alone in the ocean.” Once they are excluded from the incentive system, these power plants only sell their electricity for a gross price of 6.5 to 7 cents per kWh, essentially continuing production at a loss.
“As a sector, we recommend setting a floor price, not a ceiling, for geothermal power plants that continue to operate as base-load despite being excluded from the YEKDEM system, and setting this limit at no less than 8 cents. This way, investors can conduct cost accounting and generate resources for renewal and capacity-maximizing investments after exiting the incentive system. Given today’s suppressed prices and rising input costs far above official inflation, generating resources for these investments appears impossible,” said Kindap.
Kindap noted that the disrupted pricing mechanism negatively impacts new investment decisions, noting that geothermal energy investors are undertaking much higher investment costs for resource exploration, discovery, extraction, and processing compared to other renewable energy sources, and that all of these costs are borne by the investor due to the exchange rate.
JED Chairman Ali K?ndap also said that a 12.5 cent purchase guarantee is given for 15 years for the energy produced from nuclear power plants, which will become operational in the coming years and whose installed capacity is expected to reach 20,000 MW, due to their base load function.
Ten years is too short for a power plant
Ali Kindap added that ten years is a very short time in the life cycle of a geothermal power plant, and that there are power plants in the world that have been operating for more than a century. He emphasized that the closure of geothermal power plants, which have zero import dependency, will support the use of energy resources imported with foreign currency.
Kindap, who explained that the most vital element for a geothermal investor is the “protection of the geothermal resource,” pointed out that the implementation of a floor price will pave the way for allocating more resources to investments that will sustainably protect geothermal resources
The Chairman further stated that 163 MW of geothermal power plants, corresponding to 11 percent of the installed capacity, were removed from YEKDEM in 2024. Another 115 MW of installed capacity will go outside the scope of YEKDEM this year. Between 2016 to 2025, a total of 620 MW of installed capacity of 36% of the total installed capacity will be outside of the coverage of YEKDEM.
“We see that our power plants, which have been excluded from the YEKDEM program, are causing significant losses for investing companies. Domestic and foreign investors are ready to enter the sector. However, the current pricing mechanism does not encourage an investment climate,” said Kindap.
Source: Email correspondence via our Turkish language platform JeotermalHaberler
