Authored by Onur Candar (Managing Partner of Bain & Company Istanbul), Onur Kayahan (Financial Services Partner), and Yiğit Kılınç (Associate Partner), the report shows that wind and solar capacity growth over the past ten years displaced roughly 28 TWh of natural gas-fired electricity. However, coal-fired generation increased by approximately 32 TWh to meet rising power demand. Consequently, while the relative share of fossil fuels in electricity generation declined, absolute fossil output remained largely unchanged, demonstrating that supply additions alone cannot displace fossil fuels without structural demand-side shifts.
The findings highlight that in 2025, Turkey relied on net imports for approximately 69% of its primary energy requirements, generating an annual net energy trade deficit of roughly $47 billion. Displacing imported fossil fuels through domestic generation or efficiency measures delivers permanent structural improvements to Turkey's external trade balance.
Sectoral Capital Allocations and Financing Complexities
Industry, transportation, and residential buildings account for roughly 80% of Turkey's total energy consumption. Meeting the net-zero transformation by 2053 requires deploying capital across key sectors:
Power Sector ($210–$270 billion): Represents the most bankable asset class. However, the 6.8 GW of solar and wind commissioned in 2025 trails the annual 8–9 GW run-rate required to hit 2035 targets. Although roughly 33 GW of co-located battery capacity has been allocated to wind and solar developers, installed battery capacity stood at only about 50 MW as of 2025, with existing pipelines largely restricted to 1-hour duration storage.
Buildings ($80–$200 billion): Approximately $120 billion is targeted for retrofitting and insulating existing structures. Natural gas supplies 54% of residential energy consumption, with heating making up 63% of household energy demand. Continued installation of natural gas infrastructure during ongoing urban regeneration waves poses a long-term transition risk.
Industry ($70–$80 billion): Accounts for 30% of total final energy consumption, with coal and natural gas continuing to provide roughly half of industrial energy use. With the EU receiving roughly 43% of Turkish exports, the EU Carbon Border Adjustment Mechanism (CBAM) makes industrial decarbonization a competitive necessity rather than purely regulatory compliance, heavily impacting specific emissions-intensive industrial processes.
Road Transportation ($35–$50 billion): While battery electric vehicles (BEVs) comprised 17.8% of new car registrations in the first half of 2026, they represent only 2.5% of the total vehicle fleet. Operating cost advantages of electric vehicles diminish when users depend entirely on public commercial charging infrastructure.
Agriculture ($25–$40 billion): Continues to face bankability constraints alongside other demand sectors.
The report notes that while necessary technologies are commercially mature, transition velocity is governed by carbon pricing and taxation policies, electricity price competitiveness against displaced fossil fuels, and project bankability. Because payback periods exceed standard local debt tenors and critical equipment is priced in foreign currencies, bankability remains the central bottleneck.
Executive Commentary
Onur Candar, Managing Partner of Bain & Company’s Istanbul Office:
“Turkey has demonstrated that it can build clean power at scale. But the real challenge begins now: shifting factories, buildings, and vehicles onto that clean power, and making those investments bankable. Considering Turkey posted an annual net energy deficit of approximately $47 billion in 2025, substituting every unit of imported fuel through local generation or efficiency permanently strengthens the country's external balance. This frames the transition as an economic imperative alongside an environmental one.”
Onur Kayahan, Financial Services Partner at Bain & Company’s Istanbul Office:
“Turkey needs over $500 billion in transformation capital through 2053. Yet the most difficult segments to finance sit outside power generation: buildings, industry, road transport, and agriculture. The critical factor is not merely the availability of capital, but the bankability of projects and sustainable finance expertise in these domains. Payback horizons are long, and substantial portions of equipment are priced in foreign exchange. In a credit-constrained environment, banks that establish these underwriting capacities will lead the capital pools when conditions normalize.”
