Key Takeaways:
Russia’s state atomic energy corporation, ROSATOM, is expected to commence power generation at the Akkuyu Nuclear Power Plant (NPP) in Türkiye in October, 2024.
The Akkuyu NPP will enable Türkiye to diversify and decarbonize its energy supply, while Russia remains a pivotal player in Turkish energy infrastructure.
Strategically, the NPP is significant for Moscow as it is situated on NATO territory, gives its leverage over Ankara, and further solidifies the relationship between Ankara and Moscow.
This agreement is likely to cement Russia as the nuclear provider of choice to Türkiye over Western and Chinese alternatives.
In 2010, Moscow and Ankara signed an agreement for ROSATOM to construct the Akkuyu NPP in Türkiye, featuring four 1,200 MW VVER reactors. The first reactor was initially scheduled to begin operations in 2023. However, operations are now projected to start in October 2024, with the remaining three reactors expected to be online by 2026. Collectively, these reactors are anticipated to supply approximately 10% of Türkiye’s electricity needs.
The Akkuyu NPP is poised to play a crucial role in Türkiye’s efforts to decarbonise and diversify its energy portfolio. Currently, over 85% of Turkish energy consumption is derived from fossil fuels, which account for 25% of the country’s import costs and 75% of its current account deficit as well as contributing to above-average greenhouse gas emissions. The NPP is also expected to reduce Ankara’s dependency on Russian fossil fuel imports. Russia is currently Türkiye’s primary energy supplier, accounting for 42% of its gas imports, 51% of its oil and petroleum product imports, and 70% of its thermal coal imports in 2023. President Recep Tayyip Erdoğan has made efforts to reduce this dependency, including constructing a pipeline to transport Azerbaijani gas to Türkiye. Notably, in 2020, Baku surpassed Moscow as Türkiye’s top gas supplier.
The NPP will grant Russia a substantial stake in Türkiye’s energy market, which is the fastest-growing among OECD countries. The importance Vladimir Putin places on the Akkuyu NPP is evident in ROSATOM's decision to implement a build-own-operate (BOO) model for the first time. Typically, when exporting nuclear reactors, the exporting country handles the engineering, procurement, and construction (EPC) while the importing country operates the reactors. In Akkuyu's case, however, ROSATOM will manage not only the EPC but also the ownership, operation, spent fuel removal, and eventual decommissioning of the plant. With an expected operational lifetime of 60 years, extendable to 80, followed by decommissioning, Russia could maintain control over a critical component of Türkiye’s energy infrastructure into the next century.
Ankara’s NATO allies are likely to raise serious concerns about Russia’s expanding influence within Türkiye’s energy sector. Türkiye hosts Incirlik Air Base, NATO’s largest nuclear weapons storage facility, as well as NATO’s ballistic missile defence radar installation at Kürecik. There is potential for Russia to position military and espionage personnel near these sensitive sites under the guise of ROSATOM employees.
Forward Look:
· Due to ROSATOM’s BOO model, the Akkuyu NPP involves minimal technology transfer to Turkey. Aside from ROSATOM training Turkish personnel operating the plant, the Akkuyu NPP is unlikely to enhance Türkiye’s domestic capabilities in nuclear energy.
· The Akkuyu NPP is likely to serve as a stabilizing factor in the otherwise volatile relationship between Ankara and Moscow. The complexity, cost, and inherent risks of nuclear energy, coupled with the BOO model applied to the Akkuyu NPP, provide a strong incentive for ongoing cooperation between the two nations. The fact that Türkiye’s downing of a Russian jet in 2015, which strained bilateral relations, did not disrupt the progress of the Akkuyu project—even before construction had begun—suggests that the significant investment in and complexity of nuclear projects may act as a buffer against future diplomatic tensions.
· The Akkuyu NPP is likely to give Russia an edge in bidding for the proposed Sinop NPP on Türkiye’s Black Sea coast. Ankara appears to have had a satisfactory project experience so far. The Akkuyu NPP, with a cost of $22 billion, has only experienced a one-year delay, outperforming many Western projects. ROSATOM's BOO approach positions it as a "one-stop nuclear shop," ensuring that Russia will handle all of Türkiye’s needs throughout the reactor's lifespan, including decommissioning. Additionally, Russia provided concessional project financing, with 93% of the project funded by loans from ROSATOM. The rapid devaluation of the Turkish lira during the hyperinflation starting in 2021 had no visible impact on the project, indicating that Russia absorbed the exchange rate risk. KSG assesses that Russia’s competitors in the nuclear reactor export market — namely the USA, South Korea, Japan, France, and China — are unlikely to match these favourable conditions, giving Russia a strong position to secure future NPP contracts from Ankara. However, reducing reliance on a single foreign partner is a key aspect of President Erdoğan’s energy policy, meaning other bidders may still be awarded future NPP contracts.
· KSG assesses that Russia will reserve the BOO model for highly strategic cases. Türkiye qualifies as such due to its geographic location, NATO membership, dependence on Russian energy, and its role as a competitor in the power dynamics of the Eastern Mediterranean, Black Sea, and Middle East and North Africa regions. However, the BOO model also carries significant liabilities, particularly in the event of an accident, and is considerably more costly than selling the NPP after the completion of EPC. The increasing influence of Russia in Turkish energy creates greater dependencies for the NATO member. Moscow may use its influence to extract concessions from Türkiye in any Ukraine peace process, as well as sowing disunity in NATO by demanding Türkiye impose policies that other Allies lament.
· KSG assesses that Ankara is likely to favour the international agreement approach, which it adopted for Akkuyu in 2010, over competitive auctions for future NPP projects. According to the Turkish constitution, the Constitutional Court cannot challenge international agreements, even if they violate constitutional provisions. This is unlikely to change because it strengthens the executive branch, which negotiates international agreements. Following the 2017 constitutional amendment that transformed Türkiye from a parliamentary system to a presidential system, it is unlikely that the executive would relinquish its authority to negotiate international agreements, regardless of their constitutional implications. While the international agreement approach does not explicitly favour Russia over other competitors, Russia’s ability to secure government-to-government deals through its ownership of ROSATOM gives it a competitive edge over rivals (including Western and Chinese companies), where NPP projects require delicate public-private cooperation.