Solar Surge Powers Turkey’s Steel Industry Toward Low Carbon Growth

Executive Summary:

• At least half of Turkey’s 60 million mt/year (metric tons per year)  steel capacity is being tied to renewable energy sources (mainly solar).
• Drivers: soaring domestic energy prices (quadrupled in 2022) + the EU’s Carbon Border Adjustment Mechanism (CBAM).
• Turkey became the EU’s top steel supplier in 2024, giving low-carbon steel a competitive edge.

Industry Shift: Solar Led Decarbonisation

• At least half of Turkey’s 60 million metric tons per year capacity is being linked to renewable energy sources (RES), which will both reduce its carbon footprint and significantly cut its energy costs. These plans were initially introduced due to quadruple domestic energy prices in 2022, while also taking into account the EU’s carbon border tax, CBAM. An EU regulation that imposed a carbon price on some imported goods, aiming to balance the carbon cost between imported and EU-produced goods.
• A minimum of 14 solar plant projects have been approved so far, totalling 1,171 MWe, which will power 30.2 million metric tons per year of Turkey’s steelmaking operations, accounting for about half of its total installed crude steel capacity.
• The projects don’t stop there; there are more in the pipeline awaiting approval, which could potentially increase the share of steelmaking capacity partly powered by solar to just over 40 million metric tons per year.

Turkey is now the EU’s largest steel supplier.

• In 2024, Turkey emerged as the EU’s largest steel supplier by volume, accounting for 12% of the bloc’s 37 million mt of imports, up from less than 5% in 2014. EU purchases reached 4.39 million mt last year, nearly triple the level of a decade earlier. With low carbon steel on the horizon, Turkey is well positioned to expand its market share in Europe.
• Turkish mills are investing heavily in renewable power generation at both EAF and BF-BOF facilities. The dual benefits of compliance and cost savings make these investments strategically and financially attractive, according to Sergey Nedelin, senior analyst at Metals & Mining Intelligence.
• Electric Arc Furnaces (EAFs), which primarily use scrap steel and electricity instead of coal, are already less carbon intensive than traditional methods. In contrast, Blast Furnace Basic Oxygen Furnace (BF-BOF) operations rely on iron ore and coking coal, making them far more energy  and carbon intensive.
• The electricity from the new solar farms and wind projects is being used directly by the mills to power furnaces, rolling mills, and other high-energy operations.

How does this benefit Turkey? 

• Lower energy bills: Turkish energy prices surged (quadrupling in 2022), so self generating renewable electricity helps mills control costs.
• CBAM compliance: The EU’s Carbon Border Adjustment Mechanism penalises carbon heavy imports. Using renewables lowers emissions, making Turkish steel more attractive in the European market.
• Market edge: EAF steel with renewable power can be marketed as “low carbon sourced” steel, which commands a premium in the EU market.
• Turkey is preparing to launch an Emissions Trading System (ETS), with a pilot phase in 2026–2027 covering carbon intensive sectors such as steel, energy, and other industries affected by the EU’s CBAM. Companies emitting over 50,000 mt of CO₂ annually will need permits. 
• The ETS is supported by Turkey’s rapid expansion of renewables: installed solar capacity hit 19.8 GW in 2024, driving a 39% jump in solar power output, while national targets call for 51 GW of wind and solar by 2030 and 120 GW by 2035, potentially lifting renewables’ share of electricity generation to 49%.

Source: S&P Global Commodity insights 

Bottom line

• At Cordoba, we view Turkey’s steel industry as a standout, with strong EU demand and significant investments in renewable energy driving its momentum. Strong European demand and heavy investment in renewables are giving mills a competitive edge, while the country’s rapid solar and wind buildout is opening doors well beyond steel. In our view, it’s worth keeping an eye not just on the steelmakers, but also on Turkey’s growing renewables story.
• We’re seeing Turkey’s steel sector decarbonisation story as just the beginning. If this model succeeds, we expect similar strategies leveraging renewables for cost and carbon gains to spread across other leading Turkish industries. Sectors like automotive, textiles, consumer electronics, home appliances, chemicals, food processing, and tourism all stand out as strong contenders for this shift.