Energy is the cornerstone of sustainable modern life and economic development. The need for energy in nearly every aspect of daily life—from industrial production to transportation, from agriculture to household activities—has made it a strategic resource. Therefore, the energy sector is not limited to the generation and distribution of energy; it also plays a critical role in economic growth, environmental sustainability, national security, and societal well-being.

The energy sector is a multi-layered system encompassing the production, transmission, distribution, and consumption of energy in various forms such as electricity, heat, fuel, and kinetic energy. Within this framework, both fossil fuels (oil, coal, natural gas) and renewable resources (solar, wind, hydroelectric, biomass, geothermal) are evaluated together. Moreover, the technical, financial, and regulatory processes involved in managing these resources are integral components of the sector.

The use of energy spans a wide range—from heating and lighting in residential areas to industrial production, transportation, and information technologies. With the acceleration of digitalization, dependence on energy has grown, making a sustainable, uninterrupted, and cost-effective energy supply a top priority in national development policies.

The energy sector is a key player in combating climate change. In line with the Paris Agreement and similar international commitments, reducing carbon emissions necessitates a shift from fossil fuels to renewable energy sources. This transformation not only involves production technologies but also reshapes energy policies, business models, and sectoral oversight mechanisms.

In this context, ensuring that the energy sector’s transformation occurs on a reliable, transparent, and accountable foundation serves the interests of not only companies but society as a whole. This is where assurance services play a vital role—by verifying the accuracy of energy companies’ sustainability claims, they strengthen stakeholder trust and contribute to laying solid foundations for a sustainable future in the sector.

Trends and Assurance Services in the Energy Sector focuses on the significant changes and challenges facing the global energy industry, particularly during the transition toward sustainability. Due to increasing regulatory pressures, technological advancements, and shifting market dynamics, the sector is prioritizing renewable energy sources such as solar, wind, and geothermal to meet growing energy demands and mitigate the effects of climate change.

At the intersection of these trends lies a compelling narrative for both industry stakeholders and policymakers—one that reflects the sector’s profound transformation in response to environmental concerns and evolving consumer expectations. Technological innovations—such as the integration of smart technologies, the Internet of Things (IoT), and Artificial Intelligence (AI)—are driving this evolution, reshaping the way energy is produced and consumed. These advancements promise improved efficiency and greater consumer engagement, but also introduce challenges related to interoperability and data security.

Furthermore, recent regulatory initiatives—prompted by geopolitical tensions and market volatility—have led to stricter sustainability mandates, accelerating investment in renewable energy projects.

Assurance services play a critical role in this context by ensuring transparency and credibility in the sustainability claims made by energy companies. These services verify compliance with sustainability standards and assess the authenticity of claims, thereby providing stakeholders with confidence in the reported data.

However, the sector faces obstacles such as data complexity, the absence of standardized benchmarks, and the resource-intensive nature of assurance practices—factors that may hinder widespread adoption.

Looking ahead, the future of the energy sector will be shaped by strategic adaptations to technological innovation, regulatory change, and market forces. The growing emphasis on Environmental, Social, and Governance (ESG) assurance reflects increasing demands for accountability in sustainability practices, urging organizations to deliver reliable, comparable, and transparent sustainability information. As these trends continue to evolve, the sector must effectively manage the complexities of assurance services to maintain stakeholder trust and facilitate the transition to a sustainable energy future.

Global Energy Market Overview

The energy sector is undergoing a significant transformation on a global scale, driven by shifting climate policies, supply-demand imbalances, technological advancement, and sustainability goals. According to 2024 data, global energy demand increased by 2%, with most of this growth coming from non-OECD countries.

1. Electricity Generation and Consumption

Total Demand: In 2024, global electricity demand reached an all-time high of 592 EJ.
Top Electricity-Consuming Countries:
- China: Accounts for 30.9% of global electricity consumption.
- USA: Leads among OECD countries with 40.7% of the total.
- India: Ranks just behind China with a rapidly increasing demand.

International Energy Agency (IEA) – Electricity Consumption Data 2022

2. Renewable Energy Generation

Solar and Wind Energy: These two sources grew by 16% in 2024.
China: Accounted for 57% of this growth alone and produced 405 TWh more renewable electricity than the entire European Union in 2024.
Europe: Solar power generation surpassed coal for the first time.
USA and India: Also among the leading countries increasing investments in renewables.

BP Energy Outlook 2024

3. Oil and Natural Gas

Oil Production: The USA is the global leader, accounting for 20% of worldwide oil production.
Natural Gas Production:
- USA, Russia, Iran, and China: These four countries combined accounted for 53% of global production.
- China: Became the world’s 4th largest natural gas producer over the past decade.

Statista – Leading Oil and Gas Producing Countries 2024

4. Coal

China: Responsible for 67% of global coal demand, and is the largest producer and consumer.
India: Coal demand increased by 4%, surpassing the total coal consumption of Europe.

IEA – Coal 2023 Analysis and Forecast to 2028

5. Nuclear and Hydroelectric Energy

Nuclear Energy: Recorded a 3% growth in 2024, with most of the increase coming from France and Japan.
Hydropower:
- Saw an increase of 180 TWh in 2024, the largest growth in the last 14 years.
- Provides 14% of global electricity generation and 45% of renewable power.

World Nuclear Association – World Nuclear Performance Report 2024

6. Critical Minerals and Energy Storage

Lithium Production: Increased by 16%; Chile grew by 23%, while Argentina achieved a 109% production rise.
Storage Capacity: Grid-scale battery capacity increased by 113%, reaching 126 GW, with China holding 60% of that capacity.

IEA – Critical Minerals Market Review 2024

The World Energy Sector in Numbers

Global energy demand increased by 2% in 2024, with non-OECD countries leading in absolute demand and annual growth rates. According to a report published by the Energy Institute, the share of fossil fuels, which form the basis of the energy system, reached 87%. You can read a brief summary of the information contained in the same report below.

2024 Energy Sector Developments

Overview

Global energy-related emissions increased by 1% in 2024, breaking a record for the fourth consecutive year.
Energy demand increased by 2% annually, reaching a record high of 592 EJ.
Wind and solar energy grew nearly nine times faster than total energy demand; however, fossil fuel use also increased by just over 1%.
Natural gas demand increased by 2.5%, while oil consumption remained stable in OECD countries and grew by 1% in non-OECD countries.
The energy transition is ongoing, but uneven and with regional variations.

Electricity and Renewable Energy

Electricity demand increased by 4%, exceeding total energy demand; This demonstrates continued electrification.
Wind and solar power grew by 16%. China accounted for 57% of this increase.
China generated 405 TWh more electricity than Europe’s combined production in 2024.
In 2024, China produced twice as much renewable energy as the US, Europe, and India combined.
Wind and solar power generation growth accounted for 53% of global generation growth in 2024. Solar power generation surpassed coal generation in the EU for the first time.

Carbon Emissions

Carbon emissions increased by 1% to 40.8 GtCO₂e.
Since 2010, renewables and nuclear sources have prevented 109 Gt of greenhouse gas emissions.
China remains the largest emitter, accounting for 62% of the increase in 2024 along with India.
US emissions fell by 0.7% for the second consecutive year.
Europe’s emissions decreased for the sixth consecutive year, excluding the impact of COVID-19, falling to one-third of China’s.

Oil

The US became the largest oil producer, accounting for one-fifth of global production in 2024.
Oil continued to meet 34% of global energy needs. Demand increased by 0.7%, exceeding 101 Mbbl/d.
Demand remained stable in OECD countries, while non-OECD countries saw 0.7% growth.
China’s oil demand decreased by 1.2% in 2024, signaling a peak.
Demand for fuel oil and diesel fell, while demand for jet fuel, ethane, LPG, and gasoline increased.
Oil prices fell by 3% but remain 27% higher than pre-2019 levels.

Natural Gas

Natural gas production reached 4,124 bcm, with the US, Russia, Iran, and China accounting for 53% of production.
China has become the world’s 4th-largest gas producer in 10 years, with domestic production meeting 56% of domestic demand.
Demand increased by 2.5%, growing across all regions (except Africa). The largest increase was seen in Asia-Pacific.

Coal

Production in Asia-Pacific exceeded demand by 6%; global demand hit a record high of 165 EJ.
China accounts for 67% of global coal demand.
Coal consumption in Europe decreased by 7%, while nuclear energy surpassed coal for the first time.
India’s coal demand increased by 4%, reaching the same level as many regions combined.
Global coal prices fell by 11% in 2024, representing a 52% decline from the 2023 peak.

Nuclear Energy

Nuclear energy increased by 3% in 2024, meeting more than 5% of global energy needs. Most of the increase came from France and Japan.

Electricity Generation

Electricity generation increased by an average of 2.6% annually over the past 10 years. Asia-Pacific led the way with 52%, while Europe and North America accounted for 30%.
Gas production increased by 2.5% and coal production by 1.2%. Solar and wind power generation accounted for half of the increase.
Grid-scale battery storage capacity increased by 113% to 126 GW. China accounts for 60% of the total capacity.

Hydropower

Thanks to the surge in China, hydropower generation experienced its largest increase since 2010 (180 TWh).
By 2024, hydropower will provide 14% of global electricity and 45% of renewables.

Biofuels

Demand increased by 3%, reaching 2.2 million barrels of oil equivalent. The largest increase was seen in Asia-Pacific.
India and Indonesia accounted for 63% of the region’s demand.
Biodiesel demand in the EU fell by 15%.

Critical Minerals

Rare earth element production increased by 3.2% to 0.4 million tons. China accounted for 71% of production.
Lithium production increased by 16%. Chile came in second with a 23% share. Argentina increased its production by 109%.
The price of lithium carbonate fell by 69%, natural graphite by 26%, and cobalt by 23%.

According to International Energy Agency (IEA) data, global electricity consumption is projected to increase by 2.64% to 24,577 TWh in 2022. The industrial sector led with a 42.3% share (10,408 TWh), followed by residential buildings with 27.5% (6,751 TWh), and commercial/utilities with 20.4% (5,005 TWh). Consumption in OECD countries increased by 0.9 percent to 9,835 TWh (40 percent of global consumption), with the US leading the OECD with a 40.7 percent share. Consumption in non-OECD countries increased by 3.8 percent, with China accounting for 30.9 percent of global consumption.

Turkey’s Energy Sector in Numbers

According to the 2024 Energy Sector Report prepared by KPMG and APLUS Energy, developments in our country’s energy sector are listed below:

1. Electricity Demand Increases, Weather Conditions Decisive

High temperatures increased electricity demand in the first half of 2024; consumption increased by an average of 5.9% compared to the same period the previous year.
Demand in June 2024 increased by 14% compared to 2023. This increase was primarily due to above-average temperatures and increased cooling needs.
The increase in that month was more limited due to the Eid al-Fitr holiday falling in April 2024.

2. The Share of Domestic Resources in Electricity Generation Increases

In the first six months of 2024, electricity generation increased by 6.8% year-on-year, reaching 163,959 GWh.
During the same period, the share of domestic resources in production increased to 66%, while the share of imported resources decreased to 34%.
This trend is consistent with energy policies aimed at reducing Turkey’s foreign trade deficit.

3. Leader in Industrial Electricity Consumption

In the first half of 2024, 41% of electricity consumption came from the industrial sector.
Other consumption rates include: residential 28%, commercial 26%, agriculture 3%, and lighting 2%.

4. State Share of Generation Declining, Free Market Strengthening

Turkey’s total installed capacity reached 110,539 MW as of the end of June 2024.
57.3% of this installed capacity comes from renewable sources.
The state-owned EÜAŞ’s share of installed capacity decreased from 48.9% in 2010 to 19.5% in 2024.
The private sector’s share increased to 64.6%, and that of unlicensed power plants to 12.9%.

5. Electricity Trade: Georgia Leads in Imports, Bulgaria and Syria Lead in Exports

Imports: In 2024, Turkey imported the most electricity from Georgia, with 1,018 GWh (68%). Bulgaria follows with 331 GWh (22%).
Exports: During the same period, 405 GWh (38%) were exported to Bulgaria, and 336 GWh (31%) to Syria.
Syria ranked second in exports this year, as it did last year.

6. Electricity Access and Demand Growth Trend

In Turkey, the entire population has had access to electricity since 2010.
Electricity demand grew by 4.2% compound annual growth between 2000 and 2023.
Electricity demand increased monthly in the second half of 2023, driven by economic recovery and climate conditions.

In light of all these developments, the Republic of Turkey The seven objectives determined by the Ministry of Energy and Natural Resources’ 2024-2028 Strategic Plan are as follows:

Ensuring Sustainable Energy Supply Security
Reducing Foreign Dependency
Net Zero Carbon-Focused Energy Transformation
Safe, Sustainable, and Value-Added Mining
Increasing the National and International Efficiency of Our Energy and Mining Markets
Supporting Domestic Technologies in the Field of Energy and Natural Resources
Developing Institutional Capacity

Accelerating Transformation in the Energy Sector

The energy sector is indispensable to the global economy and societies. Since the industrial revolution, energy has been a cornerstone of economic growth and social prosperity. However, today, the sector is being reshaped by climate change, technological innovations, increasing energy demand, and changing regulations. The transition from traditional energy models based on fossil fuels to renewable energy sources forms the basis of the structural transformation of the energy sector. This transformation is fundamentally changing not only energy production and consumption methods, but also sectoral strategies, business models, and risk management approaches.

Climate change is one of the major catalysts accelerating the transformation of the energy sector.

The goal of limiting global temperature rise to 1.5°C has been a fundamental element shaping energy policies since the Paris Agreement. In addition, the European Union’s (EU) Green Deal, carbon neutrality targets, and stringent environmental regulations are driving energy companies towards more sustainable and environmentally friendly practices. At the same time, digitalization is increasing efficiency in the energy sector and redefining operational processes. Smart grids, data analytics, and artificial intelligence (AI) are revolutionizing every phase of energy production, from distribution to consumption.

In this dynamic environment, energy companies face both opportunities and risks. Assurance services are becoming a critical tool in helping companies manage risks, comply with regulations, and achieve their strategic goals during this transformation. Internal audit, risk management, and consulting services support companies on their path to sustainable growth amidst the increasingly complex nature of the energy sector.

Emerging Trends: Factors Shaping the Energy Sector

The energy sector is experiencing transformative trends driven by regulatory changes, technological advancements, and changing market dynamics. As the world increasingly prioritizes sustainability, interest in renewable energy sources such as solar, wind, and geothermal is intensifying, particularly due to rising energy demand and the urgency to reduce carbon emissions.

Technological Developments

Technological innovations are significant drivers of change in the energy sector. The integration of smart meters, advanced analytics, the Internet of Things (IoT), and artificial intelligence (AI) are revolutionizing energy production, distribution, and consumption. These advances are increasing efficiency and reliability while also fostering consumer engagement. However, the integration of these new technologies with existing infrastructures presents challenges, including interoperability issues, data privacy concerns, and the need for specialized skills to operate advanced systems.

The energy sector is rapidly changing, driven by technological, environmental, and economic factors. Below, you can examine the key trends reshaping the sector:

Renewable Energy Investments: Renewable energy sources are one of the most important trends shaping the future of the energy sector. According to the International Energy Agency (IEA), global renewable energy capacity will grow by 15% by 2024, reaching record levels. Solar energy has become the fastest-growing segment thanks to cost reductions and technological advancements. Wind energy, particularly offshore projects, is attracting significant investment in Europe and Asia. Hydroelectric and geothermal energy, on the other hand, are showing steady growth. In Turkey, incentives such as the Renewable Energy Resources Support Mechanism (YEKDEM) are accelerating renewable energy investments.

Energy Storage and Battery Technologies: The intermittent nature of renewable energy increases the importance of energy storage systems. Lithium-ion batteries are leading the way with their high energy density and cost advantages. Furthermore, new technologies such as solid-state batteries, sodium-ion batteries, and flow batteries offer longer-lasting and environmentally friendly solutions. For example, Tesla’s Megapack systems are widely used in large-scale energy storage projects. In Turkey, battery storage projects are growing rapidly in the pilot phase, particularly for the integration of solar and wind energy.

Smart Grids and Digital Energy Management: Smart grids increase efficiency and reliability in energy distribution. Internet of Things (IoT)-based sensors reduce energy losses by providing real-time data collection and analysis. Digital energy management platforms allow consumers to optimize energy use and provide energy companies with advantages in demand forecasting and grid management. For example, companies like Siemens and GE are leaders in smart grid technologies. In Turkey, distribution companies are accelerating digitalization with smart meters and SCADA systems.

Carbon Neutrality Targets and Sustainability: Globally, companies are committing to becoming carbon neutral by 2050. This target necessitates low-carbon solutions in all processes, from energy generation to distribution. Hydrogen energy and carbon capture and storage (CCS) technologies play a critical role in achieving this goal. In Turkey, the Ministry of Energy and Natural Resources’ 2053 Net Zero Emissions target is guiding the sector in this direction. Digitalization and Data Analytics in Energy Markets: Big data and artificial intelligence are transforming decision-making processes in the energy sector. Data analytics are used in a wide range of areas, from energy demand forecasting to maintenance planning. For example, predictive maintenance reduces costs by detecting equipment failures in advance. Data-driven decision-making processes in Turkish energy markets are gaining increasing importance, particularly under the Electricity Market Law.

Supply Chain Dynamics: The COVID-19 pandemic has led to increased resilience in energy supply chains, allowing the sector to adapt more quickly to disruptions. Companies are increasingly investing in supply chain visibility and accountability, which are critical for maintaining agility in a volatile market. This emphasis on innovation has also spurred the development of new supply chains for renewables, as energy demand across all sources continues to rise.

Regulation and Compliance: The Changing Regulatory Landscape

Legal changes are stimulating the renewable energy sector as companies respond to increased consumer interest and energy security concerns stemming from geopolitical tensions such as the conflict in Ukraine. Furthermore, the ongoing restructuring of energy policies at the federal and state levels is expected to further shape the transition to cleaner energy sources in the coming years.

The energy sector faces stringent regulations at both the global and local levels. These regulations profoundly impact companies’ operational and strategic processes:

EU Green Deal, CBAM, and ETS: The EU’s Green Deal aims for a carbon-neutral economy by 2050. The Carbon Border Adjustment Mechanism (CBAM) also impacts energy companies outside the EU by imposing additional costs on the import of carbon-intensive products. The Emissions Trading System (ETS), on the other hand, offers financial incentives and sanctions to reduce carbon emissions. Turkey is obligated to comply with these regulations due to its trade relations with the EU.

According to an EY (Ernst & Young) report, the EU’s Border Carbon Adjustment Mechanism (CBAM) is a tool that aims to set a fair price for carbon emitted during the production of carbon-intensive products and to encourage cleaner industrial production in countries outside the EU.

Impact of CBAM on Sectors

These sectors will be most affected due to their exports and high emissions.

Cement
Energy/Electricity
Iron and Steel
Aluminum
Fertilizer
Hydrogen

These sectors may consider using green hydrogen as a viable alternative to avoid the main impacts of CBAM, such as high carbon costs, export losses, and consequently, loss of competitiveness, as well as other negative impacts.

High carbon costs due to carbon emissions in production
Loss of exports due to sustainability concerns
Changes in business practices
Additional investments

Additional advantages may also arise:

Economic gains from reducing emissions
Comprehensive cost-benefit analysis
Improved trade relations with the EU
International cooperation

The motivation to reduce CBAM impacts and potential opportunities are increasing the demand for green hydrogen in these sectors.

According to EY (Ernst & Young)’s Turkey Green Hydrogen analysis, the cement, iron and steel, ceramics, fertilizer, and chemical sectors stand out among the areas where green hydrogen is used in Turkey. It is anticipated that carbon reduction and net-zero targets can be achieved by raising awareness of green hydrogen and decarbonization in these sectors, developing green hydrogen infrastructure, increasing electrolyzer investments, and encouraging strategic collaborations among stakeholders.

Companies that act quickly to address the opportunities and challenges presented by the Carbon Border Adjustment Mechanism (SKDM) will be able to gain both an international competitive advantage and assume a leadership role in the green transformation process. At the same time, the development of green hydrogen in Turkey requires increased government policies and incentives, development of solutions for the storage and distribution of green hydrogen, and greater participation of domestic companies throughout the value chain.

Carbon Exchange and Carbon Trading: The planned carbon exchange in Turkey will provide the trading of carbon credits for companies obligated to reduce emissions. This system will operate similarly to practices such as the ETS (Emissions Trading System) in Europe, China’s National Carbon Market, and the Regional Greenhouse Gas Initiative (RGGI) in the US. Carbon trading contributes to companies achieving their sustainability goals while also standing out as an important tool to encourage compliance with environmental regulations.

Regulations in Turkey: The Energy Market Regulatory Authority (EPDK) establishes the regulatory framework for the energy sector in Turkey. Renewable energy incentives, energy efficiency laws, and environmental obligations are guiding the sector towards a more sustainable structure. For example, the YEKDEM mechanism, updated in 2024, provides financial support for renewable energy projects. Furthermore, environmental impact assessment (EIA) reports have become mandatory for energy investments.

The New Climate Law: With the Climate Law, which entered into force in Türkiye in 2024, issues such as greenhouse gas reduction, adaptation policies, increasing carbon sinks, and climate finance have been brought under legal framework. The law is considered a significant milestone in the energy sector’s achievement of its sustainability goals. It also paves the way for the implementation of the planned National Carbon Exchange and a carbon pricing mechanism.

ESG Reporting: Environmental, social, and governance (ESG) criteria play a critical role in evaluating the transparency and sustainability performance of energy companies. Investors and stakeholders view ESG reporting as an indicator of a company’s long-term value creation potential. In Turkey, Borsa Istanbul’s ESG indices encourage companies to be more transparent in this area.

The Turkish Sustainability Reporting Standards (TSRS 1 and TSRS 2), which entered into force in Turkey in 2024, are adaptations of IFRS S1 and S2 documents from the International Sustainability Standards Board (ISSB). These standards, along with international reporting frameworks like the GRI (Global Reporting Initiative), aim to ensure that organizations report their environmental impacts in a measurable and comparable manner. Borsa Istanbul’s ESG indices, meanwhile, encourage companies to be more transparent in this area.

Waste-to-Energy: The Role of Recycled Energy Production

An important component of energy transformation is the production of energy through waste recycling. This approach both makes waste management environmentally friendly and contributes to the development of alternative energy sources. Conversion of household, industrial, and biological waste, particularly in urban areas, into energy is a sustainable method compatible with circular economy goals.

Waste-to-Energy Production Methods:

Biomass and Biogas Plants: Biogas and thermal energy are produced from organic waste.
Thermal Recovery (Incineration Plants): Electricity and thermal energy are generated by the controlled incineration of solid waste.
Residential Fuels (RDF): The use of non-recyclable combustible waste in power plants.

Sectoral Benefits:

Promotes energy supply security.
Reduces the need for landfills.
Reduces greenhouse gas emissions.
Provides economic opportunities for municipalities and energy companies.

Waste-based energy systems are one of the innovative solutions that support environmental sustainability in the energy sector. Investments and incentives from both the private sector and public institutions in this area are of great importance in achieving green transformation targets.

Energy Investments and Incentives for Self-Consumption in Industrial Enterprises

In recent years, the tendency of manufacturing and industrial companies to invest in renewable energy to meet their own electricity needs has increased significantly. This development has accelerated due to both rising energy costs and sustainability goals. Industrial enterprises are particularly interested in rooftop and land-based solar energy systems (SPPs).

Investment Motivations

Reducing energy costs
Reducing carbon footprint
Securing supply continuity
Contributing to corporate sustainability goals

Incentive Mechanisms

Various incentives and support are available for industrial enterprises in Turkey that wish to generate their own energy:

Advantages such as VAT exemption, customs duty exemption, and interest/dividend support are offered under the Investment Incentive Certificate.
The Ministry of Industry and Technology and KOSGEB provide grants and low-interest loans for SPP and energy efficiency projects.
The YEVDES (Renewable Energy and Efficiency Support) program, under the Ministry of Energy and Natural Resources, provides consultancy and implementation support.

Sales of Excess Energy

In line with the 2022/2023 regulatory updates for unlicensed generation facilities, surplus energy can be sold into the system at prices determined under the YEKDEM (Renewable Energy Resources Support Mechanism). This mechanism, which has been in place for over 10 years, allows investors to generate income by selling surplus electricity to the grid.

Thanks to the new regulations that came into effect in 2023:

Industrial organizations investing in solar power plants can offset the consumption of different facilities within the same distribution region.
The installed capacity limit has been increased to 5 MW, paving the way for higher-capacity systems.

These developments not only increase the energy independence of the industrial sector but also significantly contribute to environmental sustainability. This transformation is expected to accelerate further in the coming period with green OIZs (Organized Industrial Zones) and microgrid solutions.

Energy Regulation in Türkiye: The Public Role from Production to Distribution

The energy sector in Turkey is a strategic area in which the state plays an active role, both as a regulatory and guiding actor. In this context, the Energy Market Regulatory Authority (EMRA) regulates the market across a wide spectrum, from energy generation to transmission and distribution, and from consumption to pricing, and conducts licensing and auditing activities.

The State’s Regulatory Role

The EMRA is authorized and responsible for ensuring the transparent, competitive, and sustainable operation of the Turkish energy market in the following areas:

Licensing energy production facilities,
Monitoring the performance of electricity distribution companies,
Protecting consumer rights,
Setting tariffs,
Implementing support mechanisms for renewable energy resources.

Distribution activities in Turkey are carried out by 21 regional distribution companies, and the tariffs and investment plans of these companies are overseen and approved by the EMRA. This ensures that not only energy supply but also the provision of high-quality and uninterrupted distribution service is ensured.

Factors Determining Energy Prices

Electricity prices; It consists of a combination of numerous variables, including production, transmission, distribution, and tax costs:

Market-Based Elements:

Electricity generation costs (natural gas, coal, renewable resources, etc.)
Supply-demand balance
Exchange rate movements
Global commodity prices

Regulation-Based Elements:

YEKDEM costs
Distribution tariffs and system usage charges
Energy funds, TRT share, municipal consumption taxes

Balancing and Reconciliation Mechanisms:

Day-Ahead Market (DAM)
Balancing Power Market

EMRA regularly reviews these cost items and sets prices for free and tariffed consumer groups. Furthermore, EMRA balances the market through the energy exchange EPİAŞ (Energy Markets Operation Inc.), setting a reference based on prices in the free market.

Thanks to this structure, the Turkish energy market encourages competition in line with its liberalization goal while ensuring supply security and consumer protection through public control.

Risks and Opportunities: The Role of Internal Audit and Assurance in the New Era

Transformation in the energy sector brings with it both risks and opportunities:

Operational and Strategic Risks: Supply chain disruptions, fluctuations in raw material prices, and geopolitical uncertainties increase the operational risks of energy companies. For example, volatility in natural gas prices during the 2022 energy crisis threatened the financial stability of many companies.

Cybersecurity and Infrastructure Threats: Smart grids and digital infrastructures are vulnerable to cyberattacks. A 20% increase in cyberattacks targeting the energy sector was reported in 2024 (ENISA). Protecting critical infrastructure is critical for both national security and the operational continuity of companies.

Climate Change Risks: Extreme weather events threaten energy infrastructure. For example, floods and storms cause outages in electricity grids, while droughts affect hydroelectric production.

Opportunities: Hybrid energy systems (solar, wind, and storage), entry into new markets (e.g., green hydrogen), and innovative business models offer growth opportunities for energy companies. Turkey, with its geothermal and solar energy potential, is in an advantageous position in this area.

Internal audit and assurance services play a critical role in managing these risks and capitalizing on opportunities. Risk-based audit approaches allow companies to proactively identify and manage risks. However, these audit processes should not be limited to identification alone. Organizations should focus on concrete services that meet the following needs:

Data Validation and Reliability Analysis: Reliable collection and independent verification of sustainability data such as greenhouse gas emissions, energy consumption, waste management, and water use.
Performance Indicator Measurement: Creation, measurement, and reporting of environmental and social performance indicators (KPIs) determined according to ESG criteria.
Reporting Standards Compliance Audit: Compliance checks against national and international sustainability standards such as TSRS 1-2, GRI, and IFRS S1-S2.
Risk Prioritization Maps: Classifying operational, climate, financial, and digital risks according to their level and creating action plans.
Pre-Project Compliance Analysis: Environmental and social impact assessment for new investments, financial risk assessment, and sustainability strategy integration.
Supply Chain Compliance Assessment: Auditing suppliers’ sustainability performance and monitoring environmental impact and social compliance criteria.

Thanks to these concrete services, internal audit and assurance functions become not only a control mechanism but also a driving force for sustainable growth, investor confidence, and strategic alignment.

The Evolution and Added Value of Assurance Services

Energy Storage Solutions

As reliance on intermittent renewable resources increases, effective energy storage has become increasingly important. Advanced storage technologies, such as lithium-ion and flow batteries, are essential for managing fluctuations in energy supply and demand. However, the widespread adoption of these technologies faces challenges such as cost and efficiency. Therefore, significant investments in research, development, and supporting policies are crucial to develop energy storage solutions and optimize their integration with existing systems.

Market Volatility and Consumer Participation

Market volatility remains an ongoing challenge, as many global energy grids are outdated and unable to meet current consumption demands. Modernizing these infrastructures requires replacing aging components, implementing smart grid technologies, and strengthening cybersecurity measures to protect against threats.

To address this challenge, energy companies must adopt sophisticated energy management strategies and strengthen consumer participation efforts to build market trust and transparency.

Assurance Services in the Energy Sector

Assurance services in the energy sector are crucial for promoting transparency, reliability, and trust in organizations’ sustainability claims. These services encompass a range of methodologies and frameworks designed to verify and validate the sustainability performance of energy projects and practices.

Energy Sustainability Assurance

Energy Sustainability Assurance refers to the process of verifying the validity of claims related to sustainable practices in the energy sector. This includes setting renewable energy targets and conducting Life Cycle Assessments (LCA) to assess the environmental impacts of renewable projects. Furthermore, implementing Environmental Management Systems (EMS) is essential to effectively manage the environmental aspects of operations. Assurance services aim to provide stakeholders, such as consumers and regulators, with confidence that sustainability claims are being met in practice.

Components of Energy Sustainability Assurance

The key components of Energy Sustainability Assurance are:

Verification and Certification Programs: These programs involve independent audits that assess compliance with sustainability standards and enhance credibility through reputable certification bodies. These include internationally recognized frameworks such as ISO 14001 (Environmental Management System), ISO 50001 (Energy Management System), ISO 14064-3 (Verification of Greenhouse Gas Emissions), GRI (Global Reporting Initiative), and AA1000AS.

Different Assurance Levels: Assurance engagements are generally performed at three main levels:

Reasonable Assurance: Provides the highest level of accuracy. The independent auditor evaluates the reliability of the reported data through detailed testing and analysis.
Limited Assurance: A narrower audit process. Provides general assurance but requires fewer tests.
Self-declared/No assurance: The organization publishes its own data, but there is no third-party audit. This is the lowest level of assurance.

Understanding these levels is critical for stakeholders to correctly interpret assurance signals and assess the reliability of the reported data.

Carbon Emission Reporting: Accurate reporting of greenhouse gas emissions is vital to combating climate change. ISO 14064-1 is used to calculate emissions, and ISO 14064-3 is used to validate this data. These standards ensure the transparency, consistency, and comparability of reported data, ensuring the accuracy of the data underlying carbon trading and legal obligations.

Supply Chain Sustainability: Supply chains in the energy sector carry a high risk in terms of environmental impacts and social responsibility. Therefore, various ISO certifications can be applied, such as:

ISO 20400: Sustainable Purchasing Guidelines
ISO 45001: Occupational Health and Safety Management
SA8000: Social Responsibility Standard
ISO 14001: Assessment of environmental management practices at supplier facilities. These standards provide assurance at different levels, such as product-based environmental compliance (e.g., Green Product Certification) and facility-based management system performance.

Benefits of Sustainability Assurance Standards: The assurance process consists of the following stages:

Engagement Planning: The audit scope, objective, timeline, and resources are defined.
Risk Assessment: Risks of failure and vulnerabilities in critical sustainability areas are identified.
Evidence Gathering: Evidence is collected through interviews, document reviews, site visits, and data analysis. Assessment Based on Standards: Collected data is technically and methodologically reviewed according to selected standards (e.g., ISO 14064-3, TSRS, GRI).
Assurance Statement: This is the auditor’s final assessment of the accuracy and reliability of sustainability data.

Specifically for the energy sector, this process includes detailed analyses such as assessing the sustainability of resources used in electricity generation, comparing energy consumption intensity with industry averages, verifying emission intensity rates, and measuring the environmental impact of energy efficiency investments.

Types of Assurance Engagements: To comprehensively understand sustainability assurance in the energy sector, it is important to define the levels and types of assurance engagements. These include:

Reasonable Assurance Engagement: The auditor applies a high level of testing and provides a “reasonable belief” that the information in the reports is free from material misstatements. This is the most reliable type of reporting for investors and regulators.
Limited Assurance Engagement: Limited testing is performed on specific areas of the data. The auditor provides a lower level of confidence, stating “no doubt as to the possibility of material error.”
Verification or Compliance Assessments: Audits are conducted based on specific indicators or legal requirements (e.g., carbon tax obligations).

The following criteria should be considered when choosing between these levels:

Stakeholder Expectations: Investors, regulators, or customers’ expectations of accuracy and transparency
Information Importance: The impact of reported sustainability data on decision-making processes
Institutional Capacity and Budget: Audit resources, time constraints, and cost sensitivities

Ultimately, regardless of the assurance level, transparency, methodological relevance, and clear reporting of the audit process are critical to ensuring energy companies’ sustainability performance and earning stakeholder trust.

Future Direction

The future of assurance services in the energy sector requires a continuous research agenda that includes the development of new assurance methodologies, the integration of new technologies, and the adaptation of standards to meet evolving stakeholder expectations. An emphasis on interdisciplinary approaches that combine knowledge from environmental science, engineering, data analytics, and ethics will be critical to effectively addressing the complex challenges of sustainability assurance in the rapidly changing energy environment. Challenges in Assurance Services

The provision of assurance services in the energy sector faces several significant challenges that impact the reliability and effectiveness of sustainability reporting. These challenges can be broadly categorized as data complexity, lack of standardized metrics, cost implications, and varying levels of assurance.

Data Complexity and Accessibility

Sustainability data, particularly in areas such as greenhouse gas emissions and social impact metrics, is often difficult to accurately collect, measure, and verify due to the complexity of energy operations and extensive supply chains. Companies frequently encounter data gaps and inconsistencies, which can undermine the reliability of reported information.

The complex nature of these data sources requires a comprehensive understanding of their lifecycle from collection to inclusion in reports, further complicating the assurance process.

Lack of Standardized Metrics

While some progress has been made in standardizing sustainability reporting, inconsistencies persist in how performance is measured across various sectors and regions. The lack of uniform metrics makes comparison and benchmarking difficult, particularly in the energy sector, which includes fossil fuels and renewable resources.

As a result, stakeholders may struggle to effectively assess and compare sustainability performance across companies.

Cost and Resource Impacts

Conducting rigorous assurance engagements can be resource-intensive and costly, especially for smaller organizations or those operating in emerging economies. This financial burden often hinders the wider adoption of assurance practices, hindering companies’ ability to provide reliable and transparent sustainability reports.

The need for adequate internal control and governance structures to responsibly manage data also contributes to these resource demands.

Assurance Levels

Assurance services range in terms of the level of confidence they provide, from “limited assurance,” which offers a moderate level of certainty, to “reasonable assurance,” which provides a higher level of confidence and is similar to a financial audit.

The selection of the assurance level depends on stakeholder needs, the importance of the reported information, and the organization’s cost-benefit assessments. This variability can lead to confusion and uncertainty among stakeholders regarding the reliability of the sustainability information presented.

Assurance services are evolving in parallel with the transformation of the energy sector:

Transformation of the Internal Audit Function: The shift from traditional financial auditing to risk-based and strategic audits is making the internal audit function more valuable. Internal auditors now support not only compliance but also the achievement of strategic objectives.
Risk-Based Audit Approaches: This approach ensures the efficient use of resources by focusing on companies’ most critical risks. For example, an energy company can prevent cost overruns in renewable energy projects with risk-based auditing.
ESG and Sustainability Audits: Compliance with ESG criteria is no longer an option; it is a necessity. Independent audits verify companies’ ESG commitments and increase stakeholder confidence.
Pre-Project Risk Assessments: New energy investments require substantial capital. Independent auditing saves cost and time by identifying project risks in advance. For example, in a wind farm project, the analysis of environmental and technical risks directly impacts the success of the investment.

According to the ERTA Sustainability Assurance – Audit Report, sustainability assurance processes include the following factors:

1. Reputation Starts with Truth

“The only way to be seen as a great company is to be a great company. The only way to be trusted is to be trusted.” – Tony Langham

Credibility is the foundation of managing corporate reputation. Reputation management for companies is not an illusion, but an effort to reflect reality.

2. The Net Zero Emissions Target Is Inevitable

At COP28, scientists united on a common goal: net zero carbon emissions by 2050 is essential. Achieving this goal is possible not only through individual steps but also through the determined action of governments and companies.

3. Climate Risks Are a Real Threat to Business

Rising energy costs, carbon taxes, and environmental regulations can strain company profitability.
There is a risk of supply chain disruptions and productivity losses.
Companies that fail to meet environmental expectations risk reputational damage.

4. Efficient Resource Use = Long-Term Success

Companies that achieve efficiency in energy, water, and waste management are strengthened both environmentally and financially.
This approach reduces operational risks and provides a competitive advantage.

5. Collaboration is the Foundation of Sustainability

The United Nations’ Sustainable Development Goal 17 (SDG 17) emphasizes the importance of strong partnerships. Global goals can be achieved through collaboration between companies, governments, and civil society.

6. Why is an Assurance Process Necessary?

Transparency and Accountability: Stakeholder confidence increases, and a company’s sustainability claims are supported by concrete data.
Investor Confidence: Independently audited data supports informed investment decisions.
Legal Compliance: Sustainability reporting has become mandatory for certain institutions in Turkey as of 2024 (TSRS, IFRS S1/S2).
Risk Management: Companies can better analyze their environmental and social risks and take precautions.
Supply Chain Audit: Sustainability data can be monitored and improved with blockchain and digital tools.

7. Assurance Audit Steps

Planning: Resources and a timeline are established.
Risk Assessment: Priority areas are identified.
Review of Internal Controls
Data and Evidence Collection
Testing Procedures: Compliance, Accuracy Tests
Assurance Statement Publication

8. Choosing the Right Assurance Firm is Critical

Independence and Expertise
Global Regulatory Knowledge
Industry Experience
Strong Corporate Relationship History

9. Compliance with Standards and Transparency

Audits are generally based on ISAE 3000, ISAE 3410, GRI, and AA1000AS standards.
Assurance is a data-driven process that transparently reveals all impacts, not just the positive aspects, of a company.

Roadmap for Energy Companies: Strategic Alignment with Assurance Services

Future Prospects

The energy sector is poised for transformative change as it faces various challenges and opportunities in the coming years. As companies adapt to this dynamic environment, several key trends and innovations are expected to shape the future of the sector.

Strategic Alignment in the Energy and Industrial Sectors

The outlook for 2023 and beyond reflects the need for companies to increase their agility and resilience. Organizations are increasingly focused on improving supply chain visibility and accountability, which is expected to provide a competitive advantage in the face of ongoing disruptions.

The energy sector is experiencing a shift toward digital technologies that facilitate real-time market information and improved connectivity with suppliers and customers, spurring innovation and strategic planning.

Emphasis on Sustainability and Assurance

As sustainability becomes an integral part of business operations, the demand for Environmental, Social, and Governance (ESG) assurance is expected to grow. Companies are required to provide reliable, comparable, and transparent information about their sustainability practices.

The shift to results-based assurance methods that focus on tangible sustainability impacts will challenge traditional compliance approaches and encourage greater attention to the real-world impacts of business activities.

The development of Sustainability Assurance Standards, including frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), highlights the importance of standardization in sustainability reporting. Organizations will need to navigate the increasingly complex web of standards to ensure compliance and maintain stakeholder trust.

Innovations and Technological Developments

Technological advancements are expected to play a significant role in reshaping the energy sector. The integration of artificial intelligence (AI), big data, and other groundbreaking technologies will not only increase operational efficiency but also improve corporate social responsibility outcomes.

As these innovations mature, energy companies will be better able to respond to both market demands and regulatory requirements, thereby spurring growth in the renewable energy sector.

Regulatory and Market Dynamics

The regulatory environment is evolving, and new policies in the EU and the US are envisioned to provide tax incentives and financing for innovative projects to encourage the growth of renewable energy sources.

The goals of increasing economic competitiveness and resilience are closely aligned with the growing interest in clean energy and technological innovation. Consequently, the interaction between regulatory frameworks and market dynamics will be crucial in determining the future direction of the energy sector.

Energy companies need to strategically utilize assurance services for sustainable growth and regulatory compliance:

Regulatory Compliance: Assurance services facilitate compliance with the EU Green Deal, CBAM, and local regulations. For example, carbon emission reporting is verified through independent audits.
Audit and Consulting Collaboration: Internal audit and consulting teams enhance companies’ competitiveness by collaborating on risk management and strategic planning processes.
Corporate Governance and Internal Control: Strong internal control systems reduce operational risks, while corporate governance principles support sustainable growth. In Turkey, the Capital Markets Board (CMB)’s corporate governance principles encourage energy companies to be more transparent and accountable.

The Global Trends, Risks, and Opportunities report prepared by the Development Investment Bank summarizes the risks and opportunities as follows:

Risks

Increasing global energy demand and imbalances in energy supply could lead to energy crises. Furthermore, limited fossil fuel resources, continued dependence on fossil fuels, and energy security concerns could lead to fluctuations and increases in energy supply and pricing.
Climate change and extreme weather events pose a risk factor in the energy sector by causing interruptions in energy production and damage to resources. Along with the effects of climate change, natural disasters can also affect energy infrastructure. Disruptions in renewable energy systems can also lead to energy supply problems.
Increases in energy, food, and raw material prices affect production costs in our country. This can reduce the competitiveness of businesses and lead to economic instability and social unrest.
Tensions and political conflicts in the region can negatively impact the secure supply of energy resources and logistics networks, which can lead to fluctuations and disruptions in energy supply.

Opportunities

Increasing investments in renewable energy sources can diversify energy supply and ensure energy security. Furthermore, increasing energy efficiency enables more efficient use of energy and can mitigate the effects of energy crises by reducing energy demand.
Innovative energy storage solutions can ensure stability in energy supply. Investments in sustainable energy projects can support economic growth and create new job opportunities.
Increases in energy costs, coupled with Turkey’s proximity to the EU market, can provide a competitive advantage in the transportation sector. This could present opportunities to encourage domestic production and increase exports.
The international community’s demand for sustainable energy sources could increase Turkey’s strategic importance in energy security. Renewable energy projects and energy trade can contribute to the country’s economic revenues.

Conclusion and Recommendations

The energy sector is undergoing a complex transformation process shaped by technological innovations, environmental pressures, and regulatory changes. Assurance services help companies manage risks, seize opportunities, and achieve sustainable growth goals during this process. Recommendations:

Proactive Risk Management: Identify and manage operational and strategic risks in advance through risk-based audits.
ESG-Focused Strategies: Increase stakeholder trust by integrating sustainability goals into internal audit and reporting processes.
Digitalization Investments: Modernize audit processes with data analytics, artificial intelligence, and smart technologies.
Strategic Collaboration: Adopt a holistic risk management approach by bringing together internal audit, external audit, and consulting teams.
Training and Capacity Building: Train internal audit teams on emerging trends such as ESG, cybersecurity, and digitalization.

In the future, assurance services will play a central role in making the energy sector more transparent, sustainable, and resilient. By using these services as a strategic tool, energy companies can both ensure regulatory compliance and stand out in global competition.

A Secure and Sustainable Future in the Energy Sector with Teolupus

At Teolupus, we offer the assurance and consulting services companies need in the face of increasing risks, regulatory pressures, and sustainability expectations during the transformation of the energy sector. With our experienced team of experts, we offer:

Regulatory compliance consulting in the energy sector
Internal audit consulting services specific to the energy sector,

Sustainability and ESG Audits,

Compliance consulting with reporting standards such as TSRS 1, TSRS 2, and GRI,
Climate Risk and Energy Efficiency Assessments,
Internal Audit and Risk-Based Assurance Processes.

We support energy companies in establishing transparent, accountable, and resilient structures. Contact us to learn more about our services specifically designed for the energy sector, and let’s shape a sustainable future together!

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Trends in the Energy Sector and Assurance Services