tew (12.10.18) - Electricity market reform in turkey
1. 1
Electricity Market Reform in
Turkey
Fatih Kölmek, PhD.
Senior Electricity Advisor
USAID Energy Markets Development (EMD) Project
Energy TransparencyWeek
Kyiv, October 12, 2018
7. 7
Major Challenges in Reform
Differences between regions and consumer
groups
High technical & non-technical losses
Fast increasing demand & high investment
requirement
Lack of competition in market activities
Reliance on imported fuels in the fuel-mix
Problem
Price equalization mechanism for a smooth transition
Loss targets and incentive-based regulation
Enhanced trade opportunities for generators, long-
term tariff setting with satisfactory returns for
network operators
Unbundled market activities, privatization & enabling
supplier switching
Encouraging diversity via incentives, increasing
utilization of renewables and distributed generation
Remedy
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Determination of Hourly Market Prices
* Intra-day market transactions are open until 60 minutes to real-time, volume & price matching applied for bids (hourly/block)
Bids
Hourly
Block
Flexible
Bids
15-min
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Financial Settlement & Market Clearing
• Dual-price applied for ± imbalances (i.e. min/max(DAP, BMP)x(1±0,03))
• Balance Responsible Groups utilized (with additional responsibility for each generator)
• Market Clearing is perfomed byTakasbank (i.e. Central Clearing House responsible for clearing all
commodity markets in Turkey)
• Settlements are secured via a risk management system (including colleterals) operated by the market
operator (EPIAS) in cooperation withTakasbank
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Consumers Portal and Fast Supplier Switching
• Central database for commercial metering
– Metering by DSOs andTSO
– Management by Market Operator
• Consumers access their profiles via a special
platform – Consumers Portal (ID verification
and login via e-government integration)
• Fast supplier switching
– Unique consumer ID (in addition, Entso-e code)
– Suppliers JUST choose the consumers and add
to their portfolio for next month, NO
document or approval required
– Penalties for wrongdoing and damaging consumer
trust (supplier provides electricity but cannot
invoice the consumer, regulator bans the supplier
for 3 months and starts an audit procedure)
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Feed-in-Tariff (FIT) for Renewables
Prices Applicable (USD ¢/kWh)
Plant Type Schedule I * Schedule II ** Total
Hydro 7,3 2,3 9,6
Wind 7,3 3,7 11
Geothermal 10,5 5,8 16,3
Biomass (including landfill gas) 13,3 2,7 16
Solar (PV) 13,3 6,7 20
Solar (CSP) 13,3 9,2 22,5
* 10 years for plants to be commissioned until 31/12/2020
** Incentive for local content- 5 years for plants to be commissioned until 31/12/2020
*** Before Law No: 6094, feed-in tariff was 5 - 5,5 €¢/kWh for all of the renewables (Law No:5346)
**** FITs are differentiated on a source basis. Additional FIT is provided for using local content.
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• Incentives and market conditions (price signal) led to a high interest
• Auctions could be introduced in 2009
– First, auctions for connection capacity (fee/MW or fee/kWh)
– Second, reverse auctions (reduction from FIT)
• «Negative» prices in reverse auctions (2017), highlighting the credibility of the price
signal (i.e. day-ahead market prices)
• YEKA model was introduced for large projects (2017)
– Reverse auctions
– Includes establishment of factories for manufacturing
– NewYEKA auctions to include storage
• Cost of renewable support calculated on a monthly basis and distributed to suppliers
proportional to their shares in monthly electricity supply (mechanism operated by the
market operator EPIAS)
Renewable Energy Integration
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New Auction Model for Wind and Solar:YEKA
• Intoroduced in 2017
• Reverse auctions with a FIT guarantee of 15 years for pre-announced zones (YEKA)
• Auctions in 2017 includes obligations for establishing a manufacturing factory
– 6,99 $ cent/kWh for solar (1000 MW)
– 3,48 $ cent/kWh for wind (1000 MW)
• NewYEKA auctions announced in 2018
– local content obligation
– 1200 MW OffshoreWind (Kırklareli-Tekirdağ-Edirne region)
– 1000 MW Wind (Balıkesir, Çanakkale,Aydın and Muğla regions / 250 MW each)
– 1000 MW Solar
• Viransehir (500 MW), Niğde (300 MW), Hatay (200 MW) regions
• 30 MW/90 MWh Battery Storage in Niğde region
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FIT Portfolio – II (licensed plants only)
Hydro (with reservoir)
Hydro (run-of-river)
Wind
Geothermal
Biomass
Solar
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• Market liberalization is a long way, change does not happen overnight, gradual transition
required
• Privatization and unbundling paved the way for competition
• Incentive tariff scheme with performance targets for distribution and authorized supply
improved service and cost-effectiveness
• Maintaning reliable price signals is the key for market liberalization and development
• Secure market clearing is vital, clear and reliable mechanisms lead to liquidity
• Easy procedures and consumer empowerment facilitated supplier switching
• Importance of balance responsibility increases with the growth of market and number of
participants
• All renewables became market players and hence subject to imbalance charges for
sustainability of the market
Lessons Learnt
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Thank you!
Fatih Kölmek, PhD.
Senior Electricity Advisor
USAID Energy Markets Development (EMD) Project
fatihk@unops.org