Overview of
Turkish Energy
Market
10th Anniversary
Policies – Projections - Targets
10th Anniversary
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EMRA
Market Model
Market Indicators
Conclusion
www.epdk.org..tr
10th Anniversary
Energy Policy
Mission
To ensure efficient, effective, safe and
environmentally-friendly use of energy and
natural resources in a way that reduces import
dependency of our country and makes the
greatest contribution to our country’s welfare.
Vision
To make our country the leader of its region in
energy and natural resources.
www.epdk.gov.tr
Turkish Energy Sector
10th Anniversary
300
 Rapid growth in demand:
investment challenges and
opportunities
• Per capita consumption is 2 890
kWh/year which is well behind the
EU average.
• Despite the economic crises in
1994, 1998, 2001 and 2008, the
installed electricity generation
capacity has quadrupled in the last
25 years.
250
200
174,8
%

Total Demand Increase Rate
2000 - 2009
262
150
120,6
Electricity
96,9
100
55,3
56,8
50
30,6
22
5,6 4,6
7,6 6,9
EU
OECD
0
China
Türkiye
India
World
 High level of import dependency:


Gas
Need for more domestic resources, in particular the renewables
Need for diversification of resources
 Relatively high figures for
energy intensity:
 Potential for improvement of energy efficiency (but also linked to the structural issues
related to economy)
Economic Growth vs. Electricity Demand
10th Anniversary
GDP Growth Rate vs. Demand Growth Rate
(Quarterly)
15,0%
12,1%
11,4%
•GDP growth rate was 4.2% and
electricity demand growth rate
was 8.4% on average between
1970 and 2010
10,0%
11,9%
10,0%
5,0%
9,8%
9,7%
9,1%
8,6% 8,9%
7,1% 9,3%
7,0%
8,5%
8,1% 8,0%
7,7% 7,6% 8,0%
6,3%
6,2%
5,9%
8,1%
8,5%
9,7%10,1%
6,7%
0,0%
-5,0%
6,5%
7,0%
4,0%
5,7%
3,8%
12,0%
8,5%
10,3%
6,3%
4,9%
5,9%
7,5%
9,2%
5,2%
4,2%
3,2%
2,6%
-1,5%
0,9%
2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
I
II
III IV
I
II
III IV
I
II
III IV
I
II
III IV
I
II
III IV -3,4%
I
II -3,9%
III IV
I
II
III IV
-5,0%-2,8%
-6,3%
20,0%
-7,0%
-7,8%
-10,0%
15,0%
-15,0%
-14,7%
Electricity
GDP
-20,0%
%
10,0%
5,0%
0,0%
-5,0%
GDP Growth Rate
Demand Growth Rate
-10,0%
www.epdk.gov.tr
10th Anniversary
Strategy On Electricity
 All non-residential consumers will be eligible by the end of
2011.
 Full market opening until 2015: All consumers will be
eligible to choose their suppliers.
 Legal unbundling of distribution companies will be
completed by the end of 2012.
 Completion of distribution privatization in 2011.
 Commencement of generation privatization in 2011.
Source diversification.
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10th Anniversary
 Ensure security of
supply
 Keep the costs &
prices at a level
suitable to support
economical growth
 Decrease the
environmental effects
to the lowest
possible level
2023 Targets in Electricity Market




Exploitation of known lignite
and charcoal reserves
Decreasing share of gas in
generation mix
Introduction of nuclear energy
Achieving 30% share for
renewables in generation mix
 Full utilization of
economically and
technically feasible
hydroelectric potential
 Reaching 20.000 MW wind
capacity
 Commissioning all of
geothermal potential
 Introduction of solar
power plants
10th Anniversary
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
www.epdk.org..tr
10th Anniversary
Goals in Electricity Market
 More private sector presence,
 Increase in foreign capital investments,
 Decrease in public sector investment,
 Increasing responsibility in the protection of
environment,
 Formation of the energy prices in a competitive
environment (Competition in the Market),
 Increase in efficiency,
 Increase in service quality,
 Improvement in availability,
 Decrease in technical & non-technical loss
levels.
www.epdk.gov.tr
10th Anniversary






Fundamentals of Electricity Market
Electricity Market Law: From a vertically integrated state monopoly to a
liberal market environment
EMRA: An autonomous regulator in charge of issuing secondary
legislation, granting licensing, approving tariffs, monitoring, auditing, etc.
Unbundling: Legal unbundling regime among market activities
supplemented by privatization of distribution and generation assets.
Third Party Access: Regulated TPA regime. Transmission and distribution
companies should allow open, guaranteed, and non-discriminatory access
to their networks, which is backed by Regulator’s oversight.
Wholesale Market Design: Bilateral contracts market complemented by a
residual balancing mechanism. Introduction of a day-ahead market and an
exchange.
Mitigating Market Power: Static precautions in terms of limiting market
share. Generation 20 percent, wholesale market 10 percent.
10th Anniversary
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
www.epdk.org..tr
EPDK/EMRA
10th Anniversary
 Who is EPDK/EMRA?
 EMRA is the sole regulator of electricity,
gas & petroleum markets
 What does EPDK/EMRA do?
 EMRA;
•
•
•
•
Issues secondary legislation
Grants licenses to market players
Approves tariffs
Monitors, supervises and audits markets and
market players
 What are EPDK/EMRA’s objectives?
 EMRA’s main objective is to provide;
•
•
•
•
Financially viable, stable and competitive energy market
Sufficient energy at good quality
Low cost
Reliable and environmental friendly manner
www.epdk.gov..tr
10th Anniversary
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EMRA
Market Model
Market Indicators
Conclusion
www.epdk.org..tr
Electricity Market Structure
10th Anniversary
Regulated Activities
Transmission
Distribution
Competitive Activities
Retail Sale
Generation
Retail
Market
Wholesale
Market
Captive
Consumers
Eligible
Consumers
After Full Competition
www.epdk.gov.tr
Old Structure vs. New Market Model
Subject
Old Structure
New Structure
Structure
Monopolistic
Competitive
Tariff structure
Not cost-reflective
Cost-reflective
Market entrance
Bidding / submission of
feasibility studies
Licensing
Regulation
By the Ministry and related By the independent
organizations
regulator - EMRA
Role of state
Investment & Operation &
Auditing
Auditing
Market risks borne by
The State
Market participants
Private participation
BOO, BOT and TOOR with
state guarantees
Privatization and new
companies
Approach to Wholesale Markets
10th Anniversary
VOB:
Turkish
Derivatives
Exchange
PMUM:
Market
Financial
Settlement
Centre
Balancing Market
Exchange
Spot Market
Ref: Challenges in Pricing of Electricity Risk, Juri Hinz
Futures Market
OTC Market
10th Anniversary
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
www.epdk.org..tr
Turkish Electricity Market
10th Anniversary
Breakdown of Installed Capacity
(as of Sept.30)
51,076 MW
Wind
3,1%
Others
0,4%
Oil Products
3,4%
Domestic Coal
16,9%
Hydro
33,1%
Breakdown of Electricity Generation
(Last 12 Months - as of Sept.30)
Imported Coal
6,4%
Wind
1,9%
Others
0,5%
222.1 TWh
Oil Products
1,9%
Domestic Coal
18,4%
Hydro
22,9%
Gas
36,6%
Imported Coal
9,3%
Gas
45,2%
www.epdk.gov.tr
Turkish Electricity Market
10th Anniversary
kWh/person
GDP per capita & Electricity consumption per capita
$/person
www.epdk.gov..tr
www.epdk.gov.tr
Transmission Network & Interconnections
10th Anniversary
2 500 MVA
BULGARİSTAN
DIMODICHEV
290 MVA
BLACKSEA
SİNOP
HABİPLER
ÇAYLI
TES
BABAES
SAMSU
TES
AKFEN
Kİ
HAMİTAB
N TES
ALİBEYK
AT
CENGİZSANÖY
A.ALANI
İKİTEL
BOYABAT
ALTINKAY
AMASR
SEL SAMSU
Lİ
Y.TEP
A
A
TES N DGKÇ
D.PAŞA
KARAB
FILIPP
BEYKOZPAŞAKÖ
E
KAPTAN
EREĞLİ
BORAS
I
ÜK
Z.KÖY
ÇARŞAMBA
Y
OSMANCA
CO
ÇANKIRI
UNIMAR AMBAR
ÜMRANİ
X
ADALI
YE TEPEÖR
İÇDAŞ
GEBZE
KARABİGA
BAĞL
EN ADAPAZA
TİREBOLU
ÇAYIRHAN
RI
UM
H.UĞURLU
KAYABAŞI
ORDU-2
SİNCAN HİSAR
GÖKÇEKAYA
İÇDAŞ
K.KALE
BURS
AKINCI
DGKÇ
GÖLB
A
BALIKESİR
ÇAN
KARGI TEMELLİ
SİVAS
TUNÇBİLEK
AŞI
İÇANADO
DEÇEKO
KANGAL
LU DGKÇ
SOMA
SEYİTÖMER
KAYSERİ
GÜRSÖĞÜT
BATU
M
HO
PA
1 500 MVA
Turkish power
system was
synchronized
with the
interconnected
power systems
of Continental
Europe
(ENTSO-E)
GÜRCİSTAN
570
GUMRI MVA
BORÇK
A
DERİNE
ARTVİN
R
ARKUN
KALKANDERE
KARS
İAKSU
YUSUFE
Lİ
IĞD
IR
AĞRI
ÖZLÜCE
790KHOY
MVA
TATVAN
İRAN
KARAKAYA
HİLVAN
KONYA
DİYARBAKIR
DENİZLİ
AYDIN
YENİKÖ
Y
BAZARGAN
VAN
YEŞİLHİSAR
IŞIKLAR
UZUNDERE
BABEK
D.BEYAZIT
ERZURUM
ELBİSTAN
MANİSA
YEDİGÖZE
KAVŞAK
SEYDİŞEHİR
YATAĞAN
KEMERKÖY
ADANA
OYMAPINAR
ERZİN
G.ANTEP
BİRECİK
AKS
A
VARSAK
MERSİN
ILISU
SİLOPİ TESDOĞANLI
HAKKARİ
ÇUKURCA
PS3
Ş.URFA
ERMENEKKAYRAKTEPE
ÇETİN
BATMAN
ATATÜRK
ANDIRIN
260 MVA
HORASAN
KEBAN
KOCATEPE
ALİAĞA
ERMENİST
AN
KIZILTEPE
CİZRE
ZAKHO
KESEK
İSDEMİR
İSKENDERUN
IRAK
410 MVA
TEİAŞ-APK 2008
TS (PLANLANAN)
HATAY
HALEP
1 000 MVA
MEDITERRANEAN
SURİYE
TS (MEVCUT)
HES (PLANLANAN)
HES (MEVCUT)
TL (MEVCUT)
TL (PLANLANAN)
220 kV EİH
154 kV EİH
The parallel operation within the Continental European Synchronous Area
will increase the quality and security of the electricity supply in Turkey, and
is foreseen to eventually provide access to the European Electricity Market.
www.epdk.gov.tr
Growing Electricity Sector
10th Anniversary
Capacity Build-up
60.000
D. Coal
Imp.Coal
Oil
Gas
Hydro
Wind
O. Renew
50.000
MW
40.000
30.000
20.000
10.000
0
2001
2002
2003
•Installed Capacity
•28 332 MW in 2001
•49 523 MW in 2010
2004
2005
2006
2007
2008
2009
2010
•Breakdown of added capacity
•27% renewables
•35% renewables + domestic
sources
Growing Electricity Sector
10th Anniversary
Electricity Generation
250.000
D. Coal
Imp.Coal
Oil
Gas
Hydro
Wind
O. Renew
200.000
GWh
150.000
100.000
50.000
0
2001
2002
2003
2004
•Generation increased 71% between
2001 and 2010
2005
2006
2007
2008
2009
2010
Breakdown of generation increase
•28% renewables
•30% renewables + domestic
sources
www.epdk.gov.tr
Developing Electricity Market
10th Anniversary
•Market is
functioning
along its
dynamics
•Market is
continuous
ly enlarging
Retail Market Opening
80
9.000
7.800
7.700
10000
6.000
3.000
70
75
1.200
60
1000
63
480
50
49
100
40
100
39
30
30
28
20
41
30
32
10
23
10
0
1
2003
2004
2005
2006
2007
Eligibility Threshold (MWh)
2008
2009
Market Opening Degree (%)
2010
2011
Pace of Liberalization
10th Anniversary
Share of Producer Groups in Meeting Demand
60,0%
July 2011
50,0%
40,0%
30,0%
20,0%
10,0%
Public
Contracted
IPP
- 24 -
Sept.2011
2010
2009
2008
2007
2006
2005
2004
0,0%
Electricity Demand Growth
10th Anniversary
20,0%
Demand Growth Rate
High
15,0%
Low
Generic
Actual
%
10,0%
5,0%
0,0%
1971
1976
1981
1986
1991
1996
2001
2006
2011
2016
2021
2026
2010
2015
2020
2025
706.279
735.291
529.544
548.474
622.910
378.013
405.515
433.809
294.357
295.953
299.768
209.891
886.885
GWh
-5,0%
2030
www.epdk.gov.tr
10th Anniversary
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
www.epdk.org..tr
10th Anniversary
Why Shall Invest inTurkish Energy Market ?
 Sound legal framework (from constitutional level to
secondary legislation level),
 Reliable member of international community,
 High and rapid growth in demand,
 Compliance with the European Acquis,
 Competitive, stable, financially reliable and transparent
business environment,
 Non-discriminatory
approach
guaranteed
by
an
independent regulator,
 Good governance principles,
 Cost-reflective tariff system.
10th Anniversary
Conclusion
 Turkey pursues its goal of market liberalization in
energy sector enthusiastically,
 Achievements made electricity sector is more
than satisfactory vis-à-vis the EU directives.
 Regional cooperation and integration regards to
the energy sector and participation in the energyrelated international institutions are among the
highest-priority of Turkish policymakers.
 M&A is a key opportunity area in Turkish power
market.
Thank you…
Q&A
10th Anniversary