Abstract
It is undeniable that electricity is an indispensable element of modern life. In order to provide high-quality electricity services more reliably and at an affordable price, Turkey began to liberalise its electricity market decades ago in parallel with developments in European Union (EU) energy markets. This paper aims to overview the regulation of the wholesale electricity market in Turkey that emerged during the long reform processes, particularly in the last two decades, and to provide some suggestions, especially for capacity remuneration mechanism implemented in Turkey. In terms of structure, after briefly describing the necessity for regulation in liberalised electricity markets, the chapter deals with reforms in the Turkish electricity market. Finally, the chapter examines the existing structure of the Turkish electricity market in general.
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Notes
- 1.
The word ‘unprecedented’ is likely one of the most commonly used words to describe the destruction caused by Covid-19 in the fields of health, economics, education and social psychology.
- 2.
Clair noted in his article about the implications of Covid-19 for the EU wholesale electricity market that the process derived from the Covid-19 pandemic is, first and foremost, a human tragedy (Clair, 2020). Furthermore, in a speech about the economic effects of Covid-19 on YouTube, Gürkaynak (2020) rightly stated that the crisis human beings are currently experiencing is primarily a health crisis and that health should be the first aspect to be addressed. He added that this is supported both morally and economically, since the economic problems will not disappear until the health crisis is eliminated (Gürkaynak, 2020).
- 3.
Liberalisation in electricity markets first began in Chile and, from there, spread globally. Since the historical background of liberalisation in electricity markets around the world is well beyond the scope of this chapter, it is not further analysed here. For further analyses concerning liberalisation reforms in the Chilean electricity market, See, (Raineri, 2006).
- 4.
Italicisation is Rodrik’s.
- 5.
For the sake of clarity, it is appropriate to explain that BO was a new model to enable private sector to participate in the Turkish electricity market. This model was introduced by Law No. 4283 entered into force in 1997. The model was defined as a model that enables private parties to build and operate power plants while keeping the ownership of these plants. According to the Article 1 of this Law, only thermal power plants could be built under this model. Hydroelectric, geothermal, nuclear power plants and other RESs are outside of the scope of this model. (Construction and Operation of Electrical Energy Generation Facilities and Energy Sales in the Build-Operate Model Law No. 4283, 1997).
- 6.
It should be noted here that Turkey has not yet ratified the Paris Agreement.
- 7.
It is beyond the scope of this paper to examine the renewable energy incentive system in detail. Therefore, only a general assessment is provided here.
- 8.
This deadline was extended to 30 June 2021 by a presidential decree published on 18 September 2020 (Presidential Decree No. 2949, 2020).
- 9.
In this regard, the Presidential Decree No. 3453 was published on 30 January 2021 regarding the incentive payments in Turkish Lira to be made for RESs to come into operation from 1 July 2021 to 31 December 2025 (Presidential Decree No. 3453, 2021).
- 10.
For a brief analysis concerning this issue, see (Kıl, 2021).
- 11.
In the literature on CRMs, the term ‘energy-only market’ is more common than the term ‘liberalised electricity market’. The term ‘liberalised electricity market’ is used here rather than ‘energy-only market’ to out of a desire to maintain internal consistency within the paper.
- 12.
There are many CRM designs, including capacity payments, capacity markets, capacity obligations, reliability options and strategic reserves. Since it is far beyond the scope of this paper to individually examine these types of CRMs, such an analysis will not be undertaken here. For a further discussion of the types, working principles, pros and cons of each of these CRMs, see (Şahin, 2018).
- 13.
For a further discussion of why conventional power plants are vital elements of energy transitions due to their flexible nature and why CRMs are critically important in this process, see (Şahin, 2020).
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Şahin, T. (2021). Regulation of the Turkish Wholesale Electricity Market: A General Overview. In: Eroğlu, M., Finger, M. (eds) The Regulation of Turkish Network Industries. Springer, Cham. https://doi.org/10.1007/978-3-030-81720-6_3
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