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10th Anniversary
Overview of Turkish Energy
Market
Policies – Projections - Targets
10th Anniversary
www.epdk.org..tr
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EMRA
Market Model
Market Indicators
Conclusion
10th Anniversary
www.epdk.gov.tr
Energy Policy
MissionTo 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.
VisionTo make our country the leader of its region in energy and natural resources.
10th AnniversaryTurkish Energy Sector
174,8
55,3 56,8
30,6
5,6 7,6
262
120,6
96,9
224,6 6,9
0
50
100
150
200
250
300
China Türkiye India World EU OECD
%
Total Demand Increase Rate2000 - 2009
Electricity Gas
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.
High level of import dependency: 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)
10th Anniversary
www.epdk.gov.tr
Economic Growth vs. Electricity Demand
•GDP growth rate was 4.2% and electricity demand growth rate was 8.4% on average between 1970 and 2010
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
%
GDP Growth Rate Demand Growth Rate
-1,5%
6,2%
7,0%
8,5%
8,0%
7,1% 9,3%
9,1%8,6%8,9%9,7%10,1%
6,7%
11,4%
6,5%
4,0%
-3,4%
-6,3%-5,0%
-3,9%
6,3%
4,9%
8,5%
12,1%
7,5%10,0%
11,9%
8,1%8,0%8,5%
7,7%7,6%
9,8%
5,9%
9,7%
6,3%5,7%
8,1%
3,8%3,2%
4,2%
7,0%
2,6%
0,9%
-7,0%
-14,7%
-7,8%
-2,8%
5,9%
12,0%
10,3%
5,2%
9,2%
-20,0%
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
2004 I
2004 II
2004 III
2004 IV
2005 I
2005 II
2005 III
2005 IV
2006 I
2006 II
2006 III
2006 IV
2007 I
2007 II
2007 III
2007 IV
2008 I
2008 II
2008 III
2008 IV
2009 I
2009 II
2009 III
2009 IV
2010 I
2010 II
2010 III
2010 IV
GDP Growth Rate vs. Demand Growth Rate (Quarterly)
Electricity GDP
10th Anniversary
www.epdk.org..tr
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.
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
www.epdk.org..tr
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
10th Anniversary
www.epdk.gov.tr
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.
10th Anniversary
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.
Fundamentals of Electricity Market
10th Anniversary
www.epdk.org..tr
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
10th Anniversary
www.epdk.gov..tr
EPDK/EMRA
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
10th Anniversary
www.epdk.org..tr
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EMRA
Market Model
Market Indicators
Conclusion
10th Anniversary
www.epdk.gov.tr
Electricity Market Structure
Captive Consumers
Captive ConsumersGenerationGeneration
Retail SaleRetail Sale
Wholesale
Market
Wholesale
Market
Retail MarketRetail
Market
Eligible Consumers
Eligible Consumers
TransmissionTransmission DistributionDistribution
Regulated Activities
Competitive Activities
After Full Competition
Old Structure vs. New Market Model
Subject Old Structure New Structure
Structure Monopolistic Competitive
Tariff structure Not cost-reflective Cost-reflective
Market entranceBidding / submission of feasibility studies
Licensing
Regulation By the Ministry and related organizations
By the independent regulator - EMRA
Role of stateInvestment & Operation & Auditing
Auditing
Market risks borne by The State Market participants
Private participationBOO, BOT and TOOR with state guarantees
Privatization and new companies
10th Anniversary
Balancing MarketBalancing Market OTC MarketOTC MarketSpot MarketSpot Market Futures MarketFutures Market
ExchangeExchange
Ref: Challenges in Pricing of Electricity Risk, Juri Hinz
PMUM: Market Financial Settlement Centre
VOB:Turkish Derivatives Exchange
Approach to Wholesale Markets
10th Anniversary
www.epdk.org..tr
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
10th Anniversary
www.epdk.gov.tr
Oil Products3,4%
Domestic Coal16,9%
Imported Coal6,4%
Gas36,6%
Hydro33,1%
Wind3,1%
Others0,4%
Breakdown of Installed Capacity(as of Sept.30)
51,076 MW
Oil Products1,9%
Domestic Coal18,4%
Imported Coal9,3%
Gas45,2%
Hydro22,9%
Wind1,9%
Others0,5%
Breakdown of Electricity Generation(Last 12 Months - as of Sept.30)
222.1 TWh
Turkish Electricity Market
10th Anniversary
www.epdk.gov..trwww.epdk.gov.tr
Turkish Electricity MarketkW
h/p
ers
on
$/person
GDP per capita & Electricity consumption per capita
10th Anniversary
www.epdk.gov.trwww.epdk.gov.tr
Transmission Network & Interconnections
BLACKSEA
MEDITERRANEAN
ALTINKAYA
EREĞLİ
AMBARLI
BULGARİSTAN
FILIPPI
H.UĞURLUKAYABAŞI
ÇANKIRI
TİREBOLU
BORÇKA
GÜRCİSTANBATUM
ERMENİSTAN
GUMRI
BALIKESİR
SOMA
ALİAĞA
DENİZLİ
YATAĞAN
KEMERKÖYOYMAPINAR
SEYDİŞEHİR
KONYA
ADANAERZİN
G.ANTEP
ANDIRIN
ELBİSTAN
KANGAL
YEŞİLHİSAR
KAYSERİ
ÇAYIRHAN
GÖLBAŞI
KEBAN
KARAKAYA
ATATÜRK
DİYARBAKIR
Ş.URFA
BATMAN
HAKKARİ
KARS
ÖZLÜCEERZURUM
HORASAN
IĞDIR
D.BEYAZIT
DIMODICHEV
SURİYE
DERİNER
İSKENDERUN
İRAN
IRAK
HALEP
PS3
ZAKHO
KESEK
KHOY
BAZARGAN
BABEK
KALKANDERE
KOCATEPE
TEİAŞ-APK 2008
220 kV EİH154 kV EİH
HES (PLANLANAN)
HES (MEVCUT)
TS (MEVCUT)
TL (MEVCUT) TL (PLANLANAN)
TS (PLANLANAN)
Y.TEPE
ALİBEYKÖY
TUNÇBİLEK
D.PAŞA
KARABİGA
ADA-GEBZE
PAŞAKÖY OSMANCA
GÖKÇEKAYA
TEMELLİ
SİNCAN
BABAESKİHAMİTAB
AT
ÜMRANİYE
BURSA
AYDIN
YENİKÖY BİRECİK
SEYİTÖMER
IŞIKLAR
ADAPAZARI
YUN
ANİS
TAN
KIZILTEPE
AĞRI
Z.KÖY
TEPEÖREN
UNIMAR
HİLVAN
ILISUDOĞANLI
ÇUKURCA
CİZRE
VAN
ERMENEK
MERSİN
HATAY
İKİTELLİ
A.ALANI
KAPTAN
UZUNDERE
HİSAR
GÜRSÖĞÜT
KARGI SİVASDEÇEKO
YUSUFELİ
KAVŞAK
İSDEMİR
BOYABATAMASRAKARABÜK
X
BEYKOZÇARŞAMBA
HOPA
VARSAK
MANİSA
HABİPLER
SAMSUN DGKÇBORAS
CO
SAN-SEL TES
SAMSUN TES
CENGİZ
SİNOP TES
AKFEN
ÇAYLI TES
ÇAN
İÇDAŞ
İÇDAŞ
AKSA
SİLOPİ TES
K.KALE DGKÇ
İÇANADOLU DGKÇ
BAĞLUM
KAYRAKTEPE
YEDİGÖZE
İAKSU
ARKUN
AKINCI
ORDU-2
TATVAN
ÇETİN
ARTVİN
2 500 MVA290 MVA
570 MVA
260 MVA
790 MVA
1 000 MVA
1 500 MVA
Turkish power system was synchronized with the interconnected power systems of Continental Europe (ENTSO-E)
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.
410 MVA
10th Anniversary Growing Electricity Sector
•Installed Capacity•28 332 MW in 2001•49 523 MW in 2010
0
10.000
20.000
30.000
40.000
50.000
60.000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
MW
Capacity Build-up
D. Coal Imp.Coal Oil Gas Hydro Wind O. Renew
•Breakdown of added capacity•27% renewables•35% renewables + domestic sources
10th Anniversary
www.epdk.gov.tr
0
50.000
100.000
150.000
200.000
250.000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GW
h
Electricity Generation
D. Coal Imp.Coal Oil Gas Hydro Wind O. Renew
•Generation increased 71% between 2001 and 2010
Growing Electricity Sector
Breakdown of generation increase•28% renewables•30% renewables + domestic sources
10th Anniversary
Developing Electricity Market9.000 7.800 7.700
6.000
3.000
1.200
480
100
30
23
2830
32
3941
49
63
75
1
10
100
1000
10000
0
10
20
30
40
50
60
70
80
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail Market Opening
Eligibility Threshold (MWh) Market Opening Degree (%)
•Market is functioning along its dynamics•Market is continuously enlarging
10th Anniversary
Pace of Liberalization
- 24 -
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
2004
2005
2006
2007
2008
2009
2010
Sep
t.20
11
Share of Producer Groups in Meeting Demand
Public Contracted IPP
July 2011
10th Anniversary
www.epdk.gov.tr
Electricity Demand Growth
299.
768
433.
809 62
2.91
0
886.
885
209.
891
295.
953
405.
515
548.
474 73
5.29
1
294.
357
378.
013
529.
544 70
6.27
9GW
h
2010 2015 20302020 2025
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026
%
Demand Growth Rate
High
Low
Generic
Actual
10th Anniversary
www.epdk.org..tr
Agenda
Policy Aspects & Prospects
Main Features of Electricity Market
The Regulator - EPDK
Market Model
Market Indicators
Conclusion
10th AnniversaryWhy 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
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 energy-related international institutions are among the highest-priority of Turkish policymakers.
M&A is a key opportunity area in Turkish power market.
Conclusion
10th Anniversary
Thank you…Q&A