The Energy Regulation and Markets Review - Stikeman Elliott

Turkey
a non-discriminatory basis, which is also done in an environmentally friendly manner.
Furthermore, TEİAŞ is entitled to take any necessary measures and actions should there
be a threat to the reliability and safety of the transmission grid.
IV
ENERGY MARKETS
The EML provides the framework for the establishment of a market relying primarily
on physical bilateral contracts between market participants and the balancing (dayahead
and real-time) and settlement mechanism. The Electricity Market Balancing and
Settlement Regulation (‘the BSR’) describes the market parameters. Under the BSR, the
balancing of the system is conducted by TEİAŞ under its National Load and Dispatch
Centre. TEİAŞ also has the Market Financial Settlement Centre, which handles monetary
transactions. The National Load and Dispatch Centre estimates hourly consumption
and this estimate is used as a guide for scheduling activities for the next day. Also, it
uses a day-ahead schedule that is based on consumer use and consumption estimates to
schedule how much electricity is needed 24 hours in advance.
Looking at the market’s evolution, the implementation of the market structure has
been in three transitional stages. The first stage took place between 2006 and 2009 and
was characterised by limited price bidding and regulated imbalance prices. The second
stage began in December 2009, when the balancing and settlement market began to
operate with limited and more competitive balancing prices and the day-ahead planning
of dispatch. The last stage has been the actual implementation of the day-ahead market,
which began full operation in December 2011.
In contrast with the balancing market’s main purpose of functioning as a net pool
with only small differences traded in the spot market, the balancing market was used as
a gross pool and a few contracts were signed between independent power producers and
distribution companies. This was due to:
a transitional agreements for distribution companies with purchase prices below
generation costs;
b
c
the creditworthiness of state-owned distribution companies; and
the tight supply-demand dynamics leading to attractive prices in the balancing
market.
In addition to the implementation of the day-ahead market and the progressive
privatisation of the distribution companies and generation assets, competitive bilateral
contract market and prices reflecting the long-run cost of generation are expected.
V
RENEWABLE ENERGY AND CONSERVATION
Part of Turkey’s energy policy is to reduce its dependence on importing foreign energy
sources by relying more on the forms of renewable energy that the country is able to
produce. The Turkish government and the private investment community believe that
Turkey’s geographical and climate conditions are well suited for the continued growth
of this sector with the generation of wind, solar and geothermal power. As such, the
World Bank recently announced in 2011 that it will provide $500 million to help fund
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