Key Emerging Developments In Turkey’s Electricity Market (From Past To Present)

Oğuzhan AKYENER

1. INTRODUCTION

Although being categorized as a secondary source and comprising huge storage restrictions; existing infrastructures, increasing market capacities and utilization advantages are making electricity become the most important energy type. This trend, with the help of the technological spurts, industrial growth, updated and more binding emission targets and (as a result) increasing utilization rates of renewables doubled the electrification rates.

TESPAM’s long term demand projections argue that at the end of this century, while global energy demand will grow around %91, electricity demand rates will increase up to %175 levels (TESPAM 2019). Moreover, with the 22. century renewables will get the highest share in energy mix and also in the electricity mix (TESPAM 2019). These estimations supply important clues about the future trends in energy dynamics. Firstly, it is obvious that step by step within the spreading decarbonizing concept, (although will take a long time) renewables will become the most important (primary) energy source in the world. In addition, this step will strengthen the position of the electricity in the energy equation.

As the other developed countries, Turkey is also trying to continue to develop its electricity market. Moreover, this continuity targeted to be shaped in a greener concept.

From the governmental monopoly times to the existing more liberal models, Turkish electricity market faced with many changes. Moreover, these changes will continue while the developments become sustainable. Therefore, for a sustainable developing timeline, obviously; it is very important to understand the historical background of the emerging stages of the electricity market of Turkey for more coherent futuristic and applicable policies.

From this point of view, in this study, the key emerging developments in Turkey’s electricity market was tried to be analysed. Through these analysis and existing literature review studies, it was observed that there are different types of classifications trying to explain the development steps of the Turkish electricity market. For example; Tutuş (2006) accepted the first period between 1902-1970, the second period between 1970-1982, third in between 1982-1983, fourth in between 1984-2001 and the fifth as after 2001 (Tutuş 2006). Hepbasli (2005) claimed between 1923-1930 as the foreign investment period, 1930-1950 as nationalism, 1960-1980 as development plans and back to the mother period and after 1980 as being the investment models periods (Hepbasli 2005).

However, there may be additional approaches (which may be more adaptable) for classification and defining the main milestones in the development adventure of the Turkish electricity market. In this regard, undoubtedly an integrated graphical analysis (including the GDP, IPC and other important parameters) and an historical approach (evaluating the main steps followed by taken into considerations the macro political trends and energy-shifting strategies) also have to be considered. Therefore, within the next chapter, initially, the emerging sight of the Turkish electricity market will tried to be evaluated through some graphs prepared. Those graphs give important clues about the alteration points and possible changes in the political and real dynamics. After all the selected graphs evaluated and some important timelines (observed in the due graphs) mentioned, in the third chapter, historical milestones in the electricity market of Turkey will be overviewed. Lastly, in order not to leave any gap during commentating the market structure, current developed sectoral conspectus will be commented.

2. GRAPHICAL ANALYSIS of THE ELECTRICITY MARKET in TURKEY

Graphical analysis is very important for reaching a valuable understanding of the general trends in Turkish electricity market. As can be observed in different graphs (below), nearly all graphical alterations may give important clues about the different facts in the balances.

In this regard, while considering the first graph, where the data is taken from TEİAŞ (2021), it can be understood that;

• Installed power capacity (IPC) of Turkey was very low up to 1980’s. This means the electrification and the industrialization levels were also low. After 1983’s, an important incremental rate in the power capacity can be observed.
• Thermal plants have the highest capacity and hydro is the second. They were nearly the same in 1990’s but after that period, thermal has gained the leadership.
• Solar, wind and geothermal power plants although started to be utilized after 1980’s, higher incremental rates were observed after 2010’s.

Note: All IPC values are given in mW’s.

Graph 1: Installed Electricity Capacities and Sources in Turkey (TEİAŞ 2021) 

All these steps gives important clues about the altering governmental strategies and the results in the milestones of the electricity market of Turkey. Which means that 1980’s, 1990’s and 2010’s have deeply to be evaluated.

Nevertheless, in order to be able have a deeper understanding about the low energy consuming era, 1913 to 1980 IPC data was studied, as in the graph 2.

According to the graph 2, we can comprehend that, up to 1954’s the (nearly the only) main electricity supply source was thermal plants. After that time, government focused on for also developing its own hydro potential for electricity production. At the same time, it is expected that the demand is increasing and thermal investments were continued to be developed. That is to say, 1954’s is also important.

Graph 2: Thermal and Hydro Installed Power Capacities in Turkey from 1913 to 1980 (TEİAŞ 2021)

After evaluating the pre-1980 period, graph 3 will help to have a more detailed focus on these 3 different types of resources.  As can be observed, thermal potential increase started through 2001’s and the gap between the hydro escalated. After 2003, incremental rate is mostly stabilized in a lower level by comparing with the previous 2 years. Hydro was on increase after 2010’s and renewables gained acceleration after 2014’s. Videlicet, these dates also have to be analysed in detail.

Graph 3: Installed Power Capacities by Sources in Turkey from 2001 to 2020 (TEİAŞ 2021)

Next graph shows the GDP and IPC comparison. As can be observed, in 1980’s GDP levels were slightly higher than the IPC rates. From 1983 to 2003, the situation was vice versa (although a small shift can be occurred for a short time in 1998’s). After 2003, GDP volumes again got ahead of the IPC levels and gained of. After 2016 GDP rates started to decrease and with 2017 the gap between the GDP and IPC has being continuing to increase.

Graph 4: GDP vs. Installed Power Capacity in Turkey (TEİAŞ 2021), (Worldbank 2021)

Graph 5 gives important and interesting clues about the differing balances in Turkish electricity market. All values in the graph were calculated by dividing the due IPC rates with the GDP amounts.  All IPC intensity breaking points can be accepted as possible important dates to analyse. For example, we know that after 2010’s renewable investment trends, which are usually more costly and smaller in capacity factors by comparing the conventional resources make IPC intensity rates increase.

Graph 5: Installed Power Capacity Intensity in Turkey (mW/10 million $) (TEİAŞ 2021), (Worldbank 2021)

Undoubtedly, effect of population growth is another important item to consider while analysing the balances in electricity markets. In addition to this fact, in the last couple of years Turkey can be accepted as one of the countries receiving the highest levels of refugees. The amount of refuges in the country also effects the demand and dynamics. In this regard, in graph 6, IPC per capita by taking into consideration with immigrants and without immigrants cases are given. As can be noticed, firstly Turkey has being successfully increasing its IPC per capita rate. Incremental rates are going upward in 1983’s, 1987’s, 2002’s and 2008’s. All these dates have to be analysed in this regard. Moreover, after 2017’s refuges obviously cause downward pressure on the balances.

Graph 6: Installed Power Capacity Per Capita Turkey (TEİAŞ 2021), (Worldbank 2021)

Graph 7 gives the distribution of IPC in Turkey by different energy resources. As can be observed, thermal and hydro power plants are the dominant energy resources, where thermal is always the leader. Wind and solar capacities in the last couple of years are also increasing but their percentage in the total side is too small by comparing with the conventional ones.

Graph 7: Turkey’s Installed Power Capacity by Sources (TEİAŞ 2021)

In the next graph, after observing the thermic resources are always the leader (in the graph 7), shares of the single fluid thermic resources are evaluated. As can be understood, up to the 2000’s lignite (mostly domestic resources) was holding the leader pie in the balances. However, natural gas gained the biggest portion with the millennium. In addition to that, after Turkey’s coal import policies also made hard coal volumes to be increased again after 2000’s.

Graph 8: Turkey’s Installed Single Fluid Thermic Power Capacity by Sources (TEİAŞ 2021)

Graph 9 shows the sectoral electricity consumption in Turkey. As can be understood, industry is the biggest consumer sector in the balances. This means; industrial growth directly affect the electricity trends in the macro level.

Graph 9: Distribution of Net Electricity Consumption by Sectors (TUİK 2021)

Graph 10 shows the annual production amounts from different resources. It can be observed that, coal is the primary conventional electricity resource for Turkey. The other older resource is hydro but gas has become the most popular resource after 2000’s. There is an important incremental trend in renewables but in the macro balances, their share is not too high by comparing with the other thermals.

Graph 10: Electricity Production by Sources (TUİK 2021)

Next graph gives the electricity production intensity rate of Turkey, which was calculated as division of electricity production to the GDP. As can be followed, highest levels were reached in 1978’s, 2008’s and 2014’s. In addition, after the latest peak, the intensity rates decreased up to the pre-2000 levels. These clues can be other important points to be checked by analysing the policies.

Graph 11: Electricity Production Intensity in Turkey (mW/10 million $) (TEİAŞ 2021), (Worldbank 2021)

Last graph simulates the industrial production comparison with the installed power capacity of Turkey. As can be appeared, industrial production level increase makes the IPC rates to have higher incremental rates.

Graph 12: Industrial Production vs. Power Capacity (TUİK 2021)

Now, after analysing the process through this historical data, it will be easier to evaluate the different milestones in the electricity industry in Turkey.

3. HISTORICAL OVERVIEW of the TURKISH ELECTRICITY MARKET

By taken into consideration the above graphs and the important historical events taking attention with their results, development periods of the Turkish electricity market were divided into 6 stages. Which are;

• Dating Period (1902 – 1923)
• Beginner Level (1923 – 1932)
• Governmental Focus on the Electricity Issues (1933 – 1962)
• Governmental Structuring and Monopoly Era (1963 – 1982)
• Liberalization and Break of Monopoly (1983 – 2000)
• Controlled Professionalizing (2001 – Continuing)

3.1. DATING PERIOD (1902 – 1923)

Turkey’s electricity acquaintanceship is not so late by comparing with many developed countries in the world. Records (taken from the TEIAS reports) show that, in 1902 as the first electric generator, a small 2 kW capacity water dynamo, applied in Tarsus. Then, in addition to some similar and small applications, mostly in the capital city Istanbul, the first middle scale power plant for lightening purposes installed in Silahtaraga, in 1913 (Hepbasli 2005).

This phase (1902 – 1923) can be accepted as the dating period, where there is not a controlled and a planned governmental action regarding with the electricity policies. In this period, the country used to deal with huge wars, conflicts and invasions. These extraordinary events prevented both of the governments in Ankara and Istanbul to focus on the new energy trends.

3.2. BEGINNER LEVEL (1923 – 1932)

With the victory of Ankara and the foundation of Turkish Republic, gradually Turkey started to be concerned with energy related issues. Initial development policies were professionally planned and from agriculture to main industrial targets, government bear the burden of costs and management.

In those days, hence the industrial demand was not emerged, the new popular energy type; electricity was being used mainly for lightening purposes up to 1930’s. Moreover, in this regard usually small-scale (around or lower than 1 mW) electric generation units were applied in different locations (in big cities). The applicants of these units were mainly international investors, who produce and sell their electricity without any legal limitations.

While coming to the age of Turkish Republic, total installed power capacity in the country was 33 mW, in 1923 (Tutuş 2006). New government of Turkey, after preparing the development targets of the country, started to make research activities and prepare feasibility studies about the possible domestic energy resources to be developed. In addition to these activities, some international investors from different countries invested to supply electricity for the biggest cities of the Republic. For example, MAN and AEG built a diesel generator in Ankara in 1925 (Hepbasli 2005).

The first national electricity company Kayseri ve Civarı Turk Elektrik Inc. was founded in 1925 (Hepbasli 2005), which was also dealing with the middle Anatolia region including the capital city Ankara.

This period, from 1923 to 1932 can be accepted as the beginner level in the electricity market development process.

While coming to the end of 1933, total installed power capacity (IPC) of the country reached to 104 mW levels (TEİAŞ 2021), which was including more than 50 power plants (mainly thermic).

3.3. GOVERNMENTAL FOCUS ON THE ELECTRICITY ISSUES (1933 – 1962)

In 1933, government declared the first 5 year industrial development plan. Within this regard, started to focus on the possible national steps for electricity supply alternatives. Undoubtedly, all targeted industrialization spurts would need a sustainable supply of electricity and only international investment would not be enough to reach the targets. At that time, there were huge problems from resource side to finance, technology to transmission and distribution, legislations to marketing structures. Therefore, government took initiative in all areas of demand. The main targets were;

-analyse the hydro potential of the country and prepare the detailed construction projects (dams) for development of the resources

-explore the mining and coal potential of the country,

-financially aid the municipalities for them to be able to develop their discovered resources for electricity production and then transmission and distribution infrastructures.

Thereby, under the Ministry of Public Works, research activities on the hydro potential of Turkey was started. Then for the integrated exploration activities on coal and mining resources; Etibank and MTA (Maden Teknik Arama) and a more professional electricity market development; EIE (Elektrik İşleri Etüd İdaresi), for financing the municipalities to construct their own electricity infrastructures; İller Bankası; for a successful water management and hydro investments DSİ (Devlet Su İşleri) were founded.

Within the coordination of these governmental structures, new investment programs were taken into operation and at the end of 1963; total IPC rates reached the 1380 mW levels. Where nearly %30 of these facilities were hydro. From the sight of transmission and distribution issues, municipalities and the existing suppliers (which were also mostly the national structures) were the main players in the market. Nevertheless, there were not enough connection and transmission capacities between the different cities. And in addition, there was a huge hydropower potential waiting to be developed in the eastern side of the country but the main consuming markets were located at the western side. This means, there was an important demand for constructing an interconnection system inside the country.

This fact made the government to go into a new level in the electricity issues. Particularly, from 1933 to 1962; this period can be identified as the governmental focus on the electricity issues period. Moreover, with the foundation of Ministry of Energy and Natural Resources of Turkey (MENR or in Turkish: ETKB) (in 1963) a new period begun.

3.4. GOVERNMENTAL STRUCTURING AND MONOPOLY ERA (1963 – 1982)

MENR is founded as the biggest actor directing the markets, preparing the policies and coordinating the due governmental sub-structures in all energy and natural resources related issues. In addition, after the foundation of MENR, with a new law; TEK (Türkiye Elektrik Kurumu) was found.

In order to eliminate the mixed and dispersed structure in the electricity sector and to ensure the operational integrity, the Turkish Electricity Authority (TEK) was established with the Law No. 1312 enacted in 1970, and the production, transmission, distribution and sales services of electricity throughout the country, except for the duty regions of the privileged companies and the borders of the municipality, were gathered under the body of TEK (TEDAŞ 2021).

In this concept, initially nearly all biggest generation assets were transferred to the ownership and management of TEK (except Cukurova Elektirik, Kepez ve Antalya Havalisi Elektrik Santralleri and existing municipality assets). This means that, TEK became the monopoly structure in the Turkish electricity markets. However, this also led Turkey to be able to manage big volumes of different investment projects.

By the involvement of TEK and MENR into the energy balances, Turkey started to construct huge hydropower projects in the Eastern side of the country and also invested in high capacity-long distance transmission system, which would transfer the Eastern electricity supplies to the Western markets. With these attempts, Turkey has increased its IPC from 1381 mW to 6935 mW in 20 years period (TEİAŞ 2021). Moreover, huge hydropower projects which were activated in this period, made hydro capacity almost to reach the thermal capacity. Videlicet, Turkey’s green and national electricity production capacity reached a higher rate.

Global energy crisis started in 1973’s also effected the Turkey’s energy and electricity market. Increasing prices of oil and oil products made liquid fuelled power plants (which used to have the greatest portion in electricity equation in those days) in a bad situation. This resulted in decrease in thermic power supply volumes, higher costs, temporarily lack of enough supplies and a natural shift to hydro resources. In addition to hydro shift, as the other energy importing countries (globally), Turkey started to think about alternative energy sources such as solar, wind and geothermal.

In 1980, Turkish government was invaded with a military coup and new urgently formed military government prepared and imposed a new constitution to shape the state. Within these chaotic situation, all electricity assets of the existing municipalities were transferred to TEK, with the 2705^th enacted law in 1982 (Gazette 1982).

This period, from 1963 to 1982 can also be defined as the governmental structuring and monopoly era.

3.5. LIBERALIZATION AND BREAK OF MONOPOLY (1983 – 2000)

With the new civil government in Turkey, after the end of 1983, a liberalization period started. In this concept, by also while considering the slightly ongoing global energy crisis, it was accepted that; a strategic advance in both industrial and electrical development targets would not be able to be accomplished with the capabilities of the government. If so, new international investors have to be integrated into the system. As a result of this trend and the argumentations, in 1984, the monopoly of TEK was lifted and the new permission rights were given to the private investors to intervene generation, transmission and distribution of electricity in Turkey (Hepbasli 2005).  Moreover, for these attempts to be successful, to take the attention of the international investors and to have more efficient operating capabilities; some private investment models were started to be studied and applied, such as: build-operate-transfer (BOT), build-own-operate (BOO), auto production (AP) and transfer of operating rights (TOR). However, although the IPC could be increased slightly and some progress had been made, the desired breakthrough could not been achieved. Then, while it was understood that the increasing demand for electricity could not be met completely with the existing policies, as a new popular resource; natural gas power plant investments were supported. At last, to be able to increase the efficiency and make the market gain a more liberal environment, TEK was incorporated in the scope of the privatization in 1993, by the decree of Law No. 513.

With the beginning of 1994, as a result of the studies in 1993, TEK was divided into to two separate state-owned companies, with new names: Turkish Electricity Generation Transmission Co. (TEAS) and Turkish Electricity Distribution Co. (TEDAS) (TEDAŞ 2021).

Up to the end of 2000 existing political trends were followed and IPC was raised from 6935 mW to 27264 mW levels (TEİAŞ 2021).

This period, from 1983 to 2000 can be accepted as the start of liberalization and break of monopoly. After this period, with the new Electricity Market Law, all the dynamics in the electricity industry undergone a great change.

3.6. CONTROLLED PROFESSIONALIZING (2001 – CONTINUING)

With 2001, Electricity Market Law was accepted (Gazette 2001). Through this new law, all the dynamics in the energy markets of Turkey were reshaped and restructured. A more liberal, competitive and transparent marketing system was found.

“This law covers the generation, transmission, distribution, wholesale, retail and respective services of electricity including its import-export and also the rights and responsibilities of all real and legal persons connected with those services and establishment of a Regulatory Body of Electricity Market and its running procedures and principals as well as the procedures to be followed for the privatization of the electricity generation and distribution assets.” (Hepbasli 2005)

As mentioned, within the same law, a new governmental structure Energy Market Regulatory Authority (EPDK) was founded. In addition to natural gas, LPG and oil (and oil products) markets, EPDK was functioned for granting licenses, defining the rights and obligations of legal entities arising from the activities, performing other related transactions; monitoring market performances and establishing performance standards; establishing, developing and implementing secondary legislations; supervision of licensee legal entities; preparation, amendment and enforcement of regulated tariffs; ensuring that the market is treated in accordance with the Electricity Market Law in the electricity market (EPDK 2021).

Moreover, within an additional legal regulation, TEAS was divided into 3 new companies. Which are TEIAS (for transmission issues), EUAS (for electricity production issues) and TETAS (for trading issues) (TEİAŞ Kuruluş ve Tarihçe 2021). Then, in the coming years, some additional assets of EUAS were also prioritized in different models.

The other separated portion of TEK; besides TEDAS (which was acting as the monopole distribution company in Turkey) was effected through these liberalization steps. In order to create a competitive environment in the electricity distribution and wholesale / retail sales sector and to make necessary reforms, it was decided to privatize electricity distribution services by restructuring the public electricity enterprises based on 21 distribution regions in 2004. And as of 31.08.2013, the share transfer agreements between the due new distributor companies and TEDAS were completed (TEDAŞ 2021).

These attempts led Turkey to be able find additional private investment potential for the new projects and jointly with the regained political stability and updated US global money policies, as well as the GDP values, Turkey’s IPC has also started to be strengthening.

However, no wonder IPC levels were not be the only target for the governments’ electricity policies. As mentioned in the Electricity Market Law, the main target was including the target of supplying adequate, high quality, sustainable, low-costly, environmentally friendly electricity to the consumers. In addition to this, this target was planned to be accomplished in a liberalized, regulated, open, transparent and a sustainable marketing conditions. To reach these additional targets, different attempts were followed by the ongoing governments.

In this regard, as can be understood from the above analysis, within the light of EU regulations, Turkey initially tried to found a more liberalized and competitive market structure and for this;

• Gradually reduced its market share,
• Tried to vertically separate the huge governmental companies
• Moreover, tried to organize wholesale and retail based marketing systems for the trading activities.

Through the same targets, Turkey supported private investments in renewable resources. In this direction a special mechanism called as “YEKDEM (or RESSUM)” (Renewable Energy Resources Support Mechanism) was found in 2011. With YEKDEM, government was planning:

• To increase the private investment in green and renewable resources,
• To decrease the carbon emission levels in the total electricity production,
• To import less amounts of hydrocarbon resources,
• To increase the number of players in electricity markets.

Within this mechanism, all licensed projects directly and all accepted unlicensed projects indirectly (through the supplier companies in due regions) supported by the government. This support mostly was the fixed price purchase guarantee for a specific period (usually for 10 years). In addition to this, there were additional contributions for the facilities, where the domestic products had applied (Gazette 2013).

In the same scope, in order to be able take the intention of greater investors and add higher capacities to the system, government prepared special tenders of large-scale renewable energy investment projects, which are called as “YEKA” (Renewable Energy Resource Area). In YEKA projects, government sells the completed feasibility studies of some previously determined potential treasury lands within some obligations. These obligations are usually to make the investment and to construct the due facilities (with some portion of domestically produced equipment) on the declared land for renewable electricity production. These attempts also helped to increase the renewable potential of the country.

With the purpose of increasing the competitiveness and transparency of the electricity markets, in 2015 EPIAS was found. EPIAS (Energy Markets Operations Inc.) has gained the market operating license issued by EPDK and helped the market structure to be more transparent and efficient. EPIAS’s function was used to be operated by (slightly with some functions) EPDK and (mostly) TEIAS previously but this situation was damaging the competitiveness of the system.

EPIAS is the main third party operator in the Turkish electricity market by functioning:

• Monitoring the collateral status of market participants, their payments and informing market participants,
• Performing registration procedures and operating an open and competitive trading environment,
• Ensuring the formation of reference prices resulting from offers, buying and selling transactions offered by market participants (PTF, SMF, etc.),
• Performing monthly settlement, imbalance, financial settlement transactions,
• Transparent publication of market data,
• Determination of market operation tariffs (EPİAŞ | Enerji Piyasaları İşletme A.Ş. 2021).

Lastly, in 2021 after these important spurts could applied in the electricity market of Turkey, by accepting the Paris Climate Agreement, Turkey has started to deeply focus on the strategies to decrease the CO2 emission levels throughout the country. In addition to this, to be able to manage the possible future trade risks with EU countries (due to prospectively binding green trade deal concept), Turkey has started to supply some portion of its electricity with the green certificates by 2022.

After analysing the historical overview of the Turkish electricity market, in the next chapter a short sectoral evaluation will be hold.

4. SECTORAL OVERVIEW

As mentioned above, within its electricity market, Turkey compulsorily started with a state dominated structure and then, except the transmission side, transformed into a more private oriented, competitive model. May be for also the distribution sector, it is not coherent to say there is an efficient competitive model, but for the sales and the supply sides, markets reached an important level of competitiveness.

While having a deeper sectoral look to the updated Turkish electricity system, through the definitions in the Electricity Market Law, it is observed that; main activities are generation, transmission, distribution, wholesale, retail, market operation, import and export (Turgut 2015). However, practically we can divide these activities into 4 main items, as; production, transmission, distribution and sales. In all of these areas, to operate any activity in the electricity market of Turkey, the entrepreneurs have to get the due demanded licenses from EPDK. Current available license types are: distribution, transmission, OIZ (organized industrial zone) transmission, OIZ generation, pre-license, market operation, supply and generation (Epdk 2021).

4.1. PRODUCTION

In production side, electricity generation can be divided into 2 categories, which are licensed and unlicensed. At the end of 2020; there were totally 1782 licensed and 321 pre-licensed electricity generators in the country, with a total IPC (assigned to their licenses) of 121 gWe (111 gWe in licensed + 10  gWe in pre-licensed) (Epdk 2021). However, the actual total IPC was 95,8 gW and the peak demand reached was 49,8 gW (Epdk 2021). Around 89 gW of these capacity was licensed and the remaining was unlicensed. Total production in 2020 was around 305 tWh (around 11tWh is coming from the unlicensed production) and %25,6 of this volume was coming from hydraulics, %22,7 from natural gas, %12,5 from domestic lignite, %20,5 from imported coal, %8,1 from wind, %3,7 from solar and %3,3 from geothermal power plants (Epdk 2021). These values show that; coal totally has the biggest portion with around % 34,1 (by also including the hard coal). Second leader in the electricity pie is hydraulic and third is natural gas. %42,5 was from renewables (including hydraulic, wind, solar, geothermal and biomass) and the total domestic portion is %56,1.

%91,71 percent of the unlicensed portion belongs to solar power plants and there is also an incrementing trend in the unlicensed wind and biomass volumes (as in the solar sector) (Epdk 2021).

Only %18,9 of the licensed electricity production was belong to EUAS power plants. Which means the privacy levels are too high. From the installed capacity side, EUAS has the %24 of the total volumes.

Lastly, for keeping the frequency under control, there are two mechanisms organized by TEIAS and EPIAS, which are primary frequency control (PFC) and secondary frequency control (SFC).

“PFC brings the system frequency to a new equilibrium point by automatically increasing or decreasing the unit active power with the speed regulator in response to the decrease or rise of the system frequency. PFC reserve is obtained from production facilities determined to be capable of providing PFC services as a result of PFC performance tests in Electricity Network Regulation.

SFC brings the system frequency to the nominal value and to the programmed value of the total electrical energy exchange with neighbouring country electricity networks by increasing or decreasing the active power output of the production facilities participating in the SFC service by the signals sent automatically from the National Load Dispatch Center. SFC reserve is provided by the production facilities which are determined to be capable of providing SFC services as a result of the SFC performance tests in the Electricity Network Regulation. Pursuant to the Electricity Market Ancillary Services Regulation published on the Official Gazette dated 26 November 2017 and numbered 30252, participation in PFC and SFC services has ceased to be compulsory and PFC and SFC reserves have been procured on a voluntary basis. Currently, between 200-300 MW PFC reserve and 700-1100 MW SFC reserve are kept at different times of the day.” (Epdk 2021)

4.2. TRANSMISSION

As mentioned above, there is a continuing monopoly in the transmission sector of electricity. TEIAS is responsible for all kinds of high voltage transmission issues. From operating to supplies, balancing to investments TEIAS hold an important role in the market. This situation may seem as a negative point from the sight of liberal rules, however, for the sustainability and balancing points; role of TEIAS is very important and this governmental company accomplishes good work.

In addition to this, while accepting transmission system is mainly formed of transformer centres and transmission lines, 491 of the total 1214 transformer centres belong to the private investors. Which means there is already some portion of privatization in the transmission sector. On the other hand all transmission lines belongs to TEIAS (Epdk 2021).

By the end of 2020, there were 1.214 transformer centres in the transmission system of TEIAS and the length of the transmission lines was around 71.098 km, while the total transmission system loss rate was only 1,9% (Epdk 2021).

Regarding with the rate of tariffs, system usage and operation tariffs applied by TEIAS for 14 different determined transmission regions. Tariff rates are not too high while comparing the electricity prices in the markets.

4.3. DISTRIBUTION

Distribution, like the transmission, has the nature of a monopoly (TATLI 2018). However, in distribution sector, this monopoly effect was divided to 21 companies for 21 different regions. In addition, all of those companies are private and not state oriented.

By the end of 2020, the number of consumers using the distribution system was 46,07 million and the regions with the highest number of consumers were the Boğaziçi with 5,2 million and the Başkent with 4,4 million. The highest loss rates were seen in Dicle with 46,3%, Vangölü with 44,6% and Aras with 20,6%, which are all located in the eastern side of Turkey (Epdk 2021).

4.4. SALES and MARKETING CONDITIONS

In order to be able to found a transparent, competitive and internationally integrated market structure, in 2006 transformation of electricity market from a single buyer-single seller model to a more liberal and competitive model was accomplished. Then, before the end of 2009, Day-Ahead Market (DAM) planning system was activated. Up to the end of 2011, DAM system could be matured and took its present structure. Within the updated marketing structure, all registered participants reached the ability to create portfolios and provide guarantee to the market operator. Up to the foundation of EPIAS, TEIAS operated this structure. And with after EPIAS, in accordance with the proposals offered by the market participants in the DAM, all exchange prices and the purchase and sales quantities are transparently have started to be announced (Epdk 2021).

Now, it can be mentioned that, there is a successful and mostly competitive wholesale electricity market in Turkey, which is operated by EPIAS. In the wholesale market, the prices of the Day-Ahead Market (DAM), the Intra-Day Market (IDM) and the Balancing Power Market (BPM) are presented with the volumes and the orders given.

BPM is the other strategic structure for the security and the sustainability of the electricity market. In addition, BPM is operated and guaranteed by TEIAS.

In 2015, IDM also was taken into operation. IDM increased the abilities to provide real-time trading opportunities and offer market participants the opportunity to manage short-term portfolios (Epdk 2021).

Note: “The structure of the Turkish electricity market is based on bilateral agreements and other organized markets are designed to complement the market. In this framework, most of the energy traded in the market is traded through bilateral agreements. Bilateral agreements are made freely between market participants and are not regulated. However, bilateral agreements signed between EUAS (annulled TEIAS) and commissioned supply companies are the majority of the existing bilateral agreement volume in the framework of transitional contracts. Additionally, distribution companies have energy purchases from EUAS (annulled TEIAS) for losses and general lighting purposes under bilateral agreements.” (Epdk 2021)

From this view, while coming the total invoiced sales in 2020 in the Turkish electricity market, the volume was around 233 tWh (Epdk 2021), which is around %76 of the total production. %24 of this total invoiced sales sold to consumers at the transmission voltage level and the remaining portion was at the distribution voltage level (Epdk 2021).

5. CONCLUSION

Turkey has an interesting and a successful electricity story starting with the beginning of 20. Century and coming up to date.

Undoubtedly, having a deeper inside into the details of the milestones of the historical development phases of electricity market, will help for all concerned people to be able make more coherent analysis for the future expectations and policies for Turkey.

In this paper, development stages of the Turkish electricity market were studied initially through graphical analysis and then historical important events were interpreted in a chronological manner. After these evaluations, current structure of the market was tried to be commented through a sectoral categorization.

Development periods of the Turkish electricity market can be divided into 6 stages. Which are;

• Dating Period (1902 – 1923)
• Beginner Level (1923 – 1932)
• Governmental Focus on the Electricity Issues (1933 – 1962)
• Governmental Structuring and Monopoly Era (1963 – 1982)
• Liberalization and Break of Monopoly (1983 – 2000)
• Controlled Professionalizing (2001 – Continuing).

Within the last stage, with the beginning of millennium, Turkey could take big strides to gain a chance to have a transparent, competitive and internationally integrated market structure. In this regard, acceptance of Electricity Market Law, foundation of EPDK, restructuring the governmental monopolies, EPIAS and other related attempts have increased the efficiency and developed the electricity industry in Turkey in all dimensions.

These evaluated trends show that, within these structural sight and marketing background, Turkey will be able to continue to develop its capabilities in the electricity issues. Under-construction nuclear projects, renewable potential, Black Sea gas discovery will be the other important leverage points in this view.

In addition to these, the latest green electricity certification attempts are also very important issues that will positively affect the Turkey’s future trade policies with EU countries.

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