Baris Sanli Deputy Director General for Energy Affairs Ministry of Energy Republic of Turkey

1. PRICES, CONSUMPTION, and POLICIES
BARıŞ SANLı
DEPUTY DIRECTOR GENERAL FOR ENERGY AFFAIRS
MINISTRY OF ENERGY AND NATURAL RESOURCES
September
9,
2014
MENA
Knowledge
Sharing
and
How-­‐To
in
Subsidy
Reform:
Regional
Workshop

2. Year 1980 : The prime suspect for electricity cuts is…
TV
broadcasJng
Jme
will
be
limited
to
2.5
or
3
hours
According
to
a
research,
the
Turkish
films
during
the
week
days
are
the
prime
reason
for
excessive
power.
Therefore,
during
the
week
days
,
Turkish
films
2
will
not
be
shown.

3. A Brief History
*
2013
yılı
sonu
değerleri
2014
Resource Installed
Capacity
(MW) Share
(%) Genera?on
(TWh)
Coal
Hydro
Share in
Genera?on (%)
NaturalGas 25,538
38
104,8
44
Hydro 23,299
34
59,2
25
Lignite
8,566
13
30.0
13
Imported
Coal 4,862
7
31.4
13
Renewable 3,819
6
8.8
4
Other 1,354
2
5,1
2
Total 67,431
100
239,3
100
2002
Resource Installed
Capacity
(MW)
Share
(%)
Genera?on
(TWh)
Share in
Genera?on
(%)
NaturalGas 9.702 31 52,5
41
Hydro 12.241 38 33,7
26
Lignite
6.959
22
28,0
22
Imported
Coal 480 1 4,1
3
Renewable 33.9 0 0,2
0
Other 2.761 8 10,9
8
Total 31.846 100 129,4
100
3
Natural
Gas
2001:
Electricity
State
Periods
Market
Law

4. Turkish policy makers tried several models
• TEK
(Turkish
version
of
EDF)
• Chronic
financial
problems,
long
construcJon
Jmes,
inefficient
operaJon
• BO/BOT
(Özal
model
Built-­‐Own/Built-­‐Own-­‐Transfer)
• High
tariffs
(accelerated
returns)
• ToOR
for
exisJng
plants
• Electricity
Market
Model
in
2001
• Eliminate
cross
subsidies
• Transparent
price
formaJon
• But
you
have
lots
of
contracts
in
hand
with
purchasing
guarantees?

5. How to understand «Market» *
• Market
is
not
something
to
believe
in
• An
insJtuJon
seperaJng
poliJcs
and
economics
increasing
visibility
for
long
term
investments
(like
electricity
investments)
• Turkish
electricity
market
law
(4628
and
now
6446
by
2013)
• Clearly
defines
procedures
to
enter
market
(No
Ministry)
• Procedures
are
Jme
limited
and
need
technical
reasons
to
reject
• An
independent
Commission
-­‐>
EMRA/EPDK
• Govt
promised
not
make
any
new
generaJon
investments
and
leave
it
to
private
sector
*
My
interpretaJon

6. When you have lots of hydro, prepare for drought
• In
2007,
there
was
a
drought,
hydro
levels
were
not
good
• The
thej
raJos
were
high
• Need
to
save
electricity
for
the
summer
• Should
Govt
make
investment????
A
interesEng
idea
to
distribute
(free
of
charge)
Energy
Efficient
Light
Bulb
to
high
theM
regions.
They
were
given
to
school
kids
accompanying
a
brief
educaEon
for
benefits
for
environment

7. And……..
• They
broke
it
(may
be
not
much)
• Reason:
Conspiracy
Theory
«There
is
a
bugging
device
in
the
bulb»
Needs
careful
study
of
a
policy
design

8. Back to drawing board –Demand Dynamics
Electricity
consumpJon
• (with
Istanbul)
• (without
Istanbul)

9. Turkish Demand Dynamics
• When
it
is
hot
(+8000
MW)
• When
it
is
cold
(+4000
MW)

10. Demand = Life Ac?vity
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
30,000
27,000
24,000
21,000
18,000
15,000
Friday
Prayers
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
MW
30
Mart
2014
Pazar
23
Mart
2014
Pazar
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
35,000
30,000
25,000
20,000
15,000
10,000
Ramadan
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
MW
15
Ekim
2013
Salı
8
Ekim
2013
Salı
2600
MW
15500
MW
11000
MW
8000
MW
Election
Days
Eids
22,000
1
3
5
7
9
11
13
15
17
19
21
23
MW
11
Temmuz
2013
Perşembe
12
Temmuz
2013
Cuma
20,000
1
3
5
7
9
11
13
15
17
19
21
23
MW
08
Temmuz
2013
Pazartesi
09
Temmuz
2013
Salı
10

11. And Natural Gas Demand
In
15
days,
large
ciJes’
demand
increased
to
3
folds.
250
200
150
100
50
0
Milyon
m3
Elektrik
Konut
Sanayi
Industry
House
Electricity
As
households
increase
consumpJon
there
is
less
gas
available
for
Electricity
&
Industry
In
summer
very
liole
household
consumpJon
11
70
60
50
40
30
20
10
0
mcm
İstanbul
Ankara
Bursa

12. Seeking a Solution

13. Finding the difference between
• «can’t
pay»
and
«won’t
pay»
Registered
Employment
Thej
RaJo

14. Social Aids and The^
Thej
in
City’s
consumpJon
and
PopulaJon
benefiJng
from
Social
aids
Thej
%
Social
aid
%

15. Demand Side – Targe?ng Audiences
• EducaJon
programs
for
Kids
and
Woman
• www.enerjihanim.com
and
City
tours
(for
Ladies)
• www.enerjicocuk.org
for
kids
and
cartoons
• For
Industry
• hop://www.enerjiverimlisanayi.com/
• Govt
targets
for
efficiency
gains
• Missing:
no
eff.
For
agriculture?

16. Prices
• Price
levels
are
important
• No
subsidies
for
building
isolaJon
but…
• Finance
resources
–
Bank
credits
• Run
by
NGO
• Switch
from
Gasoline
to
Diesel
and
smaller
car
• High
taxes
for
>1600cc
• High
taxes
for
fuels
(2.32$/liter
gasoline,
2.06$/liter
diesel)
• You
can
forget
educaJon
programs
but
you
can
not
forget
prices!

17. Supply Side – Market Mechanism & Renewables
• Day
Ahead
Market
based
on
CompeJJon
• It
started
as
a
spot
market
–
A
window
of
opportunity
for
private
investors
to
sell
their
electricity
in
a
market
dominated
by
State
• If
you
can
not
beat
the
market
price,
you
reJre
your
inefficient
plant
• Market
first
opJmized
:
• Shortest
Jme
for
cash
flow
generaJon=>
Nat
Gas
Plants
• As
compeJJon
intensified:
• Most
efficient
=>
Nat
Gas
Plant
• Cheaper
resources
=>
Imported
Coal
• DomesJc
resources
=>
Wind,
hydro

18. Turkish Power Prices 101
18
BO/BOT/ToOR
Renewables
(wind
at
25%
cap)
Merit
Order
Most
Probably
new
NG
plants

19. The Increase of Wind Power
19

20. Prices deflated ? No wind / Wind (3000 MW)
20
Price
:
200
TL/MWh
(69
€)
Price
:
186
TL/MWh
(64
€)
SJll
the
price
is
formed
by
natural
gas
plant
but
what
is
the
efficiency?

21. Conclusion
• Electricity
Market
• Power
• Capacity
• CompeJJon
brings
efficiency
• But
sezng
targets
is
important
• PoliJcs-­‐free
insJtuJons
are
important
• When
asked:
Everyone
is
poor,
but
who
is
at
the
booom?
(StaJsJcal
Analysis)

22. Thank you
Barış
Sanlı
www.barissanli.com