Turkish Power Market: Investment Opportunities

Transcription

1 Turkish Power Market: Investment Opportunities

2 EMRA The sole regulator of the Turkish electricity, natural gas, LPG and fuel and lubricants markets. The architect of the liberalization and regulation of the Turkish energy market An independent public entity with administrative and financial autonomy established in 2001 Governed by a 9-member board Functions: Issuing secondary legislation Licensing market participants Approving tariffs Monitoring, supervising and auditing markets and market players

3 Objectives of EMRA To establish Financially viable Stable Transparent Non-discriminatory Competitive energy markets for delivery of Adequately Efficiently Continuously At high quality At low cost Environment friendly energy

4 Main Characteristics Source: BP Statistical Review 2014 Rapid growth in demand 20.5% pa in gas & 7% pa in electricity in the past quarter century despite economic crises in 1994, 1998, 2001 & m 3 pa & kwh pa gross electricity consumption per capita High level of import dependency 92.3% in petroleum & 98.8% in gas Relatively high figures for energy intensity 280 koe/1000 USD

5 Electricity Markets: Generation (2013) 7.6 TWh 22 TWh 10 TWh 44 TWh TWh 240 TWh 58.3 TWh 42 TWh 60 TWh Source: BP + Own Data

6 HV Electricity Grid BLACK SEA MEDITERRANEAN ALTINKAYA EREĞLİ AMBARLI BULGARİSTAN FILIPPI H.UĞURLU KAYABAŞI ÇANKIRI TİREBOLU BORÇKA BATUM GUMRI BALIKESİR SOMA ALİAĞA DENİZLİ YATAĞAN KEMERKÖY OYMAPINAR SEYDİŞEHİR KONYA ADANA ERZİN G.ANTEP ANDIRIN ELBİSTAN KANGAL YEŞİLHİSAR KAYSERİ ÇAYIRHAN GÖLBAŞI KEBAN KARAKAYA ATATÜRK DİYARBAKIR Ş.URFA BATMAN HAKKARİ KARS ÖZLÜCE ERZURUM HORASAN IĞDI R D.BEYAZIT DIMODICHEV SURİYE DERİNER İSKENDERUN İRAN IRAK HALEP PS3 ZAKHO KESEK KHOY BAZARGAN BABEK KALKANDERE KOCATEPE Y.TEPE ALİBEYKÖY TUNÇBİLEK D.PAŞA KARABİGA ADA-GEBZE PAŞAKÖY OSMANCA GÖKÇEKAYA TEMELLİ SİNCAN BABAESKİ HAMİTABAT ÜMRANİYE BURSA AYDIN YENİKÖY BİRECİK SEYİTÖMER IŞIKLAR ADAPAZARI KIZILTEPE AĞRI Z.KÖY TEPEÖREN UNIMAR HİLVAN ILISU DOĞANLI ÇUKURCA CİZRE VAN ERMENEK MERSİN HATAY İKİTELLİ A.ALANI KAPTAN UZUNDERE HİSAR GÜRSÖĞÜT KARGI SİVAS DEÇEKO YUSUFELİ KAVŞAK İSDEMİR BOYABAT AMASRA KARABÜK X BEYKOZ ÇARŞAMBA HOP A VARSAK MANİSA HABİPLER SAMSUN DGKÇ BORASCO SAN-SEL TES SAMSUN TES CENGİZ SİNOP TES AKFEN ÇAYLI TES ÇAN İÇDAŞ İÇDAŞ AKSA SİLOPİ TES K.KALE DGKÇ İÇANADOLU DGKÇ BAĞLU M KAYRAKTEPE YEDİGÖZE İAKSU ARKUN AKINCI ORDU-2 TATVAN ÇETİN ARTVİN Turkish power system is synchronized with the ENTSO-E Source: TEIAS

7 Installed Capacity

8 Electricity Demand Average Growth 7.6% Average Growth 5.1% Net Electricity Consumption per Capita EU: kwh TR: kwh Source: Eurostat

9 Billion TL Investment Requirement Firm Energy Reserve Margin (%) 27, Cumulative Greenfield Investment Requirement ,6 21, , , Source: Generation Capacity Projection + Own Data

10 Legal Fundamentals Free market entrance thru licensing. Legal unbundling supplemented by privatization. Regulated TPA regime. Cost-reflecting pricing with a temporary price equalization mechanism. Bilateral contracts market complemented by a residual balancing mechanism. Power Exchange Approach: Intra-Day Market, Day-Ahead Market, Derivatives Market. Static precautions in terms of limiting market share i.e. 20%. Non-discriminatory conduct between domestic and foreign investors. Consistency with the EU Acquis.

11 Licensing Regime An easy licensing approach: Enhanced with Pre-Licensing scheme Freedom of share transfer No regulatory approval for pledge of shares, right of usufruct and assignment of claims Step-in rights: Grant of license to a third party identified by the financer upon a limited or non-recourse project financing

12 Licensing Portfolio (Private) Pre-Licensed: MW Licensed: MW Installed: MW

13 Tariffs Principles Transparency: All criteria and procedures are made public. Stability: Concerned parties face the least possible regulatory uncertainty. Simplicity: In both methodology and tariffs, in so far as possible Non-discrimination: Nondiscrimination among equal parties secured through TPA. Cost-reflectiveness: Costs not directly related to market operations are not included. Cross-subsidies are not allowed. Regulated Tariffs Transmission Distribution Retail Last Resort Sales Price of State-owned Wholesale Company Distribution within IOZ Distribution connection

14 Network Pricing Generation Consumption Region Use of System TL/MW-Year Generation System Operation TL/MW-Year ,94 599, ,52 599, ,56 599, ,28 599, ,14 599, ,67 599, ,50 599, ,88 599, ,91 599, ,57 599, ,91 599, ,03 599, ,63 599, ,01 599,81

15 Electricity Market Model Generation Transmission Wholesale Distribution Retail Concessionaires Eligibles Hydro Assigned Suppliers Portfolio Supplier Captives IPPs

16 Markets in Progress

17 Power Exchange Approach Balancing market Interconnections Derivatives EPIAS TEIAS Day-ahead market Intra-day market Market operation as a separate activity Withdrawal of market operation from TEİAŞ: Enhancing TEİAŞ system operation capabilities Possibility for alternative markets Identification of Istanbul Exchange for derivatives trading Borsa Istanbul Capacity Mechanism

18 Capacity (MW) DAM Price ($/MWh) Renewables FIT thru RESUM Annual participation possibility Annual announcement of available connection capacity reserved for wind & solar Annual measurement data requirement for license application Solar applications during first 5 working days of April Wind applications during last 5 working days of April RESUM Portfolio Hydro Wind Geo Biomass Average DAM Price

19 Licensing fee facilities: Only 10% of pre-licensing & licensing fees (valid for other domestic sources) Exemption to pay annual license fee for 8 years in operation Connection priority Exemption from being a balancing unit License exemption for renewable power plants up to 1 MW capacity. RES Incentives

20 Conditions for Success Well established market design Confidence in proper functioning of the market Attractive increase in demand and the availability of new capacity investment needed to meet demand Availability of adequate negotiable generation margin Wholesale prices that appeal to investors Involvement of financially viable buyers in the market Eligible consumers selecting their own suppliers with competing firms through bilateral contracts

21 Opportunities & Challenges Opportunities Greenfield generation investment requirement due to high demand increase Well designed market rules & continuous monitoring for market build up Increasing trade Promising possibilities for cross-border trade M&A Challenges High demand increase Insufficient smart grid & meter infrastructure Lack of REMIT type rules High and not evenly distributed loss rates

22 Last remarks Turkey pursues its goal of market liberalization in energy sector enthusiastically. The regulatory environment is being designed and established along the path of EU accession. 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. There are substantial opportunities for greenfield investment and privatization opportunities. That is; a good opportunity and a growing market that often times nudges the potential investors domestic and international alike.

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