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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
Year 1980 : The prime suspect for electricity cuts is…
2
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 will not be shown.
A Brief History
* 2013 yılı sonu değerleri
2014
Resource Installed Capacity (MW) Share (%) Genera?on
(TWh) 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
Hydro
Coal
2001: Electricity Market Law State Periods
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?
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
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
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
Back to drawing board –Demand Dynamics
Electricity consumpJon • (with Istanbul)
• (without Istanbul)
Turkish Demand Dynamics
• When it is hot (+8000 MW)
• When it is cold (+4000 MW)
Demand = Life Ac?vity
15,000
18,000
21,000
24,000
27,000
30,000
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 10,000
15,000
20,000
25,000
30,000
35,000
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
24,000
26,000
28,000
30,000
32,000
34,000
36,000
38,000
1 3 5 7 9 11 13 15 17 19 21 23
MW
11 Temmuz 2013 Perşembe 12 Temmuz 2013 Cuma
Friday Prayers
20,000
22,000
24,000
26,000
28,000
30,000
32,000
34,000
36,000
38,000
1 3 5 7 9 11 13 15 17 19 21 23
MW
08 Temmuz 2013 Pazartesi 09 Temmuz 2013 Salı
Ramadan
10
And Natural Gas Demand
0
50
100
150
200
250 Milyon
m3
Elektrik Konut Sanayi
Electricity
House
Industry
As households increase consumpJon there is less gas available for
Electricity & Industry
In summer very liole household consumpJon
In 15 days, large ciJes’ demand increased to 3 folds.
11
0 10 20 30 40 50 60 70
mcm
İstanbul Ankara Bursa
Seeking a Solution
Finding the difference between
• «can’t pay» and «won’t pay»
Registered Employment
Thej RaJo
Social Aids and The^
Thej %
Social aid %
Thej in City’s consumpJon and PopulaJon benefiJng from Social aids
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?
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!
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
Turkish Power Prices 101
18
BO/BOT/ToOR
Renewables (wind at 25% cap)
Merit Order
Most Probably new NG plants
The Increase of Wind Power
19
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?
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)
Thank you Barış Sanlı www.barissanli.com
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