Turkey: Regulations In The New Turkish Electricity Market Law Regarding The Organised Wholesale Power Markets

Last Updated: 29 May 2013
Article by Irmak Bademli

The presence of effective spot and derivatives markets is very important for new power-generation investments as well as the optimisation of existing generation capacity. These markets provide investors with the price signals and financial products they need for feasibility studies and risk management. In the past few years, large utility companies like RWE have been stating that energy market liberalisation and the establishment of an Energy Exchange would be key for them to make new investments in Turkey. At PwC we prepared a study that quantifies the effect of energy market liberalisation on the Turkish economy and concluded that liberalisation will contribute considerably to growth and employment.

Efforts for the establishment of an Energy Exchange have finally produced concrete results. The new Electricity Market Law No. 6446, published in the Official Gazette on 30.03.2013, has brought a new regulatory framework, under which the organised wholesale power markets will be operated.

Currently the day-ahead market, the balancing power market and the ancillary services market are operated by the Market Financial Settlement Centre under the Turkish Electricity Transmission Company (TEİAŞ). Efforts are underway to establish an intraday market. Future power contracts are being traded in the Turkish Derivatives Exchange, but they do not attract much interest. Investors hold the view that the prices in the day-ahead market do not reflect the real supply-demand balance due to the large share of state-owned utilities in power generation and the fact that natural gas market prices are regulated.

According to the new law, a new Energy Markets Operation Company (EPİAŞ) will be established to operate the day-ahead and intraday markets. The operation of the balancing power market and the ancillary services market will remain with TEİAŞ. EPİAŞ will be responsible for the financial settlement in the markets operated by EPİAŞ and TEİAŞ. Standardized power purchase contracts and derivatives contracts based on power and/or power generation capacity will be traded in markets on the Istanbul Stock Exchange (Borsa İstanbul A.Ş.). The law requires the Energy Market Regulatory Authority (EPDK) to publish a regulation to lay out the working principles of EPİAŞ, taking into consideration the opinion of the Capital Markets Board (SPK). As for the working principles of the markets under Borsa İstanbul, they will be determined in regulations to be published jointly by the EPDK and the SPK. The law also allows EPİAŞ to engage in market activities other than those specified above, including emissions trading.

The law limits the direct and indirect share of state-owned enterprises in EPİAŞ to 15%, but this ratio may be doubled with a Cabinet decision. From this provision, we may conclude that TEİAŞ will get a 15% share in the first instance, followed by the Petroleum Pipeline Co (BOTAŞ) once a natural gas market is established. Borsa İstanbul, private energy and finance companies and foreign exchanges are also likely to become shareholders to EPİAŞ. All shareholders, including state-owned enterprises and BOTAŞ shall have representation in the company board. The aim here is a shareholder structure and management resembling the Energy Exchanges in the European Union. Such a management structure for the spot markets is expected to improve the risk management of these markets as well as the operational processes.

Regardless of whether the contracts traded in Borsa İstanbul are settled physically or just financially, their pricing will be affected by the price indices of the spot markets under EPİAŞ. Both the EPDK and the SPK will have to monitor price formation in the spot markets. In this context the transparency of the data, which may affect price formation in EPİAS, is very important.

The law has exempted the papers, which are related to the operations of the organised wholesale electricity markets, from stamp tax. Because organised wholesale power markets defined in the law cover the markets operated by EPİAŞ, TEİAŞ and Borsa İstanbul, over-the-counter (OTC) markets cannot benefit from the stamp tax exemption. The exclusion of the OTC markets from the scope of the Electricity Market Law has disappointed some investors, as the OTC markets provide more flexible financial products to investors than the Exchange.

While efforts towards the establishment of the Energy Exchange are positive, the Energy Exchange is only one of the steps that need to be taken for liberalisation, and it may only succeed if the other steps are taken. In this regard it is important to reduce the state's share in power generation and liberalisation in the natural gas market. The establishment of a natural gas spot market under EPİAŞ and the trade of gas derivatives products would not only benefit players in the natural gas market, but also gas-fired power plants.

As the secondary legislation is being prepared by the EPDK and the SPK in the upcoming days, energy companies will need to make the operational changes necessary to operate in the spot and derivatives markets. Regulatory institutions and energy companies may find foreign examples instructive in their efforts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions