Turkish economic growth that had been going on for more than a
decade have created a strong economy that is based on high demand
for energy. The demand has reached to such a high extend that
energy sector had turned in to one of the most important sectors
that have been contributing to the current account deficit of the
country. Approximately USD$ 60 billion of the current account
deficit is contributed by the energy sector during the last 12
months. In a country which is heavily dependent on energy imports
this is not a surprise.
The Electricity Demand
During the course of the last decade the increase in demand for
electricity have reached an annual rate of 7%. Annual worth of
electricity consumed by Turkey in 2013 has already reached USD$
33.5 billion. The continuing economic growth of the Turkish economy
lead many of the pundits to expect a similar rate of increase in
demand for the next ten years. According to the CEO of one of the
biggest players in the Turkish energy sector, when such
expectations are translated in to numbers it means that Turkey will
need to establish 5.000 megawatts established electricity
production capacity on an annual basis and around USD$ 10 billion
Especially the liberalizations in the Turkish energy market
which had led to a more competitive market increased the number of
M&A's in the sector. 6 different M&A's have taken
place during the year 2013 as the proof of a strengthening market
which is at the same time turning more competitive. All these
M&A's were Turkish based but there is an increasing
interests on the part of the American and European based private
equities regarding especially the renewable energy projects in
The liberalization of the energy sector have started in 2001 by
the establishment of Energy Market Regulatory Authority (EPDK).
Then the privatization of the distribution ensued. Then in 2009 the
policy of price determination based on hourly market was adopted y
the Turkish authorities. But the most important measure for the
liberalization of the energy market will be brought by the
establishment of the energy stock exchange EPİAŞ.
The Electricity Market Law had envisaged the establishment of an
energy stock exchange EPİAŞ in the second quarter of
2014. The main objective of the energy stock exchange is to
integrate itself in to the foreign energy stock exchanges and bring
more transparency in to the Turkish energy market especially
following its take over from the spot market. The newly established
stock exchange will be partly be owned by Istanbul Stock Exchange;
Borsa Istanbul. The estimated share of Borsa Istanbul in
EPİAŞ is 30%. The rest of EPİAŞ will be divided
between the private and the public sectors where the private sector
investors will have the ownership of the 40% and Turkish
Electricity Transmission Company (TEİAŞ)will have the
ownership of the remaining 30%. EPİAŞ is expected to
increase the liquidity in the electricity market as well as the
efficiency and the transparency.
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Turkey has amended the Electricity Market Law numbered 6446 to promote use and security of domestic energy resources. Under the amendments, planned capacity mechanisms must give priority to local energy sources.
Turkey's energy regulator previously ruled (decision numbered 5709, dated 30 July 2015) that a total capacity of 2,000 MW would be reserved in the period up until 2020 for wind power pre-license applicants to connect to the grid.
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