A number of changes to the Turkish electricity market were
enacted by a decision of the Council of Ministers Decision No.
2015/8317, dated December 14, 2015, and various decisions of the
Energy Market Regulatory Authority ("EMRA") in December
2015. These decisions introduced significant changes such as the
extension of incentives under the Electricity Market Law, a new
eligible consumer threshold, and the continuation of the national
Price Equalization, Unified National Tariff and
The Council of Ministers' decision extended the term of the
price equalization, unified national tariff and cross subsidization
mechanisms until December 31, 2020. The price equalization
mechanism allows a nationwide price to be applied to consumers,
despite fluctuating cost differentials between the 21 different
electricity distribution and retail sale regions in Turkey, through
a national tariff and cross subsidization between regions.
Extension of Incentive Terms
Provisional Article 4 of the Electricity Market Law outlines
incentives for power plants commissioned before December 31, 2015.
These incentives have now extended until December 31, 2020. Power
plants commissioned by December 31, 2020 will benefit from (i) a
50% discount on transmission system usage fees for five years
following commissioning, and (ii) a stamp tax exemption for
documents signed in connection with the power plant for five years
General Illumination Costs
Pursuant to Provisional Article 6 of the Electricity Market Law,
street lighting costs for roads and common areas are borne by the
Ministry of Energy and Natural Resources and municipalities, rather
than distribution companies, until December 31, 2015. The Council
of Ministers' decision extended this period to December 31,
New Eligible Consumer Threshold
EMRA, by a decision dated December 24, 2015, reduced the annual
eligible consumer threshold from 4,000 kWh to 3,600 kWh for 2016.
As a result, consumers that consume more than 3,600 kWh of
electricity per year will be able to buy electricity through energy
sales agreements from the electricity wholesale company of their
choice. The threshold is expected to be reduced to 0 kWh in the
near future, allowing full liberalization of the electricity
market. The eligible consumer threshold for the natural gas market
remains unchanged under EMRA's decision dated December 17,
Electricity Retail Sales Profit Margin
The ceiling for the gross profit margin of retail electricity
sales was fixed at 2.38% for 2016-2020 by an EMRA decision dated
December 16, 2015.
Similarly, the Communiqué on Transmission Income,
regulating the calculation of the transmission fees, and the
Communiqué on Market Operation Fees were published on
December 30, 2015.
Market Operation Income
The Communiqué on Market Operation Income was published
on December 22, 2015, abolishing the previous communiqué.
The communiqué changes the procedure for adopting the market
operation tariff by the Istanbul Energy Exchange (EPİAŞ)
instead of the former market operator, the Turkish Electricity
Transmission Company. Additionally, the formula for the calculation
of the tariff has been simplified and modernized, taking into
account both the opportunity cost of capital as well as research
and developments costs.
EMRA, in a decision dated December 17, 2015, announced new
pre-license and license issuance, re-issuance and amendment fees,
as well as license fees. The new fees are effective January 1,
2016. According to the decision, pre-license and license issuance
fees range from TRY 5,800 to TRY 290,300, depending on the
installed capacity of the power plant; and the annual license fee
is TRY 0.003 per generated kWh.
While most of the changes were expected, the extension of
incentives is a positive development for electricity generation
activities and supply security. The impact of the developments
related to distribution and retail sales companies, such as the
ceiling profit margin, should be evaluated in light of the
investment programs for 2015-2020.
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.
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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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