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TURKISH MARKET: CHALLENGES & OPPORTUNITIES
Anduvap Servet AKGÜN
MD, Statkraft Trading Ltd.,Türkiye
Regional Electricity Trading Conference,
Tbilisi, November 2012
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Outlook
- Interconnecting
Turkey
- Policy
Recommendations
- SWOT
Current Status of
the Market
- Balancing
Market to Spot
Exchange
- OTC Trading,
Standard
Contracts,
Derivatives
Trade Drivers
- Market and the
Players
- Best Practices
AGENDA
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Norway
Sweden
Finland
UK
Germany
Turkey
Brazil
Peru
Chile
India
Zambia
Sri Lanka
Nepal
Laos
Philippines
Statkraft
AGUA IMARA
SN POWER
STATKRAFT
Installed capacity
16 600 MW
90% renewable energy
3400
employees
Power production
52 TWh/year
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Trade Drivers
The Playground
- Organized Exchanges (Spot, Futures, etc.)
- Over the Counter Markets (OTC)
- Traditional Bilateral Trading
The Players
- Traders (Position Taking, Hedging, Pure Speculation)
- Generators
- Suppliers
- Large Industrial Companies
- even the Grid Operators
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Trade Drivers
The Game
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Trade Drivers
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Well-functioning trading platforms:
- Bring diversity of supply and demand to the market
- Accelerate the liquidity by attracting more players
- Provide transparency
- Serve as a trustworthy counterparty for every participant
- Create reliable price reference / signals
But, how?
- Keywords : Transparency & Credibility
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Trading_Best Practices
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Trading_Best Practices
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Trading_Best Practices
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EPEX FR Day Ahead vs. Imbalance Prices – 01.09.11
System Buy price System Sell Price Day Ahead price
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- Over the Counter Trading dominates the European Power Markets
- OTC + Clearing is the most preffered option for the Traders
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Trading_Back to the Playground
15% 3%
82%
2011 OTC and EEX Volumes in France and Germany
EEX Fwds Epex spot
OTC DE+FR
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Current Status_Turkey
What we have today?
- An operational day ahead market since 12/2011
- Lack of a reliable reference price, PMUM index is hard to explain fundamentally
- Market failures on the imbalance market (balancing power market)
- Retail power sales by wholesale trading companies; eligible sales business
- Tariffs, EUAS contracts with DisCos and exclusive contracts (BOT, TOR etc.) as
illiquidity factors
- Lack of regulatory framework to kick-off OTC trading (supervisory body, reporting
etc.)
- However... The Spirit is there!
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Turkish OTC Screens
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Issues
Product definition and standardization, CZ OTC market example
Stamp Tax; 0,0825% of each deal!
Counterparty base ; EFET agreements, risk management a clearing solution
maybe – more red quotes than pink ones
• What to trade on?
Lack of fundamental data, REMIT approach, Bid/Offer Curves
Removal of additional costs from trading activities; grid fees, export/import fees
Still quite low ATCs on the Turkish-Greek-Bulgarian borders and only monthly
auctions
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Amendments on the Electricity Market Law; stamp tax exemption, brokerage
licences
Establishment of an independent / private Market Operator (EPIAS), MoU with
EEX
The first Turkish EFET standard contracts have been signed, quite a number
of companies to follow
As soon as the Stamp Tax related issues are resolved and the regulatory
framework is set, OTC market will speed up
Intorduction of Intraday Market and maybe adjustments for the Imbalance
Coefficients
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Outlook
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Outlook
Accelerated integration on the borders
The Transparency Platform / Initiative
Congestion Management
- Market Splitting (mid-term) / Market Coupling (long-term) / or both?
Ancillary Services; fair/transparent compensation and market spirit
YEKDEM (Ren. Energy. Sales Mech.), negative prices soon maybe?
Further development of OTC Markets, Future / Forward Contracts, Exchanges
in search of Reference Prices
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Policy Recommendations
Turkey, with its vast potential of natural resources, granted superb location and
attractive power market, has the chance to lead the regional power market
- In order to achieve this:
Turkish power market has to ensure the power supply balance by encouraging
the existing/potential investments and well aligned policies between the
governing bodies
Turkey has to set the cross-border policies as a part of national electricity
strategies in combination with sound capacity allocation designs- in line with
EU directives – private sector might be encouraged to invest in interconnectors
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market design should be revised so as to create healthy reference prices.
Market players should be able to trade/hedge the uncertainties via well
functioning OTC markets and independent futures/derivatives exchanges
the regulatory framework has to be improved in a reasonable time period in
order to accelerate the positive developments
congestion management tools to be preferred and to be publicized to eliminate
the uncertainties, e.g. Re-dispatching, market splitting, market coupling
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Policy Recommendations
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Superb location as a potential cross-continental power trading hub
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•18 Sep. 2011 ENTSO-E
approved the trial flows
• 1 June 2011 Commercial
Flows started with limited
capacity
•X-Border flows; not only
for the exchange of power
but also for the exchange
of the know-how and
experiences
Interconnecting Turkey
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Interconnection Projects
in the Pipeline:
• Black Sea Regional
Transmission System
- Two synchronious zones:
West (Romania, Turkey,
Bulgaria /ENTSO-E), East
(Ukraine, Russia,
Moldova, Georgia,
Armenia, Azerbaijan)
- Est. Completion by 2015
Interconnecting Turkey
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Interconnecting Turkey
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To conclude...
Strengths & Opportunities
Sustainable and continuously growing consumption & population
Continious liberalization
Privatizations
Existence of a running spot market
Increasing volume at OTC/Bilateral platforms
Government support on the free market
Attractive price levels as compared to many EU markets
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To conclude...
Threats:
Lack of transparency
Data unavailability
State domination
Not foreseen spot prices
Unavailability of energy exchange
Dynamic regulations
Dependency on natural gas prices and its availability
Lack of standardization
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