Subsidy covers 87% of electricity bill charged to lowest-level household consumers in Turkey

The lowest-level household consumers in Turkey, who use up to 8 kWh of electricity daily, pay a monthly bill of Turkish lira (TRY) 496 ($14), though the cost of the electricity in question stands at TRY 3,000, according to Baris Erdeniz, head of the country's electricity grid operators association (ELDER).

On November 16, Turkey dropped subsidies for high-volume residential users of electricity, who consume more than 5,000 kWh of power per year, as well as for commercial electricity users, who consume more than 15,000 kWh per year. The subsidy cancellation starts from February 2025.

Agriculture sector, worship place, charity and disaster relief organisation electricity consumers are not affected by the decision.

There are 40mn household electricity consumers and around 1.2mn subscribers (3% of the total)  in Turkey who will be affected by the subsidy ruling, energy minister Alparslan Bayraktar said on November 1.

500bn lira allocated for energy subsidies

In its 2024 budget, the government allocated TRY 500bn for energy subsidies, up from TRY 272bn in 2023.

The government spent TRY 274bn on subsidising electricity and natural gas bills in January-October, Bayraktar said on November 18, adding that the figure stood at TRY 328bn for 2023 as a whole.

ELDER estimated that about TRY 120bn was spent on electricity subsidies in 2023.

The government subsidies 60% of electricity bills of households at low-consumption levels, 40% of electricity bills of households at high-consumption levels and 63% of natural gas bills of all households, according to Bayraktar.

Additionally, the government provided up to 150 kWh of electricity to low-income families based on the number of family members. The bill for this was TRY 8.1bn for the electricity provided to a total of 4.1mn households in January-October.

The government also provided TRY 1.4bn in natural gas support to 0.65mn households in the first 10 months of 2024.

It will also distribute 1.4mn tonnes of coal to 1.6mn households in 2024.

The government runs many other social support programmes. Observers say their existence is the main reason why voter support for the ruling Justice and Development Party (AKP) does not fall below the 20% level.

Infamous privatisations

The Turkish government has a record of subsidising all parties in the electricity transmission system from producers to grids to consumers.

As a result of infamous privatisations carried out by the governing AKP, the country has seen a big wealth transfer to private producers and grid operators.

Critics say the Turks are lucky in that the AKP has not managed to privatise the transmission monopoly, the Turkish Electricity Transmission Company (TEIAS). As a result, the profits of some business players are not subsidised.

TEIAS, meanwhile, transfers funds to idle plants under the so-called capacity support mechanism. In September, the government paid TRY 1.6bn to 43 coal and gas plants under the mechanism.

Wealth transfers under the Renewable Energy Support Mechanism (YEKDEM), introduced in 2011, continue.

Subsidised prices for producers and grids

In January-September, the government paid TRY 184bn in YEKDEM subsidies. In September, the average YEKDEM price stood at TRY 3,970/MWh versus the 2,285/MWh market price.

Unpaid loans extended to grid operators do not suffice. Government-run power producer EUAS, the largest electricity producer in the country, has been selling electricity to grid operators at TRY 480/MWh since November 2023.

Consumer prices

Story chart: In October this year, a household that consumed more than 8 kWh of electricity per day paid TRY 1,391 (low-voltage, single-term, single-phase, solely the electricity price, with no additional fees such as the distribution fee and so forth) for 1 MWh of electricity.

Last month, a household that consumed less than 8 kWh of electricity per day paid TRY 48 for 1 MWh of electricity (according to the same conditions as set out above, for other tariffs see here).

As of July 1, energy watchdog EPDK hiked electricity prices for households and corporations by 38%.

EPDK also hiked the price ceiling on the Day Ahead Market at Energy Exchange Istanbul (EPIAS) to TRY 3,000 per MWh from TRY 2,700.

Chart: In October this year, a grid operator paid TRY 2,336 on average for 1 MWh of electricity that it bought via EPIAS. The difference in comparison with the consumer prices provided above is paid by the government.