Turkey hikes wholesale electricity price ceiling by 4%

Turkey’s energy watchdog EPDK has hiked the price ceiling on the Day Ahead Market at Energy Exchange Istanbul (EPIAS) to TRY2,700/MWh from TRY2,600/MWh, effective as of July 1, the authority said on July 3.

Story chart: Monthly average price and price ceiling at EPIAS.

As a result, the electricity price for industrial enterprises that directly buy power on the wholesale market is set to increase by around 4%.

As of April 1, the price ceiling for coal plants was set at TRY1,800/MWh, while TRY1,700 will be applied for renewables and TRY2,550 for natural gas, fuel oil, naphtha and diesel plants.

Since April 2022, there have been multiple price ceilings seen on the market under the so-called maximum price reconciliation mechanism (AUM).

The government transfers funds from renewables to other plants.

As of January 1, the EPDK had dropped the ceiling by 13% to TRY4,200 from TRY4,800, the peak level, set in September. As of April 1, the ceiling, which stood at TRY2,600, was lower by 46% compared with the TRY4,800 at end-2022.

On September 2, the daily average price on the market saw a new record of TRY4,419 ($243). The dollar-denominated record was registered on February 13, 2012 at $392.

The EPDK has, meanwhile, slightly cut prices for consumers. As of July 1, the EPDK-set electricity prices (low voltage, single term, single phase) were:

–        TRY2,438/MWh for industry, down 2% month on month, 7% year on year and 40% compared to TRY4,059, a record high that was effective from September to December.

–        TRY2,218/MWh for legal persons, including small merchants (higher than 30 kWh per day), down 3% m/m, 9% y/y and down 32% compared with a record high of TRY3,267 from September to December.

–        TRY1,132/MWh for households (higher than 8 kWh/day), down 6% m/m, 29% y/y and 43% compared with a record high of TRY1,975 from September to December.

Distribution fees were hiked by 254-435% as of January 1.

Chart: Electricity prices in Turkey.

In 2022, industry consumed 108 TWh of electricity, representing a 43% share in Turkey’s overall 254 TWh of consumption. Public and private services sector consumed 65 TWh, a 26% share, while households consumed 62 TWh, equivalent to a 24% share. Agricultural irrigation took a 5% share and lighting 2%.

Meanwhile, drought conditions have slightly recovered thanks to spring rains. However, as of June 30, year-to-date water flows into Turkey’s hydropower dams was still down by 15% y/y.

The share of hydropower plants (HPPs) in Turkey’s electricity production declined to 17% in 2021 and 21% in 2022 from 25% in 2020 and 29% in 2019. HPPs have a 30% share in Turkey’s installed capacity.

The hydropower share in production is predicted to decline back to 17% in 2023, Fahrettin Arman, head of hydropower industry association HESIAD, said in January.