Turkey’s electricity producers assess April collapse in demand at 20%
Turkey’s Electricity Producers Association expects to record a 20% decline in country-wide electricity demand in April, Cem Asik, head of the association, told government-run news service Anadolu Agency on April 23.
A 17% decline in May and a 4% contraction in June were also anticipated.
Although most of Turkey’s automotive factories will resume production in upcoming days, the spot price of electricity is expected to dive 40% in April, 30% in Q2 and 15% overall this year, according to Asik.
The highest electricity rate for one-megawatt hour in the spot market on January 21 was Turkish lira (TRY) 345 ($58.3) while the arithmetical and weighted average price of electricity for the day-ahead was calculated as TRY326. The USD/TRY stood at 5.91 on the day.
On April 24, the highest electricity spot price was TRY326 ($46.7) and the average price was TRY203, according to Energy Exchange Istanbul.
Electricity producers have been struggling to sustain even operational profitability due to low prices, and, as a result, loan repayments were becoming harder, Asik warned, adding that the USD/TRY level and volatility were amplifying the problem. During afternoon trading of April 28 the exchange rate weakened as far as 6.999 to the dollar.
Despite declines in producer prices, the energy market watchdog EPDK’s method of calculating the electricity and natural gas bills of households based on average bills across the past few years—a method drawn up with the aim of avoiding sending meter readers into the pandemic-hit field—has been creating fury among consumers due to perceived outrageous rises in March’s bills.
Electricity prices for households have grown 58% and natural gas prices 60% in the past two years while official inflation has declined—although “official” is the operative word here, as many Turks do not believe in the veracity of the calculations made by the national statistical agency TUIK.
“Alarming” situation with gas plants
“Natural gas plants have been affected the most in this period. These plants are alarming us. Their capacity utilisation rate shrank to 7% in April,” Asik also said.
The natural gas plants’ share in total electricity production fell to a record low of 7% as of April 21 from 10% in March, and it was down to 3% on a daily basis, according to Asik.
Production at coal-fired plants also declined but the hydro and wind plants’ share in total of electricity output was up thanks to the level of precipitation and wind conditions, Asik said.
The total amount of coal delivered to thermal power plants in Turkey fell to 5.82mn tonnes in February from 7.22mn tonnes a year ago, Hurriyet Daily News reported.
The latest “Tracking the Covid-19 impact on the economy via electricity consumption” report by Ankara-based think-tank TEPAV showed on April 21 that electricity consumption in Turkey declined by 22% y/y in the week that started on April 13, compared to a 17% y/y contraction in the previous week.
Since the last week of March, electricity consumption in Turkey has declined at an accelerating pace for four consecutive weeks.
TEPAV also observed a 32% y/y decline in the electricity consumption of Italy in the week beginning April 13 versus 11% y/y and 10% y/y declines in Spain and Germany, respectively.
On April 18, the EPDK hiked the feed-in-tariff under the Renewable Energy Support Mechanism (YEKDEM) programme to TRY228 per MWh for unsold electricity produced by wind and hydropower projects in the first 10 years of their operations from TRY140 in March.
It is expected that YEKDEM, which applies to all plants built until the end of 2020, will be replaced by another scheme, likely to comprise of purchase guarantees at a lower price, an unnamed industry source told Reuters in February.
There is presently a rush to bring online an additional 3.7GW of capacity before YEKDEM expires, Asik told BloombergHT on April 20.
Seven geothermal plant construction projects to provide a total capacity of 100MW, which were planning to benefit from YEKDEM, have been halted due to interruptions in equipment imports, Ufuk Senturk, head of the Geothermal Power Plant Investors Association (JESDER), told Anadolu on April 9.
In March, a total of 817 facilities with a total installed capacity of 21GW received TRY4.6bn support under YEKDEM, Daily Sabah reported.
What to do with this much electricity?
In December, a lawmaker from the main opposition Republican People’s Party (CHP) lashed out at the government’s energy policy. The MP said that it encourages the construction of power plants that the country does not need.
Over the past five years, a total of 214 hydropower plants have gone operational in Turkey, but the country plans to build 261 more such facilities in coming years.
Turkey also plans to construct 180 wind power plants and 21 geothermal power plants.
Since 2014, 90 wind power plants and 51 geothermal power plants have come online.