Power producers urge structural changes to sustain supply security

(Enerji IQ – Sept. 15, 2021) Turkey’s independent power producers (IPP) urged a series of structural changes due to market conditions that have deteriorated by rising costs, capped prices on the spot market, and soaring demand.

“The market needs structural changes to maintain and sustain the growth of the available capacity. The variable upper price limit at the day-ahead market threatens the ability to maintain the available installed capacity by significantly reducing the spreads,” said an executive of an IPP on an anonymous base.

“The upper price limit, together with the subsidized retail tariffs, causes an indirect capital transfer from the electricity sector to the industry. The margins do not allow reasonable capital accumulation in the power sector, which is critical for the sustainable growth of installed capacity,” the source added.

The bids for the day-ahead market and the balancing power are subject to an upper price limit, which is calculated by a formula based on previous prices. The limit is calculated monthly

according to EMRA’s regulation. The upper price limit for September is 674 TL/MWh (€67.06/MWh with 10.05 €/TL rate).

Similarly, natural gas prices in the OTSP are capped by a limit calculated every month according to the average daily reference price formed in the first 25 days of the previous month. This month’s limit is 3,288 TL/kcsm.