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Pricing Electric Power under a Hybrid Wholesale Mechanism: Evaluating the Turkish Electricity Market

Author

Listed:
  • Hatice Karahan

    (Corresponding Author, TUBITAK, The Scientific and Technological Research Council of Turkey, Turkey)

  • Mehmet Toptas

    (TUBITAK, The Scientific and Technological Research Council of Turkey, Turkey)

Abstract

During the restructuring process, Turkish electricity sector has gone through significant changes both in wholesale and retail markets. In this framework, the Market Financial Settlement Mechanism established for handling market imbalances has become a spot market in time. So, it can be claimed that the wholesale electricity market in Turkey is a hybrid mechanism composed of bilateral contracts and the balancing market. On the other hand, the main target of liberalization program is providing consumers with affordable electric power. Hence, this study attempts to explore the link between retail tariffs for ineligible consumers and prices in the two wholesale mechanisms, in the period after the launch of the day-ahead market. Findings suggest that regulated wholesale prices are more effective in the determination of end-user prices, whereas unregulated ones might have a price reduction effect in case the free market dominates. However, the volatility in spot market prices implies that the sector would better continue with the hybrid mechanism for quite some time.

Suggested Citation

  • Hatice Karahan & Mehmet Toptas, 2013. "Pricing Electric Power under a Hybrid Wholesale Mechanism: Evaluating the Turkish Electricity Market," International Journal of Energy Economics and Policy, Econjournals, vol. 3(3), pages 221-228.
    • Handle: RePEc:eco:journ2:2013-03-3
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    References listed on IDEAS

    as
    1. Mustafa SAATC & Yasemin DUMRUL, 2013. "The Relationship Between Energy Consumption and Economic Growth: Evidence From A Structural Break Analysis For Turkey," International Journal of Energy Economics and Policy, Econjournals, vol. 3(1), pages 20-29.
    2. Izak Atiyas & Tamer Cetin & Gurcan Gulen, 2012. "Reforming Turkish Energy Markets," Springer Books, Springer, edition 127, number 978-1-4614-0290-9, December.
    3. Kaplan, Muhittin & Ozturk, Ilhan & Kalyoncu, Huseyin, 2011. "Energy Consumption and Economic Growth in Turkey: Cointegration and Causality Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 31-41, June.
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    More about this item

    Keywords

    Electricity Prices; Wholesale; Retail; Competition; Turkey;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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