IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2023-06-10.html
   My bibliography  Save this article

Capacity Payments in the Turkish Electricity Market: A Necessity or Policy?

Author

Listed:
  • Aysun Korucan

    (Energy Market Regulatory Authority, Ankara, Turkey.)

  • Okan Yardimci

    (Energy Market Regulatory Authority, Ankara, Turkey.)

Abstract

Capacity mechanisms have been implemented in different forms for various purposes. Contrary to altering trends in the electricity markets, Türkiye opted for enforcing “capacity payments,†regarded as a primitive form of the mechanisms to ensure the security of supply and system reliability. This study mainly aims to build a critical review of the Turkish capacity mechanism design. The survey conducted makes valuable inferences along with the opinions of different stakeholders. The results indicate that the current capacity payment scheme, a non-market based, is not sustainable in the long run. Therefore, improving the existing payment methodology by reconsidering mechanism’s scope and different age criteria, efficiency, and deliverability for plants or implementing other types of mechanisms with a market reform, such as demand response participation, seems more efficient.

Suggested Citation

  • Aysun Korucan & Okan Yardimci, 2023. "Capacity Payments in the Turkish Electricity Market: A Necessity or Policy?," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 81-92, November.
    • Handle: RePEc:eco:journ2:2023-06-10
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/14833/7546
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/14833
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2019. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Energy Economics, Elsevier, vol. 80(C), pages 1059-1078.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    2. Wilkinson, Sam & Maticka, Martin J. & Liu, Yue & John, Michele, 2021. "The duck curve in a drying pond: The impact of rooftop PV on the Western Australian electricity market transition," Utilities Policy, Elsevier, vol. 71(C).
    3. David P. Brown & Andrew Eckert & Douglas Silveira, 2023. "Strategic interaction between wholesale and ancillary service markets," Competition and Regulation in Network Industries, , vol. 24(4), pages 174-198, December.
    4. Simshauser, Paul, 2022. "Rooftop solar PV and the peak load problem in the NEM's Queensland region," Energy Economics, Elsevier, vol. 109(C).
    5. Mier, Mathias, 2021. "Efficient pricing of electricity revisited," Energy Economics, Elsevier, vol. 104(C).
    6. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    7. Simshauser, P. & Gilmore, J., 2020. "Is the NEM broken? Policy discontinuity and the 2017-2020 investment megacycle," Cambridge Working Papers in Economics 2048, Faculty of Economics, University of Cambridge.
    8. Mastropietro, Paolo & Rodilla, Pablo & Rivier, Michel & Batlle, Carlos, 2024. "Reliability options: Regulatory recommendations for the next generation of capacity remuneration mechanisms," Energy Policy, Elsevier, vol. 185(C).
    9. Söder, Lennart & Tómasson, Egill & Estanqueiro, Ana & Flynn, Damian & Hodge, Bri-Mathias & Kiviluoma, Juha & Korpås, Magnus & Neau, Emmanuel & Couto, António & Pudjianto, Danny & Strbac, Goran & Burke, 2020. "Review of wind generation within adequacy calculations and capacity markets for different power systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    10. Thomaßen, Georg & Bruckner, Thomas, 2024. "Market based decarbonization and the interaction with reliability policies," Contributions of the Institute for Infrastructure and Resources Management 01/2024, University of Leipzig, Institute for Infrastructure and Resources Management.
    11. Holmberg, Pär & Tangerås, Thomas, 2021. "Strategic Reserves versus Market-wide Capacity Mechanisms," Working Paper Series 1387, Research Institute of Industrial Economics.
    12. Simshauser, Paul & Newbery, David, 2024. "Non-firm vs priority access: On the long run average and marginal costs of renewables in Australia," Energy Economics, Elsevier, vol. 136(C).
    13. Naoki Makimoto & Ryuta Takashima, 2023. "Capacity Market and Investments in Power Generations: Risk-Averse Decision-Making of Power Producer," Energies, MDPI, vol. 16(10), pages 1-19, May.
    14. Fraunholz, Christoph & Kraft, Emil & Keles, Dogan & Fichtner, Wolf, 2020. "The merge of two worlds: Integrating artificial neural networks into agent-based electricity market simulation," Working Paper Series in Production and Energy 45, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    15. Simshauser, P. & Gohde, N., 2024. "3-Party Covenant Financing of ‘Semi-Regulated’ Pumped Hydro Assets," Cambridge Working Papers in Economics 2425, Faculty of Economics, University of Cambridge.
    16. Fraunholz, Christoph & Miskiw, Kim K. & Kraft, Emil & Fichtner, Wolf & Weber, Christoph, 2021. "On the role of risk aversion and market design in capacity expansion planning," Working Paper Series in Production and Energy 62, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    17. Simshauser, Paul, 2020. "Merchant renewables and the valuation of peaking plant in energy-only markets," Energy Economics, Elsevier, vol. 91(C).
    18. Shu, Han & Mays, Jacob, 2023. "Beyond capacity: Contractual form in electricity reliability obligations," Energy Economics, Elsevier, vol. 126(C).
    19. Ishizaki, Takayuki & Koike, Masakazu & Yamaguchi, Nobuyuki & Ueda, Yuzuru & Imura, Jun-ichi, 2020. "Day-ahead energy market as adjustable robust optimization: Spatio-temporal pricing of dispatchable generators, storage batteries, and uncertain renewable resources," Energy Economics, Elsevier, vol. 91(C).
    20. Conor Hickey & Derek Bunn & Paul Deane & Celine McInerney & Brian Ó Gallachoir, 2021. "The Variation in Capacity Remunerations Requirements in European Electricity Markets," The Energy Journal, , vol. 42(2), pages 135-164, March.

    More about this item

    Keywords

    Electricity Market; Security of Supply; Capacity Mechanisms; Capacity Payments; Market Reforms; Türkiye;
    All these keywords.

    JEL classification:

    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2023-06-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.