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Review of the security of supply in Turkish energy markets: Lessons from the winter shortages
Abstract
Turkey has changed the essentials of its energy markets more than a decade ago. It was mainly a transition from a state-led model to a free-market one. Although some levels of progress is observable; security of supply, particularly in times of short term supply disruption had not been widely tested. Harsh winter conditions set a litmus test for Turkish energy markets. Basing on the this test, this paper provides an analysis of to what extent Turkey is open to the risks of energy supply security; and discusses possible measures to relieve future supply disruption risks. Energy policy-making should consider the fact that electricity and gas markets are highly intertwined in Turkey; and security of supply measures could have cross-market implications, paper concludes.
... In parallel to the developments in the renewable energy production, Turkey has well progressed in the creation of a transparent power market and established a market operator, Energy Exchange Istanbul (EXIST), an example of which can be seen in more mature markets. The developments in the creation of a spot market have triggered the entry of new players to the market especially in the field of renewable energy generation (Dastan and Selcuk, 2016). The developments in the power exchange have led the entrepreneurs to invest in the generation with relatively less capital and trade the electricity on a daily basis on the spot market. ...
... Turkey's motivation to support renewable energy generation mainly stems from the fact it is heavily reliant on imported fossil fuels (Camadan, 2011a;Simsek and Simsek, 2013). The dependence on imported gas is particularly dramatic while almost half of the electricity generated from gas-fired plants and there is an over-reliance on imports from Russia (Dastan and Selcuk, 2016). This factor has pushed Turkey to seeks ways of diversifying the energy resources. ...
... In addition, we added gas crisis dummies which have clear outlier effects on the price. As it can be (Dastan and Selcuk, 2016). In this respect, we determined the most significant influential days according to the scaled difference values in the fitted values, determinant of covariance ratios and the diagonal elements of hat matrix. ...
The environmental concerns and dependency on gas imports push Turkish policy makers to find ways of increasing the share of renewable sources in electricity generation. Providing incentives for renewable energy in the form of feed-in-tariffs is one of the measures to achieve this goal. Basing on the data of Turkish electricity market operator, we quantified the magnitude of the price effects of wind and river type hydro generations on hourly average of day-ahead prices. We find that wind and river type hydro plants reduced the spot electricity prices during the period of 2012-2017, and despite these resources get the same incentives, their impacts on the spot prices and price volatility are different: this can be useful for a more comprehensive cost benefit analysis aimed at differentiating incentive schemes. The paper also discusses possible underlying reasons of these different impacts such as high seasonality of hydro generation and volatility of wind generation. Finally, we show that, assuming more than 75% of the price reductions were reflected into the consumer prices in Turkey, the net impact of wind and river type hydro generation on final consumer prices would be negative. This finding contributes to the discussions on renewable energy incentive mechanisms.
... Turkey is an important actor in this energy war, especially in the world where the powerful actors focus on with its almost central position and its historical and geographical proximity to the Middle East and the Central Asian region. To be a powerful country, Turkey must continue to work in order to increase the diversity and to reduce oil dependency with its strategy of location and researches on oils and must follow policies that will succeed [4]. ...
... Nuclear power plants and the energy obtained from them must have high technology systematically and in terms of the risks involved. The nuclear power plants required for a country dependent on foreign energy like Turkey constitutes also a different commitment to countries that provide this technology as well as help the development of technology [4]. ...
The energy is the essential input of the economic and social developments of the countries. The energy and state legislators must provide this most basic necessities of the community in an uninterrupted, reliable, timely, cheap and clean manner. This necessity is much the same for the industrialists and tradesmen as well as the consumers in their home. In the globalizing world, an indispensable prerequisite is to supply the energy for the country’s industry from uninterrupted, reliable sources and low-priced as the most basic and weighted input into the cost of the final product. However, the realities experienced in the energy field of our country, far from being in harmony with these basic requirements, are in stark contrast. The energy policy of Turkey aims at diversifying the source country and route, starting to use nuclear energy while increasing the share of renewable energy in the energy mix, research on increasing energy efficiency and contributing the energy security of Europe. Our country, which is located in a region with approximately seventy percent of proven oil and natural gas reserves, is one of the largest natural gas and electricity markets in its region.KeywordsEnergy policyForeign politics
... 27 Despite the importance of fuel costs, notably natural gas prices, in market dynamics, ''the effect of natural-gas fuel cost risk on market price and capacity investment in a liberalized electricity market has attracted little academic attention'' (Gal et al., 2017, p.233). Fundamentally, problems in the fuel markets (shortages, anticompetitive practices, or transportation issues) immediately affect the electricity markets and cause price spikes (Dastan and Selcuk, 2016). 28 The literature recommends long-term contracts and forward markets to hedge risks and reduce the volatility of fuel prices; however, governments are more likely to take restrictive measures when there are prices spikes, and how these interventions affect the electricity markets still requires further attention. ...
This paper aims to explore the underlying motivations that drive regulatory measures to address surging electricity prices. We discuss this question with a systematic review of the literature on price spikes in electricity markets and compare the recommended measures in the literature with political and regulatory actions taken during the 2021-22 European energy crisis. Our review shows a discrepancy between the arguments presented in the literature and the regulatory narrative in practice. Although theoretical arguments assume a general regulatory framework driven primarily by market efficiency, recent regulatory decisions show that political concerns can shape regulatory measures to a great extent, and the political economy of regulation should be incorporated into market analyses.
... Moreover, recent events have triggered the rise and volatility of energy commodity prices such as crude oil or natural gas. Energy independence and energy security are common goals around the world [2]. As a result, the energy transition has taken off, and renewable energy technologies are more sought after than ever. ...
The oscillating water column is one of the most tested and used wave energy converter types. It requires the use of an air turbine connected to an electrical generator. The deep understanding of all physical quantities of the energy chain components is based on transducers. The electrical generator efficiency is a key input to wave-to-wire numerical models for wave energy conversion to enable the industry to embark on projects with reliable data. Assembly of a standard torque meter is not feasible in prototypes following an industrial design. Therefore, the turbine shaft power must be calculated from the electrical generator dry-testing results at various rotational speeds and loads. This paper presents normalised data for estimating generator power output and turbine torque based on generator efficiency measurements. Experimental results show the electrical generator efficiency dependency on the rotational speed and load. A new kind of filter to post-process the raw data was used. The results will be used as a reference for wave-to-wire numerical models of oscillating water columns and post-processing the data from prototypes operating in real sea state conditions.
... Fundamentally, problems in the fuel markets (shortages, anticompetitive practices, or transportation issues) immediately affect electricity markets, and this causes major price spikes (Dastan and Selcuk, 2016). For example, Fernández et al. (2020) show that firms engaging in strategic behavior in natural gas markets can increase electricity market prices significantly even if the electricity market is perfectly competitive. ...
This paper starts with a simple question: How should regulators respond to price spikes? We examine this question with a systematic review of the literature and a case study of the European energy crisis of 2021-22. We discuss the causes of price spikes, outline the recommended measures to deal with them, and compare the recommended measures in the literature with those applied in practice. Our review shows that there is a discrepancy between the arguments presented in the literature and the regulatory narrative in practice. In addition, institutional and political perspectives are overlooked in scholarly analyses of price spikes in electricity markets. Although theoretical arguments assume market efficiency as the fundamental driver of regulatory decisions, the European energy crisis shows that political concerns can shape regulatory measures to a great extent in some countries. Therefore, further research is needed to understand the interactions between the political context and markets to improve the regulatory framework.
... High average prices during winter months compared to spring are due to dispatching natural gas plants at a higher intensity as hydro output dwindles. Additionally, gas supply disruptions tend to occur more frequently during these months, adversely affecting system reliability which in turn is reflected in the electricity market prices (Dastan and Selcuk, 2016;IEA, 2021). ...
This paper presents the first firm-level estimates of how an increase in the variable renewable energy (VRE) generation affects individual firms’ day-ahead available capacity and generation plans in a developing country. Specifically, we first cluster firms in the Turkish day-ahead market based on their generation profiles using unsupervised machine learning and hourly data from years 2017 to 2019. Then, we estimate the short run marginal effects of the projected VRE generation on firms’ day-ahead available capacity and generation plans via panel data methods. Turkey, in addition to having a fast growing energy demand, represents an understudied market case where the market leader, unlike the rest of the generators, is a public enterprise which potentially prioritizes political motives over economic efficiency. Our results support the existing concerns that the public enterprise, especially during the times of financial turmoil, acts with the motivation to stabilize market prices. Additionally, we find that there is significant heterogeneity in firms’ responses to VREs and individual responses significantly differ from the aggregate market response.
... In recent years, global energy demand has shown increase depending on the emerging technology and population growth, and at the same time, unfortunately, fossil fuels have been sharply declining. In this respect, the global warming being the threat of climatic change, efficient usage of energy sources, greenhouse-gas (GHG) emissions based on fossil energy consumption and use of renewable energy resources have become most attractive issues in the present decade [5][6][7][8][9]. ...
There is an on-going demand for energy from hydrocarbon compounds and intermediate goods in meeting the need for both production and intermediate products. The European Union and Turkey’s need for energy and intermediate goods are provided by petroleum and natural gas imported from geographically nearest energy regions through pipelines. In this study, a strategic solution to demand for energy in Turkey is proposed. Furthermore, information about the energy status, the chemical sector and intermediate goods imports of Turkey is provided. Considerations are proposed on the capabilities of petrochemical plants to be established in Ceyhan Energy Specialized Industrial Zone (CESIZ) as an outlet of petroleum from Azerbaijan and Iraq and a potential logistic energy base in the Eastern Mediterranean region. Ceyhan Energy Specialized Industrial Zone, as the first energy zone in Turkey and the nearby region, is introduced and the investors are briefed on the petrochemical facilities planned to be established in the zone. The importance of intermediate chemical products produced by petrochemical plants to be established in Ceyhan Energy Specialized Industrial Zone in reducing the country’s foreign trade deficit is revealed. Due to lack of studies conducted on CESIZ in the literature, this study would contribute to potential investors and academicians.
... Studies conducted on energy security and risk have focused thus far on countries depending on energy import, especially crude oil ( [5][6][7][8]12,13], and [14]). Although few studies have been conducted in energy-exporting countries in the field of natural gas ( [9,10], and [11]), it should be mentioned that risk studies have not been applied and the gas export portfolio, which includes both LNG and gas pipeline, has not been considered in these studies. On the other hand, many studies have been conducted on the identification of energy-related portfolios. ...
Remarkable proven reserves of approximately 1200 trillion cubic feet of natural gas, with an unprecedented
growth in global demand, have led Iranian policymakers to look for optimal natural gas export programs. This
paper attempts to provide a novel conceptual framework to evaluate the natural gas export portfolio. In this
regard, the present study develops the concept of non-systematic risk based on both the natural gas dependency
risk index and the geopolitical risk index. Furthermore, it presents an aggregated quantitative index using entropy-
based index aggregate method by providing appropriate sub-indicators toward natural gas transmission
via pipeline and LNG. By introducing the non-linear mathematical programming model of Iran's optimal gas
export portfolio and proposing four export scenarios, the efficient frontier is obtained for each scenario. Finally,
the results show that the minimum risk level can be attained when the gas export portfolio constitutes a significant
share of LNG transmission method.
... Natural gas and imported coal powered plants constitute more than half (%50.5) of the installed capacity. There are studies as outlook to Turkish power sector and supply structure, especially during gas shortages in winter [5]. Turkey has long term purchasing contracts relied on foreign currency and commodity stock prices. ...
Deregulations in electricity market of Turkey are expanding. However, electricity market is driven by exogenous risk factors. To hedge their risks market participants use derivatives, mostly forward contracts. Due to bear extreme volatility even forwards can cause high financial losses. We propose financial options usage to minimize risks. We have first developed a sophisticated spot price forecast model than priced plain-vanilla options and exotic options. Using real time historical data, we compared performance of forward contracts with option contracts.
... diplomacy. Thirdly, other influencing factors and risk (e.g., socioeconomic development [77], energy policy change, energy-use technological innovation, and supply interruption [65,78,79]) can be integrated to make more reasonable decisions by combing with other analysis, e.g., the prediction of industrial development, energy demands and mix of different energy sources. Of course, the analysis accuracy will be challenged by such factors as the data quality, the limitation of applied methods, and the uncertainty of various related polices. ...
Energy has become a scarce global strategic resource, and energy supply security is receiving increasing attention. A common evaluation platform is necessary to systematically understand the supply security levels of different energy sources and help make the national energy strategy. Ecological network analysis (ENA) is thus regarded as a useful common tool to systematically simulate, evaluate, and compare the supply security for different energy sources, when considering the fact that modern energy systems have formed a complex global energy network through extensive energy trading. Based on the established ENA platform, we evaluated and compared China's crude oil and natural gas supply security from 2000 to 2012. To this end, we assessed the overall security level, investigated the relationship among different compartments within the network system, determined the system's structure, and analyzed the system's properties. It was found that the Chinese crude oil supply security level was higher than that of the natural gas supply and that the crude oil supply system was more mature in terms of multiple properties. Suggestions are proposed to improve the Chinese energy supply security based on further scenario analysis, including increasing domestic energy production, controlling energy consumption, diversifying foreign supply sources, and strengthening the strategic reserve. The ENA-based common platform can be used for the systematic evaluation and improvement of energy supply security and further support national energy policymaking for both developed and developing countries, both energy importers and exporters.
... 1.3. Country-specific assessment of natural gas supply system security Notably, Jang et al. (2014) estimated the willingness to pay (WTP) of the Korean public for natural gas supply security; Villada and Olaya (2013) simulated the Colombian natural gas market to evaluate its short-term supply security; Biresselioglu et al. (2015) used principle compartment analysis (PCM) to construct a composite natural gas supply security indicator for the purpose of investigating the level of natural gas supply security and Dastan and Selcuk (2016) employed a model of short-term security of energy supply (MOSES) to quantify the security of Turkey's natural gas supply. ...
... For regional level analyses, Lochner and Dieckh€ oner (2012) investigated the impact of civil war in North Africa on its natural gas export to Europe; Flouri et al. (2015) employed Monte Carlo simulation analysis to study the impact of natural gas supply interruptions from Algeria to Europe; Le Coq and Paltseva (2009) developed a compound indicator consisting of import diversification, political risks of the supplying country, risks associated with transit and the economic impact of a supply disruption to reflect the level of natural gas supply security in European countries; and Olanrewaju (2015) constructed a mathematical programming model to study the potential impact of a loss of natural gas exporting capacity by the Ukraine in the case of a severe conflict between Russia and Europe. For country level analyses, Jang et al. (2014) estimated the Korean public's willingness to pay (WTP) for natural gas supply security, Villada and Olaya (2013) developed a simulation model of the Colombian natural gas market to quantify its short-term supply security, Biresselioglu et al. (2015) used principle compartment analysis (PCM) to construct a composite natural gas supply security indicator for the purpose of investigating the level of natural gas supply security, Dastan and Selcuk (2016) employed a model of short-term security of energy supply (MOSES) to quantify the security of Turkey's natural gas supply, and Ren and Sovacool (2014) developed the DEMATEL (fuzzy decision-making trial and evaluation laboratory) methodology to analyze country-specific levels of supply security. ...
The aim of this paper is to find out whether the cost shocks occur in the passenger rail transport, whether it can cause problems of financing as well as to evaluate the ways which are used by the purchaser of public transport to change the subsidy for carriers in case of cost shock.
Results have shown that costs shocks can negatively impact financing of the subsidised passenger railway transport, so purchasers of the transport services must be extremely cautious in setting the tender documentation. So that purchasers avoid time-inconsistency solution, it is necessary to set the change in the subsidy in the contract. None of the tested clauses used by purchasers is ideal. We can see over-/under-compensation. The clause with 55 % of the consumer price index and 35 % of the change in labour costs in the transport sector reaches better results especially in contracts with vehicles purchased by the carrier.
This study attempts to provide a novel analytical framework for assessing Iran’s gas export portfolio risk considering the aggregate dependency index of natural gas of importing countries and geopolitics factor. After providing indicators related to each of the natural gas transmission methods, the aggregate dependency index of each country is determined using the entropy-based aggregating method. This paper considers pipeline and liquefied natural gas. In this study, 17 countries are selected to evaluate the risk of dependency in natural gas exports. With respect to Iran’s exporting natural gas plans, gas export portfolio risk is calculated based on two proposed scenarios. Considering two methods of transmission, the results show that gas export portfolio risk will be 63.4% at the lowest risk level.
This study analyzes the case of a Russian gas export embargo starting in November 2014 and its effects on security of gas supply in Europe. Russian gas exports are crucial for European supply. In 2013, Russia exported more than 160 billion cubic meters of natural gas to Europe (including Turkey, excluding Belarus and the Ukraine), thereby supplying more than 30 % of European annual gas demand.
The analysis is conducted on a country level with a special focus on Germany. The study is based on a computer simulation of European pipeline, storage and LNG infrastructure utilization. We simulate different durations of an export embargo, i.e., 1 to 9 months, different availability of LNG on global markets and different use of gas storage. Technical aspects such as pipeline pressure could be another threat for security of gas supply during an embargo, but these are beyond the scope of this paper.
The results found imply that in case of a 3-month embargo supply would be secured in almost all of the European countries except for in Bulgaria, Poland, Turkey and Finland. In case of a 9-month embargo the case is different and gas supplies in Germany, Italy, France and many countries in Eastern Europe would severely be affected. In total 46 bcm of European gas demand could not be served in that case.
Two aspects of investment in generation capacity in liberalized electricity markets are investigated: the question of whether investment will be sufficient to meet society's goals for the reliability of electricity supply (generation adequacy) and the question of how to coordinate investment in electricity generation capacity in a competitive market while bound by the physical requirements and limitations of the electricity networks. The study focuses on the situation in European electricity markets. A number of factors discourage generating companies from investing in a level of generation capacity that is optimal for society as a whole. Due to the limited possibilities for the storage of electricity and the low price-elasticity of demand, electricity prices are highly volatile. This, in addition to the lack of historical trend data (due to the short history of liberalized electricity markets), insufficient transparency and high capital costs, causes investment risk to be high. Investment risk is increased by several sources of regulatory uncertainty. Given these circumstances, it is rational for investors to be cautious. A number of policy options for improving investment incentives and for stabilizing the volume of generation capacity, called capacity mechanisms, are described and analyzed. A policy framework is introduced for evaluating them and deciding on the best policy options for different circumstances. With respect to the issue of coordinating investment in electricity generation capacity with the networks, the consequences of the choice for fixed transmission tariffs in most European countries were investigated. While fixed transmission tariffs are intended to make the market simple and transparent, paradoxically they create the need for several additional measures to compensate for their external effects. Among these, the implementation of a congestion management method ranks among the most necessary measures. The options for congestion management, given the choice for fixed transmission tariffs, are analyzed and compared.
Most customers in electricity markets do not face prices that change frequently to reflect changes in wholesale costs, known as real-time pricing (RTP). We show that not only does time-invariant pricing in competitive markets lead to prices and investment that are not first best, it even fails to achieve the constrained second-best optimum. Increasing the share of customers on RTP is likely to improve efficiency, though surprisingly it does not necessarily reduce capacity investment, and it is likely to harm customers that are already on RTP. Simulations demonstrate that the efficiency gains from RTP are potentially quite significant. Ordering information: This article can be ordered from https://pubs3.rand.org/cgi-bin/rje/pdf.cgi .
Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. This paper evaluates the .rst program to expose residential consumers to hourly real time pricing (RTP). I .nd that enrolled households are statistically signi.cantly price elastic and that consumers responded by conserving energy during peak hours, but remarkably did not increase average consumption during o�-peak times. Welfare analysis suggests that program households were not su� ciently price elastic to generate efficiency gains that substantially outweigh the estimated costs of the advanced electricity meters required to observe hourly consumption. Although in electricity pricing, congestion pricing, and many other settings, economists.intuition is that prices should be aligned with marginal costs, residential RTP may provide an important real-world example of a situation where this is not currently welfare-enhancing given contracting or information costs.
A new concept of electricity pricing referred to as "spot pricing" is presented. Spot pricing is shown to encompass and achieve more fully the objectives of load management techniques and other rate structures proposed so far. The contribution of this paper is the derivation of optimal spot prices and a discussion of and proposals on a number of implementation issues which arise when the theory of spot pricing is turned into practice. A set of rates related to optimal spot prices are proposed and their applicability is discussed in view of different customer characteristics, metering, and communication costs. The impact of spot pricing on line losses and reactive energy, the quality of supply and rationing is elaborated. Issues related to customer response, utility revenues, investments and generation deregulation are also discussed.
The problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process. Although ideally the market itself should be enough to provide adequate investment incentives, there are several factors that prevent this result from being achieved, and some actual markets have already experienced problems related with a lack of generation capacity. A regulatory framework to address this question is presented. The procedure is based on an organized market where reliability contracts (based on financial call options) are auctioned, so both their price and their allocation among the different plants are determined through competitive mechanisms. This results in a stabilization of the income of the generators and provides a clear incentive for new generation investment, with a minimum of regulatory intervention. Additionally, the method represents a market-compatible mechanism to hedge demand from the occurrence of high market prices.
Large-scale blackouts have occurred frequently throughout the world. The blackouts that have occurred in recent years not only seriously affect the lives of local residents, but they also cause substantial economic losses. In particular, as modern society increasingly depends on electricity, power outages occurring at any time may result in devastating consequences. Accordingly, identifying the reasons for blackouts and implementing proper restoration measures are of particular importance. This paper analyses the sphere of influence, the scale of the effects, the restoration measures and the causes of previous worldwide blackouts. Based on the findings, suggestions for the development of China׳s power industry are then offered.
Nowadays, the European natural gas production has declined having, as a consequence, increased import dependence, which is estimated to reach 85% by 2030. Therefore, the implementation of a European energy policy, towards the viability, competitiveness and security of energy supply, is more than essential. Necessary parameter for the elaboration of such a policy is the diversification of natural gas supply sources and corridors, in order to eliminate growing dependences. Moreover, the recent cases of natural gas supply interruptions to the EU, due to international geopolitical conflicts, further underline the above, indicating the necessity towards an assessment of the potential impact that a natural gas supply disruption would cause to the European natural gas security. To this end and, given the political uprising in the area of North Africa, main objective of this paper is to investigate how a natural gas supply interruption from Algeria, the EU’s third largest supplier, would affect the European natural gas security, in terms of natural gas demand satisfaction. Monte Carlo simulation was applied, producing results on the more affected countries and underlining the importance of supplies diversification, reserves and production, when applicable, towards the enhancement of natural gas security.
The blackout risk in power systems is difficult to estimate by actual probabilistic methods because they usually neglect, or do not properly consider, the dependencies between failures and the dynamic evolution of the grid in the course of a transient. Our purpose is therefore to develop an integrated probabilistic approach to blackout analysis, capable of handling the coupling between events in cascading failure, and the dynamic response of the grid to stochastic initiating perturbations. This approach is adapted from dynamic reliability methodologies. This paper focuses on the modeling adopted for the first phase of a blackout, ruled by thermal transients. The goal is to identify underestimated dangerous cascading scenarios and better calculate their frequency. A Monte Carlo code specifically developed for this purpose is validated on a test grid. Some dangerous scenarios are presented and their frequency calculated by this method is compared with a classical estimation, showing important differences.
Societies are highly reliant on power systems for their energy needs. Reliability assessment is performed in both planning and operation of these power systems. Although there has been increasing interest in hardening the power system to be resilient against power outages, the risk of power outages cannot be completely diminished. Numerous models and algorithms are available to predict hazards that subsequently result in loss of energy services to customers. Many quantitative and qualitative approaches to determining restoration strategies in the event of a power outage have been developed. Very few studies have assessed restoration strategies in response to the risk of predicted hazards. As a result of the hurricanes and storms that have damaged critical infrastructures in the U.S. in recent years, this has become a burgeoning area for active research. In this literature survey we present the various studies that have been completed to date and discuss potential areas for future research.
With a strong global demand for some 30 years, natural gas is a particular challenge for countries of South and Central America since each cubic meter of natural gas that is consumed is produced in this continent. It therefore seems appropriate to consider the risk of a collision gas and its effects on the countries most dependent on gas (either as producers or as consumers). Thus, in this paper, we study the vulnerability of gas in several countries on four ratios developed by Cabalu (2010). Once calculated from empirical data, these ratios helped to determine indicators and to classify countries according to their vulnerability in the event of a gas shock (sudden rise in prices). A picture emerges which represents an indicative classification of the countries.
Turkey implemented the electricity sector reform by which the Electricity Market Law no. 4628 passed in February 2001. Recently, all segments of the Turkish electricity sector are dominated by a vertically integrated, public-owned monopoly—Türkiye Elektrik Kurumu—the Turkish electricity institution. The Turkish electricity reform involves vertical deintegration of generation, transmission and distribution, introduction of competition into generation and retail sale, establishment of an independent regulatory authority and privatization of public generation and distribution entities. This article provides an overview of the Turkish electricity sector reform and defines some problems that may affect the reform success.
Economic regulation of public utilities has become a worldwide phenomenon with the preceding privatisation stream. It is questionable to transfer regulatory models hastily without customising the policy options or introducing necessary institutional reforms enabling the achievement of expected results of regulatory reform. Institutional configuration of a country affects credibility of regulatory commitments, quality of regulatory design, and way of policy transfer. Turkey’s energy market regulation experience confirms the decisive role of institutions in shaping the regulatory framework.
The uprising and military confrontation in Libya that began in February 2011 has led to disruptions of gas supplies to Europe. An analysis of how Europe has compensated for these missing gas volumes shows that this situation has not affected security of supply. However, this situation would change if the North African uprising were to spread to Algeria. Since Algeria is a much more important gas supplier to Europe than is Libya, more severe consequences would be likely. Applying a natural gas infrastructure model, we investigate the impact of supplier disruptions from both countries for a summer and winter period. Our analysis shows that disruptions in the low-demand summer months could be compensated for, mainly by LNG imports. An investigation of a similar situation at the beginning of the winter shows that security of supply would be severely compromised and that disruptions to Italian consumers would be unavoidable.
European energy demand and import dependence continues to increase and primary energy sources are mainly used to cover European energy needs, making clear that the risks of energy security of supply and their minimization is a critical issue. The aim of this article is to address the energy supply status, considering the energy supply corridors to the European Union, in order to underline the importance of risk analysis and risk minimization. The aim of this article is to present an overview of possible risks to smooth energy supply. The emphasis is given on oil and natural gas's categorization of most important risks, as well as the presentation and analysis of collection of incidents that justify the categorization itself.
http://www.tandfonline.com/eprint/pirPuvCQ5Wn8sExHpbKs/full
The aim of this article is the comparative analysis of oil and gas supply for the 27 European Union member countries throughout the measurement of the vulnerability that their economies exhibit to oil and natural gas. In this framework, 6 indicators that quantify the core concepts that affect the security of supply of a country have been integrated, with the usage of Principal Component Analysis, in two synthetic indices, which measure the vulnerability of the case study countries.
We present evidence on one facet of energy security in OECD economies--the extent of diversification in sources of oil and natural gas supplies. Viewed from the perspective of the energy-importing countries as a whole, there has not been much change in diversification in oil supplies over the last decade, but diversification in sources of natural gas supplies has increased steadily. We document the considerable cross-country heterogeneity in the extent of diversification. We also show how the extent of diversification changes if account is taken of the political risk attached to suppliers; the size of the importing country; and transportation risk.
Balancing and settlement market is a crucial part of restructured Turkish electricity market. In this framework, the main purpose of this study is to examine whether the prices constituted in the transitional balancing and settlement market reflect the real cost of imbalances. Although it is observed that the prices are not powerful in indicating the real cost of imbalances, Turkey has the opportunity to form a well-functioning market within the context of planned new market structure. Turkey needs to define a proper roadmap reckoning the points mentioned in this paper to be able to achieve her objectives.
Natural gas has become an increasingly valuable resource and a global commodity. The demand for it has significantly increased. Japan, Korea and Taiwan heavily rely on liquefied natural gas (LNG) imports for their gas supplies from Malaysia, Brunei, Indonesia, Australia and the Middle East. On the other hand, countries like Thailand and Singapore import gas via trans-border pipelines. Gas supply interruptions, volatile gas prices, transportation and distribution bottlenecks, and a growing reliance on imports over longer distances have renewed interest on gas security in Asia. This paper examines the relative vulnerability to natural gas supply disruptions of seven gas-importing countries in Asia for year 2008. Based on four indicators of security of gas supply, a composite gas supply security index is estimated as an overall indication of gas vulnerability for our sample countries. The results demonstrate that there are differences in the values of the overall indicator of gas vulnerability among countries and the assessment is useful in developing an effective strategy of natural gas supply security in countries in the Asian region.
The “European Blackout” of 4 November 2006 is a key reference in current debates on transnational electricity infrastructure vulnerability and governance. Several commentators have observed that to understand what happened, one must look at history. Our paper answers this call and demonstrates how historical choices, path dependencies, and ways of dealing with these afterwards, have shaped Europe's electric power infrastructure and its vulnerability geography. We show that the decentralized organization of transnational electricity infrastructure and governance, often blamed for present-day power grid fragility, was informed by reliability considerations that still count today. We also address the (meso)regional logic of the failure, foregrounding how stakeholders from different parts of Europe historically chose to collaborate in different ways, with due consequences for the 2006 disturbance and other recent blackouts. Finally, the paper observes that today's notion of transnational electricity infrastructure vulnerability, supposedly demonstrated by the 2006 blackout, is highly contested as many stakeholders find the system extremely reliable.
This paper assesses the relative oil vulnerability of 26 net oil-importing countries for the year 2004 on the basis of various indicators—the ratio of value of oil imports to gross domestic product (GDP), oil consumption per unit of GDP, GDP per capita and oil share in total energy supply, ratio of domestic reserves to oil consumption, exposure to geopolitical oil market concentration risks as measured by net oil import dependence, diversification of supply sources, political risk in oil-supplying countries, and market liquidity.The approach using the principal component technique has been adopted to combine these individual indicators into a composite index of oil vulnerability. Such an index captures the relative sensitivity of various economies towards developments of the international oil market, with a higher index indicating higher vulnerability. The results show that there are considerable differences in the values of individual indicators of oil vulnerability and overall oil vulnerability index among the countries (both inter and intraregional).
There has been total unanimity about the vital importance of reliability of supply since the beginning of the electricity sector deregulation process. This paper describes the procedure proposed by Pérez-Arriaga et al. [2005. White paper for the reform of the regulatory scheme of the power generation in Spain. For the Ministry of Industry, Tourism and Trade of Spain (in Spanish)] to improve upon the current scheme to guarantee a reasonable reserve margin, the capacity payment mechanism. This alternative design introduces improvements aimed at guaranteeing at least a minimum capacity reserve margin, as well as at providing a strong incentive for generating units to be available when needed, namely, in situations when supply is likely to be insufficient to meet the total demand.
The emergence of new big consumer countries on the energy markets and the perspective of oil and gas depletion at the end of the current century raise the concerns about fair distribution of the remaining resources for the common and sustainable well-being of the mankind. High volatility of energy prices discourages the investment and delays the energy technology transition. Voluntary measures are needed mainly in industrialised countries in order to develop alternative and sustainable energy sources, to enable technology transfer towards emerging and developing countries and to avoid struggle for energy procurement. In this paper, a composite index of energy demand/supply weaknesses is defined as a proxy of energy vulnerability. The proposed index is based on several indicators such as energy intensity, oil and gas import dependency, CO2 content of primary energy supply, electricity supply weaknesses and non-diversity in transport fuels. The assessment of this composite index for selected industrialised countries is discussed as well as the sensitivity to various factors.
The paper considers the main components of energy policy, in particular the challenges of network security of supply, long-term contracts and the environmental constraints. It is argued that policy should take account of multiple market failures and context dependent. Given energy liberalisation in the 1980s and 1990s, interventions based upon market-based instruments should be given greater prominence. Institutional reform to reflect the shift in focus towards investment in non-carbon technologies and the security issues associated with networks is proposed, notably the creation of an energy agency.
Over twenty years since electricity industry deregulation was first implemented, and nearly ten since many power systems boarded the liberalization train, reliability of supply appears to be the major concern of energy regulators. Drawing from the cumulative experience of systems that have already implemented some manner of security of supply mechanism, the present article reviews the main criteria to be taken into consideration in the design of a regulatory mechanism of this nature.
The idea that increasing the capacity of the transmission network should improve the security of the system and reduce the probability of blackouts is intuitively appealing. However, this intuition does not withstand scrutiny.
Regulators, system operators, and consumers should consider just how much reliability is enough. A widespread blackout that affects 50 million people should never occur with properly designed systems and operating procedures in place. Yet local outages are bound to occur.
The paper starts with a detailed technical overview of recent blackouts in the US, Sweden/Denmark and Italy in order to analyse common threads and lessons to be learnt. The blackouts have exposed a number of challenges facing utilities worldwide. Increased liberalisation of electricity supply industry has resulted in a significant increase in inter-area (or cross-border) trades which often are not properly accounted for when assessing system security. The traditional decentralised way of operating systems by TSOs, with each TSO looking after its own control area and little information exchange, resulted in inadequate and slow response to contingencies. A new mode of coordinated operation for real-time security assessment and control is needed in order to maintain system security. This new mode of operation requires overcoming a number of organisational, psychological, legal and technical challenges but the alternative is either to risk another blackout or run the interconnected system very conservatively, maintaining large security margin at a high cost to everyone. The paper also includes technical appendices explaining engineering power system concepts to non-engineering audience.
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