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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
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    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.
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    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

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