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What is the electricity bill structure in Turkey?

The greater part of Turkey’s electricity derives from conventional thermal sources. The major contributor of electricity is Natural Gas, which is majorly imported from other markets, such as Russia, Iran, and Azerbaijan. Followed after by Coal and Hydro generation.

The price of electricity in Turkey is highly dependent on the International dollar exchange value. Therefore, the fluctuation in the FX rate has a material impact on the electricity price in Turkey. For instance, Gas and Coal are imported and paid in USD and subject to special import taxes.

The Turkish government can announce a hike in electricity bills, citing pressure from the increase in dollar currency exchange – rate levels at any time. The last increase happened in Jan’22, when the TEDAS government tariff for business consumers increased by > 130% vs the previous quarter Q4 2021.

Obviously, the doubling of electricity prices has a negative impact on a company’s operating expenses. However, there’s a way to reduce this impact by choosing a competitive electricity provider from the free market. First, however, it’s important to understand what a typical electricity bill looks like in Turkey.

Understanding the Electricity Bill

A typical electricity bill is made of 2 main types of cost elements: regulated and unregulated (commodity component). The regulated components are industry grid charges, taxes, and levies that are set by market regulations, while commodity costs, such as generation and supplier margins, are linked to free-market economics, i.e. supply and demand. Therefore, by implementing an effective procurement strategy, it’s possible to reduce supplier margins and optimize electricity costs.

Indicative Electricity Bill Structure in Turkey in 2022 as of Jan’22

By looking at the electricity invoice structure above, we can see that there’s a big portion of the electricity bill that can be addressed through a supplier negotiations process, e.g. the commodity component of the electricity bill. This commodity component can vary significantly depending on the supply contract terms signed, your counterparty, and current market content in general. As an example, the Jan’22 TEDAS government commodity tariff is set at 1.890 TL/MWh for low-voltage consumers and 1.830,5 TL for medium voltage.

Managing Electricity Costs

It’s also important to note that although YEKDEM cost is considered to be a regulated component, some suppliers can take the risk and give you a fixed YEKDEM cost for 12 months at least. The reason is that YEKDEM is determined on a monthly basis by the market regulator based on several factors:

1. average day-ahead electricity market price;
2. renewable generation output and;
3. dollar exchange rate.

And because the formula is linked to free-market economics, it’s possible to price the risk for some of the market participants. Therefore, it’s possible to fix not only the typical commodity component (pure energy cost + supplier margin) but also Yekdem, which would make close to 70-80% of your electricity bill secured.

However, did you know that you can get a better offer from a free-market electricity supplier than your regional distribution company? If you are interested to learn more about these opportunities and wish to discuss how I can help you achieve the best electricity terms, please check my contact details.

If you want to learn more about how to source electricity in Turkey, please read the article here.

Curious to learn more about PPAs? Our guide offers a concise roadmap to navigate Power Purchase Agreements (PPAs). Learn more here.

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