As of present, there are, at least, 3 different markets for sourcing electricity in Turkey. Each of them has its characteristics as described below. However, corporates who intend to optimize their electricity cost and have better control over their electricity bill, prefer procurement of electricity on a forward basis via bilateral supplier agreements (Option No 2).
As described in my previous article about electricity bill structure in Turkey, the riskiest component in your electricity bill is a commodity part of the bill (pure electricity generation cost). This cost is very volatile and therefore it’s not advisable to procure 100% of your volume needs from the day-ahead (DAM) market. Instead, your should seek to hedge your energy volume position via OTC markets.
While the difference between day-ahead and OTC forward markets procurement seems to be clear, let’s now talk about TEDAS regulated electricity tariff. Did you know that TEDAS on average is 10-20% more expensive than buying from the free market?
You may be surprised but it’s a fact. This can be illustrated by the historical comparison of Tedas commercial tariff with the free market day-ahead price. And this phenomenon is more than likely to continue into the future because it’s one of the government’s objectives to liberalize the electricity market and boost competition. Otherwise, if Tedas remains under the free market rate, it means more government debt and no investments from the private sector.
Apart from the pure price advantage, there are many other benefits that come with free-market electricity procurement.
Those benefits may include but are not limited to, improved working capital through higher payment terms, advanced customer CRM reporting, renewable supply attributes so companies can claim 100% of their electricity come from renewable sources and many other advantages that you can always negotiate with your supplier.
Shall your company need help with switching from TEDAS regulated tariff to the free market procurement or if you have any questions, please leave your comments below or reach me via the contact form. I check my email box daily and always try to answer promptly.
If you want to learn more about the attractiveness of Tedas tariff in 2022, please check my next article.
Pingback: (2022) How To Choose Your Electricity Supplier In Turkey? | Futrue Energy Go
Thanks Kyrylo for such great explanations of the renewable energy market in Turkey. Much appreciated!
Thank you Amanda for your feedback!