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REGULATION ON THE ELECTRICITY MARKET CAPACITY MECHANISM

The Regulation on the Electricity Market Capacity Mechanism was published in the Official Gazette dated 20.01.2018 (“Regulation”). Capacity mechanism is defined as a support mechanism operated by the Turkish Electricity Transmission Corporation (“TEIAS”) to ensure supply and system security.


The Regulation concerns the capacity payments TEIAS (as the system operator) will make to electricity generators to create and/or maintain sufficient installed capacity (including spare capacity) for security of supply in the electricity market. 


As per the Regulation, TEIAS will make a capacity payment to electricity generators within the scope of a yearly budget to be approved by the Electricity Market Regulatory Board.  Capacity payments to be made to generation plants will be calculated within 15 days following the end of the relevant invoicing period and notified to the license holder. Payment will be realized within 30 days. The calculation for such payments is detailed in the Regulation.


The Regulation sets forth certain criteria, and if a plant fulfills at least one of such criteria, it will not be included in the capacity mechanism. For example, for plants based on local resources, those below 50 MW and for others, those below 100 MW are part of this list. Local resources are defined as renewable energy resources and fossil fuel resources generated within the country.


In case the budget determined for each invoicing term is less than the total capacity payment calculated for all plants taking advantage of the capacity mechanism in the relevant period, priority will be given to plants based on local resources.


Legal entities owning a plant will have to make an application to TEIAS for each plant by October 15th in order to benefit from the capacity mechanism the following year.  Applications with regards to plants to benefit from this mechanism in 2018 will be made by 31.01.2018. TEIAS will review the applications and announce the plants to benefit from such mechanism on its web site by 15.02.2018 at the latest and notify them to the Electricity Market Regulatory Authority. These plants will be included in the capacity mechanism starting from 01.01.2018. 

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