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EU IPA13/CS-02.a

2013 ENERGY SECTOR PROGRAM PHASE-2 PROJECT

Energy Market Development

Task 1E

Workshop 2 Report [English Version]

Revision 1

July 2019

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TABLE OF CONTENTS

TABLE OF ACRONYMS ............................................................................................................................ 3

TABLES INDEX ........................................................................................................................................ 4

FIGURES INDEX ...................................................................................................................................... 5

1 INTRODUCTION ............................................................................................................................. 6

2 AGENDA ........................................................................................................................................ 7

3 WORKSHOP OVERVIEW ................................................................................................................. 9

3.1 QUESTIONS FOR THE PANEL OF EXPERTS ............................................................................................. 12

4 LIST OF PARTICIPANTS ................................................................................................................. 14

5 SATISFACTION SURVEY RESULTS .................................................................................................. 21

6 ATTENDANCE CERTIFICATE TEMPLATE......................................................................................... 23

7 MATERIAL SHARED ...................................................................................................................... 24

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TABLE OF ACRONYMS

Acronym Definition

DGEA MENR’s Directorate General for Energy Affairs (Turkey)

EMRA/EPDK Energy Market Regulatory Authority (Turkey)

EU European Union

EPIAS Turkish MO

IPA Instrument for Pre-Accession Assistance

MENR Ministry of Energy and Natural Resources (Turkey)

MIPD Multi-annual Indicative Planning Document

ToR Terms of Reference

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TABLES INDEX

Table 1 – List of participants ....................................................................................................................... 14

Table 2 – Results of the Satisfaction Survey ............................................................................................... 22

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FIGURES INDEX

Figure 1 – Event’s Agenda ............................................................................................................................ 7

Figure 2 – Opening remarks and introduction ............................................................................................. 9

Figure 3 – Presentation of findings............................................................................................................. 10

Figure 4 – Discussion with participants ...................................................................................................... 11

Figure 5 – Panel of experts ......................................................................................................................... 11

Figure 6 – Original Attendance Sheet ......................................................................................................... 16

Figure 7 – Satisfaction Survey Template .................................................................................................... 21

Figure 8 – Survey Results (Mean values) .................................................................................................... 22

Figure 9 - Attendance Certificate Template ............................................................................................... 23

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1 INTRODUCTION

The Instrument for Pre-Accession Assistance (IPA) is the means by which the European Union (EU) supports reforms in the 'enlargement countries' with financial and technical help. The IPA funds build up the capacities of the countries throughout the accession process, resulting in progressive, positive developments in the region.

This project - Energy Market Development- is funded as part of the Energy Sector Program (Phase 2) and relates to the second IPA Multi-Annual Indicative Planning Document (MIPD) 2011-2013 objective: “further alignment with and implementation of acquis on the internal gas and electricity market”. Within this framework, the studies on the harmonization of electricity and natural gas laws following the adoption of the EU Third Energy Package are ongoing. Within this context, IPA funds and EU experience are crucial, in order to achieve a better functioning internal energy market.

The goal of this document is to satisfy the ToR requirements that explicitly entail, for each of the workshops associated to the project tasks, the following deliverables:

Preparation a short workshop report which will include a short overview of the training material and the discussions held during the workshop (This document)

Ensure the attendance of the speakers/discussants who will participate in these events.

Photo and video shooting of these events

Compiling the list of attendees

Distribution of participant satisfaction survey forms during these events and reporting on the results of these surveys in the Workshop Reports

Provision of attendance certificates to the successful attendees of these events

In order to do so, this document provides for each the following material:

Training Agenda

Short overview of the training material and discussions held, including photos of the

event (video footage and additional images have been shared with client on a separate

file)

List of Participants (including original attendance lists)

Results of the survey carried out after the sessions (original surveys have been shared separately with the client’s project coordinator) and comments

Presented material (power point presentations)

Template of the attendance certificate delivered to all participants

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2 AGENDA

Figure 1 – Event’s Agenda

EU IPA13/CS-02.a - Energy Market Development Project

Workshop on Electricity Exchange Assessment and Recommendations

Ankara 5 July

Module Content Schedule

1 Energy Exchange Assessment 10:00 – 11:30

1.1 Scope of Task 1B-1.1

1.2 Institutional framework

1.3 The market model

1.4 Transmission capacity allocation

1.5 Integration of renewable and decentralized resources in the market

1.6 The guarantee and payment systems

1.7 The ViOP derivatives market

1.8 Market performance indicators

2 Energy Exchange Recommendations 12:00 – 13:00

2.1 EMRA’s consultation process

2.2 Scarcity pricing in the Turkish market model

2.3 Capacity remuneration mechanisms

2.4 Transparency and market supervision

2.5 Participation to the balancing power market

2.6 Exposure of renewable generation to the spot prices

2.7 Market liquidity

- Lunch Break 13:00 – 14:30

3 Introduction to the panel’s discussion

Recall of EERR in the broader context of the Turkish energy policy

14:30 – 15:00

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4 Moderated panel of experts:

Topic: Energy Exchange Desing best practices and challenges

Expert 1: Mr. Guido Cervigni (former Head of markets development at GME, Italy)

Expert 2: Mr. Anders Houmoller (former head of the Nordic electricity exchange Nord Pool’s office in Denmark)

Expert 3: Mr Abdullah Korkmaz (EPIAS Spot Market Manager)

Expert 4: Mr Yusuf Sinan Akıncı (EPIAS Strategy & Business Development Expert)

Moderator: Jorge Bircher (International Energy Market Design Expert, Energy Market Development Deputy Director and Energy Market Assesment Task Leader)

15:00 – 16:30

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3 WORKSHOP OVERVIEW

Workshop 2 covered the topics related to the work developed under the Electricity Exchange Assessment Report and the Electricity Exchange Recommendations Report. The workshop was held at Wyndham Hotel in Ankara on Friday 05 July 2019.

Participants from all relevant stakeholders were present and actively participated in the discussions throughout the whole day.

Figure 2 – Opening remarks and introduction

After a brief introduction and opening remarks on the scope of the task, the workshop started presenting findings related to:

• The institutional framework of the Turkish power wholesale markets, focusing the Market Operator (EPIAS)

• The Turkish market model and features of the design

• The design guarantee and settlement system

• Long term markets:

o ViOP derivatives market

o Forthcoming “physical delivery” market

• Market performance:

o Excess capacity

o Market volatility

o Market power

o Liquidity of the spot and derivatives markets

o Investigation on “too low” market prices

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A detailed presentation of these topics was given, together with our findings on the compliance of the market model with the EU Third and Fourth packages.

Figure 3 – Presentation of findings

Main issues related to the market design were already pointed out at this stage. However, a second module of the workshop was dedicated to a point-by-point presentation of all the flaws identified. For each matter we:

• Illustrated its possible implications

• Presented our recommendations

• Identified institutions and resources involved in implementing our recommendations

• Provided a tentative timeline for implementation.

The second module of the workshop covered the following topics:

• EMRA’s consultation process

• Scarcity pricing

• Capacity remuneration mechanisms

• Market transparency and market supervision

• Participation to the Balancing Power Market

• Exposure of renewable resources to the market prices

• Intra-day market liquidity

• Derivatives market liquidity

• Price predictability and EUAS’ scheduling and bidding behavior

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Figure 4 – Discussion with participants

To end, the workshop finalized with a moderated discussion, in which a panel of international and local exports on the field on energy exchanges shared their views on the topics presented in the next section.

Figure 5 – Panel of experts

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3.1 QUESTIONS FOR THE PANEL OF EXPERTS

1. Several comments and concerns have been raised in relation with the Turkish Power Sector in the latest years. Which, from your point of view, are the most important challenges facing by the sector nowadays?

o EPIAŞ (Yusuf Sinan Akıncı) o Guido Cervini o Anders Houmoller

2. EPIAŞ (in its current mission and structure) has been functioning now for 5 years. What is the balance of this period, in terms of achievements, problems faced, current developments and the challenges for the near future.

o EPIAŞ (Abdullah Korkmaz) o EPIAŞ (Yusuf Sinan Akıncı)

3. Do you think that the level of competition in the Turkish electricity market, considering that there is a dominant player (EÜAS] is appropriate or it should be improved? Any recommendation in this regard? [I like to make this question twice: first to our Turkish colleagues, later to the international consultants.

o EPIAŞ (Abdullah Korkmaz) o Guido Cervini

4. The workshop has highlighted that the interaction between markets and public decision making in driving the development of a country’s generation capacity may be complicated. This is not an un-common issue and several countries are experiencing similar dilemmas. Can you tell us what has been the experience in Europe in this regard?

o Guido Cervini o Anders Houmoller

5. What, from your point of view, are the best tools to reconcile, on the one side, the purse by the Government of legitimate security of supply and environmental objectives and, on the other hand, the investors’ needs for predictability of future revenues?

o EPIAŞ (Yusuf Sinan Akıncı) o Anders Houmoller o Guido Cervini o EPIAŞ (Abdullah Korkmaz)

6. The workshop has found that a missing element of the Turkish market design is a robust scarcity pricing method. Do you think that implementing a mechanism of this type would help addressing the issues that might prevent capital accumulation in the Turkish power industry?

o Guido Cervini o EPIAŞ (Yusuf Sinan Akıncı)

7. In relation with previous issue, a capacity payment mechanism has been recently introduced (in 2018). As it was stated in the regulation, this mechanism was introduced to assure generation that is important for reliability purposes (which by the way were experiencing important financial problems) remain operative in the market. Do you think this is the correct answer to address this problem? What other mechanism have been used in other European countries? Do you think any of these approaches is useful for the Turkish environment (in the near and medium future)?

o Anders Houmoller o Guido Cervini o EPIAŞ (Abdullah Korkmaz) o EPIAŞ (Yusuf Sinan Akıncı)

8. Financial products (futures, forwards, etc.) and, eventually, medium/long term contracts and in a relatively liquid markets are tools which permit to hedge the risks both on the seller and buyer side. Do you think these long term markets are properly function in Turkey? It is enough that these products/contracts are negotiated using OTC

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approaches or, alternatively, it would be useful to foster organized market to foster their utilization? What does the European experience tell us in this regard?

o EPIAŞ (Abdullah Korkmaz) o Anders Houmoller o Guido Cervini o EPIAŞ (Yusuf Sinan Akıncı)

9. The workshop has found that the Turkish market design is basically ready to accommodate decentralized generation and demand response. Why then don’t we see much of either?

o Anders Houmoller o Guido Cervini o EPIAŞ (Yusuf Sinan Akıncı)

10. Final question: All what we have been discussing today can be seen like some kind of “patches” (very important patches indeed…) to the “classic” market design. And this is happening all around the world (i.e. capacity payments, reliability options, balancing mechanisms, etc.). What do you think? Are the current market structures prepared to such “revolution” or do we have to start thinking in totally different approaches? How would they look like?

o EPIAŞ (Abdullah Korkmaz) o Anders Houmoller o Guido Cervini o EPIAŞ (Yusuf Sinan Akıncı)

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4 LIST OF PARTICIPANTS

The following list shows the participants that were registered to the event (73 participants).

Table 1 – List of participants

# NAME INSTITUTION

1 ALAADDIN EMRE EVGALLIOGLU EPDK

2 ABDI KORPINAR TEIAS

3 ABDULLAH KORKMAZ EPIAS

4 AHMET GUNGOR EPIAS

5 AHMET KADIOGLU EUD -Gama Enerji

6 AHMET SEMERCI ETKB /EIGM

7 ALI DURSUN TEIAS

8 ALI OSMAN YILMAZ TEIAS

9 ALPER SENER DELOITTE

10 ALPEREN AVSAR ETKB /EIGM

11 ANDERS P. HOUMOLLER MRC-HC

12 ASLI POYRAZ KUNT KUTLU DELOITTE

13 AYSE YASEMIN ORUCU WORLD BANK

14 BATU BILGE EUD - Sisecam

15 BEKIR TAS TEIAS

16 BERIL ZABUN SEN EUD - Bilgin Enerji

17 BERKAY BAYTOK TEİAS

18 BILGE KUCUKKARAASLAN OZCAN EUAS

19 BUDAK DILLI WORLD BANK

20 BURAK BURAL AB BASKALIGI

21 CAN DEMIRKAZIK EUAS

22 CANER BURAK OZER EUD - Bilgin Enerji

23 CEREN AYTURAN TEIAS

24 CHRISTOPH BRUNNER EUD Borusan ENBW

25 DANIEL SERRANO MRC

26 DUYGU PAPUR SARICI EUD - Ayen Enerji

27 ELIF UZUN ETKB /EIGM

28 EMRAH SOLAK ETKB /EIGM

29 EMRE AKIN EUAS

30 EMRE TUNA AKIN EPIAS

31 ENGIN BOSTANCI ETKB /EIGM

32 ERHAN DUMAN EUAS

33 ERHAN BAYKUS EY

34 ERKAN OZKOC TEIAS

35 FAHRI TASKIN TEIAS

36 FATIH MEHMET KAYA ETKB /EIGM

37 GOKCEN KASAPOGLU YARAMIS ETKB /DIGM

38 GOKHAN BILDIK TEIAS

39 GUIDO CERVIGNI MRC-DFC

40 HASAN SILAHTAROGLU EPIAS

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# NAME INSTITUTION

41 ISIN UNVER BAS EPDK

42 ILCIN YENI EUD- IC Ictas Enerji

43 INANC BILIMGUT ETD -RWE

44 ISTEMI MAVI ELDER

45 JORGE BIRCHER MRC

46 LATIFE DEMIRTAS ETKB /EIGM

47 MEHMET EMRE OLMEZ EPIAS

48 MEHMET HUSEYIN YILMAZ ETKB /DIGM

49 MERDEN YESIL TEIAS

50 MURAT CAN ALKAN EUD - Bilgin Enerji

51 MURAT CIFTCI ETKB /EIGM

52 MURATHAN YENICELI TEIAS

53 MUSTAFA ANIL AKKAYA EPIAS

54 NURETTIN CEMIL GOKPINAR ETKB /DIGM

55 NURULLAH CAKMAK EMRA

56 ONUR ALICAN KURTAR EPDK

57 ONUR DONMEZCELIK ETKB /EIGM

58 ORCUN YUKSEK EUD - Bilgin Enerji

59 OYTUN ALICI ELDER

60 ONDER AKAR ETD -APLUS

61 FIRAT GUNINDI EUAS

62 SEFA GEYLANI BOTAS

63 SELMAN GEZER ETD

64 SEVTAP BODUR ETD- Enerjisa Uretim

65 SIRRI UYANIK EUD - Iskenderun Enerji

66 SEYDA ERSOY TEIAS

67 UMIT BUYUKDAGLI TEIAS

68 YASIN DULGEROGLU EKTB/EIGM

69 YUSUF SINAN AKINCI EPIAS

70 ZEHRA TUNCAY MRC

71 ATACAN GULBAY ELDER

72 SADI BUYUKKEGECI ELDER

73 ISMAIL IRKIN ETKB /DIGM

Out of the 73 registered participants, 56 signed the attendance sheet as shown on the following pages. Only those participants that provided an email address will receive the attendance certification.

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Figure 6 – Original Attendance Sheet

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5 SATISFACTION SURVEY RESULTS

The following template was used in order to collect the answers of the satisfaction surveys.

Figure 7 – Satisfaction Survey Template

The results of the survey were very satisfactory, the number of respondents was 27, out of the 56 participants. The results are shown below:

EU IPA13/CS-02.a - Energy Market Development Project

Workshop on Electricity Exchange Assessment and Recommendations -

Satisfaction Survey 1. The speaker(s) was(were) intellectually challenging

Strongly Disagree Strongly Agree

1 2 3 4 5

2. The speaker(s) was(were) presented material in a clear manner

1 2 3 4 5

3. The speaker(s) was(were) well prepared for each session

1 2 3 4 5

4. The speaker(s) showed concern for atendees' understanding of the material

1 2 3 4 5

5. Overall, the session(s) was(were) well organized

1 2 3 4 5

6. The level of the material was adequate, according to expectations and allowed a better

understanding of the workshop’s topics

Below Expectations Above Expectations

1 2 3 4 5

7. Was the length of the event too long, too short or about right?

Too Short Too Long

1 2 3 4 5

8. Overall, how would you rate your speaker(s)?

Lowest Highest

1 2 3 4 5

9. Please help us improve, kindly add any additional comment regarding speaker(s) and / or

workshop organization

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Table 2 – Results of the Satisfaction Survey

Electricity Exchange Report

Question Mean Median Mode

Intellectually challenging 4.22 4.00 4.00

Presented in a clear manner 4.26 4.00 4.00

Prepared for each session 4.41 4.00 4.00

Concern for attendees' understanding 4.30 4.00 4.00

Well organized 4.33 4.00 4.00

Adequate level 3.96 4.00 4.00

Speaker rate 3.48 3.00 3.00

Length 4.19 4.00 4.00

For all questions the best response possible was a 5 except for the one related to the length of the event, to which the optimal response would be a 3. It can be seen that all answers are on average very close to 4.3 out of 5 in satisfaction level, being the length of the workshop on the lengthy side in duration terms according to the respondents (4.2 out of 5).

The average answers for each question are also shown on a graphical manner hereafter. The overall satisfaction metric is calculated as the average of the mean results to questions 1 through 8 (not taking into account Q#7).

Figure 8 – Survey Results (Mean values)

NOTE: The original scanned copies of the surveys have been shared with the project coordinator on the client side on a separate document.

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6 ATTENDANCE CERTIFICATE TEMPLATE

Figure 9 - Attendance Certificate Template

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7 MATERIAL SHARED

Available as an annex on a separate document.

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This publication has been produced with the assistance of the European Union. The content of this publication is the sole responsibility of the consultant and can in no way be taken to reflect the

views of European Union or MENR