Overview of Electricity Deregulation, Power Quality and Energy Efficiency Studies in Turkey

mer GL
Department of Electrical Engineering Istanbul Technical University, Istanbul, Turkey enerjikalitesi@gmail.com
AbstractPower quality and energy efficiency become more important to both electric utilities and energy customer. The purpose of this study is to explore the basis for a relationship between electricity deregulation, power quality and energy efficiency in Turkey. The theft of electric energy overloads the distribution system and causes power quality problems and ineffectiveness in electrical distribution system. The electric system restructuring, whose main objectives are decreasing theft of electric energy, increasing energy efficiency and power quality, has been carried out in Turkey. Keywords- Electrical power system; power quality; deregulation; energy efficiency, non-technical losses, Turkey

Deregulation of the electric power market present the possibility of improving the system operation efficiency. This efficiency requires the development of an infrastructure that can address the information needs of the sector in a less centralized and more organized sense. Many utilities are indisposed to invest in system improvements that aren't believe critical. Utilities have no cash to invest because of technical and non-technical losses in the unregulated arena. In actuality, customer power quality and energy efficiency has not increased significantly yet, because of the liberalization in the electricity distribution system have not proceed in Turkey. The electricity generation and distribution assets will be start again privatization after parliament election. The purpose of this study is to explore the basis for a relationship between electricity deregulation, power quality and energy efficiency in Turkey. Even the best managed electricity transmission and distribution systems cannot operate without losses. These losses can be technical and non-technical; one of non-technical losses, the theft of power overloads the distribution system and causes power quality problems and ineffectiveness. Electric power systems can be restructured to make power sector organizations operate in competitive environments where efficiency and effectiveness in service delivery are both virtues and necessities in Turkey [2]. II. ELECTRICITY DEREGULATION IN TURKEY

I.

INTRODUCTION

The importance of power quality will increase with the number of pieces of consumer equipment sensitive to power quality. Any disturbance in voltage, frequency or current may lead to serious damage to load equipment [1]. Because of the cost of low power quality will be paid by the failure of consumer equipment, lost productivity and labour, poor power quality is the most important factors limiting growth in Turkey. Electric power quality is becoming an important issue in the deregulated power systems. Restructuring of electric power utilities will lead to an even worse situation. Deregulation is resulting in important structure changes in the utility industry. Deregulation of the electric power market present the possibility of improving the system operation efficiency and power quality. Each of us involved with electrical design, operations or customer service has an interest in power quality and energy efficiency which is ultimately define system performance. Industries that begin to analyze power use patterns and understand how power quality problems affect their operations will be able to take advantages of these opportunities. A company that can control the energy use can work out better rates by participating in power interrupting programs.

Turkey is one of the fastest growing economies of the world. Also, the electricity market in Turkey was the most rapidly growing market in the OECD over the last two decades. The investment opportunities in Turkey are particularly attractive in the framework of countrys ongoing ambitious privatization agenda. Demand estimation for electricity in 2015 will be approximately 410,000 GWh and total capacity will need to increase to 65,000 MW from approximately existing capacity

of 30,000 MW. Demand for electric energy in Turkey is growing at an average rate of 7 percent per annum. Annually, Turkey needs investments worth over USD 1-2 billion in power generation, transmission and distribution through 2015 to meet its growing demand. Until 1993, generation, transmission and distribution of electricity are delivered by Turkish Electric Authority (TEK). In September 1993, TEK was divided into two public companies: TEA (generation and transmission) and TEDA (distribution). The activities of both TEA and TEDA were excluded from the scope of public services. The share of TEA generation in total fell to less than 80% in 1999 from more than 90% in 1995. Transmission and wholesale trade of electricity remained under TEA control. TEA was further divided into generation (EA) and Turkey transmission Co. Inc. (TEA), The Turkish Electricity Trading and Contracting Co. Inc. TETA companies in 2001.. The Turkish Electricity Transmission Co. Inc. will perform international interconnection activities in line with the decision provide transmission and connection services to all system. Turkey currently has electric transmission line connections with Georgia, Armenia, Azerbaijan, Bulgaria, Iran, Iraq and Syria. Projects are continuing to establish electric interconnection lines between Turkey-Greece, Turkey-Black Sea Countries, Egypt-Iraq-Jordan-Syria-Turkey, and TurkeyCentral Asian countries. The connection of 400 kV lines linking the Turkish and Greek networks is being tendered with the ultimate aim of integration with the West European Electrical System (UCTE.) The generation, transmission, distribution, wholesale, retail sale and retailing services, import, export of electricity and the establishment of the Energy Market Regulatory Authority (EMRA) and rules and principles related to its operations, is the subject of law [3]. An Electricity Generation Company and private sector generation companies may sell electricity and/or capacity to customers in accordance with their licenses. An Electricity Generation Co. Inc. may build, lease and operate new generation facilities on behalf of the state where deemed necessary in accordance with the Board-approved generation capacity projection, taking into account private sector generation investments. The total market share of a private sector generation company, which it may acquire through the generation facilities it operates together with its affiliates, may not exceed twenty percent of the published figure for the total actual installed electricity generation capacity in Turkey in the preceding year [5]. An auto-producer and auto-producer group can sell within a competitive environment, a certain to be determined by the board of electricity that it has generated in a calendar year. Distribution companies may not purchase more than 20% of the electricity that they have distributed during the previous year in the area defined in their license from generation companies that they own or are affiliated with. Distribution companies in areas specified in their respective licenses shall conduct the electricity distribution activities. Distribution companies by obtaining a retail sale license can

sell electricity to consumers in their respective areas on a retail basis and/or can provide retail sale services even if there are other retail companies in their designated regions. TEDAs monopoly on distribution was reduced by the privatization of several distribution systems in Turkey The Turkish Electricity Trading and Contracting Co. Inc. and private sector wholesale companies will conduct wholesale activities. The total market share of any private sector wholesale company together with its affiliates may not exceed ten percent of the total electricity consumed in the market during the preceding year. Retail sale companies are allowed to occupy with retail sale or retail sale service activities without being subject to any regional limitation. In order to reach primary objective and the target for adoption of the relevant EU Acquits, the liberalization in the electricity sector will proceed [4]. Following the completion of the necessary sector reforms and the restructuring of stateowned electricity enterprises the electricity generation and distribution assets will be privatized [6]. The primary benefits expected from electricity sector reform and privatization has been determined as follows: Decreasing of costs through effective and efficient operation of electricity generation and distribution assets; Increasing the supply quality and supply security in the electricity sector; Ensuring that the required rehabilitation and expansion investments are performed by the private sector without creating any liabilities on the public institutions; and transferring to consumers the benefits obtained through competition in generation, trade of electricity, efficiency and regulation of quality of service.
TABLE I. DISTRIBUTION REGION

provinces included in the Distribution The distribution region Region Diyarbakr, Mardin, Siirt, anlurfa, Batman, 1. rnak Bitlis, Hakkari, Mu, Van 2. Ar, Erzincan, Erzurum, Kars, Bayburt, 3. Ardahan, Idr Artvin, Giresun, Gmhane, Rize, Trabzon 4. Bingl, Elaz, Malatya, Tunceli 5. Sivas, Tokat, Yozgat 6. Adana, Mersin, Osmaniye, Hatay, Gaziantep, 7. Kilis Krehir, Nevehir, Nide, Aksaray, Konya, 8. Karaman Ankara, Krkkale, Zonguldak, Bartn, 9. Karabk, ankr, Kastamonu Antalya, Burdur, Isparta 10. zmir, Manisa 11. Balkesir, Bursa, anakkale, Yalova 12. Edirne, Krklareli, Tekirda 13. stanbul Province Anatolian Side 14. Sakarya, Bolu, Dzce, Kocaeli 15. Afyon, Bilecik, Eskiehir, Ktahya, Uak 16. stanbul Province European Side 17. Kayseri 18. Aydn, Denizli, Mula 19. Adyaman, Kahramanmara 20. Amasya, orum, Ordu, Samsun, Sinop 21.

Figure. The distribution region in Turkey

Tender announcement for the sale of 3 electricity distribution companies; (Bakent EDA, Sakarya EDA, AYEDA Electric Distribution Company) has been made on August 31, 2006. But Turkish Government postponed tender after 2007 Parliament Election. Timely and successful privatization of electricity generation and distribution is an essential element of market liberalization. III. ENERGY EFFICIENCY IN A DEREGULATED SYSTEM

Energy losses arise as power flows through the network to meet customer load demands. The accurate estimation of electrical losses enables the supply authority to determine with greater accuracy the operating costs for maintaining supply to consumers. This in turn enables a more accurate estimate of the system lifetime costs, over the expected life of the installation. In power systems the copper losses utilities operating as government monopoly institutions in vertically integrated structures, have overlooked these losses since they do not constitute major operational or quality of supply problems [7]. However, their impact is economic; hence they are assuming greater importance in deregulated energy market. Electricity supply industry losses are both technical and non-technical. The problem of how to deal with technical and non-technical losses is a complex one for the new commissions. The issues to grapple with include setting levels of acceptable loss, whether utilities should be allowed to pass on theft and other inefficiency costs to customers, A. The NonTechnical Losses in Turkey Electricity theft can never totally be annihilated in any power system in the very efficient systems of Japan and Canada. Turkey effort has been devoted to the technological and managerial methods necessary to reduce theft to levels tolerable. Many of these systems operate in a governance culture that promotes organizational efficiency and theft law enforcement. Because of some electricity consumers will try to steal electricity, organizations pay little attention to theft

problems; perhaps hoping theft will disappear and not become a public issue. The first-step in electricity theft reduction is to become knowledgeable about the theft problem. Power systems, should be encouraged to initiate a detailed power theft analysis in cities or regions. The analysis must go beyond conventional engineering and explain why theft occurs and what factors perpetuate theft. In the systems where power theft is the highest, electricity sector organizations are state owned and managed enterprises. The organizations may be intertwined into the political and bureaucratic structures and processes and there are few incentives to reduce theft in Turkey. A world trend has been deregulation and the transformation of public sector enterprises into the private sector. In the past decade many power systems were privatized and now operate as businesses with shares traded on the stock exchanges. From a business perspective, electricity theft results in economic losses to the utility. Some may argue that large utilities providing essential services give poor service, overcharge, make too much money anyway, and, therefore, some theft will not break the company or drastically affect its operations and profitability in Turkey. Others looking at the same situation would argue that theft is a crime and should not be allowed. Theft is a crime Turkish laws and court would put in prison as penalty until 3 years. The consequences of theft in the worst case systems are important to the viability of the services provided. The combined losses (including nonpayment of bills) in TEDA have severe impacts resulting in utilities operating at a loss and must continually increase electricity price. Locked into a culture of inefficiency and corruption, the electricity utilities have difficulty delivering reliable service [8]. The evidence points to the increasing levels of power theft in many countries and the financial losses for some systems are so immense that the utility is in financial turmoil. Investment in improving the system and adding additional capacity cannot be undertaken, loans and payments cannot be met, and the consumer faces increased electricity charges.

TABLE II.

TECHNICAL AND NON-TECHNICAL LOSSES OF ELECTRICITY DISTRIBUTION CORPORATION IN TURKEY

Transformer loss Medium Voltage lines loss Low voltage lines loss Measurement Devices loss Total technical losses Total non-technical losses Total losses
TABLE III. Mardin rnak Hakkari Batman Idr Bitlis Diyarbakr Van anlurfa Mu Bingl Ar Siirt Kars Erzurum Ardahan Mersin Boazii EDA Gaziantap Adyaman Sinop Tunceli Kilis Gmhane Hatay Tokat Giresun Samsun Artvin Sakarya EDA Krfez EDA Trabzon Elaz Malatya orum Rize

%2,1 % 2,5 %5,4 %0,4 %10,4 %10,8 %21,2

TECHNICAL AND NON-TECHNICAL LOSS IN TURKEY IN 2004 % 71,6 71,1 67,2 65,7 64,0 62,0 61,7 61,4 58,3 55,7 39,8 39,7 37,8 35,4 29,4 26,6 22,8 19,3 18,0 17,7 16,4 16,0 15,9 15,7 15,1 14,9 14,8 14,7 14,1 14,0 13,8 13,3 13,2 13,1 12,2 11,9 Aydn Adana Yalova Trakya EDA Manisa Yozgat Ayeda Antalya Balkesir Burdur Bayburt anakkale Aksaray K.Mara Amasya Osmaniye Erzincan Bakent EDA Nigde Ordu Mula Krehir Ktahya Kastomonu K.Elmas EDA Meram EDA Afyon Uak Isparta Sivas Eskiehir Denizli zmir Nevehir Bilecik Bursa % 11,4 11,3 11,3 10,8 10,8 10,8 10,5 10,5 10,4 10,2 10,2 9,9 9,9 9,9 9,9 9,7 9,6 9,6 9,6 9,4 9,3 9,0 9,0 8,9 8,9 8,9 8,8 8,5 8,2 8,1 7,3 7,2 7,0 6,4 5,7 5,0

performance potential. The total energy efficiency of combined heat and power plants based on natural gas or coal can reach 85-90% efficiency compared with 40% for conventional power plants. Even the best managed electricity transmission and distribution systems cannot operate without losses. These losses can be technical, such as those occurring during long distance transmission or grid failures. Technical losses can usually be decreased by the introduction of modern technologies and improved management practices. Similar conclusions can be drawn from industry experiences: each factory individually can decrease its energy consumption per unit of output with more energy efficient technologies. IV. THE ELECTRICITY INDUSTRY LAWS TO SUPPORT DEREGULATION IN TURKEY

The electricity supply industry is undergoing deregulation around the world. A free market approach to buying and selling electricity is forecasted to drop the cost and introduce choice into what has been a monopoly industry. A. Electricity Market Law The "Electricity Market Law" no: 4628, published in the Official Gazette dated 3 March 2001, was enacted to unbundled electricity market activities, enable progress into a liberalized electricity market and provide for fair and transparent market regulation. The objective of the aforementioned Laws is to establish a financially viable, stable and transparent energy market, which will function as per the provisions of private law and within a competitive environment to ensure the independent regulation and supervision of the market in order to provide sufficient electricity. The new laws include the following key elements: An autonomous Energy Market Regulatory Authority, governed by a board; A new licensing framework for market participants; An energy market, comprised of bilateral contracts between market participants; Eligible consumer concept, eligible consumers to be free to choose their suppliers; A transition mechanism to be implemented over a two year programs for electricity.

Turkeys distribution utilities is facing serious problem of lean revenue collection in lieu of energy supplied due to energy thefts and network losses. Theft losses can account for 2 billions of dollars in Turkey each year in lost direct revenue. Losses of distribution utilities are defined as the net result of the difference between the distributed energy and the energy effectively billed. The theft of power overloads the distribution system and causes low voltage, voltage dips problems. The theft varies from 5 to 71% in different regions as given below: B. Technical losses Energy efficiencies in power generation can be achieved by improving the availability of existing plants or by replacing the existing power plant fleet and by technology achieving 45% efficiency today. In fact, if this area is not improved, new technologies will be unable to achieve their inherent superior

The purpose of this Law is to ensure the formation of an electricity market which is financially strong, transparent and operates in accordance with the provisions of private law in a competitive environment. B. Energy efficiency law Energy efficiency contributes to economic and social prosperity. Energy is a costly production factor in Turkeys economies. Increased energy efficiency contributes to energy security and makes us more competitive in an increasingly globalize world. Energy efficiency provides us with the time require to replace fossil fuels and other non-sustainable energy sources with renewable in an ecological, economic and socially responsible approach.

Energy efficiency refers to the ratio between energy outputs and inputs. There are many sources of energy efficiency throughout the energy chain such as: Transmission and storage of primary energy Generation and transmission of electricity Distribution of energy and the provision of services in industrial, commercial, and residential activities. Energy intensity, measured in terms of the amount of energy required to produce a unit of GDP, increases during the first stage of industrialization in developing countries before decreasing as observed in maturing economies. In developed countries the rate of growth in energy consumption is decoupled over time from the rate of growth of GDP resulting in a decrease of energy intensity. The response of energy demand to energy prices depends on several factors such as existing taxes or the type of service or payment system or the quality of consumer information. As relatively efficient technologies and practices move into the marketplace, initially lowering energy use, there is a potential rebound effect on energy demand. Turkeys energy policy approach has been highly supply oriented; energy efficiency has been a lower priority. Turkeys energy use per unit of GDP is rising. The Energy Efficiency Law is a good first step to realize an energy savings potential of 25-30% [9]. To reach this goal, stronger policies are necessary, particularly in the transport sector. C. Renewable Energy Law Small scale power generating technologies, such as gas turbines, small hydro turbines, photovoltaic, wind turbines and fuel cells, are gradually replacing conventional generating technologies in various applications in the electric power systems. These distributed technologies have many benefits, such as modular installation, high fuel efficiency, short construction lead time, and low capital expense, which all contribute to their growing recognition. The prospect of independent ownership for distributed generators, as encouraged by the current deregulation of the generation sector, further broadens their appeal. In addition, the industry restructuring process is moving the power sector in general away from the traditional vertical integration and cost-based regulation. Turkish Parliament has approved a renewable energy law which will provide feed-in tariffs for electricity from renewable energy sources including wind energy [10]. The approval of the new renewable energy law by the Turkish National Assembly follows the example of the leading renewable energy countries in Europe. The new renewable energy law will support mainly wind power by setting up a purchase guarantee of the average whole-selling electricity price (some 5 ct/kWh) for a period of 7 years for electricity generated from renewable energies. This tariff is much below the average compensation in the leading European wind markets. Grid operators will be obliged in principle to provide access to the grid for renewable energy generators. An important

aspect is that in principle also independent power producers can benefit from the feed-in tariff which can make it easier for local and rural population and enterprises to benefit from the new legislation. Turkish renewable energy industry law also brings Turkish energy policies closer in line with European Union legislation, but we still hope for further improvements. Unfortunately, the law is certainly not sufficient to attract investment in small hydro, PV and biomass installations. These technologies will also require additional legislative measures. V. CONCLUSION

In resent years, power quality and energy efficiency become more important to industry, commercial and residential energy users in Turkey. This paper presents a brief evaluation of the existing electric power sector and its restructuring and explore the basis for a relationship between electricity deregulation, power quality and energy efficiency. The theft of electric energy overloads the distribution system and causes power quality problems and ineffectiveness. The electric system restructuring, whose main objectives are decreasing theft of electric energy, increasing energy efficiency and power quality, has been carried out in Turkey. Turkey that is developing countries have great scope for realizing energy efficiencies through the use of the newest technologies if they are affordable and available. Energy efficiencies can be realized in Turkey through a mix of government, industry and individual actions. Turkey includes long-term high cost agreements, low quality of power and therefore restrictions for synchronization with UCTE network. REFERENCES M.H.J. Bollen, Understanding Power Quality Problems, IEEE Press, The Institute of Electrical and Electronics Engineers Inc., New York, 2000. [2] Turkish Electricity Transmission Co, Annual Development of Turkeys Gross Electricity Generation-Imports -Exports and Demands, 2004. [Online]. Available: www.teias.gov.tr. [3] Electricity Market Law No. 4628 was published in the Official Gazette No. 24335 dated 3 March 2001. [4] A. Eybalin and M. Shahidehpour, Electricity Restructuring European Council, 2004 Regular Report on Turkeys Progress towards Accession EU [5] Energy Market Regulatory Authority, The Electricity Market Application Handbook, Apr. 2003. [Online].Available: www.epdk.org.tr/yayin_rapor/elektrik/yayin/elkitabinisan2003. [6] High Planning Council of Turkey, Electricity Sector Reform and Privatization Strategy Paper, March 17, 2004. [7] 07-0356 ECI Regulation of Voltage Quality. pdf, [online] avaible www.leonardo-energy.org/drupal/voltage-quality-regulation [8] State Planning Organization. VIII. Five year development plan (2001 2005). Energy special experts commission report, State Planning Organization, Pub.no. 2531, Ankara, Turkey, 2001. [9] Law of Energy efficiency, Law No. 5627 was published in the Official Gazette, 2 May 2007 [10] Utilization of Renewable Energy Sources for the Purpose of Generating Electrical Energy Law No. 5346, Official Gazette 18 May 2005.
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