Power goes out as electricity prices hit cap

Turkey has entered August with forest fires. Along with news of the blazes, there were also reports of power cuts on the first business day of the month. Many people thought there might be a link between the cuts and the wildfires, but there wasn’t.

Then, the Ministry of Energy and Natural Resources, as well as some officials and experts, made a series of statements. They said the reason for the power cuts was that high temperatures raised electricity demand. On its own, this appears to be a reasonable explanation, but when look a bit deeper you see that it is also not enough to explain the situation. So, let’s try to explain what actually happened… Why wasn’t the demand increase met? Because insufficient electricity was provided to the network to meet demand. Because power stations couldn’t generate enough electricity for the country. Is the generation capacity insufficient? No, it isn’t, it is sufficient, there is even surplus capacity.

Turkey has installed power of 98,000 megawatts (MW) at the moment. The available power necessary to meet ‘peak demand’, during periods of high consumption, is around 50,000-55,000 MW. Why couldn’t those tens of power plants meet this demand?

Because some power plants held by the private sector weren’t operating on those days when electricity demand increased. Private sector investors install power plants to make profit. Generating uninterrupted power is not their priority. They base their power generation policy on profit maximization. So, is the issue that tey haven’t made profit recently? Yes, this is the exactly the situation for some power plants.

But aren’t periods of high demand the most profitable for producers and sellers? No, because no matter how much demand increases, prices can’t exceed a certain level. Because the price cap set at the Day-Ahead Market (DAM), which can also be described as an Energy Exchange, makes many power plants unprofitable.

Each power plant has a generation cost per unit. This cost can change in line with the resource used (coal, hydropower, natural gas etc.) and the technology used by it. Moreover, generation costs can change any moment in line with price fluctuations of the resource. If the generation cost of a power plant per kilowatt hour (kWh) is higher than the price cap at the DAM, you can’t expect it to generate electricity.

In other words, electricity demand hits the cap in these moments. So, what is the price cap at the electricity market?

In July it was TRY 617 per megawatt hour (MWh). The price cap set for August is TRY 636 per MWh. Can this price be increased? Of course, it can. Electricity demand already peaks at certain times of the day. Is the current price cap low? It seems so, because the power had to be cut.


Forest fires, which started on July 28 in Turkey, have adversely affected tourism, agriculture, livestock, and transportation. Another sector that has been affected is energy.

Blazes around Manavgat damaged two hydroelectric power plants and transmission lines and they couldn’t supply electricity to the national network.

Power stations in Mugla, feeding a large part of Southwest Anatolia, were under wildfire threats. Yatagan, Yenikoy and Kemerkoy Thermal Power Plants, which are important to Turkey’s power generation capacity, are located in the wildfire area.

The battle continued against blazes that approached to within 300-400 meters of the Kemerkoy Thermal Power Plant while Energy and Natural Resources Minister Fatih Donmez was there on a visit. Donmez was expected to make a statement on August 4 at around 3.00-4.00 pm, but blazes started to approach to the power plant again after the wind direction changed.

All plant personnel and nearby residential areas were evacuated, and all flammable and explosive materials were removed on August 4. Firefighters worked throughout the night to put out the blaze, which was largely contained early on August 5. The blaze continued for 11 hours. Minister Donmez said no harmful emissions were detected and no harm was caused to the main plant units. He also confirmed that the fire did not spread to the coal stock area of the plant.

Measures have also been put in place to avoid any fires re-igniting. According to ‘s Donmez’s, ditches over 20 meters were dug around the plant while its hydrogen tanks were emptied.

The Kemerkoy Thermal Power Plant and nearby Yenikoy Thermal Power Plant are operated through a partnership between Limak Enerji and IC Ictas Enerji, which took them over as a result of a privatization tender. IC Ictas executive Firat Cecen and Limak Group official Batuhan Ozdemir were also at the plants visited by Donmez.

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