Volatility in the Turkish wholesale electricity market: an assessment

OĞUZ F., Peker M. C.

Energy Sources, Part B: Economics, Planning and Policy, vol.18, no.1, 2023 (SCI-Expanded, Scopus) identifier identifier

  • Publication Type: Article / Article
  • Volume: 18 Issue: 1
  • Publication Date: 2023
  • Doi Number: 10.1080/15567249.2023.2173340
  • Journal Name: Energy Sources, Part B: Economics, Planning and Policy
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, Academic Search Premier, Aerospace Database, Applied Science & Technology Source, CAB Abstracts, Communication Abstracts, Compendex, Computer & Applied Sciences, Environment Index, Greenfile, INSPEC, Metadex, Pollution Abstracts, Public Affairs Index, Veterinary Science Database, Civil Engineering Abstracts
  • Keywords: Wholesale electricity markets, Volatility, Wholesale markets' policy, Rolling window analysis, ARMA models
  • Ankara Yıldırım Beyazıt University Affiliated: Yes

Abstract

Electricity prices are determined in wholesale markets. A major issue in determining prices is the distortive effect of high volatility of supply. This paper investigates the volatility of electricity supply in the Turkish energy exchange for the period between 2017 and 2020, by using hourly data. We find that volatility increased substantially during this period and uncertainty became a major issue. High volatility brings non-price variables such as institutional and political preferences to the forefront in terms of the decision-making of suppliers. We also discuss the dominance of bilateral contracts, the design of the renewable support mechanism, and the disappearance of independent traders in the wholesale market as some of the major issues that correlate with high volatility.