Acid Test for Turkish Energy Markets

Dear Colleagues,

We have an extraordinary evaluation opportunity to have acid test of Turkish Energy Markets, and to check local market forces in energy business of our local investment environment.  New 800 Mwe electricity generation output capacity  naturalgas firing Bandirma combined cycle power plant is expected to feed the national grid commercially soon. The Investment Group has already announced that the plant opening ceremony will take place on 23^rd October 2010 with presence of our Prime Minister. With maximum local overall national demand of 35K MWe, we shall have a great opportunity to test the average floating unit price of national electricity  markets with new influx of additional clean 800 MWe capacity, a real yardstick to evaluate the market impact. This plant has a substantial capacity. It is very important for market and will influence price fluctuations. So it will provide extraordinary information not only in national scale but also in international magnitude to provide precious information for global investment appetite.  We need to evaluate the floating price figures at least for 1-month   or more, upon new extra clean electricity contribution.  Similarly the price evaluations will need information on new investments in operation, which are recent power plant investments namely OMV Samsun 800 MWe, RWE Denizli 800 MWe, 1150 MWe full capacity in Aksa Antalya, Unit CCPP 800 MWe Gebze, Catalagzi 1360 MWe Eren.  All of these new power plants in construction will have the same course of experience in entering energy markets and they will give us important clues.  These findings will advise us to update our feasibility calculations, payback period estimations for our colleagues in investment banking, financing disciplines, whether the public expectation of 5-years payback period is feasible, reliable, and reasonable.  Accordingly foreign as well as local investors will have a better roadmap in their investment decisions, whether or not to continue in base electricity generation power plants in thermal/ nuclear/ and local/imported coal, or completely more to renewable.  It is our speculation that the average overall electricity unit price will be lowered immediately after addition of new 800 MWe capacity due to stagnant demand at maximum 35K Mwe level, however this new capacity will give some relaxation and release some load from public power plants to enable them to have rehabilitation / maintenance in marginal scale. In any case the privatization of electricity generating power plants will have priority in our near future before general elections in July 2011.  These above estimations are pure speculation and need to be proven in due time with market figures and evaluations. You all know that markets are guided by expectation in global means as always.  Get ready, be prepared.  We are able to predict this much, and will be too pleased to receive your comments/ contributions.  With deepest regards

Haluk Direskeneli, Ankara based Energy Analyst