Evaluation of the reform in the Turkish electricity sector: a CGE analysis
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Evaluation of the reform in the Turkish electricity sector: a CGE analysis Erisa Dautaj Şenerdem1 · K. Ali Akkemik2 Received: 29 May 2019 / Accepted: 11 April 2020 © Japan Economic Policy Association (JEPA) 2020
Abstract Turkey’s electricity market has undergone extensive reform since 2001 through market liberalization, unbundling, privatization, the establishment of organized power markets, retail market opening, and the establishment of an independent energy regulatory authority. We use a computable general equilibrium model to test the impact of power sector reform on the economy. We construct Turkey’s social accounting matrix for 2010 by disaggregating it into energy accounts. Major findings suggest that the reform has, for a major part, been beneficial to the economy. We find that GDP increases by 0.35% from the baseline when monopolistic rent is reduced simultaneously at all state-run power companies, suggesting that the economy would be better off with these firms behaving as competitive agents in the market, rather than using their dominant position to intervene in the market. One alternative is wider participation of state-run utilities in the day-ahead market, which leads to a 0.25% increase in GDP. Our findings also suggest that the introduction of the day-ahead market and privatization of state-run utilities are positively related to economic growth. Keywords Electricity market reform · Regulation · Turkey · General equilibrium model
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s4249 5-020-00038-x) contains supplementary material, which is available to authorized users. * K. Ali Akkemik akkemik@yamaguchi‑u.ac.jp Erisa Dautaj Şenerdem [email protected] 1
Argus Media Ltd., Lacon House, 84 Theobald’s Road, London WC1X 8NL, UK
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Department of Economics, Yamaguchi University, Yoshida‑1677‑1, Yamaguchi‑shi 753‑8514, Japan
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Vol.:(0123456789)
International Journal of Economic Policy Studies
Introduction The long quest for optimal allocation of power resources has pushed for fundamental reform in the electricity sector in many countries during the past decades. Electricity markets have been subject to significant liberalization starting from the 1980s. However, liberalization in the electricity markets across countries was never an easy process. There still exist challenges in opening up power markets completely due to the sector’s complexity and new challenges arising from various generation sources and environmental concerns. Electricity sectors are regulated to ensure that supply and demand are always balanced, so that the system does not collapse. The sector has traditionally been recognized as strategic and managed through state-run vertically integrated monopolies with prices set lower than marginal costs. However, this has led to high inefficiencies and large burdens on state budgets. Since the 1980s, governments have been trying to open up all or certain segments of the power sector to competition, starting first in Chile, the UK
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