Enerjisa = The Energy in Turkey · Group's strategic plans for 2015 have identified the energy...

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EnerjisaEnerjisa = The Energy in Turkey

6th Emerging Europe Energy Summit4 – 5 November 2010 Istanbul

Bernhard Raberger

Vice Chairman, Enerjisa Group

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T E I A Ş(State owned transmission operator)

Electricity Flow1

EUAŞ(92 TWh)

BO, BOT, TOR(57 TWh2)

Autoproducers(15 TWh2)

IPPs(23 TWh2)

TETAŞ(73 TWh)

Spot market - DUY(18 TWh)

Private wholesalers(5 TWh)

Distribution companies(158 TWh)

Eligible customers3

(51 TWh)Exports(3 TWh)

Subscribers (Residential, Industrial, Agricultural, State, Corporate customers and Others)

Gen

era

tion

Wh

ole

sale

Tra

nsm

issio

nD

istrib

utio

n

& R

eta

il

2 TWh 1 TWh

1 TWh

15 TWh3 TWh4 TWh2 TWh12 TWh57 TWh16 TWh74 TWh

65 TWh 6 TWh 2 TWh 1 TWh 4 TWh 18 TWh

109 TWh4 25 TWh

1) 2008 Figures2) Figures net of internal consumption and transmission losses of 11 TWh3) Eligible customer limit determined as 1.2 GWh for 20094) After distribution losses of 24 TWh

Turkish Market Structure

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� Turkish electricity demand: 7.2% growth p.a. Since early 80’s, versus c.2% global average.

� Low consumption per capita and growing GDP result continuity in demand growth for coming years.

� Introduction of Balancing & Settlement Market (DUY) and Automatic Pricing Mechanism will help full market deregulation unlocking value for power producers.

Growth Prospects– Low consumption per capita and increasing demand

Demand Forecasts

High case scenario

CAGR 7.0%

Low case scenario

CAGR 6.3%

-

60

120

180

240

300

360

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010E

2012E

2014E

2016E

2018E

TWh

Source: TEIAS(Turkish Electricity Transmission Company )


For forecasts, TEIAS 10

year Generation

Capacity Projections

Report

Electricity Consumption vs. GDP per capita

US

Russia

Hungary

Romania

OECD

JapanFranceKorea

GermanyEurozoneCzech R.

UKSpain

ItalyGreecePortugal

PolandWorld

Brazil TurkeyChina

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

- 10,000 20,000 30,000 40,000 50,000Power consumption per capita (kWh/pa, y axis) and GDP per capita(USD, x axis)

Source: World Dev elopment Indicators

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417 2.582 3.333

7.454

14.245 16.375

2.864

4.874 6.048

6.509

7.131

8.110

480

1.986

2.256

1.728

1.748 1.353

1.586

2.506

2.526

3.875

6.764

9.863

11.175

12.906

14.507

18

18

31

60

70

961

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

1985 1990 1995 2000 2005 2009

MW

Evolution of Installed Capacity in Turkey

Source: TEIAŞ (Turkish ElectricityTransmission Company)

Evolution of Installed Capacity– Installed capacity increased significantly over time


Geothermal,

wind & waste

Hydro

Hard coal & imported coal

Lignite

Natural Gas

Other thermal

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Enerjisa at a Glance

� The Enerjisa Group of companies is 50:50 jointly owned by Sabanci Group and Verbund. The Sabanci Group's strategic plans for 2015 have identified the energy sector as a key growth area with a focus on electricity and natural gas operations. In parallel, Turkey has been defined as a major growth area by Verbund, Austria's largest electric utility. Consequently, Enerjisa intends to be leader in the Turkish electricity market as an integrated utility and has set an ambitious target to command a minimum 10% market share in the Turkish electricity sector by the year 2015.

� In May 2007, Sabanci signed a joint venture agreement with Verbund. The agreement is based upon the principles of joint control. Sabanci and Verbund work together and exclusively with one another in the Turkish electricity sector, except for nuclear energy investments, which are excluded from the Enerjisa joint venture.

� Planning to attain a total installed capacity of 5,000 MW by 2015 and a six-million customer portfolio, Enerjisa has accelerated its efforts to expand and diversify its generation portfolio. In addition to the existing generation portfolio of 455 MW currently operated by Enerjisa Power Generation Company, the implementation of a well balanced generation portfolio has started. Major milestone toward this goal, 920 MW Bandırma CCGT, became operational in September 2010 and currently new hydro and wind power plants with a capacity of around 1.200 MW are financially committed, and are under implementation and construction.

� Enerjisa also aims to become the market leader of the electricity sector in a vertically integrated structure, by combining generation, distribution, supply, wholesale and trading activities. The acquisition of Baskent EDASin 2009 , the distribution company of Ankara city and surroundings, with some 3 million customers, is a major milestone towards this goal. The Group is also working actively on seeking opportunities along the natural gas value chain.

Enerjisa Group

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History of Operations

1996 1997 2002 2003 2004 2005 2006 2007 20082009 2010

�Establishment of Enerjisa Power GenerationCompany

�Grounbreakingof Kentsa (120MW)

�The first electricity generation by Enerjisa.

� The first electricity and steam generation at Mersin Power Plant (65MW)

�Establishment ofEnerjisa Electricity Wholesale & Trading Company

�Establishment ofEnerjisa Natural Gas Wholesale & Trading Company

� Acquisition of Ser EnergyGeneration Company

�Joint venture with Verbund

�Acquisition of KEAŞKahramanmaraş Electricity Generation Company, ERE Hydroelectric Generation Company and ERE Electricity Generation and Distribution Company

�Groundbreaking of Bandırma CCGT(920MW)

�Groundbreaking of HacınınoğluRegulator and HPP(142MW)

�Acquisition of Başkent ElectricityDistributionCompany

Enerjisa Group

�The first electricity and steam generation at Adana PP (120MW) and Çanakkale PP (65MW)

�Revision of Auto Producer Group Licenses to Generation Licenses

�Groundbreaking of Kavşak Bendi HPP(180MW), Sarıgüzel HPP(103MW), Köprü HPP(145MW) and Menge HPP(85MW)

�Acquisition of Arkun(237MW) and Doğançay(46W) Project Companies

�Application for Bandırma II CCGT

�Commercial operation of Bandırma CCGT(920MW)

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Enerjisa Group Vision and Mission Statement

We will be the most admired and most valuable vertically integrated power company in Turkey with a minimum

10% market share by 2015

To create sustainable value for all of our stakeholders by being the leader in the Turkish Market, setting

benchmarks in the business excellence and implementing environmentally friendly, highly efficient projects with the

best people.

MISSION

VISION

Enerjisa Group

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Enerjisa Group Strategic Targets

Enerjisa Group

Turkey as a key strategic/growth market.

Exclusive partnership to jointly operate in Turkey through vertically integrated business model covering full value chain (generation except nuclear power investment, wholesale/trading, distribution/retail).

Well diversified generation portfolio of hydropower, gas, coal and wind power plants with a total capacity of minimum 5,000 MW by 2015.

Target to reach minimum market share of 10% and access to 6 million end users in the Turkish electricity market by 2015.

Intention to participate in the privatization of the generation assets in Turkey.

Pursuing opportunities in the power sector in neighboring countries.

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� Enerjisa Power Generation Company was founded on April 4, 1996 to explore new business opportunities in the energy sector and to operate as a reliable and competent supplier of energy to its customers.

� In addition to gas-fired power plants with a combined capacity of 370 MW, Enerjisa added operating hydroelectric power plants with a combined capacity of 85 MW to its generation portfolio through acquisitions in 2007.

� With the aim of diversifying the generation capacity to create strategic advantage, major milestone of the portfolio, 920 MW Bandırma CCGT, became operational in October 2010 and 9 hydropower power plants with a capacity of around 1,150 MW and the 30 MW wind power plant are currently in construction and implementation stage.

� On the other hand, the 450 MW Tufanbeyli Thermal Power Plant and other capacity expansion plant options are in development stage.

� The Company has acquired Doka Elektrik Üretim AŞ and Ceylin Elektrik Üretim AŞ in 2009 – project company of Arkun HEPP (237 MW) and project company of Doğançay HEPP (46 MW), respectively. In addition, Enerjisa has also applied for generation license of additional 1,000 MW Natural Gas CCGT in Bandırma (Bandırma II).

� As a part of the Group's commitment to renewable energy, Enerjisa Power Generation Company also has wind power plant projects in development and planning stages with a total capacity of 270 MW.

� Enerjisa will continue to add value to its shareholders, customers, employees, suppliers and society by exploring every opportunity in the market. The Company aims to be a preferred supplier by virtue of its customer-centric approach in all operations. The Company constantly develops its processes and systems in a bid to increase and sustain competitiveness.

Enerjisa Power Generation Company– A reliable and competent supplier of energy

Generation Company

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Enerjisa Power Plants,Projects and Distribution Regions

Generation Company

Existing Power Plants

Hydroelectric PP Projects

Wind PP Projects

Thermal PP Projects-Coal

Thermal PP Projects-N.G.

Başkent Edaş

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Electricity Market– Balancing & Settlement Regulation in Turkey

Day Ahead Balancing

Yes Day Ahead Planning Day Ahead Market

Bid offer

One bid set for each settlement period

A bid set on BME basis for each hour(depends on the bid type) of following next day

A bid set on portfolio basis for each hour (depends on the bid type) of the following day

Amount offer

�Determined depending on FPN, MSG and AC

�Daily notification for the following day

�Hourly, flexible and block bid types


�Hourly, flexible and block bid types


Price determination

�SMP�Determined at day ahead�The same SMPs are valid for Real Time Balancing

�SMP(unconstrained marginal prices)

�Determined at day ahead�Used for settlement of Day Ahead Planning onlu

�Regional day ahead prices�Determined at day ahead�Used for settlement of Day Ahead Market only

Demand side participation

No Yes – as balancing entity Yes – through price elacticity of demand

Balancing Mechanism

Monthly Settlement in 3 Time Periods

Day Ahead Planning

Balancing Power Market

Hourly Settlement

Day Ahead Market

Balancing Power Market

Hourly Settlement

Trade Company

Day Ahead Planning is in force as of December 2009 whereas complete day-ahead-market structure is targeted in Phase-2, starting from January 2011

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(15)%

(10)%

(5)%

0%

5%

10%

15%

20%

-

2.500

5.000

7.500

10.000

12.500

15.000

17.500

20.000

22.500

J F M A M J J A S O N D J F M A M J J A S O N D

Ch

an

ge -

%

Con

su

mptio

n -

GW

h

Monthly Electricity Consumption in Turkey

Previous year Current Year Change

2008 – 2009 2009 – Aug’2010

Trade Company

Electricity Market– Monthly electricity consumption and market prices

� Spot market prices were more than 20% above the TETAŞ wholesale prices in recent history. However, price trend has changed with the introduction of day ahead planning in early 2010. As the market develops and the demand recovers, spot prices again exceeded the TETAŞ wholesale price.

� Enerjisa Group has outperformed the market in terms of pricing and average electricity prices of Enerjisa were higher than the spot market prices for the given period.

80 90

100 110 120 130 140 150 160 170 180

J-07

F-07

M-0

7

A-0

7

M-0

7

J-07

J-07

A-0

7

S-0

7

O-0

7

N-0

7

D-0

7

J-08

F-08

M-0

8

A-0

8

M-0

8

J-08

J-08

A-0

8

S-0

8

O-0

8

N-0

8

D-0

8

J-09

F-09

M-0

9

A-0

9

M-0

9

J-09

J-09

A-0

9

S-0

9

O-0

9

N-0

9

D-0

9

J-10

F-10

M-1

0

A-1

0

M-1

0

J-10

J-10

A-1

0

TL /

MW

h

DUY and TETAŞ prices

DUY priceTETAŞ price

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Natural Gas Market Law

Past(Public sectordominance)

Transition(Privatization)

Future(Open

competition)

Import Co.

BOTAŞ (transmission, storage, and wholesale)

Distribution &Retail Co.

Full

liberalization

with BOTAŞ

vertically

disintegrated

Energy Board (established)

Import Co.

BOTAŞImport Co.

TransmissionCo.

BOTAŞTransmission Co.

Storage Co.

WholesaleCo.

Distribution &Retail Co.

BOTAŞWholesale Co.

Energy Board

Ministry of Energy

Gas explorationand production

TPAO

Distributionand retail

Transmission Storage

Import & Export

Wholesale

HH

Industry

NG Power Plant

HH

Industry

NG Power Plant

� Public sector dominance through BOTAŞ

� BOTAŞ still vertically integrated and acting as monopoly for transmission, storage, and wholesale activities

� However private companies participating in import, and distribution

� Future structure to resemble European examples (unbundling law)

� BOTAŞ fully disintegrated into separate companies

� Increased competition, with private companies competing with each other and public companies at each stage

Trading

Export Co.

BOTAŞ

Private participation yet to occurPrivate participation yet to occur

May

2001

2010(?)

2012 – 2014

Natural Gas Market–Turkey is still on its way to a liberalized structure since 2001

Trade Company

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Distribution Privatizations

Distribution Company

AYEDAŞ

�2.3

MENDERES

MERAMGÖKSU DĐCLE

FIRAT

ARAS

VAN GÖLÜ

YEŞĐLIRMAK

BAŞKENTSEDAŞ

ULUDAĞ

GEDĐZ

TRAKYA

OSMANGAZĐ

ÇAMLIBEL

ÇORUH

AKDENĐZTOROSLAR

BOĞAZĐÇĐ

KAYSERĐ

Date of the

tenderWinning bidder

Highest bid -

USD m

Bid for captive customer

sales (USD/MWh)

Consumption'09 -

GWh

Captive

consumption'09 -

GWhBaşkent Jul-08 Sabancı-Verbund 1,225.0 196 11,134,261 6,371,378

Sakarya Jul-08 AkCEZ 600.0 214 8,405,333 2,942,980

Meram Sep-08 Alarko-Cengiz 440.0 123 5,574,133 3,347,830

Aras* Sep-08 Kiler 128.5 99 1,710,481 1,314,359

Çoruh Nov-09 Aksa 227.0 155 2,295,105 1,517,200

Osmangazi Nov-09 Eti Gümüş 485.0 218 4,846,186 2,266,677

Yeşilırmak Nov-09 Çalık 441.5 197 4,049,650 2,237,273

Vangölü Feb-10 Aksa 100.1 112 1,300,787 1,000,857

Çamlıbel Feb-10 Kolin 258.5 227 2,146,351 1,110,368

Fırat Feb-10 Aksa 230.3 183 2,032,633 1,084,450

Uludağ Feb-10 Limak 940.0 225 11,049,990 4,197,107

Boğaziçi Aug-10 İşKaya-MMEKA 2,990.0 282 18,434,621 10,596,365

Gediz Aug-10 İşKaya-MMEKA 1,920.0 297 12,436,056 6,455,964

Trakya Aug-10 Aksa 622.0 356 5,780,809 1,745,337

Dicle Aug-10 Karavil – Ceylan Consortium 228.0 86 4,190,977 2,663,359

*Tender result is not approved due to limited competition.

Privatized regions

To be privatized in Dec’10

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� Enerjisa intends to be the leading service company of the Turkish electricity sector, adhering to internationally accepted target benchmarks and highest customer satisfaction. In the distribution and retailing businesses, the Group aims to have a customer portfolio of 6 million by 2015.

� Sabancı Verbund Joint Venture won the privatization tender for the block sale of 100% of the shares of Başkent Electricity Distribution Company (Başkent EDAŞ) offering the highest bid at USD 1,225 billion on July 1, 2008. In line with the commitment of Enerjisa Group to becoming a vertically integrated leader of the market, Enerjisa Power Distribution Company was established on October 24, 2008. The transfer of shares of Başkent EDAŞ to Distribution Company was finalized on January 28, 2009.

� By securing in Baskent EDAS some 11 TWh of total supply volume, and 6 TWh of captive customervolume, the Enerjisa-JV thus builds up a natural hedge towards its ambitious electricity generationexpansion plans. Households and commercial customers represent more than 50% of Baskent EDASsupply volume.

� Enerjisa Group is currently evaluating the options for privatization of remaining distribution companies and eager to acquire one or two distribution company in order to reach its target of 6 million customers by 2015.

Enerjisa Power Distribution Company– Aiming to be the leading service company of the Turkish electricity sector


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Başkent at a Glance


� Başkent Electricity Distribution Co. is one of the biggest distribution region in Turkey which covers; Ankara, Çankırı, Kırıkkale, Karabük, Zonguldak, Kastamonu, Bartın and has more than 3 million customers.

� The Region’s land area is 60,121 km2 or 7.7% of the country total. As of year 2009, with an estimated population of 6.4 million inhabitants, or 8.9% of the total country population resides in the region. Başkent region’s population density factor (population/km2) of 106 is slightly higher than the country average of 91.

� In 2009, Başkent provided electricity distribution and retail services to 3.2 million customers. The total electricity sales of Başkent in the same year was recorded as 11,134 GWhand the Company operated with one of the lowest loss & theft ratios in Turkey, 8.3% as of 2009.

� Enerjisa intends for Başkent EDAŞ to be the leading service company of the Turkish electricity sector, adhering to internationally accepted target benchmarks and highest customer satisfaction.

Commercial

Industrial

Residential

0.1%

13.0%

84.5%

Other* 1.8%

100%3,185 thds

(2009)

27.1%

19.4%

34.7%

6.8%

100%

2,691

11.1 TWh (2009)

Public

0.8

3.9

1.3

2.1

3,0

19

413

4

59

0.6% 12.0%

9,9%

8,1%

10,0%

7,8%

10,6%

8,1%

9,9%

8,2%

0%

3%

6%

9%

12%

# of subscribers Consumption of electricity

Share in Turkish Electricity Market

2006 2007 2008 2009

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Generation Company

Sabanci Center Kule 2, Kat 5, 4. Levent 34330 IstanbulPhone: +90 212 385 88 66Fax: +90 212 385 88 55

www.enerjisa.com.tr/

Wholesale and Trading

Company




Başkent Elektrik Dağıtım AŞ

Başkent PlazaEhlibeyt Mahallesi Ceyhun Atıf Kansu Caddesi No:106Balgat/Çankaya – AnkaraPhone: +90 312 573 50 00www.baskentelektrik.com.tr

Thank you...Enerjisa Group



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