Key Changes to Turkey’s Electricity Market: New Aggregator Licenses Explained

I. Introduction

The Turkish energy sector is undergoing a transformative shift with the introduction of the Electricity Market Aggregator Regulation, which introduceses the new aggregator licenses, published on December 17, 2024, and set to take effect on January 1, 2025. This new regulation establishes the aggregator as a formal electricity market participant, laying down the legal and operational framework for aggregators to manage and optimize energy production, consumption, and storage across the grid.

The introduction of aggregators marks a significant milestone for the Turkish energy market, aligning with global trends toward distributed energy resource (DER) management, grid flexibility, and renewable energy integration. By enabling multiple smaller energy producers, storage operators, and consumers to collectively participate in energy markets, the aggregator system enhances operational efficiency, grid stability, and overall market competitiveness.

The legislative framework supporting this change involves both newly introduced regulations and amendments to existing ones, including:

• Electricity Market Aggregator Regulation (New Regulation), along with amendments to the following regulations:
• Balancing and Settlement Regulation: Amendments to integrate aggregators into balancing and settlement mechanisms and define balancing regions.
• Electricity Market License Regulation: Changes to establish licensing processes for aggregators and ensure technical and financial adequacy.
• Ancillary Services Regulation: Updates to include aggregators in demand-side response and frequency support services.
• Grid Regulation: Introduction of technical infrastructure requirements for aggregators, such as SCADA systems and real-time monitoring standards.
• Unlicensed Electricity Production Regulation: Provisions for managing surplus energy from unlicensed facilities via aggregators.
• Electricity Market Licensing Regulation: Adjustments to licensing processes to incorporate aggregator operations.
• Electricity Market Renewable Energy Guarantee Certificate Regulation: Amendments for aggregators to participate in renewable certification mechanisms.
• Electricity Market Storage Activities Regulation: Updates enabling storage integration under aggregator portfolios.

Furthermore, the regulation introduces specific requirements regarding aggregator licensing, portfolio management, balancing responsibilities, and technical infrastructure, ensuring compliance with grid and market standards.

Why is the Aggregator License System Important?

 The aggregator system establishes a structured and efficient framework for integrating distributed energy resources into Turkey’s electricity market. As the sector evolves toward greater flexibility, renewable energy adoption, and consumer-driven dynamics, aggregators play a critical role in ensuring smooth transitions and optimized operations.

Aggregators enhance grid stability by consolidating smaller energy assets, enabling more effective load balancing, frequency control, and overall grid management. They also broaden market access by allowing small-scale producers, including renewable energy operators, and consumers to participate in markets traditionally dominated by larger entities.

Moreover, aggregators promote demand-side participation, empowering industrial consumers and other facilities to reduce energy use during peak demand periods, thereby supporting grid stability while lowering costs. Additionally, they play a vital role in renewable integration, ensuring that renewable energy sources are efficiently incorporated into the grid and market mechanisms, improving their economic viability and facilitating their active participation in balancing and ancillary markets.

II. The Concept of Aggregators in the Electricity Market

 a. Definition and Role of Aggregators

The Electricity Market Aggregator Regulation defines an aggregator as a market participant authorized to combine energy production, consumption, and storage activities from multiple facilities into a single portfolio. This system is designed to facilitate the participation of smaller energy entities in organized markets, balancing power markets, and ancillary services, while simultaneously promoting grid stability and operational efficiency.

Aggregators are required to operate under a specific license. This can be either an Aggregator License or an amended Supply License that includes aggregator activities. This licensing framework is intended to ensure that only entities with the necessary technical and financial capacity can manage aggregation portfolios effectively, safeguarding the integrity and stability of the electricity market.

b. Key Activities of Aggregators

Aggregators play a multifaceted role in the electricity market, enabling smaller producers, consumers, and storage operators to participate collectively. The core activities of aggregators include:

1. Participation in Organized Wholesale Markets: Aggregators can trade energy on organized platforms such as the day-ahead and intraday markets. By consolidating smaller energy resources, they enhance market liquidity and competitiveness.
2. Balancing Market Operations: Aggregators manage energy imbalances by coordinating production and consumption across their portfolios. This allows for efficient participation in balancing markets, where real-time adjustments to supply and demand are critical for grid stability.
3. Provision of Ancillary Services: Aggregators contribute to essential grid support services, including:
   • Frequency Control: Maintaining grid frequency by adjusting energy production or consumption.
   • Demand-Side Response: Reducing energy consumption during peak hours or critical grid events.
   • Reactive Power Support: Ensuring voltage stability through coordinated grid participation.

 c. Licensing Framework

To operate as an aggregator, entities must obtain a specific Aggregator License or amend an existing Supply License to include aggregator activities, as outlined in Article 6. The licensing process requires entities to demonstrate financial adequacy to manage aggregation portfolios, meet technical infrastructure standards such as advanced metering and real-time monitoring capabilities, and submit a detailed business plan and operational framework to the Energy Market Regulatory Authority (EMRA).

This rigorous framework is designed to ensure that aggregators are fully equipped to meet their responsibilities, thereby safeguarding grid stability and maintaining the integrity of the electricity market.

 d. Technical and Operational Requirements

Aggregators must comply with specific technical and operational standards to manage their portfolios effectively. Key requirements include:

• Real-Time Monitoring and Control (Article 14): Aggregators must implement advanced metering infrastructure systems to remotely monitor energy production, consumption, and storage in real time.
• Data Accuracy and Reporting: Aggregators are responsible for submitting accurate load forecasts and operational data to market operators and grid authorities.
• Compliance with Grid Standards: Aggregators must ensure their operations align with grid frequency, voltage stability, and other technical parameters outlined in Article 105/A of the Grid Regulation.

By adhering to these requirements, aggregators contribute to a more resilient and efficient electricity market, capable of integrating renewable energy sources and distributed energy resources.

 e. Balancing Regions and Aggregator Portfolios

The concept of Balancing Regions, as defined in Article 4, is central to aggregator operations. These regions, defined by the transmission system operator (TEİAŞ), are localized grid areas designed to enable precise energy management. Within these regions, aggregators are required to optimize their portfolios to achieve efficient load balancing, maintain frequency control, minimize energy imbalances, and ensure compliance with grid operational standards. This structured approach allows for improved coordination and stability in the electricity market.

The regulation also sets clear portfolio limits for aggregators:

• Licensed Production Facilities: Maximum total installed capacity of 2000 MW.
• Unlicensed Production Facilities: Limited to 500 MW within the 2000 MW cap.
• Storage Facilities: No specific cap unless determined by the regulatory authority.

These limits aim to ensure that aggregator portfolios remain manageable while preventing market dominance by any single aggregator.

III. Changes in Secondary Regulations Supporting Aggregators

a. Balancing and Settlement Regulation

The Balancing and Settlement Regulation has been amended to integrate aggregators into Turkey’s balancing and settlement mechanisms. Key changes include:

1. Introduction of Balancing Regions:

Balancing regions are defined as localized grid areas where aggregators coordinate the production, consumption, and storage activities within their portfolios. These regions are established by the Transmission System Operator (TEİAŞ) to optimize grid balancing and energy flow management.

2. Aggregator Participation in Balancing and Settlement Mechanisms:

Aggregators are now permitted to group multiple facilities—including production, consumption, and storage units—into a single balancing unit. This collective participation enhances access for smaller energy players, enabling them to join balancing markets through the aggregator’s management, which improves economic opportunities for distributed energy resources.

3. Amendments Addressing Aggregator Activities:

Recent changes ensure that aggregators are integrated into the settlement mechanisms. Aggregators are required to submit accurate load forecasts and align their operations with real-time grid requirements. This integration allows deviations from submitted forecasts to be managed within existing settlement frameworks. Aggregators must address any imbalances that arise, fostering grid stability while formalizing their role in balancing operations.

b. Electricity Market License Regulation

The Electricity Market License Regulation has been amended to integrate aggregators as formal participants in Turkey’s electricity market and to regulate their operations. Key changes include:

1. Introduction of the Aggregator License:
   • A new licensing category, the Aggregator License, has been established, enabling entities to operate as aggregators.
   • Existing supply licenses can be amended to include aggregator activities, creating flexibility for current market participants.
2. Amendments to Article 20:

The amendments to Article 20 establish financial adequacy and procedural requirements for aggregator and supply license applications, including:

• The minimum capital requirement determined by the Energy Market Regulatory Authority (EPDK) for entities applying for aggregator or supply licenses.
• Submission of documentation confirming the applicant’s capital adequacy in their articles of association.
• For entities seeking to integrate independent electricity storage facilities into their licenses, the amendments outline procedural steps, including provisions exempting these facilities from capital adequacy and collateral requirements under certain conditions.

3. Addition of Article 34/A:
   • Article 34/Adefines the operational framework for aggregators, specifying their ability to aggregate production, consumption, and storage facilities under their portfolio.
   • The article establishes the legal basis for aggregators to manage these portfolios while participating in balancing and ancillary markets.
   • Aggregators are required to comply with specific obligations related to portfolio management and integration with the broader market framework.
4. Licensing Procedures  (Temporary Article 42):
   • Applications for aggregator licenses or amendments to supply licenses to include aggregation activities can be submitted starting January 1, 2025.

c. Ancillary Services Regulation

The Ancillary Services Regulation has been amended to integrate aggregators into critical grid support services. These changes establish the operational framework for aggregators to participate in ancillary markets, contributing to demand-side response mechanisms, frequency support, and overall grid stability. The amendments emphasize compliance with technical standards and validation processes to ensure aggregators effectively fulfill their roles in enhancing grid flexibility and operational efficiency.

d. Grid Regulation

The amendments to the Grid Regulation establish the framework for aggregators’ integration into grid operations. These changes formalize their participation in demand-side services and grid compliance, requiring aggregators to align their operations with technical standards for communication, performance validation, and grid stability. By defining these roles and responsibilities, the regulation ensures that aggregators contribute effectively to grid flexibility and operational efficiency.

e. Unlicensed Production Regulation

The Unlicensed Electricity Production Regulation has been amended to incorporate unlicensed production facilities into aggregator portfolios, creating a structured framework for managing surplus energy. A key addition is Additional Article 2, which permits unlicensed production facilities that have completed their 10-year purchase guarantee period to participate in aggregator portfolios.

This amendment allows these facilities to monetize surplus electricity by accessing balancing markets and ancillary services. By enabling their integration into aggregator operations, the regulation expands market opportunities for unlicensed producers, particularly those utilizing renewable energy sources, and enhances their contribution to the broader energy market.

IV. Challenges and Compliance Obligations

The implementation of the aggregator system presents a range of challenges and compliance obligations for stakeholders. A significant obstacle is the substantial investment required in technical infrastructure. Aggregators must deploy advanced metering systems, SCADA platforms, and robust communication networks to comply with technical standards and ensure efficient portfolio management. These investments, though necessary for regulatory compliance, can be prohibitively expensive, particularly for smaller entities or new entrants, potentially limiting market participation.

Regulatory compliance adds another layer of complexity. Aggregators are required to adhere to stringent operational standards, including submitting accurate load forecasts and making real-time adjustments to address energy imbalances. Failure to meet these obligations, as stipulated in the Balancing and Settlement Regulation, can result in severe financial penalties, escalating the operational risks for aggregators. The burden of compliance demands precise forecasting tools, advanced analytics, and a high degree of operational readiness.

Additionally, aggregators are held fully accountable for financial imbalances within their portfolios, necessitating effective risk management and real-time operational expertise. This financial responsibility underscores the importance of maintaining accuracy in energy forecasting and balancing adjustments. The licensing process also presents a significant challenge, with applicants subject to rigorous assessments of financial adequacy and technical capability. Although these measures are designed to safeguard market stability, they may inadvertently create barriers to entry, particularly for smaller or less-resourced participants.

Compounding these challenges is the uncertainty surrounding licensing fees for aggregators, which remain undetermined. Market speculation suggests these fees could be substantial, further raising the financial threshold for participation. Furthermore, the full implementation of the aggregator system is not expected until 2025, leaving stakeholders in a transitional period that requires careful planning and adaptation.

V. Conclusion

The introduction of the Electricity Market Aggregator Regulation and the accompanying changes to secondary regulations represent a significant restructuring of Turkey’s electricity market. This regulatory framework formally establishes aggregators as market participants, enabling the combined management of energy production, consumption, and storage under a single portfolio.

The regulation outlines clear requirements for aggregators, including licensing processes, technical infrastructure obligations, and financial adequacy standards. Aggregators are tasked with responsibilities in organized wholesale markets, balancing power markets, and ancillary services. The amendments to the Balancing and Settlement Regulation provide a structured pathway for aggregator participation in grid balancing and settlement mechanisms, while the Grid Regulation sets forth the technical criteria for real-time monitoring and system compliance. Further adjustments to the Ancillary Services Regulation and Unlicensed Production Regulation ensure that aggregators can optimize surplus energy and contribute to demand-side response.

By introducing balancing regions and specific portfolio limits, the regulatory framework creates operational boundaries and technical standards to safeguard grid stability. Aggregators are expected to assume full financial responsibility for imbalances within their portfolios, aligning with the broader goal of maintaining a reliable and efficient electricity market.

The new system brings considerable changes for all stakeholders, including energy producers, consumers, storage operators, and market authorities. Compliance with technical and regulatory standards, investment in advanced infrastructure, and operational readiness will be essential for all market participants navigating this transition.

In conclusion, the Electricity Market Aggregator Regulation and related amendments mark a key step in modernizing Turkey’s energy market. The regulation establishes a clear and structured framework for aggregator operations, balancing market participation opportunities with grid stability requirements, and aligning regulatory oversight with operational demands.