A comparative study on energy income estimation: A case study in Turkey

Hydropower is the main domestic energy resource of Turkey. The total gross and the economically feasible hydropower potentials of Turkey are estimated as 433 TWh/yr and 127 TWh/yr, respectively, by the General Directorate of State Hydraulic Works (DSI) of the Ministry of Forestry and Water Affairs.1 Approximately 35% of the economically feasible hydropower potential is currently being utilized. The government accelerated the development of the unused potential by enabling the private sector to build and operate hydroelectric power plants. The primary goal of a feasibility study is the determination of the best installed capacity through economic analysis, which is based on evaluation of energy incomes and investment costs associated with alternative installed capacities. Generally, it is relatively easy to realistically estimate the investment costs. On the other hand, energy income estimation is not a straight forward process; a number of different methods which result in different income estimates are being used in Turkey. The General Directorate of Renewable Energy (YEGM) of the Ministry and Natural Resources and DSI recommend similar methods for energy income estimation based on firm and secondary energy generations. However, suggested unit prices for firm and secondary energy generations by DSI and YEGM are quite different, which results in different energy income estimations. Apart from these two methods, consultancy firms, unlike DSI and YEGM, use a single unit price for energy without making any distinction between firm and secondary energies. In all three methods fixed energy prices are used. Nevertheless these approaches do not represent the current situation in Turkey, since the electricity market allows development of hourly electricity prices. In this study, a new energy income estimation method which utilizes hourly electricity prices, called the Variable Price Method is developed. Results of these four methods are compared for a case study, namely Altiparmak Hydroelectric Power Plant.