1) Why the balancing market matters more than most contracts
In every liberalized electricity market, the “real” market is the one that runs after the trading screens close—because electricity must be balanced in real time. Even if you have a perfect day-ahead schedule, your plant may trip, wind may drop, demand may spike, or a transmission constraint may force redispatch. Turkey’s Balancing Power Market (Dengeleme Güç Piyasası – DGP) is the mechanism that keeps the system stable and ensures that the costs of imbalances are allocated to responsible parties.
For generators, suppliers, industrial consumers, aggregators, and investors, DGP is not just an operational topic. It is a legal risk perimeter that can trigger:
- settlement debts and collateral calls,
- administrative sanctions,
- termination events in PPAs, financing documents, EPC/O&M contracts,
- disputes over metering data, dispatch instructions, and price formation,
- reputational impact and “bankability” concerns.
This guide explains how DGP works in Turkey at a functional level and maps out the most common legal liabilities—so that market participants can build compliance, contract protections, and dispute strategies that match regulatory reality.
2) Institutional architecture: who does what?
EMRA/EPDK (Regulator)
The Energy Market Regulatory Authority (EMRA/EPDK) regulates and supervises electricity market activities through the Electricity Market Law and secondary legislation. In balancing-related disputes, EMRA’s decisions may affect licensing status, market access, and compliance sanctions.
TEİAŞ and the System Operator (National Load Dispatch Center)
Turkey’s transmission system operator (TSO) is TEİAŞ. In balancing operations, the system operator’s dispatch instructions and operational data are central to settlement. EPİAŞ describes DGP settlement inputs as including instructions issued by the National Load Dispatch Center (Milli Yük Tevzi Merkezi) and other market variables. (epias.com.tr)
TEİAŞ also publishes operational procedures relevant to balancing price formation—such as procedures on determining label values and calculating the System Marginal Price (SMP). (teias.gov.tr)
EPİAŞ (Market Operator and Settlement)
EPİAŞ operates organized wholesale markets and performs financial settlement functions under the market framework established by the Electricity Market Law. (epias.com.tr)
In the balancing context, EPİAŞ provides settlement processes and documentation. It states that balancing market settlement is carried out on a monthly basis and that dispatch instructions, bid prices/SMP, notified day-ahead schedule values (KGÜP), and metering data are used as core settlement inputs. (epias.com.tr)
Legal basis: the Balancing and Settlement Regulation
Turkey’s Electricity Market Balancing and Settlement Regulation is expressly prepared based on the Electricity Market Law No. 6446, and sets out the framework for balancing mechanism participation and settlement. (epias.com.tr)
3) What is DGP in practical terms?
Turkey’s balancing framework is built around a simple physical fact: system balance must hold each moment. The balancing market supports real-time balancing by enabling the system operator to call on resources (typically generation units, sometimes demand-side resources through permitted structures) to increase or decrease output to maintain frequency and system security.
From a market participant’s perspective, DGP has three interconnected layers:
- Scheduling layer: participants submit their planned positions (including generation and consumption forecasts) in defined formats and timelines (e.g., KGÜP—daily generation/consumption programs). (epias.com.tr)
- Real-time balancing layer: the system operator issues dispatch instructions to balancing units to manage real-time conditions. (epias.com.tr)
- Settlement layer: EPİAŞ performs financial settlement using dispatch instructions, bid prices/SMP, KGÜP values, and metering data, and reflects results in monthly settlement invoices. (epias.com.tr)
This means liability in DGP is rarely based on a single “breach.” Instead, liability typically arises from a chain: incorrect scheduling → deviation (imbalance) → higher settlement cost → collateral stress → potential default → contractual cross-default and regulatory consequences.
4) Key concepts that drive liability (and disputes)
(a) Balancing mechanism participation and settlement responsibility
The Balancing and Settlement Regulation governs the settlement of receivables and debts resulting from participation in the balancing mechanism and settlement. (epias.com.tr)
In practice, the compliance duty is twofold:
- operate in line with the rules, and
- bear the financial consequences of deviations and instructed actions under the settlement methodology.
(b) System Marginal Price (SMP) and price formation
SMP is central to balancing settlement economics. TEİAŞ publishes procedures relating to calculating SMP within the balancing market framework. (teias.gov.tr)
Legal exposure arises when participants dispute whether SMP was calculated correctly, whether the relevant procedure was applied, or whether a data or dispatch error distorted the price.
(c) KGÜP (day-ahead notified schedules)
EPİAŞ lists KGÜP values among the inputs used in DGP settlement. (epias.com.tr)
If a participant’s KGÜP is materially inaccurate (or not updated properly), imbalance volumes and imbalance charges can increase sharply.
(d) Metering data and data integrity
EPİAŞ identifies metering data as an input to balancing settlement. (epias.com.tr)
Disputes commonly involve:
- meter configuration errors,
- data communication failures,
- inconsistencies between SCADA and metering,
- corrections and reconciliation methods.
5) Main categories of legal liability in DGP
Below is the most useful way to think about exposure: five liability layers, each with different rules, forums, and remedies.
5.1 Regulatory and administrative liability (public law)
Regulatory liability is triggered when a participant violates obligations under the Balancing and Settlement Regulation, market rules, or licensing conditions. The Balancing and Settlement Regulation is a formal secondary legislative instrument with binding obligations. (epias.com.tr)
Outcomes may include administrative sanctions, restrictions on market participation, or other enforcement measures based on EMRA’s supervisory powers (the exact sanction pathway depends on the breach type and the applicable decision practice).
Typical triggers
- repeated non-compliance with scheduling or notification duties,
- failure to comply with dispatch instructions (without valid technical justification),
- misuse of market positions that undermines system security,
- failure to meet settlement-related obligations (e.g., collateral requirements) leading to participation restrictions.
Legal strategy (public law)
When a regulatory decision is issued, the participant usually needs:
- a rapid evidentiary package (technical logs, event reports, metering documentation),
- a structured legal narrative (why the breach is not attributable, or why proportionality is violated),
- where necessary, an administrative litigation plan for challenging the decision (and seeking interim relief where available under administrative procedure rules).
5.2 Settlement and financial liability (market operator layer)
This is the most immediate form of liability: the balancing settlement produces receivables and payables based on the participant’s imbalance and balancing actions. The Balancing and Settlement Regulation explicitly frames settlement of such receivables/debts as its core subject. (epias.com.tr)
EPİAŞ also describes DGP settlement as monthly and driven by dispatch instructions, SMP/bids, KGÜP, and metering. (epias.com.tr)
Common pain points
- unexpected imbalance charges due to forecast errors,
- high SMP periods magnifying costs,
- disputed metering corrections posted after initial settlement,
- collateral calls following volatility or increased exposure,
- payment default risk leading to market access restrictions.
Contractual spillover
Settlement debts frequently trigger:
- default under financing agreements (debt service coverage, liquidity covenants),
- default under PPAs (especially corporate PPAs with imbalance allocation),
- disputes with offtakers or suppliers about who bears imbalance and balancing costs.
5.3 Contractual liability (private law)
DGP is a classic “hidden clause” risk: parties often sign PPAs, tolling agreements, or supply contracts without properly allocating imbalance risk.
Who bears imbalance risk?
It depends on contract architecture:
- In merchant projects, the generator often bears it directly.
- In fixed-price PPAs, risk may be shared or shifted to the supplier/offtaker through imbalance clauses.
- In tolling structures, responsibility may sit with the tolling party (or be shared via scheduling cooperation).
Drafting points that reduce disputes
- precise definitions of “imbalance,” “balancing cost,” “SMP exposure,” and “settlement correction,”
- clear cooperation duties for forecasting, nominations, and re-nominations,
- dispute procedure clauses aligned with EPİAŞ reconciliation timelines,
- caps and pass-through rules (where commercially feasible),
- force majeure alignment: operational constraints vs. regulatory balancing actions.
5.4 Tort / extra-contractual liability (civil liability for damage)
Most balancing exposures stay within settlement and contract disputes. However, where negligent conduct causes broader damage (e.g., equipment damage due to improper dispatch response, or economic losses due to wrongful operational behavior), extra-contractual claims may arise under general principles of Turkish obligations law—subject to causation and proof.
This is less common in court practice than settlement disputes, but it becomes relevant when:
- a counterparty alleges negligent operational decisions beyond contractual allocation,
- an incident creates third-party damage claims (especially where safety or property loss is involved).
5.5 Governance and managerial liability (internal corporate risk)
Balancing exposure can become a board-level issue when:
- compliance failures are systemic,
- risk management is inadequate,
- collateral stress threatens insolvency or triggers accelerated debt.
Managers may face internal liability under corporate governance rules if they fail to implement reasonable compliance and risk controls for a business whose economics are materially driven by balancing settlement.
6) Where disputes typically arise: “real cases” in market terms
Dispute Type 1: “We followed the instruction; settlement is still wrong”
Because settlement is data-driven, disputes often involve mismatches between:
- dispatch instruction records (National Load Dispatch Center),
- metering data,
- participant-submitted schedules.
EPİAŞ’s own description shows that all of these are used as settlement inputs. (epias.com.tr)
A robust case file therefore needs synchronized evidence from all three layers.
Dispute Type 2: Metering and reconciliation disputes
The most litigated energy disputes are often not ideological—they’re accounting disputes. Metering errors, data communication faults, and post-settlement corrections can change a month’s payable by a material amount. If a contract passes through balancing costs, a metering dispute becomes a commercial dispute between generator and offtaker.
Dispute Type 3: SMP calculation and procedure compliance
TEİAŞ publishes procedural documents on SMP calculation in the balancing framework. (teias.gov.tr)
Participants may challenge settlement outcomes by arguing:
- a procedure was misapplied,
- a data point was wrong,
- an extraordinary operational event distorted price formation without proper handling.
Dispute Type 4: Allocation of responsibility inside corporate groups
Large groups often operate multiple plants and supply entities. If schedules and imbalances are managed centrally, disputes can occur internally regarding:
- which entity bears the cost,
- whether operational decisions caused unnecessary exposure,
- whether risk policies were followed.
7) Compliance obligations: what sophisticated participants implement
A strong compliance posture is usually cheaper than a single year of avoidable imbalance charges. Advanced participants implement:
7.1 A forecasting and nomination governance model
- documented forecasting methodology,
- day-ahead nomination procedures with checklists,
- re-nomination decision authority (who can change schedules and when),
- incident response playbooks for outages and deratings.
7.2 Data integrity and audit trails
Since metering data is a settlement input, data integrity is central. (epias.com.tr)
Best practice includes:
- periodic meter audits,
- SCADA-to-meter reconciliation reports,
- timestamped instruction logs,
- evidence preservation policies.
7.3 Collateral and liquidity planning
Balancing costs can spike in extreme events. Projects should treat collateral calls like margin calls:
- define internal liquidity buffers,
- set board-level triggers for stress events,
- keep “rapid funding” lines or sponsor support letters where necessary.
7.4 Contract alignment
Every key contract should be aligned with balancing reality:
- PPAs: imbalance and balancing cost allocation, metering dispute process
- EPC/O&M: performance guarantees that reflect dispatch realities, availability definitions, instruction response standards
- Financing: covenant definitions that account for balancing volatility, cure periods, and reserve accounts.
8) Litigation and dispute resolution strategy: choosing the right forum
(a) Public-law challenges (regulatory decisions)
When the dispute is about a regulator decision (sanction, restriction, licensing impact), the pathway is typically administrative litigation, with a focus on:
- legality of the decision,
- procedural compliance,
- proportionality,
- technical evidence and expert opinions.
(b) Private-law disputes (PPAs, settlement pass-through, EPC/O&M)
These are typically heard by commercial courts or arbitration (depending on dispute clause). The core issues are:
- contract interpretation of imbalance clauses,
- evidentiary disputes on dispatch compliance and metering,
- damage quantification linked to settlement outputs.
(c) Technical expert evidence
Balancing disputes are technical. A winning strategy often requires:
- independent expert reports (power systems, metering, dispatch),
- structured data presentation (chronology + datasets),
- clear causation story (what happened, why it happened, who could prevent it).
9) Client-ready checklists and clauses (practical “value adds”)
9.1 Due diligence checklist for buying a generator or supply business
- Review historical imbalance costs and volatility exposure (12–24 months).
- Check metering configuration, audits, and correction history.
- Review dispatch instruction compliance records and incident logs.
- Map nomination governance: who forecasts, who submits, who approves.
- Examine collateral policy and past collateral stress events.
- Review contracts for imbalance allocation, caps, pass-through, and dispute procedures.
- Confirm that internal controls exist for settlement review and objections.
9.2 PPA clause ideas (high-level)
- Imbalance Allocation Clause: “Each party bears imbalance costs arising from its scheduling responsibility…”
- Settlement Correction Clause: “Any correction applied after the initial settlement shall be passed through in the next invoice cycle…”
- Metering Dispute Protocol: “Parties will jointly appoint a metering expert; pending dispute, the undisputed portion is payable…”
- Operational Cooperation Clause: “Parties shall exchange forecasts and operational constraints to minimize imbalance exposure…”
(Exact drafting must be tailored to project type, counterparty profile, and financing requirements.)
10) Conclusion: balancing is a legal discipline, not just an operational one
Turkey’s DGP is a structured framework where dispatch instructions, SMP/bids, KGÜP schedules, and metering data drive monthly settlement outcomes. (epias.com.tr) The legal basis and participant obligations are anchored in the Balancing and Settlement Regulation prepared under the Electricity Market Law. (epias.com.tr)
For market participants, the most costly mistakes tend to be predictable:
- weak forecasting governance,
- poor data integrity and missing audit trails,
- imbalance risk not allocated clearly in contracts,
- lack of liquidity planning for settlement volatility,
- late and disorganized responses to disputes or enforcement actions.
If you design compliance and contracts around how settlement actually works, you reduce both cost and dispute probability. If you ignore it, DGP becomes the place where profits evaporate and liabilities multiply.
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