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Abstract: Electricity markets have undergone regulatory reforms since the early 1980s around the world. Technical analyses of these reforms usually pay lip service to the influence of politics over regulatory processes. Existing studies examine certain aspects of the market such as demand, pricing, and efficiency, and they touch upon political issues only passingly when economic models cannot provide sufficient explanation. This approach problematically takes politics as an ad hoc variable. This study shows that electricity is intrinsically a ‘political good’ and argues that any meaningful reform effort should take institutions as the starting point rather than a residual. The argument that politics has to be an endogenous variable in any model aspiring to explain behavior in electricity markets is demonstrated in the paper. The evidence for the political good character of electricity is found by examining the Turkish regulatory reform, for which it is argued that there is not a satisfactory relationship between expected and realized gains. [Copyright &y& Elsevier]

Pumped-storage hydroelectricity (PSH) has been used worldwide as a means of energy storage for many years. Unlike many countries with pumped storage, Turkey has not needed a PSH facility until very recently since the existing hydropower plants with large reservoirs provided the required flexibility to meet daily demand variations. The share of renewable energy in Turkey's electrical grid has significantly increased in the last decade. Moreover, the first nuclear power plant of the country is planned to start operating in 2023, reducing the hydropower share. All of these combined have begun to bring forth the need for energy storage and PSH. On the other hand, the high investment costs of PSH and present electricity pricing policy raises questions about the profitability of a projected PSH facility. In this paper, the Gökçekaya PSH project is selected as a case study to determine the profitability of a PSH implementation in Turkey considering probable operation scenarios based on hourly prices without any reference to environmental issues to highlight the consequences of pricing policy on storage schemes. Evaluations are made using real-time electricity prices and generation-consumption values through the perspective of both the public and private sectors. Results show that the current prices in the Turkish electricity market are not profitable enough for potential PSH projects to attract investment by the private sector. • The decreasing share of hydropower in Turkey's electricity production is increasing interest in PSH. • When Akkuyu NPP becomes operational, a PSH will be needed on days with minimum energy consumption. • Current prices in the Turkish electricity market are not profitable enough for PSH projects. • Electricity price differences between peak and off-peak hours fluctuate significantly over the years. • Converting existing dams into PSH would be more feasible than constructing a pure PSH. [ABSTRACT FROM AUTHOR]