The Effect of Fossil Fuels and Macroeconomic Indicators on the Electricity Sector in Turkey: Quantile Regression Analysis

Climate change has turned to be a security problem for all nations in the world. The reason of climate change is the cumulation of carbon dioxide. The major reason of carbon emission is the electricity producers depending on fossil fuels especially natural gas and coal. Therefore, the countries are trying to phase out the fossil fuel-based energy production and switch to renewable energy production. Despite all the efforts natural gas and coal are still the major resources in electricity production. Turkey is no different and natural gas and coal-based electricity production is an important source of energy. Besides climate change, the war between Russia and Ukraine also showed that natural gas dependence can be a serious security issue. This study aims to explore the impact of natural gas and coal prices together with major macro-economic factors on the electricity firms enlisted in Borsa İstanbul. Quantile regression model is used to determine the impact of factors in different market conditions. Statistically significant impact of BIST 100, exchange rate and coal on BIST Electricity index is observed.