AN OVERVIEW DOCUMENT FOR ENERGY EFFICIENCY IN TÜRKİYE
- Overview of cross-sectoral and sector specific energy consumption (relevant official energy data sources) and energy efficiency developments in Türkiye in the last years
Rapid economic and population growth in the past two decades have not only driven strong growth in energy demand, but also an associated increase in import dependency. As a result, Türkiye has pursued a restructuring of its energy system with the aim of rationalizing energy demand growth, lowering energy prices for consumers and slowing the pace of import growth. These reforms have included measures targeted at modernization, liberalization and increased domestic production capacity, including through more private and foreign investments. Notably, Türkiye has seen considerable diversification of its energy mix in the past decade. In particular, renewable energy has staged impressive growth, with renewable electricity generation tripling in the past decade. The commissioning of Türkiye’s first nuclear power facility in 2023 will further diversify the country’s fuel mix. Still, fossil fuels continue to drive Türkiye’s economy, with a heavy dependency on imports, especially oil and gas (93% and 99%, respectively). Türkiye has prioritized an expansion of domestic exploration and production to help reduce its oil and gas import dependency. However, given limits on upstream resources and with consideration to emissions reduction, Türkiye should also place due consideration on cost-optimal demand-side measures such as efficiency improvements and fuel switching in the transport sector, which is still 98% reliant on oil. Moreover, there is still considerable scope for Türkiye to target even more ambitious growth in renewables, not just in electricity, but also in other sectors such as heating. In addition, Türkiye’s efforts to use more domestic energy resources to meet its consumption needs might interfere with efforts to decarbonize the energy sector, particularly as it relates to the government’s policy to use more low-quality domestic lignite in power generation. In light of its heavy dependence on oil and gas imports, Türkiye has prioritized security of energy supply as one of the pillars of its energy strategy. The policy includes efforts to boost domestic oil and gas exploration and production, diversify oil and gas supply sources and associated infrastructure, as well as reduce energy consumption through increased energy efficiency.
Figure 1: Total final consumption by source and sector, Türkiye, 2018 Source: IEA (2020), IEA World Energy Statistics and Balances (database), www.iea.org/statistics
Table 1: Primary and Final Energy Intensity of Türkiye, Report of Department of Energy Efficiency and Environment, November 2022
Figure 2: Comparison of primary energy intensity (toe/thousand$2015) of EU, OECD, Türkiye and World for 2020, Report of Department of Energy Efficiency and Environment, November 2022
Figure 3: Evolution of Energy Efficiency Index by Sector, GDRE, 2017. The energy intensity index is an important indicator of the contribution to the national economy through the energy savings and energy efficiency improvement in primary and end-use energy consumption in manufacturing, housing and transport sectors. The breakdown of the indicator shows that, for the period of 2000-2015, the manufacturing sector achieved an annual improvement rate of 1.8%, housing sector 1.9% and transport sector 2.7% for an overall annual improvement of 2.1% in energy efficiency
Türkiye recognizes that a primary foundation to improve energy security is to slow the rate of consumption growth by improving energy efficiency. To this end, the National Energy Efficiency Action Plan (NEEAP), covering the period 2017-23, aims to reduce Türkiye’s primary energy consumption by 14% from business-as-usual levels across several sectors, including buildings and services, power and heat, transport, industry and technology, agriculture, and cross-cutting areas. Though it is a very timely policy initiative, progress to date on the NEEAP has been mixed and additional efforts will be needed to reach the 2023 target of 23.9 million tons of oil equivalent (Mtoe) saved with USD 10.9 billion invested. According to the Ministry of Energy and Natural Resources’ (MENR) official records,
- In the period of 2017-2021 the amount of investments for energy efficiency achieved in Türkiye reached to USD 6.44 billion.
- With the said investments performed, a total of 4.45 million toe energy has been saved. The monetary value of this saving is estimated as USD 1.62 billion.
- In 2021, the value of energy efficiency investments is USD 1.32 billion.
- With the investments performed in 2021, a total of 1.63 million toe energy has been saved. The monetary value of this saving is estimated as USD 372 million.
Implementation gaps remain across and within sectors, with policy progress slowed by delays in secondary legislation and lack of demand or incentives for energy efficiency products and services, among other factors. To foster timely progress, the NEEAP Steering and Coordination Board, consisting of high-level representatives of the responsible institutions of the NEEAP under the leadership of the MENR, was established. One of the important recent steps regarding promotion of energy efficiency in buildings are obligatory efficiency targets for public buildings. With the Presidential Decree dated 16 August 2019, public buildings with energy managers assigned according to the Energy Efficiency Law No. 5 627 are expected to procure energy savings of 15% until 2023, in order to use public resources efficiently and to reduce the burden of energy costs on the public sector. The Presidential Decision on the Procedures and Principles Regarding Energy Performance Contracts in the Public Sector from 21 August 2020 sets out the procedures and principles for energy performance contracts to be concluded by public administrations. The related sectors mentioned in NEEAP experienced the following developments in 2020:
Buildings and Services Sector: a) The Presidential Circular on Energy Savings in Public Buildings was published, setting a minimum energy saving target of 20 percent (updated from 15 percent) by the end of 2023 for public buildings that are obliged to assign an energy manager. b) The “World Bank (WB) Energy Efficiency in Public Buildings Project”, with a budget of $200 million, was signed and the works for the Project began, with the aim of renovating 500 -700 public buildings across the country within different climate zones. c) Energy efficient technologies and renewable energy technologies were incorporated into the Construction and Installation Unit Prices Book. d) Energy Efficiency Technology Atlas for the Buildings Sector was published. e) The heating and cooling demand of the building sector has been determined, and the heat demand has been calculated in each of the high-resolution (1 km2resolution) areas, in which Türkiye is divided into approximately 15,000 regions to determine the most suitable areas for the implementation of district heating systems, and the mapping on the basis of regions (neighborhoods) has been done using the Copernicus Monitoring Program. Furthermore, cost-benefit analyses were conducted in selected regions with different climates and population densities in an attempt to identify the cost-effectiveness of district heating systems.
Industry and Technology Sector: a) Efforts were made in relation to such areas as process efficiency, energy management, industrial symbiosis, and the establishment of green Organized Industrial Zones (OIZs) through national and international collaborations. b) Within the scope of the Efficiency Improvement Project Support Program, TRY 36 million of support was provided for 308 projects in the 2009-2020 period, achieving financial savings of TRY 120 million and energy savings of 72 thousand toe. c) Activities for the establishment of Capability and Digital Transformation Centers (Model Factory) and Innovation Centers are ongoing. Model Factories in Ankara, Bursa, Konya, Kayseri, Mersin, Gaziantep, and İzmir provinces continue their activities within the framework of their respective programs. Works for the establishment of İzmir, Mersin, and Adana Innovation Centers are continuing. d) Projects for Developing National Lifecycle Assessment Database and Promoting Energy Efficient Engines in Small and Medium Scale Enterprises in Türkiye are being carried out.
Energy Sector: a) With the efforts to reduce technical and non-technical losses in electricity transmission and distribution of electricity, savings of 22.85 ktoe and 114.07 ktoe cumulative savings were achieved in 2020. b) With the efforts to reduce technical and non-technical losses in the transmission and distribution of electricity, the grid loss rate was reduced to 11.9 percent in 2021, compared to 13.42 percent in 2016. c) With the studies “Energy Efficiency in Thermal and Hydraulic Power Plants” and “Determination and Mapping of Heating and Cooling Demand in the Building Sector”, analyzes were carried out to determine the waste heat potential of industrial and electricity generation plants. d) The Rules and Procedures for the Use of LED Fixtures in General Lighting Plants were published and the implementation in the new plants to be constructed started as of 2021. e) Demand Response Reserve service has been defined in the Electricity Market Ancillary Services Regulation published in the Official Gazette on 27 January 2021. f) With the enactment of regulations, consumers are now provided with comparable and more detailed information in their electricity bills, including information on their daily average energy consumption and total consumption in the current and previous calendar years. g) Within the scope of the IPA Project named Energy Efficiency in the Natural Gas Transmission System, supported by EU, energy audits were conducted in compressor stations. h) For thermal power plants with an installed capacity of 20 MW and above, the obligation to carry out energy audits was introduced to evaluate the utilization of waste heat primarily in buildings for heating and cooling as well as in other sectors such as industry, agricultural production, aquaculture, cold storage rooms, and freshwater production.
Transport Sector: a) Grant support has been provided to municipalities by the Ministry of Environment and Urbanization (whose name was amended as Ministry of Environment, Urbanization and Climate Change [MEUCC] with a Presidential Decree issued in 2021) in cooperation with İlbank to support the construction of bicycle lanes, green walking trails, environment- friendly streets, and noise barriers. b) A total of 16 port facilities have been granted “Green Port Certificates” to date. c) The total railway line has reached 12,803 km, out of which 1,213 km is for high-speed trains. d) Four different distribution networks have been examined to identify the effects of electric vehicles on Türkiye’s distribution grid, and it has been concluded that there is sufficient capacity to integrate 10% electric vehicles in the total passenger car stock by 2030.
Agriculture Sector: a) Fifty-percent grant support was provided for the modernization of individual on-farm irrigation systems; 18,466 projects were included in the grant program and 1,832,952 decares of land were provided with modern irrigation systems. b) As part of the renovation of irrigation facilities, the construction works on 30,267 hectares of land was completed, as of 2020. Construction work on 81,149 hectares of land is underway. c) The renovation works of 248 irrigation facilities serving 1,165,461 hectares of net irrigation area were commenced by the State Hydraulic Works and the institutions that have taken over the irrigation facilities. d) Support payments were made for tractor purchases in 5,400 projects, and applications were received for 28 projects involving the purchase of combine harvesters. e) Fifty percent grant financing for the ongoing projects of farmers has continued under the Program for the Support of Rural Development Investments. Support was provided to 18 greenhouses using renewable energy and 31 renewable energy generation plants. In 2020, 17 project applications were accepted and 66 projects that completed their installation activities received support payment and 139 projects that were accepted in previous periods are still being set up. In addition, grant support was provided to 10 greenhouse projects using renewable energy. f) The registration procedures for land consolidation on a total area of 4,76 million hectares were completed between 2017 and 2020.
- Overview of political and regulatory framework (e.g. energy efficiency goals and strategies, energy efficiency law, decree on EPC in the public sector)
Türkiye sees energy efficiency as an area that complements and cross-cuts its national strategic goals of easing the burden of energy costs on the economy, ensuring energy supply security, alleviating risks arising from external dependency, transitioning to a low-carbon economy and protecting the environment. In this context, the Energy Efficiency Law adopted in 2007 started a new transformation process. The Energy Efficiency Strategy issued in 2012 set energy efficiency goals for 2023, and the NEEAP was formulated for effective implementation and monitoring. These goals were: 1) Reducing energy intensity and energy losses in industry and services sector; 2) Reducing the energy demands and carbon emissions of buildings – promoting sustainable environmentally friendly buildings using renewable energy sources; 3) Ensuring market transformation of energy efficient products; 4) Increasing efficiency in electricity generation, transmission and distribution, reducing energy losses and harmful environmental emissions; 5) Reducing the unit fossil fuel consumption of motor vehicles, increasing the share of public transportation on land, sea and railways, and preventing unnecessary fuel consumption in urban transportation; 6) Using energy effectively and efficiently in the public sector; 7) Strengthening institutional structures, capacities and collaborations, increasing the use of advanced technology and awareness-raising activities, creating financing environments outside the public. The NEEAP, covering the period 2017-23, was adopted in 2018 with support from the European Bank for Reconstruction and Development. It was prepared in compliance with the template set in the EU Energy Efficiency Directive 2012/27/EU, which allows for comparing and monitoring studies with EU countries. Obligated parties under the plan are required to provide data to the Department of Energy Efficiency and Environment (DEEE) within the MENR annually for inclusion in its database: EnVer Portal. The portal includes the energy consumption data of buildings and industrial enterprises over a certain size. Using the raw data, DEEE sectoral experts produce annual reports, including indicators such as energy intensity and an energy efficiency index. Generated indicators are also used for preparing national progress reports and benchmarking studies. Some measures envisaged under the NEEAP have yet to be taken, including secondary legislation for energy performance contracts as well as national financing mechanisms such as energy efficiency auctions and energy efficiency obligations. Due to the expiration of NEEAP, MENR started the preparatory work for the 2nd NEEAP, which will cover the years 2024-2030. In this context, a total of 10 workshops have been held during 2022 with the support of the WB.
Presidential Decision No. 2850 on the Procedures and Principles Regarding Energy Performance Contracts in the Public Sector was published in the Official Gazette on 21 August 2020. The purpose of this decision is to determine the procedures and principles regarding energy performance contracts to be concluded by public institutions and organizations to reduce their energy consumption or energy costs. The decision has been regulated in the Notification on the Implementation of Energy Performance Contracts in the Public Sector published in the Official Gazette dated 15.04.2021 and numbered 31455.
Energy savings performance contract (EsPC) is a bilateral contract and one of the parties is the person or institution that wants to save on the energy it spends, while the other party of the contract will make the necessary determination for energy saving and then make the necessary changes with the financing it will provide directly or through a third party. Energy Service Companies (ESCO) are companies that design and implement energy saving projects in order to ensure more efficient use of energy, guarantee the energy saving performance to be provided, provide or mediate the financing necessary for the implementation of the projects, and perform risk management within the scope of the projects they implement. At the Presidential Decision No. 2850 and at the Notification on the Implementation of Energy Performance Contracts in the Public Sector, the term “Energy Efficiency Consultancy Companies” is used to refer to ESCOs. In the Law No. 5627, energy efficiency consultancy companies are defined as companies that have been given authorization certificates to carry out consultancy, training, survey and application services on energy efficiency within the framework of the authorization agreement they have made with the General Directorate of Electrical Power Resources Survey and Development Administration (This department has been abrogated and now DEEE is in action) or authorized institutions. Therefore, energy efficiency consultancy companies must first obtain an authorization certificate in order to carry out energy efficiency services in regulated sectors (public sector, commercial buildings and industrial facilities) of Türkiye.
Within the scope of developing financial mechanisms for energy efficiency, the “Supporting the Establishment of National Energy Efficiency Financing and Tender Mechanisms” project, financed by the European Bank for Reconstruction and Development (EBRD), was launched on 28 May 2019. A road map is expected to be developed for a national energy efficiency mechanism and a competitive energy efficiency tendering mechanism, which will be integrated into the proposed mechanism. The National Energy Efficiency Action Plan Monitoring and Guidance Board was formed with the Circular No. 2019/27 of the Presidency. The representatives of the Board are the Presidential Strategy and Budget Department (CB SBB), Presidential Economic Policy Committee (CB EPK), MEUCC, MENR, Ministry of Treasury and Finance (MoTF), Ministry of Interior (MoI), Ministry of National Education (MEB), Ministry of Health (MoH), Ministry of Industry and Technology (MoIT), Ministry of Agriculture and Forestry (MoAF), Ministry of Transport and Infrastructure (MoTI), Energy Market Regulatory Authority (EMRA), The Banks Association of Türkiye (TBB) and high-level representatives authorized to make decisions on behalf of Union of Chambers and Commodity Exchanges of Turkey (TOBB). The Board is responsible for the effective execution of energy efficiency studies throughout the country, the determination of energy efficiency strategies at the national level, the preparation of action plans and programs, the monitoring of NEEAP realizations and the coordination for their effective implementation. With the 3 board meetings held so far, the Progress Reports were reviewed, the business plans were updated with the relevant institutions and organizations, and 5 working groups were formed. One of the working groups is on “Developing the National Energy Efficiency Financing Mechanism Proposal”. However, there is no progress in this working group that has been announced to the public.
Large-scale investments of industrial enterprises in the manufacturing industry with annual energy consumption of 500 tonnes of oil equivalent (toe) and above, which provide at least 15% energy savings compared to the current situation, benefit from regional incentives by MoIT. The technical evaluation of investments is made by the MENR. Enterprises meeting the energy efficiency criteria benefit from a value-added tax exemption, customs tax exemption, insurance premium support, interest support, tax reduction and regional investment incentives.
The WB-sponsored Small and Medium Enterprises Energy Efficiency Project, which took place between 2013 and 2019, comprised three lines of credit for a total amount of USD 201 million to three financial intermediaries. The overall objective of the SME Energy Efficiency Project was to improve the efficiency of energy use in SMEs by scaling up commercial bank lending for energy efficiency investments. Besides the industrial sector, WB funding also covered the building and service sectors.
Turkey also runs the Promoting Energy-Efficient Motors in Small and Medium Sized Enterprises in Türkiye (TEVMOT) Project covering the five -year period of 2017-22, funded by the Global Environment Facility. The project is run by MoIT in cooperation with the United Nations Development Program (UNDP) Türkiye Office. The project is designed to encourage additional investments in industrial energy efficiency through the market transformation of electric motors used in SMEs. In addition to replacing the existing inefficient motors used in industrial enterprises, it also aims to promote new energy-efficient electric motors and machines equipped with more efficient motors.
Energy Efficiency in Industry (SENVER) Project competitions are also organized annually at the Energy Efficiency Forum and Fair, as part of efforts to boost public awareness of energy efficiency.
Given Turkey’s heavy reliance on roads for transport, the government aims to promote combined/intermodal/multimodal applications in passenger and freight transport, to increase the share of railroad and maritime transport, and to adopt the corridor approach in transport planning. Along these lines, the Transport and Communications Strategy Goal 2023 defines objectives to increase the share of rail in freight transport beyond 15% and in passenger transport beyond 10%. It therefore plans to reduce road transport’s share in freight to under 60% and passenger transport to under 72% by the end of 2023. However, progress toward these targets does not appear to be on track, with road transport still heavily dominating in both the freight and passenger segments.
Turkey has a rapidly growing and transforming building stock. Turkstat data indicate that as of October 2019, there were 9.5 million buildings in Turkey, of which approximately 90% were residential. The number of housing units was around 24 million. According to occupancy permit statistics, more than 100.000 new buildings are added every year to the building stock.
The Regulation on Energy Performance for Buildings (BEP-TR) was passed in 2008 and updated in 2013. In January 2011, an Energy Performance Certificate (EPC) was introduced to provide information on primary energy demand and CO2 emissions from new buildings and buildings that have been purchased or rented. New buildings must have at least C Class EPCs (under EU classification). While existing buildings are also required to have an EPC, there is no minimum threshold requirement they must achieve. With the Regulation on Amending the Energy Performance Regulation in Buildings published in the Official Gazette on 19 February 2022 by the MEUCC, as of 1 January 2023 all new buildings over 5,000 m2 must have at least B Class EPCs (in the current Energy Performance Certificate classification) and obtain at least 10% of their energy from renewable energy sources (solar, wind, heat pump, etc.). This is the first time “Nearly Zero Energy Building” concept is used in the regulation, yet could have been bolder and cover all new buildings.
Though Turkey’s policies and regulation focus heavily on new buildings, the income tax and stamp tax laws were amended in 2018 to promote the renovation of existing buildings, whereby insulation and energy savings measures can be written off in the year they were undertaken. For public buildings, an August 2019 presidential circular issued a target for public buildings with energy managers assigned according to the Energy Efficiency Law to save 15% (later upgraded to 20%) energy until 2023. This was preceded by a March 2018 amendment to the Energy Efficiency Law related to energy performance contracts, which allowed energy efficiency measures in public buildings through ESCOs.
Besides all the good works conducted, the TS 825 Thermal Insulation Rules Standard in Buildings, only includes the heating degree days (HDD) and excludes the cooling degree days (CDD). Although detailed works have been carried out and updated U-values for different climate zones for different building components have been suggested, the updated version still has not been enacted by MEUCC.
Appliances, lighting and products:
Türkiye has mostly harmonized its product efficiency standards with the EU Eco-design Directive 2009/125/EC and the Energy Labelling Framework Directive 2010/30/EU and its implementing measures as reflected in the 2011 regulation on labelling and standard product information. Value-added tax and special consumption tax reductions were introduced for home appliances in 2018 and expired at the end of June 2019. In 2013, Turkey’s Energy Minister announced plans for a project to replace approximately 7 million street lights with more efficient LED lamps. The plan was further reinforced by the NEEAP. Under this action item, MENR, TEDAŞ (the state-owned electricity distribution company), EMRA, distribution companies, the MEUCC, municipalities and the General Directorate of Highways were meant to prepare detailed transition programs. A legislative framework was supposed to be put in place in 2017 and 2018, with a transition program to get underway in 2020. The procedures and principles for LED lighting installations in public areas was published by the MENR in January 2020, with an announcement that 20.000 LEDs are planned to be installed in 2020. The state-owned electric utility EÜAŞ has fixed agreements with municipalities, limiting the motivation for the utility to undertake the conversions absent a requirement or incentive. The energy savings potential remains significant as street lights now number around 8 million and consume around 4.4 terawatt hours (TWh) of electricity annually.
- Overview of the most important energy efficiency funding programs and projects and their implementation status (including relevant projects with IFIs like EEPB with WB)
Turkey has a number of programs and initiatives in place to promote energy efficiency and reduce energy consumption. Some examples of these programs include: 1) Energy Efficiency Financing Program (providing financing to businesses and organizations for energy efficiency projects, administered by the MENR and supported by the WB. 2) Energy Efficiency Investment Support Scheme (providing funding to businesses and organizations for energy efficiency projects through a combination of grants and loans, administered by MENR and supported by the European Union (EU). 3) Energy Efficiency and Renewable Energy Credit Guarantee Fund (providing guarantees to financial institutions that lend money for energy efficiency and renewable energy projects, administered by MENR and supported by the EBRD. 4) Energy Efficiency and Renewable Energy Support Mechanism (provides financial support for energy efficiency and renewable energy projects through a combination of grants and loans, administered by MENR and supported by EU). In addition to the programs and initiatives mentioned, there are several other funding sources available in Türkiye for energy efficiency projects: 5) Energy Efficiency and Renewable Energy Investment Fund (provides financing to businesses and organizations for energy efficiency and renewable energy projects, administered by MENR and supported by EU). 6) Energy Efficiency and Renewable Energy Support Scheme (provides funding to businesses and organizations for energy efficiency and renewable energy projects through a combination of grants and loans, administered by MENR and supported by EU). 7) Energy Efficiency Investment Support Fund (provides financing to businesses and organizations for energy efficiency projects, administered by MENR and supported by WB). The financing provided by international development finance institutions for energy efficiency in the 2002-2018 period is estimated to be in the range of USD 3-3.5 billion. In addition to providing financing, there has been immense contribution to the capacity building of industrial organizations and local financial institutions from which resources were provided, in terms of defining energy efficiency practices, evaluating investment and establishing the financing framework. In addition, these organizations provided funding and technical support for the work on shaping public policies. Two outstanding projects of this nature are addressed down below.
The Energy Efficiency in Public Buildings in Türkiye Project within the scope of the German Climate Technologies Initiative (DKTI) Program was financed by the Federal German Ministry of Environment, Nature Conservation, Construction and Nuclear Safety (BMUB) and implemented with collaboration of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and General Directorate of Professional Services of MEUCC between 2014 and 2018. The main objective of the project was to develop legal, technical and administrative prerequisites for increasing energy efficiency in public buildings as a part of sustainable economic and technological development in Türkiye. This goal-oriented approach was developed with activities under four components. 1) Providing support in the development of the legal framework conditions for promoting energy efficiency in public buildings and in the development of the necessary capacities in line with the effective implementation of the current legal regulations (important outputs: The Trainer Program for Energy Performance Certificate (EPC) Experts of the BEP-TR System; Nearly Zero Energy Buildings (nSEB) Guide; Heat Pump Systems). 2) Supporting the strengthening of the data and information infrastructure for the energy efficiency decision-making process of public buildings (important outputs: Data Systems for Energy Efficiency). 3) Supporting technology collaborations between Türkiye and Germany/EU countries aiming at supporting the transfer of technical knowledge to the private sector (important outputs: Energy Efficiency Technologies Atlas for Türkiye’s Building Sector; Technology Collaborations; private sector collaborations with the support of German-Turkish Chamber of Commerce and Industry (AHK); academic and municipality collaborations; Introduction of Energy Efficiency and Renewable Energy Technologies with Building Model). 4) Guiding the implementation of exemplary applications of energy efficiency technologies in public buildings and the development of a systematic approach that will ensure the successful replication of similar projects (important outputs: Energy Efficient School Renovation; Guide on School Renovation; Developing a Typology Project for New Schools in terms of Energy Efficiency; analysis of the MEUCC Services Building).
The $200 million Energy Efficiency in Public Buildings Project, supported by the WB and Clean Technology Fund and implemented by Turkey’s MEUCC with the support of MENR, aims to reduce energy use in 700 central government buildings and to help develop a national program for energy efficiency in public buildings across the board. The project includes: 1) investing in energy efficiency and renewable energy in central government buildings; 2) piloting the use of ESCOs to support public building renovations; 3) promoting renovations in public spaces to produce near-zero energy buildings (or NZEBs). In addition, the project includes technical assistance activities to help refine secondary legislation and build institutional and market capacity. The idea is for the government to demonstrate energy efficient designs, materials, equipment and services in order to catalyze the market for the rest of the building sector (commercial, municipal and residential), and develop local capacity to finance and deliver such services. Although most project investments is relying on a traditional approach to implementation, with energy audits, detailed designs and construction contracts based on the lowest price and fixed payments, about USD 30 million is reserved to support ESCOs and the use of energy performance contracts, which base payments on actual energy savings.
Türkiye provides state support to energy efficiency projects. Efficiency Enhancing Projects (VAP) are the most common of the government supports provided. Within the scope of VAP, 30% of the cost of energy efficiency projects up to 5 million Turkish Lira (TL) is paid as a grant from MENR budget. Various conditions have to be fulfilled, in order to be rewarded for a VAP. The evaluation of the VAP mechanism has been examined in the “Projects to Increase Efficiency in 10 Years” report published by MENR in 2020. According to the report, a total of 562 applications were received within the scope of VAP in a 10-year period and contracts were signed for 440 projects. In this context, a total of 210 projects were completed, the total investment amount of the projects was TL 96.3 million, and the total amount of support provided was TL 23.1 million. The total energy savings achieved within the scope of the program have been calculated as 61.3 Mtoe, and the monetary value of the savings as TL 84 million. The average implementation period of the covered projects was approximately 1 year (0.95 years). Within the scope of VAP, the implementation of 230 projects are continuing.
Another support mechanism provided by MENR annual budget is Voluntary Agreements (GA). Any industrial facility with an annual energy consumption of over 1,000 toe and committed to reduce their energy intensity by 10% in the following three years can apply for GA. Some further conditions have to be fulfilled, in order to be rewarded for a GA. Within the scope of the Energy Sector Research and Development Projects Support Program (ENAR), projects for innovation-oriented energy efficient equipment and method development are supported by MENR, covering 80% of the costs of the projects for up to two years.
The Ministry of Agriculture and Forestry (MoAF) has provided grant support of 50% to the projects with an investment amount of up to TL 2.5 million of renewable energy projects within the scope of the IPARD II program covering the period 2014-2020 in the framework of pre-accession EU support. Although energy efficiency is not specified as a separate project area within the scope of this program, distributed renewable energy projects often contribute to energy efficiency by increasing the efficiency of the electricity grid. As of end of 2019, a total of TL 82 million support (TL 57 million of which was grant) was provided to 67 renewable energy projects with a total investment amount of TL 179 million.
In the 2013-2016 period energy efficiency studies were carried out in SMEs within the scope of cooperation of Small and Medium Industry Development Organization (KOSGEB), MENR and the French Development Agency (AFD), and SMEs with an annual energy consumption of more than 20 toe were supported for energy efficiency studies. Within the scope of the project, 50 pre-audits and 7 detailed audits were carried out. Another important program related to SMEs has been the Turkey Sustainable Energy Financing Program (TurSEFF) financed by EBRD. It was established to finance SME energy efficiency and renewable energy investments. Within the scope of the program, which also included a free technical support package for investors for project development, a total of EUR 224 million financing was provided to 849 energy efficiency projects in Turkey during the 2010-2018 period. TURSEFF financing was provided to users through intermediary local banks; namely Akbank, Denizbank, Garanti Bank, İşbank, Yapı Kredi Bank and Vakıfbank. In the last phase, the financial leasing companies Aklease, Garanti Leasing and QNB Finans Leasing were included onto the program. In the 2010-2018 period, 34% of the financing provided to energy efficiency projects was allocated to large-scale projects in industrial and commercial buildings, 20% to small-scale projects, 37% to suitable equipment suppliers, and 9% to electric bus purchases by municipalities.
Concerning the residential market, Turkish Residential Energy Efficiency Financing Facility (TuREEFF) has been developed by EBRD and supported by EU and the Clean Technology Fund (CTF), under Climate Investment Funds (CIF). The program combined USD 300 million in loans to four local banks, Garanti BBVA, Şekerbank, Türkiye İş Bankası and Yapı Kredi Bankası, to provide financing to residential consumers, who wished to invest in energy efficiency and renewable energy measures in their homes. Residential level energy efficiency and renewable energy technologies were financed through consumer loans for individuals and commercial loans for vendors. 2,058 small investment projects were financed with USD 110 million. As a result, 50,818,827 kWh/year primary energy was saved and 10,544 tonnes of CO2 emission reduction was achieved. Mortgages of buildings with B or above energy classes were supported. 3,292 mortgages were financed with USD 158 million and 3,746,733 kWh/year primary energy was saved and 996 tonnes of CO2 emission reduction was achieved. Sustainable energy measures were supported with the goal of improving the energy performance of the existing buildings. Reconstruction of demolished buildings, under the Urban Transformation Plan of the government, and new building projects with B or above energy performance classes were also supported. 396 assisted investment projects were financed with USD 28 million. 9,205,554 kWh/year primary energy was saved and 2,602 tonnes of CO2 emission reduction was achieved.
- Overview of recent plans regarding the development of new energy efficiency policies and instruments (e.g. energy efficiency instruments discussed in the context of the second NEEAP in Türkiye)
As known, EU Green Deal, which includes the EU’s strategies such as zero net greenhouse gas emissions by 2050 and ensuring economic growth by using resources efficiently, covers trade sanctions that will affect not only the EU but also the whole world. Accordingly, the Green Deal Action Plan was published in the Official Gazette No. 31543 of July 16, 2021, as a road map with the Presidential Circular to ensure Türkiye’s green transformation and to strengthen or protect its exports with other countries, especially with the EU. The plan aims to evaluate Türkiye’s renewable energy and energy efficiency efforts within the framework of the updated amendments within the scope of the EU Green Deal, to examine the areas of development, to prepare a roadmap for informing and raising awareness in the industry and for the dissemination of energy efficient and low emission heating and cooling systems. As stated in the Green Deal Action Plan, the following activities will be carried out in the coming years:
- Carrying out the studies to develop National Energy Efficiency Financing Mechanism,
- Supporting energy efficiency investments which provide a certain level of energy savings,
- Raising awareness and providing training on energy efficiency for the authorities of industrial facilities,
- Conducting a gap analysis of Türkiye’s energy efficiency efforts while regarding the amendments in EU Green Deal,
- Preparing the national strategy and guidance documents for energy-efficient and low-carbon heating and cooling systems.
In the 11th Development Plan, which is considered as a road map to meet the basic values and expectations of our country by setting out Türkiye’s development vision between 2019-2023, it is mentioned that the issue of energy efficiency will be prioritized with the restructuring of Development Agencies’ supports. These supports have increased compared to the previous years and are expected to increase further in the coming years. The preparation studies are currently ongoing for the 12th Development Plan, which will cover the period of 2024-2028, and ad-hoc working committees have recently initiated their studies. The name of the ad hoc committee regarding energy has been assigned as “Energy Security and Efficiency”, which should be interpreted as a clear signal that the government attaches importance to the energy efficiency, and the observers expect that energy efficiency will likely be one of the crucial pillars of the next development plan.
Within the framework of EU harmonization efforts, the first National Energy Efficiency Action Plan (NEEAP) covering the period between 2017 and 2023 was published in the Official Gazette No. 30289 of January 2, 2018 as the High Planning Council Decision No. 2017/50. Since the period of this strategy document will be expired in 2023, the MENR has started to work on second NEEAP covering the period between 2024 and 2030. Throughout the preparation period, the first NEEAP is guiding the preparation of the second NEEAP. There are some possible future actions discussed during the preparation of the second NEEAP for new energy efficiency policies and instruments. Some are mentioned below.
Energy Efficiency Obligation System (EEOS), one of the main additional policy instruments designed to ensure energy efficiency in the EU, might be established in Türkiye since significant energy savings can be achieved through the EEOS. The framework for Energy Savings Performance Contracting (EsPC), successfully implemented in many developed countries and enabling the realization of efficiency-boosting projects without any investment and with the method of receiving a share from the guaranteed saving to be provided in the future, might be established to accelerate the energy efficiency projects. In Türkiye, EsPC is already practiced in the private sector and the (legal) framework for its implementation in the public sector is already established (regardless of further adjustments). However, there are quite a lot of barriers. One of the biggest barrier is the lack of project financing or green financing alternatives present in current economic environment. What is more, it is quite difficult for ESCO companies to secure construction period risks as creditors are not willing to take any sort of risks between the contract signing date and commissioning of the system offered even if the customer is a reliable (blue chip) entity. Other barriers are; unavailability of proper insurance options, legal and financial infrastructure. It is also discussed that providing incentives for EsPC such as VAT exemption, corporate tax exemption, various discounts or various exemptions in equipment procurement might be a way to increase energy efficiency projects in the future. Energy Efficiency Fund that can be utilized for energy efficiency applications might come into agenda within the context of second NEEAP. For the Energy Service Companies (ESCOs), it is planned to enhance capacity and enrich their service network. Moreover, preparation of a legal infrastructure that can secure ESCOs and determination of a roadmap showing the benefits to be provided according to the type of investment might be taken into consideration in the upcoming future.
Enerji Verimliliği Çözümü: Finansman Mekanizmaları. (2020). SHURA Enerji Dönüşümü Merkezi
NEEAP 2017-2020 Progress Report, Department of Energy Efficiency and Environment
Türkiye 2021. (2021). IEA Energy Policy Review. IEA Publications
Ministry of Trade. (2021). Green Deal Action Plan. https://ticaret.gov.tr/data/60f1200013b876eb28421b23/MUTABAKAT%20YE%C5%9E%C4%B0L.pdf
Ministry of Energy and Natural Resources. (2018). National Energy Efficiency Action Plan (2017-2023) https://www.resmigazete.gov.tr/eskiler/2018/01/20180102M1-1-1.pdf
 Ministry of Trade. (2021). Green Deal Action Plan. https://ticaret.gov.tr/data/60f1200013b876eb28421b23/MUTABAKAT%20YE%C5%9E%C4%B0L.pdf
 Ministry of Energy and Natural Resources. (2018). National Energy Efficiency Action Plan (2017-2023) https://www.resmigazete.gov.tr/eskiler/2018/01/20180102M1-1-1.pdf