TOBB Hosts Panel on Energy Efficiency

Union of Chambers and Commodity Exchanges of Turkey (TOBB) Energy Council Chairman Zeki Konukoğlu stated that productivity criteria need to be structured more flexibly and regulations should be adapted to current conditions. Within the framework of the 2022 Energy Efficiency Week Activities, an "Energy Efficiency Panel" was held online with TOBB Sector Council Chairmen as speakers, during which energy efficiency policies and investments in energy efficiency were evaluated.

Public policies matter in energy efficiency

In the first session of the panel organized under the heading "Energy Efficiency Finance," TOBB Turkey Energy Sector Council Chairman and SANKO Holding Honorary Chairman Zeki Konukoğlu, Turkey Consumer Durables Council Chairman Fatih Ebiçlioğlu, Turkey Air Conditioning Council Chairman Zeki Poyraz, and TOBB Deputy General Secretary Cengiz Delibaş took part as speakers. Konukoğlu noted that obligations, incentives, education and consulting within the framework of public policies are important for achieving energy efficiency, stating: "In world practice, making existing financing mechanisms more suitable for energy efficiency investments and developing dedicated financing mechanisms for energy efficiency have become a focus area for supranational and national public institutions."

"Energy efficiency financing worldwide falls into three main categories"

Konukoğlu noted that energy efficiency financing worldwide falls into three main categories, stating: "One of these is credit financing through funds, another is financing provided by energy service companies, and another is support provided by governments." Konukoğlu shared the following on energy efficiency financing: "The funds and credit financing system directs investments through intermediaries such as commercial banks, specialized organizations, and national revolving funds from national or international sources. Energy service company financing involves conducting energy efficiency investments at a commercial facility and sharing a portion of the energy savings profit for a specified period, with bank loans for investments and gains being repaid from revenues. Support projects provided by the state can be implemented by energy efficiency centers as well as electricity and gas service organizations and similar utilities."

"Developed countries provide significant support for energy efficiency"

Reminding that developed countries provide substantial incentives and support for energy efficiency within their capabilities, Konukoğlu continued: "The World Bank also provides various forms of support to certain countries. As energy efficiency funds, Bulgaria, Armenia, Mexico and Romania are working to provide these opportunities. On credit matters, we can mention China, Uzbekistan, Tunisia, Turkey, Vietnam, and Ukraine; under credit guarantees, Bulgaria, China, India and Poland; as revolving capital funds, Bulgaria, Armenia, India, Hungary, Mexico, Romania; as super energy efficiency companies Armenia and Croatia; and for Green Mortgages, only Turkey. We are pleased to say that in Turkey, international development finance institutions provided USD 3.5 billion in financing for energy efficiency investments during 2002-2020, and with domestic bank financing, the total amount reached USD 5 billion. The Turkey Sustainable Energy Finance Program, established to finance SME energy efficiency and renewable energy investments, with EBBA as its funding provider, provided financing valued at a total of EUR 224 million from 849 energy efficiency projects during 2010-2018 under a program that includes a free technical support package for investors in project development."

Financing sourcing challenges

Explaining that financing sourcing challenges include the public budget system not encouraging energy efficiency practices, lengthy procurement and contract processes that hinder the purchase of energy efficiency product services, failure to allocate funds for energy management and projects, and high transaction costs, Konukoğlu continued: "On the industrial side, we can cite high investment costs leading to high borrowing costs and limited financing access, particularly for SMEs, expectations for rapid returns, and high project development and transaction costs. In residential buildings, high additional investment costs, particularly for low-income groups, and limited or high-cost financing access make implementation difficult."

Proposed solutions

Expressing that current financing options could be more widely used in Turkey's banking systems, Konukoğlu shared the following views on proposed solutions: "Similar to export credits and agricultural development credits, productivity credits should also be supported by a specialized public finance institution such as Eximbank with specific expertise in this field, and it should not be overlooked that exports' fundamental requirement is becoming green production. Not only foreign currency but also TL credit sources need to be activated. Longer-term credits should be provided compared to commercial credits, preferably 10 years and above. Credit opportunities should be increased through Eximbank. Costs below market conditions and adequate financing should be provided based on energy savings performance."

Appropriate regulations should be implemented

Underscoring that productivity criteria need to be structured more flexibly and regulations should be adapted to current conditions, Konukoğlu concluded his remarks: "Turkey's high energy efficiency potential requires a framework, particularly in SMEs and buildings, capable of implementing turnkey efficiency projects that combine financing and technical support. For this reason, the energy service company model stands out as an opportunity for Turkey with a potential market size of USD 250 million. Completing and implementing legislation containing contracts for energy service company operations, standards, and measurement and verification protocols will benefit in increasing consumer demand for the model."   Source