EBRD to in­tro­duce new en­ergy ef­fi­ciency fi­nance model

Dünya Executive - - ENERGY -

The Euro­pean Bank for Re­con­struc­tion and De­vel­op­ment (EBRD) is pre­par­ing to in­tro­duce a new en­ergy ef­fi­ciency fi­nance model for Turkey’s pub­lic sec­tor that will fund en­ergy per­for­mance com­pa­nies (EPCs) who will col­lab­o­rate for en­ergy sav­ings with pub­lic in­sti­tu­tions, Sule Kilic, Turkey’s deputy head at the EBRD, told Anadolu Agency on Septem­ber 27.

The Bank will pro­vide loans to the EPCs that are tasked with guar­an­tee­ing a pre­scribed de­gree of sav­ings re­sult­ing from th­ese ef­fi­ciency in­vest­ments in pub­lic in­sti­tu­tions, Kilic ex­plained.

The EBRD’s five-year strat­egy for Turkey, an­nounced two weeks ago to mark the 10th year of the Bank’s op­er­a­tions in the coun­try, cen­ters on en­ergy ef­fi­ciency in­vest­ments, along with re­new­ables. The Bank has al­ready funded three gi­gawatts of in­stalled ca­pac­ity in wind, so­lar and geo­ther­mal pro­jects - equiv­a­lent to 7 per­cent of the to­tal in­stalled re­new­able ca­pac­ity across Turkey.

Turkey’s Na­tional En­ergy Ef­fi­ciency Ac­tion Plan, launched by the En­ergy and Nat­u­ral Re­sources Min­istry in early 2018, out­lines a roadmap tar­get­ing sav­ings of $30.2 bil­lion by 2030 by in­vest­ing $10.9 bil­lion in sev­eral sec­tors, espe­cially in­dus­trial and con­struc­tion. Kilic high­lighted that pub­lic in­sti­tu­tions have a very high po­ten­tial for sav­ings as part of this plan.

Pub­lic build­ings to save more

To ben­e­fit from fund­ing, Turkey’s En­ergy and Nat­u­ral Re­sources Min­istry asked that pub­lic build­ings, whose en­ergy con­sump­tion ex­ceeds the equiv­a­lent 250 tons of oil, cal­cu­late the build­ings’ av­er­age con­sump­tion and mon­e­tary value in 2016, 2017 and 2018 and sub­mit the find­ings to the en­ergy min­istry by March 2020.

The build­ings will need to save at least 15 per­cent from Jan­uary 2020 to De­cem­ber 2023 com­pared to the cal­cu­lated av­er­age con­sump­tion of the build­ing in 2016, 2017 and 2018.

“If we take the ex­am­ple of a heat­ing or elec­tric­ity bill of a pub­lic build­ing, the EPC will make all the nec­es­sary ef­fi­ciency in­vest­ments for the build­ing with the loan pro­vided from the Bank. The pub­lic in­sti­tu­tion and the EPC will make a con­tract, part of which will in­volve the EPC’s guar­an­tee of a sav­ings amount each month. How­ever, the pub­lic in­sti­tu­tion will pay this sav­ings amount to the EPC to re­pay the loan,” Kilic ex­plained.

Pub­lic-pri­vate co­op­er­a­tion

The new fi­nance model, which is al­ready in use in Europe and other coun­tries, will be used for the first time in Turkey. “We can de­fine this as a new model of pub­lic-pri­vate col­lab­o­ra­tion in en­ergy ef­fi­ciency in­vest­ments,” Kilic said. How­ever, to launch it in the coun­try, some leg­isla­tive amend­ments are re­quired so pub­lic in­sti­tu­tions are al­lowed to make such con­tracts with the EPCs.

She ex­plained that the con­tract be­tween the EPC and the re­spec­tive pub­lic in­sti­tu­tion will run for an agreed pe­riod, say five years, dur­ing which time the pub­lic in­sti­tu­tion will fully pay off the loan monthly, avoid­ing the need for an up­front re­pay­ment from pub­lic funds. She also stated that when put into prac­tice, a new mar­ket would arise for EPCs.

BO­TAS to be a pivot

Kilic said the same model could be ap­plied to Turkey’s un­der­ground gas stor­age fa­cil­i­ties, which are crit­i­cal to the coun­try’s en­ergy se­cu­rity. The EBRD no longer funds car­bon pro­jects but could fo­cus on a fi­nan­cial mech­a­nism for float­ing liq­ue­fied nat­u­ral gas (LNG) and re­gasi­fi­ca­tion units (FSRU) in Turkey, she said.

As the pub­lic sec­tor can­not make all the nec­es­sary in­vest­ments, she ex­plained that some pri­vate sec­tor play­ers are plan­ning to build the much-needed un­der­ground gas stor­age fa­cil­i­ties, which would en­hance en­ergy se­cu­rity, would al­low for more com­pet­i­tive prices and elim­i­nate de­pen­dency on longterm gas con­tracts.

She sug­gested that the role of Turkey’s Pe­tro­leum Pipe­line Com­pany (BO­TAS) would be piv­otal for the suc­cess of such a fi­nance model. “To be able to fi­nance the pri­vate sec­tor play­ers plan­ning to in­vest in gas stor­age or FSRUs, BO­TAS should guar­an­tee them the use of a cer­tain ca­pac­ity of their stor­age so they can earn and re­pay the loans,” Kilic ex­plained. Turkey, with around 50 bil­lion cu­bic me­ters (bcm) of an­nual nat­u­ral gas con­sump­tion, plans to have a stor­age ca­pac­ity of 11 bcm thanks to the in­vest­ments from BO­TAS.

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