Turkey’s energy policy priority has been to increase the energy supply to fuel the strong economic growth of the last decade. As energy demand is expected to grow further, reliance on imported fuel exposes Turkey to vulnerabilities by increasing the current account deficit as well as the environmental consequences, especially on greenhouse gas emission growth. Turkey also has room to improve energy efficiency, which will reduce the energy intensity of the economy and increase its competitiveness. With the enactment of the Renewable Energy Law in 2005, the government refocused its policies to promote private sector investments in renewable energy and energy efficiency.
However, promoting renewable energy and energy-efficiency investments faced challenges from a lack of knowledge of the new technologies, higher transaction costs, smaller investment amounts, and a dearth in long-term financing. Financiers clearly perceive these investments as higher risk, and thus access to finance with adequate maturity and terms remains scarce.