Clean Technology Fund Drives Turkey's Renewable Energy Growth

December 4, 2012

Turkey is expanding its renewable energy portfolio with support from the World Bank and Clean Technology Fund.

The World Bank

  • Sharp focus on building renewable capacity and improving energy efficiency.
  • Clean Technology Fund support helps move Turkey's renewable energy agenda forward.
  • Towards lower carbon emissions and higher energy efficiencies.

White stone windmills in 18th century Turkey harnessed the winds unique to the peninsular geography to grind flour to meet local needs. Today, the winds drive 12 modern turbines off the Aegean Sea to provide clean energy to 250,000 households — playing a part in Turkey’s transformation to a clean energy economy. With US $250 million support from the Climate Technology Fund, leveraging nearly US$1.9 billion, Turkey is on the path to grow its renewable energy and improve energy efficiency to meet growing demands.

" The bottom line is for Turkey to produce more goods with less energy so it can become a global player. Turkey’s ambition is to become a leading global economy so energy use has to be a priority. "
Erdal Calikoglu

Erdal Calikoglu

Ministry of Energy, Turkey

Every year, for the past 20 years, Turkey’s energy demand has grown by at least six percent. Increased urbanization, a high dependence on energy imports and the need for energy security is changing Turkey’s outlook on energy. With a population of 74.7 million that is growing at a yearly rate of 1.21 percent, demand for energy will continue to rise.

About 60% of Turkey’s power comes from fossil fuels, while 60% of the country’s production relies on imported energy. Turkey’s government and investors both see the need to scale up renewables and invest in energy-efficiency.

“The answer to Turkey’s growing energy and power needs lies not only in increasing the capacity but in more efficient use of energy,” said Orhan Beskok, Secretary General, TSKB Bank. “There is substantial room for energy efficiency investments.”

With support from the World Bank and the Clean Technology Fund, Turkey is growing its sustainable energy production and energy efficiency. The CTF has pledged US$ 271 million to push Turkey’s market towards advanced renewables and energy savings.

As Erdal Calikoglu, Ministry of Energy, sums up, “The bottom line is for Turkey to produce more goods with less energy so it can become a global player. Turkey’s ambition is to become a leading global economy so energy use has to be a priority.”

There is a growing sense of excitement about the prospects for the future. Elvan Ongun, Undersecretariat of the Treasury said, “I believe that we are achieving transformational change in Turkey and awareness has increased tremendously since we started the first CTF project.”

Renewables on the map

Turkey has adequate wind, water, and sun to explore the potential of renewable energy, which is still in its infancy. Currently, wind power provides two percent of Turkey’s energy while geothermal accounts for 0.3 percent.

Atlases prepared by the Turkish government show vast potential for wind, geothermal, and solar energy. The wind atlas indicates a technical power generating capacity of 48 GW, for example. The country’s Electricity Market and Security of Supply Strategy calls for its development to meet an overall target of renewable energy providing at least 30 percent of total energy generated by 2023. Of this renewable energy mix, wind power is expected to scale up to 20 GW.

For nearly 10 months in a year, Turkey experiences westerly winds across the Aegean Sea, making investments in wind energy a logical choice. Mehmet Toker, Bilgin Energy Engineer says, “Looking at a wind map, I see that three sides of Turkey are surrounded by seas so this means a steady wind stream for the country’s energy.”

Vadi Cakmak, Bilgin Energy Chief Technician, emphasizes, “We are sure that there is a growing market for wind power. Here, there are plans for 15 more wind parks so the numbers will increase even as you move from the coast to the heart of the country.

Turkey is developing its geothermal resources too. In Aydin, Dora 1 and Dora 2, geothermal stations, provide energy for 20,000 households every day.

Muharrem Balat, President, Baskan Holdings, the owner of the Dora 1 and 2 plants is now building Dora 3 for US$ 77 million. He is convinced that the key to the energy security lies in increasing local production. “Geothermal is a very important resource that Turkish businesses are investing in. It is important as geothermal will help Turkey be less reliant on foreign energy”, he says.

The Doras are a first but important step as experts say that Turkey has the potential to be the world’s leader in geothermal energy. Already, the two Doras save over 70,000 tons of greenhouse gas (GHGs) emissions a year.

Clean Technology Funds – Shaping the Clean Energy Landscape

Turkey was among the first countries to receive Clean Technology Funds (CTF) funds in 2009. Turkey’s CTF Investment Plan aims to contribute to Turkey’s transformation into a lower carbon economy. The low-interest CTF loans aim to increase privately operated renewable energy and energy efficiency production, and reduce greenhouse gas emissions.

Turkey’s progress on renewables was underscored November 7, 2012, when the third meeting of Climate Technology Fund countries was held in Istanbul. The CTF has provided $172 million out of a commitment of $250 million. This financing of $172 million has leveraged nearly $1.9 billion. Turkey shared the transformational impact of the CTF, showcasing its results.

The CTF was essential to investments in sustainable and efficient power, say Turkish business leaders.“If we didn’t have this fund, I would be doing this not this year but maybe 10 years later when I have enough funds,” said Ercan Sayari of Nuh Cement. “Today, I found this fund and did this job properly. Otherwise, I couldn’t have done it.”

Towards lower carbon emissions

Turkey’s CO2 emissions per capita are 4.0 metric tons, lower than the Europe and Central Asia group’s average of 7.8 metric tons. But IEA reports that energy-related CO2 emissions have more than doubled since the 1990s.

The CTF has resulted in GHG emission savings of 4.0 million tons of CO2 per year, surpassing the government-set target by 25%. To date, the CTF has invested 56% in renewable energy and 44% in energy efficiency. Investment from the CTF, combined with co-financing from other multilateral banks is transforming the renewable energy landscape. Highlights include energy savings of 2.7 TWh, an increase over projected savings by over 42 percent. In terms of renewable energy generation, the first stage has generated 7.1 TWh, an increase over planned generation by over 103 percent.

These gains, combined with the increased focus on renewable energy development, augur well for energy security and lower carbon emissions.

Energy efficiency is critical

The challenge in addressing Turkey’s energy needs lies in scaling up renewables while implementing energy efficiency on a wide scale.

The Nuh Cement Plant in Hereke, is Europe’s largest cement manufacturing plant. The plant uses giant energy-efficient recovery systems to recover heat from sludge. As a result, the plant uses 30,000 tons less of coal per year, decreasing its annual coal consumption by nearly five percent. The energy efficiency components of this plant were built with the help of a US$ 22 million loan and support from the CTF. Without this assistance, the clean technology intervention would not have been possible.

To scale back energy demand, over the past five years, Turkey has run massive public awareness campaigns, created incentives for Turkish companies to use less power, and regulations to enforce efficiency.

Sustainable energy for the future

In the last 10 years, renewable power and improved efficiency have saved the economy about 25 million tons of oil. Today, sustainable energy is already 25 percent of the Turkish energy market.

By 2023, Turkey plans to be 20% more energy efficient and scale up renewable energy to meet 30% of its energy needs. Experts say that by 2030, Turkey will need an additional US$ 130 billion in energy investments to keep pace with the demand.