turseff: a great financing opportunity for cogeneration...

DESIGNED BY SUPPORTED BY IMPLEMENTED BY

TurSEFF: A great financing opportunity for

Cogeneration, Tri-generation and Energy Efficiency

projects in Turkey

TÜRKOTED Sempozyum

Izmir, 28 May 2015

Dario Dilucia La Perna

Content of the presentation

1. The TurSEFF programme

2. Energy Surveys and

Simplified Energy Audits to

identify Energy Efficiency

opportunities under TurSEFF

3. Co-generation and Tri-

generation market

4. Co-generation and tri-

generation financing under

TurSEFF

5. Conclusions

2


The TurSEFF programme

Turkey Private Sector Sustainable Energy

Financing Facility (TurSEFF)

• The EBRD has developed the Turkey Private

Sector Sustainable Energy Financing Facility

(TurSEFF).

• The programme is supported by EU and CTF

4

Which are the overall goals of the

programme?

Enhancing energy security through improving energy efficiency in key sectors of the economy (private sector)

Supporting a clean energy transition by reducing reliance on fossil fuels and focusing on meeting energy needs in an environmentally sustainable manner, thereby reducing GHG emissions

Promoting and increasing the awareness of energy efficiency across economic sectors together with climate change

5

Which are the TurSEFF stakeholders?

6

Which type of loans is available?

7

(1) • Large Scale loan in Industry (SMEs)

• (up to EUR 5 million)

(2) • Large scale loan in commercial buildings(SMEs)


(3) • Small Scale loan (LEME-LESI) (SMEs)

• (up to EUR 250,000)

(4) • Supplier loan (SMEs)


(5) • Vendor loan (End-users must be SMEs)


Energy Efficiency and Renewable Energy Projects

Which are our core activities?

Management

• Ensure that the technical criteria of the Facility are clearly defined, consistently applied and updated

• Provide overall Facility coordination

• Establish an efficient tracking, monitoring, management and reporting system

• Monitor the portfolio of Sub-projects of the Facility

• Provide all the assistance and help needed to the VC and to the PBs during the verification phase

• Periodically report to EBRD the progress of the Facility (monthly and quarterly)

PB relationship

• Training of Loan Officers of Participating Banks

• Focus on working with regional branches of the PBs to increase the outreach to investors

• Development of new loan products and financing schemes

• Design of incentive Scheme for Loan Officers

8

..Marketing and Engineering

Marketing

• Promote the TurSEFF through targeted public awareness and marketing campaigns in cooperation with Participating Banks and other stakeholders in the energy market

• Arrange information dissemination activities related to the project to inform a wide range of stakeholders about the Facility and the benefits of rational energy utilisation

• Support the development of an adequate project pipeline

• Work with local ministries and other governmental agencies related to energy

• Preparation and distribution of marketing material

Engineering

• Provide free-technical assistance to beneficiaries such as Energy Audit, help in developing energy efficiency and renewable energy sub-projects in both industry and buildings

• Prepare Project Assessment Reports (PAR) for large scale projects

• Design, establish, and regularly update the List of Eligible Measures and Equipment (LEME) and a List of Equipment Suppliers and Installers (LESI)

• Energy management training for Turkish enterprises and for local engineers/energy auditors/architects and designers

9

Phases of sub-project development

Project origination

Project screning

Project preparation

Project appraisal

Project financing

Project implementation

Project Verification

10

Project Consultant Verification

Consultant PB Beneficiary

How can TurSEFF help mitigating the risks

and barriers of the market?

• Competitive pricing;

• LEME-LESI List to boost the process for small scale projects (loan

amount lower than 250,000 EUR)

• Fast evaluation process against the TurSEFF criteria (if data are

available)

• The technical assistance provided by us is free-of charge for both the

banks and the end-users

• Wide spectrum of technical assistance activities provided, including:

– Tailored energy surveys to the most energy intensive clients (both industrial and

commercial);

– Energy Management trainings to: • Beneficiaries

• PBs

• Engineers and architects (via training)

• Regional Development Agencies (via training)

– Technical support to the client to promote their projects to the bank for financing

11

TurSEFF website

12

www.turseff.org

http://www.turseff.org/

Small-Scale projects (up to EUR 250,000):

visit our LEME-LESI on TurSEFF website!

http://www.turseff.org/en/page/introduction

13

http://www.turseff.org/en/page/introduction

TurSEFF website – express request form

14

The express request form is widely adopted

by potential benefiaciaries

TurSEFF website – sector leaflets

15

Leaflets for many industrial sector (almost 20)

can be easily downloaded from the website!

TurSEFF website – Frequently Asked

Questions

16

Frequently Asked Questions tab to easily and

quickly provide answers to the key questions!

Energy efficiency financing under TurSEFF:

results achieved so far!

17

Out of EUR 300 million financed under TurSEFF,

EUR 210 million was financed for EE projects

The primary energy savings are

equivalent to the electricity

consumption of around

1.2 million people living in Turkey!

The CO2eq emissions savings are

equivalent to the emissions of

80,000 cars!

Manufacturing, Textile,

Construction and Service

are the leading sectors!

Which EE technologies are financed under

TurSEFF?

18

Wide spectrum of technologies have

been financed so far under TurSEFF!

Process machine replacement,

Insulation and cogeneration are leading

the primary energy savings achieved

Regional coverage of TurSEFF financing for

EE projects

19

Marmara, Aegean and Central Anatolia have been the most active

Regions in terms of disbursement!

Marmara: 43%

Aegean: 28%

Central Anatolia: 15%

Mediterranean: 8%

South and Eastern Anatolia: 6%

Black-sea: 1%


Energy Surveys and Simplified Energy Audits to

identify Energy Efficiency opportunities under

TurSEFF

Energy Surveys and Simplified Energy

Audit under TurSEFF

21

SME

TurSEFF Team

Bank Industrial Clients Free-of charge Energy

Surveys (ES) approved by EBRD

Commercial Building Clients Free-of

charge Simplified Energy Audit (SEA)

approved by EBRD

Pre-screening of the Clients:

a)Energy intensive facilities

b)Interested to invest in EE projects in short-

time

c)Committment of the Management

d)High-operating time

e)Medium to high energy costs

Industry - Break-down of primary energy

savings by technology

22

The total potential loan amount with ESs activities equals EUR

4.8 million and the total primary energy savings identified so far

with ESs activities amount to 5,100 toe per year

1,677

318

88

541

248

478

167

349

84 54

217 165

715

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Co

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on

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eco

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Project type

Sum of Annual primary energy equivalent savings [toe/year]

Sector

Since June 2013

Industry - Break-down of cumulative energy

savings by sector

23

1,750

767

101

606

335

138

488 505409

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

TO

E/y

ea

r

Economic Activity


SectorThe ferrous sector is leading with 34% of the potential savings

identified followed by food&beverage and non-ferrous sectors. Since June 2013

Commercial buildings- Break-down of

primary energy savings by technology

24

1,440

5

294

0

198349

38

270

17 1

484

198

899

277

30

200

400

600

800

1,000

1,200

1,400

1,600

Co

ge

ne

rati

on

Co

mp

ress

ed

air

FMC

S

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l sw

itch

He

at

Pu

mp

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at

reco

very

HV

AC

Insu

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Ligh

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mp

s/m

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Syst

em

Sola

r W

ate

r H

ea

ters

Tri

gen

era

tio

n

Win

d P

ow

er

Pla

nt

Win

do

ws

TO

E/y

ea

r

Project type


Sector

The total potential loan amount with SEAs activities amounts to

EUR 6.6 million and the total primary energy savings identified

so far with SEAs activities amounts to 4,472 toe per year. Since June 2013

Commercial buildings - Break-down of

cumulative energy savings by sector

25

868

1,088

2,515

0

500

1,000

1,500

2,000

2,500

3,000

Hospital Retail Tourism

TO

E/ye

ar

Economic Activity


Sector

The tourism sector is leading with 55% of the potential

savings identified, followed by the retail and hospital sectors Since June 2013


Co-generation and Tri-generation market

Cogeneration and tri-generation

applications

• The heat to power ratio demand of the facility should match with the heat to power ratio of the selected cogeneration system

• Low temperature heat demand improves the profitability of the project (for reciprocating engines applications)

• High requirements for heating and / or cooling (at least 5,000 hours);

• The ability to connect to the grid at a reasonable price with the availability of back-up;

• Availability of space for the equipment and short distances for heat transport.

• Reliable, long-term supply of fuel

Benefits of cogeneration for end-users and

the Country

• At end-user level

– Increased efficiency of energy conversion

and use (49% 75%)

– Improved local security of supply

– Additional competitiveness

• At country level

– Lower emissions to the environment, in

particular of CO2.

– An opportunity to move towards more

decentralised forms of electricity generation

– Improved general security of supply

– Enhanced electricity network stability

through reduction in congestion and ‘peak-

shaving

– Reduced investment in energy system

infrastructure

28

The role of cogeneration in total electricity

generation in Europe and Turkey

29

“The EU currently generates 11.2% of its electricity using

cogeneration on average ”

Barriers in Turkish market..

a) Lack of technical awareness (especially

amongst SMEs)

b) Creditworthiness of Clients (especially

amongst SMEs located in the least

development Regions)

c) Electricity tariff very low in OIZ

d) Lack of budget resources on EE projects

e) Natural gas market not fully liberalized

(uncertainty for CHP and tri-generation

projects)

f) Lack of awareness of business models

such as ESCO, PPA agreement

g) Poor quality Feasibility Study

h) ESCO modeling is difficult for the un-

licensed segment of the market (< 1 MW)

i) Lack of incentives for micro-cogeneration

(<30kW)

30

..and opportunities

a) Good penetration rate of top-equipment

suppliers

b) Good penetration rate of high-efficiency

equipment

c) Different financing schemes are available

d) High Efficiency Cogeneration requirement

has been recently defined in the energy

legislation

e) There are many energy intensive industries

f) Very good profitability for many industrial

clients

g) Natural Gas is available in many Regions of

the country

h) ESCO model can reduce the technical and

financial risk from Client side (especially for

commercial building applications)

31


Cogeneration and tri-generation financing

under TurSEFF

Co-generation and tri-generation

financing under TurSEFF!

33

EUR 27.8 Million was disbursed under TurSEFF for both cogeneration and tri-generation projects leading to 335 GWh/year electricity generation .

The electricity generation would offset the electricity consumption of around 660,000 people living in Turkey. The tCO2eq savings are equivalent to the tCO2eq emitted by nearly 30,000 cars.

Type of Clients which have used TurSEFF

funds for co/trigeneration since 2010!

34

(1) • Industrial Clients, up to EUR 5 million

(2) • Commercial Clients, up to EUR 5 million

(3) • Energy Service Companies (ESCOs), up to EUR 5

million

(4) • Cogeration manufacturers, up to EUR 1 million

(5) • Cogeneration dealers, installers and vendors, up to

EUR 5 million

TurSEFF case study: tri-generation project

at Florence Nightingale Hospital, Istanbul

Esko (the Seller) has signed a long-term PPA with

Florence Nightingale Hospital (the Buyer).

• It is one of the few PPAs in place in Turkey so

far;

• Win-win solution: Esko benefits from the

revenues from the customers, and the customer

benefits from lower energy tariffs applied to its

energy bill.

• The PPA solution overcomes the barrier of lack

of technical expertise from customer side (a

hospital) which takes neither financial nor

technical risks.

• The tri-generation application in hospitals can

provide both reliable electricity and satisfy the

contemporaneous demand of electricity, thermal

energy and cooling.

Structure of the Power Purchase Agreement

36

Results

Key Performance Data

Implementation date June 2014

Category of investment Energy Efficiency

Power installed 800 kW

Primary energy saving 4,912 MWh/year

CO2 emission reduction 425 Tons CO2/year

Investment 592,105 EUR

TurSEFF loan amount 592,105 EUR

Internal Rate of Return 32.2 %

Simple Pay Back Time 3.1 years

• The capacity of the new tri-

generation unit is 800 kWel

increasing the overall installed

capacity up to 2,800 kWel.


Conclusions

Country energy overview

• Turkey relied on energy supply from other

countries to an extent of 75.5% of the country

primary energy needs in 2013

• the electricity demand will increase annually at

a rate of 5-6 %

• Industrial, residential and services account for

more than 70% of the final energy consumption

39

National 2023 energy efficiency targets

• General Turkish energy efficiency targets, articulated in Energy

Efficiency Strategy Paper 2012 – 2023, are established for 2023.

• The final objective is decreasing at least 20% of amount of energy

consumed per unit of GDP of Turkey in the year 2023

40

Why does Energy efficiency play a key role

to achieve the National Targets?

• Pay-back time can be very short

• “Negawatt” means the energy that is never used

• Energy Efficiency can be «partially» done even for free, just changing the

behavior of people and managing energy

• Energy Efficiency improves the competitiveness of Clients

• Energy Efficiency is the «cheapest fuel» available in the market

• At final user level, energy efficiency MUST come before renewable

energy for self-consumption

• Energy Efficiency is the «quickest way» to save energy

• Nothing else can allow to achieve the below sustainable energy targets all

at once as the energy efficiency can do:

i. Reduction of energy consumption at final users;

ii. Reduction of primary energy consumption at country level;

iii. Reduction of GHG emissions at country level, and;

iv. Improvement of Power Supply security.

41

Why can TurSEFF help contributing to the

achievement of the National targets?

42

Excellent results achieved since 2010

Very flexible financing mechanism

Very strong free of charge Technical Assistance

Great network with key stakeholders of the market

LEME-LESI as a tool to promote high efficiency equipment in the market

Very short and easy process

Competitive pricing

43

“Energy Efficiency is one of the highest-return and lowest-

risk investments in the whole economy”

By Amory Lovins, Rockey Mountain Institute

A final quote from Rockey Mountain

Institute

Contact details

Asmadalı Sokak No:27

Koşuyolu / Kadıköy

34718 Istanbul / TURKEY

Tel: +90 216 340 0020

Fax: +90 216 339 2444

www.turseff.org

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turseff: a great financing opportunity for cogeneration...

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