Development Banking The Environment, Energy, Energy Efficiency, Infrastructure & Technology Finance Metin Pehlivan Acting General Manager Development Bank

Development Banking The Environment, Energy, Energy Efficiency, Infrastructure & Technology Finance

Metin Pehlivan

Acting General ManagerDevelopment Bank of Turkey

ADFIAP Association of Development Financing Institutions in Asia and the Pasificİstanbul, 26 April

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WORLD ELECTRICITY GENERATION

SOURCE :INTERNATIONAL ENERGY AGENCY 2011

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Com-bustible

Fuels 61%

Nuclear 20%Hydro-Geoth-

Wind-So-lar-Other

19%

Development Bank of Turkey

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SUMMARY OF ENERGY ENVIRONMENT IN TURKEY

Since 1996, the Turkish Government has focused on a comprehensive electricity reform program to establish a competitive electricity market. The target is to increase private investment, improve supply-demand side efficiency and ensure energy supply security in an environmentally sustainable manner.

Important progress had been made in reforming the power sector;

i. state owned electricity monopoly had been split into two state owned companies: a generation and transmission company (further split into three: transmission, trading, contracting, electricity generating) and a distribution company (most of the distrubition rights and framework later privatised)

ii. in 2001 Electricity Market Regulatory Agency established as an independent regulatory commission which provides generating licenses to private entrepreneures and set tariffs.

iii. in 2001, the Electricity Market Law also laid the basis for the establishment of a wholesale market and further retail electricity market

iv. in 2006 a competitive wholesale market for private investors to trade electricity was established

v. Government guarantees the purchase of electricity at hydro-wind 7.3 cent/kw, geo 10.5 cent/kw, bio-sun 13.3 cent/kw.

Energy loans extended to sector is 15.5 bn TL as of 2010 in Turkey today, it was less than 1 bn TL before 2002.


INSTALLED ENERGY CAPACITY – TURKEY 2010

SOURCE : TURKISH ELECTRICITY GENERATION CO.

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Fossil Fuel 65%

Hydro 32%

Geo-Wind 3%

2002 2003 2004 2005 2006 2007 2008 2009 2010

31.835.6 36.8 38.8 40.6 40.8 41.7

44.848.6

12.3 12.6 12.7 12.9 13.1 13.6 14.2 15.3 16.8

Total Renewable

GW


INSTALLED ENERGY CAPACITY – TURKEY 2010

(*) LESS THAN % 10 BEFORE 1985

SOURCE : TURKISH ELECTRICITY GENERATION CO.

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State owned

54%

Private sector 46%

MW

(*)


OBJECTIVES I

• Determine potential renewable energy capacity of the country by source to ensure that the economic renewable energy resources are adequetly and safely exploited to meet the domestic energy demand,

• Store reliable datas of hydro and wind sources for sufficient time period,

• Establish independent electricity market regulatory agency to set adequate tariffs, to provide generation lisences and to supervise the market,

• Encourage private sector to involve in the energy producing and distribution sector, not only as a constructor but as an owner.


OBJECTIVES II

• Provide long term and compatible loans (WB, EIB etc.), national banks should be involved in these kind of lending transactions as an intermediary, Treasury gurantee for these lines will also be acceptable.

• State sector purchase guarantee ( project financing for energy sector is usually made available on the basis of long-term offtake agreements that remove market risk), free market price, investment incentives, tax favour create motivation for lenders and investors.


INVESTMENT COST PER KW IN RENEWABLES

Investment costs per kw for a hydro power plant differs related to project sites geological conditions, capacity and technology.

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TYPE WORLD TURKEY

Min-Max Min-Max Average

Hydro 1.970-2.600 1.450-2.300 1.700

Wind 1.770-1.960 1.760-2.100 1.900

Geothermal 3.470-4.060 1.950-2.450 2.200

Source: IEA & Development Bank of Turkey


COST DISTRIBUTION BY TYPE OF POWER PLANT

Construction cost dominate hydro plant investments, as machine&equipment cost become important in wind and geothermal.

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Source: Development Bank of Turkey

Construction Mach & Equip Other Total

Usd/KW % Usd/KW % Usd/KW % Usd/KW

Hydro 950 56 620 36 130 8 1.700

Wind 140 7 1.650 87 110 6 1.900

Geothermal 836 38 1.078 49 286 13 2.200


SCOPE

-Renewable Energy Sources; Run-off-river hydropower, Geothermal, Solar Energy ( thermal and PV) , Wind Power, Biomass

-Energy Efficiency ; District Heating/cooling, Energy Savings/Energy Efficiency in Buildings, High efficiency Co-Generation of Heat and Power, Electricity Distribution

-Manufacturing facilities for Renewable Energy Equipment , -Pollution Abatement Sectors as well as other Investments with a Significant Positive Environmental Impact in the Field of Energy MATURITY : Maximum 12 Years (Including max. 4-year grace period )

LOAN AMOUNT : Maximum 50 % of up to 25 M EUR Investment Cost.

RENEWABLE ENERGY, ENERGY EFFICIENCY LOANS


RENEWABLE ENERGY LOANS

THE WORLD BANK, IBRD, CTF ENERGY LOANS

SCOPE

Commercial Renewable Energy projects; Hydroelectric projects and power generation projects based on solid waste/landfill Gas .

Emerging or Less Developed Renewable Energy Projects; geothermal, Wind, Solar, Biomass, Wave and tide. Energy Efficiency Projects; Showing at least 50% of incremental benefits resulting from a reduction in energy consumption or at least %20 energy savings. MATURITY Sufficient maturities and grace periods can be determined on project bases.

LOAN AMOUNT: 75 % of investment cost ,not exceeding 50 million USD per project.


DEVOLOPMENT BANK OF TURKEY - ENERGY LOANS

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2008 2009 2010 2011

177.7

811.8

1,161.4

593.1

77.5

641.6

1,232.0

552.1

PROPOSALALLOCATED

Million TL


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132 projects evaluated and TL 2.7 billion (USD 1,6 bn) allocated to 85 of these projects with a total power capacity of 1.286 MW.

1052; 82%

75; 6%

65; 5%

52; 4%

36; 3%

6; 0%

HydroEfficiencyWindGeotherLandfillCojen

2011

ALLOCATION

Mw %


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Kalkınma has undertaken significant capacity expansion in recent years. Our progress as a client focused business has been recognized through various energy investors.

132 projects evaluated and TL 2.7 billion (USD 1,6 bn)

allocated to 85 of these projects with a total power capacity of 1.286 MW.

19 hydro power plants, 1 energy efficiency, 1 geothermal and 3 landfill plant have started to generate electricity; 21 more hydro power plant is projected to operate by the end of 2012.

Furthermore, loan utilization already started for the 11 projects (10 hydro power plant and 1 energy efficiency project) and 11 projects with a power of 113 MW are still being evaluated.


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ÇEVRECİ BİR KALKINMA

The Bank is well performing with his significant role to increase the share of privately owned renewable energy capacity of the country.

Besides, as of April 2010, The Bank was qualified to have the certificate of ISO 14001 Environment Management System, passing successfully the external audit of Turkish Standards Institution.


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Istanbul’s landfill gas power project is the largest scale land-fill gas utilization project of Turkey , which generates energy from landfill gas with a power capacity of 32 MW financed by The Bank. In the plant, electricity production is generated by burning methane gas formed in storage area, methane gas is 21 times more poisonous than carbon dioxide gas and an ultimate amount of carbon emission reduction is provided.

Secondly Kayseri Province landfill gas power project also financed by the Bank in 2011


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Project site view at the Aydın province.

The first geothermal power plant project financed by The Bank with an installed power capacity of 42 MW.


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Greenhouse plant on the 41 thousand m² was operationalized with using waste heat by integrating geothermal energy power plant.

Investment in drying agricultural area and cold storage is in progress.

As another integration of geothermal energy , study on tourism investment blending history and nature with health tourism on the geothermal field is in progress.


ENERGY EFFICIENCY

20 % cost reduction in energy consumption via energy efficiency until 2023 planned in order to reduce foreign dependency in energy in the Goverment’s national targets . Parallel to this policy Development Bank of Turkey has faciliated several projects on this issue.

The Bank financed an important energy efficiency project of an iron & steel producer company to generate electricity through capturing waste flue gases formed during the production in blast furnace, coke ovens and steelworks.


The facility of this 50 MW power plant is approved by European Investment Bank and World Bank after their environmental feasibility study.

The company will meet 403 million kwh of annual 572 million kwh energy cost equivalent to 70 % energy cost saving.

The line committed to the costumer is 41 M USD.


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The Bank financed energy efficiency project on modernization of furnaces in cement plants.

With completion of investment, annual energy savings of the company will be equal to a hydroelectric power plant with an 40 MW installed capacity.


The Bank’s main strategic objective is to finance renewable energy investments in the fields of hydro, wind, geothermal, solar and biomass paralel to Turkey’s energy resources. We are also following up the energy efficiency investment agendas of primary iron&steel, cement and fossil fuel based energy companies of the country.


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Development Banking The Environment, Energy, Energy Efficiency, Infrastructure & Technology Finance Metin Pehlivan Acting General Manager Development Bank