1. Development Banking The Environment, Energy, Energy Efficiency, Infrastructure & Technology Finance Metin Pehlivan Acting General Manager Development Bank of Turkey ADFIAP Association of Development Financing Institutions in Asia and the Pasific İstanbul, 26 April www.kalkinma.com.tr Development Bank of Turkey

2. WORLD ELECTRICITY GENERATION SOURCE :INTERNATIONAL ENERGY AGENCY 2011 www.kalkinma.com.tr Development Bank of Turkey

3. www.kalkinma.com.tr 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. Development Bank of Turkey

4. INSTALLED ENERGY CAPACITY – TURKEY 2010 SOURCE : TURKISH ELECTRICITY GENERATION CO. www.kalkinma.com.tr GW Development Bank of Turkey

5. INSTALLED ENERGY CAPACITY – TURKEY 2010 (*) LESS THAN % 10 BEFORE 1985 SOURCE : TURKISH ELECTRICITY GENERATION CO. www.kalkinma.com.tr (*) Development Bank of Turkey

6. 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. www.kalkinma.com.tr Development Bank of Turkey

7. 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. www.kalkinma.com.tr Development Bank of Turkey

8. 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. www.kalkinma.com.tr TYPEWORLDTURKEY Min-Max Average Hydro1.970-2.6001.450-2.3001.700 Wind1.770-1.9601.760-2.1001.900 Geothermal3.470-4.0601.950-2.4502.200 Source: IEA & Development Bank of Turkey Development Bank of Turkey

9. COST DISTRIBUTION BY TYPE OF POWER PLANT Construction cost dominate hydro plant investments, as machine&equipment cost become important in wind and geothermal. www.kalkinma.com.tr Source: Development Bank of Turkey ConstructionMach & EquipOtherTotal Usd/KW% % % Hydro950566203613081.700 Wind14071.6508711061.900 Geothermal836381.07849286132.200 Development Bank of Turkey

10. 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 www.kalkinma.com.tr Development Bank of Turkey

11. 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. www.kalkinma.com.tr Development Bank of Turkey

12. DEVOLOPMENT BANK OF TURKEY - ENERGY LOANS www.kalkinma.com.tr Million TL Development Bank of Turkey

13. www.kalkinma.com.tr 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. 20112011 ALLOCATION Mw % Development Bank of Turkey

14. www.kalkinma.com.tr 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. Development Bank of Turkey

15. www.kalkinma.com.tr 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. Development Bank of Turkey

16. www.kalkinma.com.tr 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 Development Bank of Turkey

17. www.kalkinma.com.tr 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. Development Bank of Turkey

18. www.kalkinma.com.tr 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. Development Bank of Turkey

19. 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. www.kalkinma.com.tr Development Bank of Turkey

20. 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. www.kalkinma.com.tr Development Bank of Turkey

21. www.kalkinma.com.tr 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. Development Bank of Turkey

22. 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. www.kalkinma.com.tr Development Bank of Turkey

23. www.kalkinma.com.tr Thanks…