D evelopment Banking T he Environment, Energy , Energy Efficiency , Infrastructure & T echnology Finance Metin P

1. ADFIAP Association of Development FinancingInstitutions in AsiaandthePasific İstanbul, 26 April DevelopmentBanking The Environment, Energy, EnergyEfficiency, Infrastructure &Technology Finance Metin Pehlivan Acting General Manager Development Bank of Turkey 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. 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; 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) in 2001 Electricity Market Regulatory Agency established as an independent regulatory commissionwhich provides generating licenses to private entrepreneures and set tariffs. in 2001, the Electricity Market Law also laid the basis for the establishment of a wholesale marketand further retail electricity market iv. in 2006 a competitive wholesale market for private investors to trade electricity wasestablished v. Governmentguaranteesthepurchase 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. www.kalkinma.com.tr Development Bank of Turkey

4. INSTALLED ENERGY CAPACITY – TURKEY 2010 GW SOURCE : TURKISH ELECTRICITY GENERATION CO. www.kalkinma.com.tr 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 • Determinepotentialrenewableenergycapacity of thecountrybysourcetoensurethattheeconomicrenewableenergyresourcesareadequetlyandsafelyexploitedtomeetthedomesticenergydemand, • Storereliabledatas of hydroandwindsourcesforsufficient time period, • Establishindependentelectricity market regulatoryagencyto set adequatetariffs, toprovidegenerationlisencesandtosupervisethe market, • Encourageprivatesectortoinvolve in theenergyproducinganddistributionsector, not only as a constructor but as an owner. www.kalkinma.com.tr Development Bank of Turkey

7. OBJECTIVES II • Providelongtermandcompatibleloans (WB, EIB etc.), nationalbanksshould be involved in thesekind of lendingtransactions as an intermediary, Treasuryguranteefortheselineswillalso be acceptable. • Statesectorpurchaseguarantee ( projectfinancingforenergysector is usuallymadeavailable on thebasis of long-termofftakeagreementsthatremove market risk), free market price, investmentincentives, taxfavourcreatemotivationforlendersandinvestors. www.kalkinma.com.tr Development Bank of Turkey

8. INVESTMENT COST PER KW IN RENEWABLES Source: IEA & Development Bank of Turkey Investmentcostsperkwfor a hydropowerplantdiffersrelatedtoprojectsitesgeologicalconditions, capacityandtechnology. www.kalkinma.com.tr Development Bank of Turkey

9. COST DISTRIBUTION BY TYPE OF POWER PLANT Source: Development Bank of Turkey Construction costdominatehydroplantinvestments, as machine&equipmentcostbecomeimportant in windandgeothermal. www.kalkinma.com.tr Development Bank of Turkey

10. RENEWABLE ENERGY, ENERGY EFFICIENCY LOANS 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 Fieldof Energy MATURITY :Maximum 12 Years (Including max. 4-year grace period ) LOANAMOUNT:Maximum 50 % of upto 25 M EUR Investment Cost. www.kalkinma.com.tr Development Bank of Turkey

11. RENEWABLE 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. THE WORLD BANK, IBRD, CTF ENERGY LOANS www.kalkinma.com.tr Development Bank of Turkey

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

13. 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. ALLOCATION Mw % 2011 www.kalkinma.com.tr Development Bank of Turkey

14. Kalkınma has undertakensignificantcapacityexpansion in recentyears. Ourprogress as a clientfocusedbusiness has beenrecognizedthroughvariousenergyinvestors. 132 projectsevaluated andTL 2.7 billion (USD 1,6 bn) allocated to 85of these projects with a total power capacityof 1.286 MW. 19hydropowerplants, 1 energyefficiency, 1 geothermal and 3landfill planthave started to generate electricity; 21 morehydropower plant is projectedtooperateby the end of 2012. Furthermore, loanutilizationalreadystartedforthe 11 projects (10 hydropowerplantand 1 energyefficiencyproject) and 11 projects with a power of 113 MW are still being evaluated. www.kalkinma.com.tr Development Bank of Turkey

15. ÇEVRECİ BİR KALKINMA TheBank is wellperformingwith his significant role toincreasetheshare of privatelyownedrenewableenergycapacity of thecountry. Besides, as of April 2010, TheBank was qualified to have the certificate of ISO 14001 Environment Management System, passing successfully the external audit of Turkish Standards Institution. www.kalkinma.com.tr Development Bank of Turkey

16. Istanbul’s landfill gas power project is thelargestscaleland-fillgasutilizationproject of Turkey, which generates energy from landfill gas with a power capacityof 32 MW financed by TheBank. In the plant, electricity production is generated by burningmethane gasformed in storage area, methanegas is 21 times more poisonous than carbon dioxide gas and an ultimate amount of carbon emission reduction is provided. Secondly Kayseri Provincelandfillgaspowerprojectalsofinancedbythe Bank in 2011 www.kalkinma.com.tr Development Bank of Turkey

17. ThefirstgeothermalpowerplantprojectfinancedbyThe Bank with an installedpowercapacity of 42 MW. Project site view at the Aydın province. www.kalkinma.com.tr Development Bank of Turkey

18. Greenhouse plant on the 41 thousand m² was operationalized with using waste heat byintegrating 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. www.kalkinma.com.tr Development Bank of Turkey

19. ENERGY EFFICIENCY 20 % costreductionin energyconsumptionvia energyefficiency until 2023 planned in order to reduce foreign dependency in energy in theGoverment’snationaltargets. Paralleltothispolicy Development Bank of Turkeyhas faciliatedseveralprojects on thisissue. TheBank financedan importantenergyefficiencyproject of an iron & steelproducercompanytogenerateelectricity through capturingwaste flue gases formed during the production in blast furnace, cokeovens 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 aftertheirenvironmental feasibilitystudy. The company will meet 403 million kwh of annual572 million kwhenergycostequivalentto70 %energycostsaving. Thelinecommittedtothecostumer is 41 M USD. www.kalkinma.com.tr Development Bank of Turkey

21. 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 40MW installed capacity. www.kalkinma.com.tr Development Bank of Turkey

22. TheBank’s main strategicobjective is tofinancerenewableenergy investments in the fields of hydro, wind, geothermal, solar and biomass paralel toTurkey’s energy resources. We arealsofollowingupthe energyefficiency investmentagendas of primaryiron&steel, cementandfossilfuelbasedenergycompanies of thecountry. www.kalkinma.com.tr Development Bank of Turkey

23. Thanks… www.kalkinma.com.tr