Can Hakyemez, the Head of the Energy Working Group at the Industrial Development Bank of Turkey (TSKB), stated that an increase in investment appetite in renewable energy, particularly in wind and solar power plants, is anticipated in 2024, contributing to the ongoing clean energy transformation. Hakyemez highlighted that 85.6% of the power plants commissioned last year were comprised of wind and solar energy facilities.
Hakyemez emphasized the significance of this data for the current state and future of clean energy in Turkey, stating, “Considering the goals outlined in our country’s National Energy Plan, we can say that investments in clean energy will continue.” He also pointed out that as of the end of last year, the capacity of wind energy plants reached 11.7 gigawatts (GW).
“By 2024, we expect some of the ongoing Renewable Energy Resources Zone (YEKA) projects, hybrid plants, and additional investments from electricity storage applications to come into operation. Similarly, due to cost advantages, solar energy plants are expected to continue to become operational. As the share of renewable energy plants in total capacity increases, we observe a decreasing trend in electricity production dependence. We expect Turkey’s renewable energy potential to continue to act as a leverage for clean energy transformation in the coming years. Regarding the integration of renewable energy sources into the electricity system, we believe that electricity storage systems will also be beneficial. We anticipate that some of these systems may become operational in 2024,” Hakyemez said.
Hakyemez also discussed the potential impact of decarbonization efforts on reducing the relatively high costs of non-renewable energy investments, stating, “Due to both concerns about energy supply security and cost advantages, it is predicted that renewable energy financing and, consequently, clean energy transformation can positively differentiate within this framework. Mechanisms such as the Renewable Energy Resources Support Mechanism (YEKDEM) and YEKA, supporting these investments, are expected to enhance renewable energy financing due to increased predictability.”
Touching upon lending in the energy sector, Hakyemez stated, “If foreign and domestic financial conditions are supportive in 2024, there may be an increase in investment appetite, especially considering the predominantly foreign currency use in renewable energy. The use of credits for solar energy plants, mainly directed towards domestic consumption, is supported by various incentive mechanisms. With the adjustments made in both domestic and foreign economic policies in the long term, it can be expected that the decline in interest rates will lead to an increase in investment appetite.”
Hakyemez pointed out that Turkey aims to exceed $400 million in equity for the Turkey Green Fund, the first venture capital investment fund financed by the Ministry of Treasury and Finance and the World Bank. He mentioned that recent years have seen a significant increase in wind and solar energy capacity, stating, “Over the past five years, an average of 63% of the total capacity increase consisted of wind and solar energy plants, and this ratio exceeded 85% in the last year. As TSKB, renewable energy has been on our agenda for many years. With our medium and long-term resources, we have been supporting projects in the field of renewable energy in our country since 2002. The energy projects we fund represent 15% of Turkey’s total installed renewable energy capacity.”
Hakyemez also referred to the importance of restoring the electricity infrastructure alongside these investments. “The increase in renewable energy sources requires some changes in the electricity infrastructure. However, the earthquakes and floods resulting from extreme weather events that occurred in 2023 highlighted the importance of the electricity infrastructure once again. The goals in this context should not be ignored. Considering the investment goals set for the 2053 net-zero target, it is believed that macroeconomic conditions should also be supportive. In this regard, all stakeholders have a lot of work to do,” he concluded.
Highlighting a significant decrease in external borrowing costs in recent times, Hakyemez mentioned, “In addition, it is observed that international financial institutions, including our bank, have made renewable energy-themed credit agreements with financial institutions. In 2024, it is expected that this source of financing will continue, leading to an increase in investment appetite in renewable energy, particularly in wind and solar power plants.”
Hakyemez concluded by mentioning that TSKB signed a $155 million, 24-year term loan agreement at the end of 2023 to establish the Turkey Green Fund, the first venture capital investment fund financed by the Ministry of Treasury and Finance and the World Bank. He explained, “Under the Turkey Green Fund, while capital investment is provided to companies, private sector capital will also be mobilized. It is aimed that the Turkey Green Fund will reach an equity amount of over $400 million, with $155 million from the World Bank loan, $100 million at the fund level, and $150 million at the company level.”
The focus of this fund is on financing equity and mobilizing private capital to support companies in their green transformation processes, contributing to Turkey’s 2053 Net Zero goal.
source: aa.com.tr / prepared by Melisa Beğiç