EBRD boosts financing for renewable energy in Turkey

By Olga Rosca
@olgarosca


US$ 180 million in new funding to Garanti and Yapı Kredi banks under mid-sized renewable energy facility

The European Bank for Reconstruction and Development (EBRD) is providing a further boost to Turkey’s renewable energy sector with new financing of US$ 180 million to Garanti Bank (Garanti) and Yapı ve Kredi Bankası (Yapı Kredi).

The funds will finance mid-sized renewable energy projects implemented by private sector companies, each ranging between €10 and €40 million. These include solar, hydropower, wind, geothermal, waste-to-energy and energy efficiency projects.

The financing is extended through an investment in “A-” rated senior bond notes under the banks’ Diversified Payment Rights (DPR) programmes, an established market instrument used by Turkish banks to raise long-term funding in the capital markets.

The EBRD’s funds are made available through the Turkey Mid-size Sustainable Energy Financing Facility (MidSEFF), a €1 billion programme through which the EBRD and the European Investment Bank are supporting sustainable energy finance in Turkey.

The programme is supported by a €5 million grant from the European Union’s Instrument for Pre-Accession in close collaboration with the Turkish Treasury. This grant funding enables the EBRD to provide expert advice to its partner banks and to private sector companies seeking finance for their renewable energy and energy saving projects.

The highly successful MidSEFF programme has financed 42 projects to date through seven Turkish banks and has created over 700 MW in additional renewable capacity.

Sylvia Gansser-Potts, EBRD Director for Financial Institutions in Turkey and southern and eastern Mediterranean, said: “This new financing builds on the fruitful cooperation the EBRD has established with Garanti and Yapi Kredi in recent years. Both banks have a strong track record of on-lending to private companies which invest in mid-sized renewable energy projects. Demand for renewable energy finance in Turkey remains high and both lenders have a strong pipeline for many successful investments in the sector.”

Investing in sustainable energy is a strategic priority for the EBRD in Turkey as the country is working to meet growing demand for electricity and diversify away from expensive imported fuel. Turkey has pledged to develop 30 per cent of its total installed capacity from renewable sources by 2023.

Almost half of the Bank's total portfolio in Turkey is in sustainable energy and since 2009 the EBRD has invested €2.2 billion in almost 60 such projects, including two of the country’s largest wind farms and, most recently, Turkey’s biggest geothermal power plant.

The Bank is also working closely with the Turkish Ministry of Energy and Natural Resources and has helped develop Turkey’s first National Renewable Energy Action Plan to attract more investment in renewable energy projects.

The EBRD started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. In just six years the Bank has invested over €5.5 billion in Turkey through more than 150 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilised over €12 billion for these ventures from other sources of financing.

In 2014 Turkey became the leading recipient country of the EBRD, with new investments worth €1.4 billion.