EFELER Geothermal Power Plant

Location:

Turkey

Project number:

44596

Business sector:

Power and energy

Notice type:

Private

Environmental category:

A

Target board date:

05 Jun 2019

Status:

Concept Reviewed

PSD disclosed:

24 Sep 2014

Translated version of this PSD: Turkish

Project Description

A senior loan of up to USD 75 million to Gurmat Elektrik Uretim A.S. ("Gurmat Elektrik" or the "Company") to finance the EFE-6, EFE-7 and EFE-8 geothermal power plants (GPPs) located in Aydin province, Turkey (the 'Project' or 'Efeler Extension Project') which will be a part of a financing package to be provided together with other lenders.

Project Objectives

Support the development and construction of renewable power generation in Turkey.

The Project aims to contribute to the development of base load, indigenous energy resources in Turkey which are essential to support macro-economic stability in a sustainable manner to reduce Turkey's needs for energy imports.

Transition Impact

The Project will target the 'Competitive' and 'Resilience' transition qualities. The extension of the existing geothermal facility will further increase the amount of generation capacity in operation by the private sector and provide secure, baseload power to the Turkish system.

Client Information

GURMAT ELEKTRIK URETIM AS

Gurmat Elektrik is owned 85% by Mogan Enerji Yatirim Holding A.S. ("Mogan Enerji"), 0.56% by Gurenerji Elektrik Uretim Ltd. Sti. ("Gurenerji"), 4.72% by Guris Holding A.S. ("Guris Holding") and 4.72% by Guris Insaat ve Muhendislik A.S. ("Guris Construction", together with Mogan Enerji, Guris Holding and Guris Construction, the "Sponsors"). The remaining 5% of the Company is owned by Mr. Musfik Hamdi Yamanturk.

Gurmat Elektrik was established in 1999 to construct and operate a set of GPPs based on the Germencik geothermal field in Western Anatolia. Currently, Guris has Turkey's second largest GPP portfolio, which represents almost one-fifth of the country's total capacity.

EBRD Finance

Up to USD 75,000,000.00

The remainder of the required funding is expected to come from commercial banks and Sponsors’ equity/shareholder loans.

Environmental Impact

Categorized A. The Project involves the expansion of the existing Bank financed (DTM 44596) Efeler Geothermal Power Plant ('Efeler GPP') with additional 3 GPP units as well as the associated boreholes, pipelines and transmission lines. The Project will increase the existing total operating capacities of Efeler GPP by 97.6 MWe, from 162.3 MWe to 259.9 MWe. Due to the size, location and cumulative impacts, the Project requires an Environmental and Social Impact Assessment (ESIA) in accordance to the Bank's Environmental and Social Policy prior to Board consideration. The ESIA for the original project was publicly disclosed on 24 September 2014. The Project extension's ESIA was disclosed on 13 November 2018.

An independent consultant was retained to undertake an Environmental and Social Due Diligence (ESDD) of the Project. The ESDD confirmed that the Efeler GPP has been built and operated in compliance with the Bank's requirements. Efeler Extension Project will have no impacts on any protected areas and will not be associated with any resettlement, and it is structured to comply with the Bank's Performance Requirements, National and IFC requirements. The project has been subject to a national Environmental Impact Assessment (EIA) procedure and permits have been granted by the appropriate Competent Authority. The permit for Efeler 8 has been revoked by a Court Decision and the Company is conducting additional studies to address the issue and  comply with the environmental legislation. The Bank will undertake additional due diligence  and update the PSD accordingly.

The Company already operates five geothermal power plants with a combined capacity of 162.3 MWe, with the first plant commissioned in 2009. The Bank's due diligence and ESIA have taken account of the cumulative impacts and performance of these plants as well as the client's compliance with the existing ESAP. The ESDD has confirmed that the Sponsors have been implementing good international practice at the existing geothermal power plant sites and have had good experience with addressing EHS management and engagement with local communities. Overall labour and social issues are well managed and the ESDD confirmed that the Project and current operations are in compliance with the Bank's Performance Requirements.  A Participatory Monitoring Mechanism is to be established to oversee the cumulative impacts and management of these impacts by the geothermal developers in the long run.

The ESDD suggested that HR policy and practices shall be strengthen to be aligned with PR2 and management of other social impacts such as stakeholder engagement in particular disclosure of systematic information and consultation with stakeholders on issues such as: CO2 emissions, compensation standards, planned construction and operational activities, available job opportunities and other project impacts and mitigation measures in line with the Bank requirements. These areas will be covered in the final ESAP.

As agreed in 2016 under Efeler GPP, the Bank has engaged with local authorities and initiated a TC project to develop a Strategic Environmental and Social Review (Cumulative Impact Assessment) of geothermal development in the areas to address the concerns of CSOs and develop best practice standards. The Company is expected to cooperate with local authorities and other geothermal companies in mitigating the cumulative impacts which will be identified through the Strategic E&S review in the region. Overall this will enable EHS and social issues to be managed collectively in a similar manner for all operations and therefore reduce cumulative impacts. This TC is currently under way and will be completed in 2019.

The GPP does not involve the combustion of fossil fuels. There are no gaseous emissions from the plant itself. However, geothermal fluids contain non-condensable gases, of which the great majority (98%) is carbon dioxide (CO2). These non-condensable gases are emitted from the power plant via the cooling tower and the vaporizers and this leads to the release of carbon dioxide (CO2). The emission from the projects has decreased with time and the existing units are currently attaining emission factors of 0.61 tCO2e / MWh. The planned capacity expansion is estimated to emit around 0.55 tCO2e / MWh. The total emission from the Project is projected at around 425,000 tonnes CO2-e per annum, with total emission from the Guris-operated GPP plants will be around 1.315 million tonnes per annum, with an average emission factor of 0.62 tCO2e / MWh. The Company is investigating methods to further reduce emission of non-condensable gases. However, given the specific nature of the resources, this may require additional studies once the plant is fully operational.

The emissions to air will also contain trace levels of hydrogen sulphide (H2S) - also a non-condensable gas. Whilst the H2S levels within the emissions to air are below regulatory threshold limits, the H2S emissions will continue to be monitored. Experience to date with existing geothermal power plants operated by Guris within the same area has been well managed; however, there have been a number of concerns raised by CSOs in the region as to geothermal operations. The Company will continue to monitor emissions from the Project as part of the ESAP implementation.

Following ESIA disclosure and the 60-day public review and comment period, all concerns raised will be summarised and responded to for EBRD Board consideration. The ESAP may also be amended if new information or analyses suggest this would improve environmental and social performance of the project. This Project Summary Document will be updated in case of important new information or significant revisions to the ESAP. The Environmental and Social Impact Assessment disclosure package is available for this project: Environmental and Social Impact Assessment.

The Bank will undertake additional due diligence and update the disclosure materials as appropriate to take account of Project changes and permitting requirements and ensure compliance of the Project with the Bank’s Performance Requirements.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

As agreed in 2016 under the previous financing the Bank has engaged with local authorities to develop a Strategic Environmental Review of Geothermal development in the areas to address some concerns of CSOs and develop best practice standards. Overall this will enable EHS and social issues to be managed in a similar manner for all operations and therefore reduce cumulative impacts.

This Technical Cooperation is currently under way and will be completed in 2019.

Company Contact Information

Yesim Erdemir
yerdemir@guris.com.tr
Page 4
+90 (312) 484 0570
+90 (312) 484 2677
www.guris.com.tr
ANKARA CADDESI NO: 222 KARAOGLAN MAHALLESI GOLBASI 06830 ANKARA/TURKIYE

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