Improving Energy Efficiency for Small and Medium Enterprises in Turkey
This ESMAP-funded analytical tool helped local banks in Turkey evaluate projects’ potential energy savings in order to facilitate more than 300 loans through a $201 million World Bank credit line to small and medium enterprises (SMEs) to purchase modern equipment, improve industrial processes, and upgrade production lines.
Improving energy efficiency in Turkey is crucial for reducing expensive energy imports and meeting climate change targets. Small and medium enterprises (SMEs) play a very important role in the Turkish economy in generating income and employment. To help overcome some of the challenges and scale up commercial bank financing for energy efficiency investments in SMEs, the World Bank financed the Turkey Small and Medium Enterprises Energy Efficiency Project. It was the first World Bank loan globally that specifically targeted energy efficiency projects for SMEs.
Three Turkish public banks needed a way to determine if projects seeking funding would save energy and be able to repay the loans with the cost savings generated from the investment. To help overcome these challenges, ESMAP provided funding to develop an analytical tool to help the banks determine the energy savings of potential SME investments by allowing the banks to compare data from the baseline equipment (i.e., lighting, boilers/kilns, chillers, motors, and other industrial equipment and machinery) with the replacement equipment. The tool calculates the energy savings, estimated cost savings, reductions in CO2 emissions, simple payback period, and net present value.
This ESMAP-funded analytical tool helped local banks in Turkey evaluate projects’ potential energy savings in order to facilitate more than 300 loans through a $201 million World Bank credit line to small and medium enterprises (SMEs) to purchase modern equipment, improve industrial processes, and upgrade production lines.