In Turkey, companies of different scales use alternative financing methods, such as government supports (KOSGEB, Ministry of Energy and Natural Resources), bank loans (investment loans, vendor loans, etc.), leasing, energy performance contracts (EPCs) and energy service companies (ESCO), for the financing of investments into energy efficiency.
GOVERNMENT SUPPORTS
I. KOSGEB SME Development Support Programme
Energy Efficient Electric Motors Replacement Support
Through a cooperation of the TEVMOT Project and KOSGEB, a financing support mechanism has been developed for the replacement of both independent and coupled inefficient electric motors of 7.5 kW and above, currently being used by SMEs in the manufacturing sector, with efficient motors. This support entered into force on 2 January, 2020 with the name of “Energy Efficient Electric Motors Replacement Support”, and took its place among KOSGEB SME Development Supports.
Pilot Organised Industrial Zones in which the support is provided:
Energy Efficient Electric Motor Replacement Support is applied in seven OIZs: Adana Hacı Sabancı OIZ, Ankara Chamber of Industry 1st OIZ, Antalya OIZ, Bursa OIZ, İzmir Kemalpaşa OIZ, Gebze OIZ and Uşak OIZ. SMEs registered on the KOSGEB database that apply to the SME Development Support Programme and that are approved by KOSGEB are provided with support. The support, which will be valid until the end of 2021 with an upper limit of TRY 80,000 per SME, will amount to 75 and 60 percent for domestic motors and imported motors, respectively.
Through the support currently being implemented by TEVMOT, SMEs may benefit from:
- free energy efficiency motor audits,
- investment plan reports and training courses
- investment plan reports and training courses
- ease of adaptation to ISO 50001 and reduction in production costs as a result of investments that pay for themselves.
You can find detailed information about the application conditions, duration and steps and the support payments provided under the “Energy Efficient Motor Replacement Support” project, under KOSGEB’s SME Development Support Programme, at the KOSGEB official website: www.kosgeb.gov.tr
II. Supports provided by the Ministry of Energy and Natural Resources of the Republic of Turkey
a. Productivity Enhancement Project (PEP / VAP)
Projects aimed at preventing or minimising the unnecessary use of energy, as well as energy losses and waste, by means of energy-efficient equipment and systems, insulation, rehabilitation and process rearrangements, include such solutions as the recovery of waste energy and the use of cogeneration systems, which are considered Productivity Enhancement Project (PEPs).
In this context, projects with a maximum investment value of TRY 5,000,000 excluding VAT are supported by the Ministry with a maximum of 30 percent of the project cost provided as a grant.
Applications for Productivity Enhancement Project (PEPs) for 2020 have started to be received by the Ministry, and applications for Productivity Enhancement Project (PEPs) prepared by ESCOs for Industrial Enterprises will continue until 31 December, 2020.
b. Voluntary Agreement Supports
Voluntary Agreements are agreements that an industrial enterprise concludes with the Ministry by committing to reduce energy intensity by at least 10 percent on average in the 3 years following the agreement, based on the reference energy density of the past five years. Within the scope of voluntary agreement support, 30 percent of the energy expenses of an enterprise that fulfils its commitments for the year in which the agreement is made are covered in cash, up to a limit of 1,000,000 TL.
c. 5th Regional Incentives
Based on the approval of the project by the Ministry, investments for energy efficiency with a minimum of 500 TEP energy consumption per year that are designed to provide energy savings of at least 20 percent compared to the current situation, and energy savings with a maximum investment return period of 5 years, can benefit from incentives granted for the 5th Region, regardless of the region in which the investment is made.
The incentives to be benefited include value added tax exemption, customs tax exemption, tax reduction, support for employer’s insurance premium share, interest support and allocation of investment location.
Leasing
As a medium- and long-term financing method, leasing stands out as an alternative financial model used by companies of different scales operating in the manufacturing and services sector for investments. VAT exemption for certain products is one of the factors that makes leasing attractive for companies.
In terms of energy efficiency, leasing is mostly used in the investments of companies for generators and for heating, cooling and ventilation systems. The share of such equipment in the total leasing transaction volume is less than 1 percent.
Leasing will be preferred as an alternative financing model, since there is also an exemption for investments made within the scope of energy efficiency, and the leasing of “electric motors” that fall under the main equipment group of “electrical energy generation and control equipment” is subject to a VAT rate of 1 percent and leasing for motor replacement will be supported with a VAT reduction.