Renewable Energy Project

closed

The project objective is to increase privately owned and operated distributed power generation from renewable sources, without the need for government guarantees, and within the market-based framework of the new Turkish Electricity Market Law. The project has the following two components: Component 1) The SPDF is a term lending facility which will be established and will be operated by the two financial intermediaries (Fls). The two Fls selected are: (a) Turkiye Sinai Kalkinma Bankasi (TSKB) - the Turkish Industrial Development Bank (private); (b) Turkiye Kalkinma Bankasi (TKB) - the Turkish Development Bank (Government) The World Bank loan for the SPDF will be on-lent from Treasury (the Borrower) to the Fls. The Fls will utilize the SPDF to provide long-term debt financing to private sponsors of renewable energy projects. The SPDF is intended to leverage equity investment from local private developers, export credit financing and other financing for the construction and operation of qualified renewable generation projects. Component 2) In order to support the implementation of the Project, Ministry of Energy and Natural Resources (MENR), General Directorate of State Hydraulic Works (DSI) and General Directorate of Electrdic Power Resources (EIE) will undertake various institutional development activities. These activities will be financed through internal sources and grants. The World Bank and the Government will work together to obtain the required grant financing for these activities. The principal institutional development activities that will be pursued include: (a) Renewable Energy Development Capacity: For the immediate to medium-term (next 2-3 years) there is a substantial potential pipeline of projects which are at an advanced stage of development by private sponsors. (b) Legislation for Renewable Energy Resource Development: Apart from the Electricity Market Law ( EML) and the MENR-DSI Regulation on Principles and Procedures for Obtaining a Water-Use Rights Agreement, Turkey does not have a specific and comprehensive law for renewable energy resource development. (c) Mechanisms for Public-Private Hydropower Development: With the implementation of the new Electricity Market Law (Law No. 4628), the responsibilities for developing new hydropower generation will tend to shift towards the private sector.