Preparation of Guidelines for EPC Contracting for ESCOs and Case Study Development

Energy efficiency (EE) is critical for Turkey to achieve its economic growth objectives in a sustainable manner. The Government of Turkey has therefore made EE a key component of its energy strategy and National Climate Change Strategy and Action Plan. Typically, recurrent EE barriers often prevent industrial, public and other end-users from investing in EE, such as a lack of knowledge and know-how, high transaction costs associated with relatively small EE investments, lack of access to affordable and appropriate financing, and limited capacity among stakeholders to prepare and implement EE projects. Energy service companies (ESCOs) have proven to be an effective way of facilitating EE investments and the Government has identified them as a vector to achieve its EE objectives.

The General Directorate of Foreign Relations and EU from the Ministry of Energy and Natural Resources (MENR) has asked Econoler to recommend actions and tools to help enhance the energy services market in Turkey by studying the market, identifying major barriers and recommending measures to address these issues. To achieve this, Econoler was required to:

• conduct an assessment of the national ESCO market;
• assess EE’s market potential in Turkey’s public sector;
• develop case studies on current energy performance contracts (EPC) experience in Turkey;
• identify necessary key changes in Turkey’s legislative framework and develop adapted recommendations for implementation;
• develop guidelines for EPC contracting;
• develop adapted tools to support the development of the EPC market, including: (1) various types of contracts, (2) a saving measurement and verification (M&V) protocol, (3) M&V protocol methodology, (4) an ESCO certification process, (5) an ESCO pilot project grant scheme, and (6) an adapted arbitration scheme to deal with disputes.

  These tasks were performed in close collaboration with representatives from the MENR and other relevant public institutions involved in the development of EPC in Turkey. The outcomes enabled the Government of Turkey to identify and promote adapted ESCO models suited to the Turkish context and provide the market with the necessary information and tools to ensure an increase in the use of the EPC model in the country.