Green (Renewable) Energy and Participation Banking
Energy sources are divided into two parts, namely renewable and non-renewable energy sources. Fossil fuels such as oil, coal, and natural gas are non-renewable energy sources, meaning that they are exhausted when used for energy. Green energy, on the other hand, is the energy obtained from natural sources such as the sun, wind, and water and they are inexhaustible. Green energy refers to renewable energy obtained from renewable sources, which is proven through green energy certificates. The green energy certificate is a document proving that a company's electricity use comes from renewable sources. It documents the fact that the energy used is from renewable sources through a method that is internationally valid, transparent, and traceable.
Even though a steady growth momentum has been achieved in renewable energy investments in recent years, a faster and more reasonable scaling is required in order to achieve basic goals such as combating climate change, achieving sustainable development, and reducing foreign dependency on energy needs. As in many countries around the world, the financing of energy projects has developed rapidly due to the increase in investments in the field of renewable energy in Türkiye. Despite this high level of growth that had unprecedented success in recent years, the question of how to finance renewable energy projects remains important to the industry.
Despite the fact that participation banks started to play a role much later than conventional banks in terms of financing green energy projects, they achieved success beyond expectations. The financing of energy projects is analyzed and evaluated in a different manner compared to the balance sheet analysis that participation banks are used to. In other words, in this type of project, cash flows formed by taking into account the income and expenses that do not currently exist will appear in the future as a result of many technical and financial evaluations and the reimbursement plans to be designed accordingly are of utmost importance. Therefore, teams that will evaluate energy investments need to comprehensively address all components in this area (such as project design, materials, and equipment used, investment amount, tax, inflation, exchange rate, etc.), follow the industry closely, analyze their financial implications effectively, identify risk factors that may occur for the project, and design mitigation measures to reduce them. Any mistake made in these analysis processes, which consist of assumptions and projections as well as technical data, will adversely affect the capability of the financed project to reimburse its own debts.
Participation banks have to work very carefully and meticulously during the feasibility phase when dealing with the financing of any energy project, especially renewable energy projects. Otherwise, the effort will go to waste and the balance sheets of banks will be adversely affected. Another point that participation banks should pay attention to in terms of renewable energy investments is that the Renewable Energy Support Mechanism (YEKDEM) has changed as of 2020, and several changes have been made in the prices and conditions of public purchase guarantee. In order for participation banks to benefit from these opportunities offered by the current investment environment, it is of utmost importance that they quickly adapt themselves to the financing of existing investments, which may have a shorter reimbursement period compared to the past, and that they develop and implement their financing policies urgently. Otherwise, participation banks that will enter the market later may be subject to projects in relatively inefficient areas, which have a longer maturity structure and therefore more risk. There is a considerable market on which participation banks can focus in the area of biomass, solar, hydroelectric, and wind power plants, which are less risky compared to the others.
Even if participation banks only finance 10 percent of renewable energy investments, it is predicted that a total of USD 1.5 billion will be placed with 75 percent financing support. Therefore, it is observed that one of the most strategic areas in which participation banks that aim to increase their market share in the Turkish banking sector can make a leap is renewable energy financing. Supporting investments in renewable energy will reduce our country's dependence on foreign sources, thus having a positive effect on closing our current account deficit and providing positive environmental impacts. For example, biomass and biogas projects not only ensure the disposal of wastes in a way that takes into account public and environmental health but also provide electrical energy production as a final output. In the projects to be realized with the separation and gasification method, by-products such as fertilizer and petrochemical products are produced and commercial profit is obtained. Since waste management in the form of wild landfills is no longer sustainable in growing cities, it is essential to recycle both domestic and vegetable or animal waste in such facilities and to meet the energy needs of the cities with the electricity to be obtained. The acceleration in the industry and the resulting increased energy consumption worldwide are mostly met by fossil fuels. Increasing the use of renewable energy sources is vital for our future in order to ensure the sustainability of energy policies.
In our country, significant activities are carried out through public-private initiatives in the field of energy. Through the projects implemented in this context, our 2023 national strategy targets such as energy-saving and efficiency, ensuring energy supply security, reducing the risks of foreign dependency, protecting the environment, and increasing the effectiveness of the combat against climate change are being realized. The energy efficiency studies aim to reduce Türkiye's energy intensity (energy consumed per national income) by at least 20 percent by 2023, compared to 2011. Considering the risks posed by global climate changes, all circles have to take up significant duties in this regard. Increasing the use of resources for Türkiye's national and domestic energy production and export, and especially the proliferation of projects in renewable energy sources are of great importance for our country. It is important that participation banks provide the financing needed by the energy sector, not only for our country but also for the contribution they will make to the future of entire humanity. As is known, energy expenditures are one of the largest expenditure items in terms of the current account deficit of our country. Shaping its goals through production and exports, Türkiye's energy needs are becoming more and more significant in this field.
Awareness of the efficient use of natural sources is increasing day by day in our country. Significant projects are being implemented in our country in order to reduce foreign dependency on energy and even to become a country of energy exports. In this direction, participation banks firmly support the steps towards renewable energy, which have been emphasized in the two 100-Day Action Programs announced so far. Participation banks in Türkiye keep accompanying every step that will take our country forward, as they have done so far, and aim to become one of the most significant players, especially in the field of solar power plants (SPP). Participation banks have so far provided resources for SPPs of over 550 megawatts and realized the establishment of these power plants. The activities in these areas are maintained and participation banks also focus on new areas such as wind, landfill gas, and biogas.
In brief, as participation banks, we can profitably increase our market share through quality assets by taking a more active role in the financing of the renewable energy sector. At the same time, we can reduce the current account deficit, which is one of our most fundamental economic problems, by making a positive contribution to closing the energy deficit of our country and ensuring the safety of the energy supply. As we carry out all these activities, we protect our investments by accessing energy sources that do not harm the nature we live in.
Zeynep Aslı Kekeç