Tech-Based Energy Efficiency Solutions
Tech-Based Energy Efficiency Solutions
Business Model Description
Promoting resource efficiency through the integration of advanced technologies and digital connectivity into the infrastructure of buildings and the manufacturing process.
Expected Impact
Energy efficient infrastructure solutions will reduce energy consumption and decrease energy-related CO2 emissions in the country.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Turkey: Aegean Region
- Turkey: Central Anatolia Region
- Turkey: Marmara Region
- Turkey: Mediterranean Region
Sector Classification
Technology and Communications
Development need
Technology is a cross-cutting sector for many SDGs. In terms of its performance on SDG 9 (Industry, Innovation and Infrastructure), Turkey faces major challenges. The country performs well-below the global long-term objective in indicators such as Expenditures on Research and Development and the Number of Researchers (per thousand employed people). (1)
Policy priority
The 11th Development Plan, the Sustainable Development Goals Evaluation Report, 2020 Annual Presidential Program and the 2019-2023 Strategy Plan of the Ministry of Industry and Technology all highlight the importance of technology for the achievement of the SDGs and stress the need to digitally transform the country’s economy as a prerequisite for competitive production.
Gender inequalities and marginalization issues
According to the Women in Tech Index, the percentage of female employment in technology is at a mere 9.91% in Turkey. 37.11% of STEM graduates are female. There is a gender pay gap of 8.42% between men and women in the tech industry. This necessitates policies and business models that promote the employment of women in technology with fair wages. (22)
Investment opportunities
The government intends to mobilize investment momentum in this sector. Existing incentives are offered by TUBITAK, KOSGEB, The Ministry of Industry and Technology and the Development and Investment Bank of Turkey. The importance of investing in this sector is increasingly evident with the outbreak of the COVID-19 pandemic, necessitating remote access to vital services
Key bottlenecks
The ability to compete on prices with imported technological products and services already present in the Turkish market; infant-industry problems. Ambiguity of the regulations in some of the latest areas of development such as IoT. Issues related to cyber security and data privacy.
Technology
Development need
Turkey needs to implement technology-integrated solutions to boost energy efficiency. Turkey’s building sector’s energy demand is growing rapidly, at a rate of 4.4% on average, effectively rendering it the one sector with the largest energy consumption among all end-use sectors, representing around one third of the country’s total final energy consumption. (2)
Policy priority
It is a policy priority to decrease domestic and household energy consumption by implementing innovative solutions. Turkey aims to invest roughly $11 billion in energy efficiency over the next five years, cut its primary energy consumption by 14%, and reduce 66 million tons of CO2 emissions (insert source from document, (3)
Gender inequalities and marginalization issues
According to the Women in Tech Index, the percentage of female employment in technology is at a mere 9.91% in Turkey. 37.11% of STEM graduates are female. There is a gender pay gap of 8.42% between men and women in the tech industry. This necessitates policies and business models that promote the employment of women in technology with fair wages. (22)
Investment opportunities
The investment incentives delineated for the technology sector are also available for its subsectors if they fulfill the necessary budgetary/project criteria. Moreover, decreased input costs and the increasing availability of advanced technologies such as IoT combined with the necessity for digital markets created by the pandemic create new investment opportunities.
Key bottlenecks
IoT is an area of increasing interest globally, especially for energy efficiency and smart cities. It boosts the automation of services/production, offers greater supply-chain resilience. However, the Turkey needs to support the necessary infrastructure to facilitate the adoption of this technology. The country performed below the average for 2020 in terms of its IoT adoption. (4)
Electronic Manufacturing Services and Original Design Manufacturing
Pipeline Opportunity
Tech-Based Energy Efficiency Solutions
Promoting resource efficiency through the integration of advanced technologies and digital connectivity into the infrastructure of buildings and the manufacturing process.
Business Case
Market Size and Environment
10% - 15%
The number of businesses using IoT technology globally: 25% (10)
The global CAGR rate is estimated in an analysis by McKinsey (10). It is based on several factors such as the reduction of the costs of sensor technology, availability and cost effectiveness
Indicative Return
> 25%
The interviewed investors already active in the Turkish technology and energy efficiency space base this estimation on experience.
Investment Timeframe
Short Term (0–5 years)
The timeframe is based on the testimony of the stakehodlers interviewed in this area.
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Enhanced energy efficiency offers a unique opportunity to reconcile economic competitiveness with sustainable development; simultaneously reducing the cost of energy and increasing productivity.
32% of global energy use and 30% of total GHG emissions are constituted by buildings alone. (13)
Gender & Marginalisation
The solution could be used to provide access to marginalized population with connectivity, competitiveness and infrastructure gaps in rural areas
Women are currently underemployed in the technology sector in Turkey, with only 9.91% of the workforce in this sector being female. This is trend is not solely driven by the lack of female STEM graduates, as 37.11% of STEM graduates in Turkey are female. (22) -continued below
Increased investments and job openings within this sector can help remedy this employment gap. However, it comes down to targetted policy interventions and incentives to promote this initiative. Companies within this business model should be encouraged to hire female STEM graduates.
Expected Development Outcome
Energy efficient buildings can decrease the energy requirements of the heating and cooling processes by 50% to 90% (13)
If total energy consumption is reduced in line with the National Energy Efficiency Action Plan (2017-2023), energy consumption savings equivalent to 23.9 million tons will be generated by 2023. This corresponds to a reduction of 14% in Turkey's primary energy consumption in 2023 (14).
This model will decrease CO2 emissions per unit of value added by encouraging sustainable and resilient building infrastructure and increasing the use of the Internet of Things monitoring technology
Gender & Marginalisation
Reducing infrastructure, energy efficiency and connectivity gaps for rural population
Increasing female employment in the technology sector
Primary SDGs addressed
8.4.1 Material footprint, material footprint per capita, and material footprint per GDP
8.4.2 Domestic material consumption, domestic material consumption per capita, and domestic material consumption per GDP
16 tonnes per capita (11)
18.5 tonnes per capita (12)
9.4.1 CO2 emission per unit of value added
9.5.1 Research and development expenditure as a proportion of GDP
0.26 kg/$ (12)
0.96% (1)
3.7% (1)
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
People
Corporates
Public sector
Outcome Risks
Job displacement as digital technologies might contribute to increased automation. The skills of some of the existing working population might be rendered outdated (15)
System-wide risk from centralized control and cyber-attacks
Impact Risks
Evidence Risk: The probability that insufficient high quality that exists to know what impact is occuring in the country
Impact Classification
What
Increased energy efficiency and reduced energy spending
Risk
Level of impact risk: Low. If impact is not materialized or cannot be determined, the business model will still have minimal consequences for the people and the planet
Impact Thesis
Energy efficient infrastructure solutions will reduce energy consumption and decrease energy-related CO2 emissions in the country.
Enabling Environment
Policy Environment
(Ministry of Industry and Technology's Strategic Plan of 2019-2023): The Ministry of Industry and Technology's Strategic Plan of 2019-2023 mentions the importance of digitally transforming the manufacturing industry and KOBIs as well as the necessity of energy efficiency measures.
(Sustainable Development Goals Evaluation Report): The Sustainable Development Goals Evaluation Report of the Directorate of Strategy and Budget highlights digital transformation and energy efficiency as important areas of action
(11th Development Plan): The 11th Development Plan highlights the increasing shift to high-value added technology products and information systems as a global development trend Turkey needs to follow
Financial Environment
Financial incentives: The existing financial support mechanisms are the TÜBİTAK R&D Support Initiative, KOSGEB’s Support for SMEs and the Project-Based Encouragement System (for projects that have an investment value above 50 million TRY -US$7.2 million).
Financial incentives (cont.): The Ministry of Industry and Technology and the Development and Investment Bank of Turkey established "The Technology and Innovation Fund" under the Turkey Development Fund to finance innovative tech. based companies/projects with a budget of 350 million TRY. (16)
Other incentives: The Development and Investment Bank of Turkey signed a 15-year 200 million USD loan agreement with the Asian Infrastructure Investment Bank to finance renewable energy and energy efficieny projects. (16)
Regulatory Environment
(Regulation): Law #5746 – Law on Supporting R&D Activities governs the incentives given to R&D projects in Turkey
(Regulation): Law #5627 on Energy Efficiency has been published in the Official Gazette on the 2nd May, 2007.
(Regulation): The Regulation on Energy Performance in Buildings published in 2008 includes conditions on central heating systems in buildings as well as ways to use renewable energy and cogeneration especially for buildings/spaces over 20,000 m2
Marketplace Participants
Private Sector
AT&Ts equivalents in Turkey (such as Türk Telekom and Vodaphone), energy efficiency consultancy firms and service providers such as Reengen and Isıpark, domestic and international banks such as İşBank,Halk Bank, Garanti BBVA
Government
The Energy Markets Regulatory Authority, the Development and Investment Bank of Turkey, KOSGEB, the Ministry of Industry and Technology, the Ministry of Energy and Natural Resource, TUBITAK
Multilaterals
MDBs such as EBRD
Non-Profit
Energy Efficiency Association (Enerji Verimliliği Derneği)
Public-Private Partnership
TurSEFF
Target Locations
Turkey: Aegean Region
Turkey: Central Anatolia Region
Turkey: Marmara Region
Turkey: Mediterranean Region
References
- (1) SDG Index & Dashboard, 2020, https://dashboards.sdgindex.org/profiles/TUR/indicators
- (2) SHURA Energy Transition Center, 2019, https://www.shura.org.tr/wp-content/uploads/2019/06/Buildings-Energy-Efficiency-Policy-Working-Paper.pdf
- (3) Hurriyet Daily, 2019, https://www.hurriyetdailynews.com/turkey-set-to-invest-11-billion-in-energy-efficiency-142556
- (4) Huawei, 2020, https://www.huawei.com/minisite/gci/assets/files/gci_2020_whitepaper_en.pdf?v=20201217v2
- (5) 2020 Annual Presidential Program, http://www.sbb.gov.tr/wp-content/uploads/2019/11/2020_Yili_Cumhurbaskanligi_Yillik_Programi.pdf
- (6) 11th Development Plan http://www.sbb.gov.tr/wp-content/uploads/2020/03/On_BirinciPLan_ingilizce_SonBaski.pdf
- (7) Sustainable Development Goals Evaluation Report from the Directorate of Strategy and Budget, 2019
- (8) Ministry of Energy and Natural Resources 2019-2023 Strategic Plan, http://www.sp.gov.tr/upload/xSPStratejikPlan/files/LBigi+ENERJI_VE_TABII_KAYNAKLAR_BAKANLIGI_2019-2023_STRATEJIK_PLANI.pdf
- (9) The National Strategy for Regional Development https://www.resmigazete.gov.tr/eskiler/2015/03/20150324M1-1-1.pdf
- (10) McKinsey, 2019, https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/growing-opportunities-in-the-internet-of-things
- (11) Footprint Network, 2015, https://www.footprintnetwork.org/content/images/uploads/Turkey_Ecological_Footprint_Report_Executive_Summary-Conclusion.pdf
- (12) SDG Tracker, 2020, https://sdg-tracker.org/
- (13) Global Environment Facility, Energy Efficiency, https://www.thegef.org/topics/energy-efficiency
- (14) Energy Efficiency Association, http://www.enver.org.tr/enerji-verimliligi
- (15) Climate Transparency Organization, 2017, https://www.climate-transparency.org/wp-content/uploads/2017/07/B2G2017-Turkey.pdf
- (16) Statement by DIBT CEO, 2019. https://www.hurriyet.com.tr/ekonomi/bolgesel-kalkinma-fonu-ile-teknoloji-ve-inovasyon-fonu-kuruldu-41404794
- (17) UNDP, 2030 Agenda for Sustainable Development, https://www.undp.org/content/undp/en/home/2030-agenda-for-sustainable-development/planet/sustainable-energy/energy-efficiency.html
- (18) EBRD, https://www.ebrd.com/news/2019/turkish-families-invest-in-energy-efficient-homes.html
- (19) Energypedia. Turkey Energy Efficiency in Buildings. https://energypedia.info/wiki/Turkey-_Energy_Efficiency_in_Buildings
- (20) Deloitte’s Digital with Purpose: Delivering a SMARTer 2030 Report, https://digitalwithpurpose.gesi.org/
- (21) The 2019-2023 Strategy Plan of the Ministry of Industry and Technology, https://www.sanayi.gov.tr/strateji2023/sts-ktp.pdf
- (22) Honeypot, Women in Tech Index, 2018 https://www.honeypot.io/women-in-tech-2018/
- (23) Turkis Statistical Services, 2021. https://cip.tuik.gov.tr/#