tech-based solutions

Tech-Based Energy Efficiency Solutions

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Tech-Based Energy Efficiency Solutions

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
10% - 15% (CAGR)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Climate Action (SDG 13)

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.

Disclaimer

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The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Aegean Region
  • Central Anatolia Region
  • Marmara Region
  • Mediterranean Region
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

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.

Sub Sector

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)

Industry

Electronic Manufacturing Services and Original Design Manufacturing

Pipeline Opportunity

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Investment Opportunity Area

Tech-Based Energy Efficiency Solutions

Business Model

Promoting resource efficiency through the integration of advanced technologies and digital connectivity into the infrastructure of buildings and the manufacturing process.

Business Case

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Market Size and Environment

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

10% - 15%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

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

IRR
Describes an expected annual rate of growth of the IOA investment.

> 25%

The interviewed investors already active in the Turkish technology and energy efficiency space base this estimation on experience.

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

The timeframe is based on the testimony of the stakehodlers interviewed in this area.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

< USD 500,000

Market Risks & Scale Obstacles

Business - Business Model Unproven

ESCO contracts are not recognized in Turkey, which limits investments. Moreover, business models utilizing Internet of Things and other such advanced technologies might face legislative ambiguities as they are relatively new areas of investment in the Turkish market.

Impact Case

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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

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth

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

Current Value

16 tonnes per capita (11)

18.5 tonnes per capita (12)

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.4.1 CO2 emission per unit of value added

9.5.1 Research and development expenditure as a proportion of GDP

Current Value

0.26 kg/$ (12)

0.96% (1)

Target Value

3.7% (1)

Secondary SDGs addressed

Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Consumers who will cut down on energy costs

Planet

The environment; CO2 emissions and the material footprint of building infrastructure will be reduced

Corporates

Energy efficiency service providers, beneficiary firms and organizations

Public sector

Electricity service providers

Indirectly impacted stakeholders

People

Population in search of employment (the growth of this sector is likely to produce new avenues of employment), researchers.

People

Population in rural areas who lack access to proper connectivity, population living in areas with low energy efficiency

Corporates

Internet service providers

Public sector

Municipalities, government

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

C—Contribute to Solutions

What

Increased energy efficiency and reduced energy spending

Who

Building energy efficiency models directly benefit households and buildings with excess energy consumption due to inefficiencies as well as energy efficiency service providers

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

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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

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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

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
urban

Aegean Region

Aegean, Central Anatolia, Marmara & Mediterranean regions demonstrate the highest per capita energy consumption based on TUIK figures (23).
semi-urban

Central Anatolia Region

Aegean, Central Anatolia, Marmara & Mediterranean regions demonstrate the highest per capita energy consumption based on TUIK figures (23).
semi-urban

Marmara Region

Aegean, Central Anatolia, Marmara & Mediterranean regions demonstrate the highest per capita energy consumption based on TUIK figures (23).
semi-urban

Mediterranean Region

Aegean, Central Anatolia, Marmara & Mediterranean regions demonstrate the highest per capita energy consumption based on TUIK figures (23).

References

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