From Fragmented to Bankable: Financing the Next Wave of Türkiye’s Clean Energy Projects
Türkiye has demonstrated a strong commitment to transitioning towards clean energy. This effort is reinforced by government policies that promote the development of renewable energy and energy efficiency. As is widely known, Türkiye aims to achieve net-zero emission by 2053 and has shown significant progress to achieve that. Despite this significant progress, these achievements are not yet sufficient to ensure the sustainability of future clean energy projects. One of the major challenges is creating a financing system that is inclusive, efficient, and sustainable. Without a structured financing mechanism, many clean energy initiatives risk being stalled, especially at the implementation by small market players.
Financing Gap as the Main Problem
Financing remains the primary barrier to clean energy development in Türkiye. Currently, there’s no dedicated, structured financing system dedicated to this sector. As a result, many clean energy projects, especially those undertaken by small-scale actors, struggle to access financing from domestic or international banks. It is commonly known that small businesses are considered to have a higher risk profile and lack sufficient collateral.
Most of the clean energy project financing in Türkiye still relies in partnership with international donors such as the World Bank, EBRD, and others. While these collaborations have proven effective, they cannot meet all the sector’s needs. This situation created a disparity, where large-scale projects relatively easily obtain funding, while smaller projects despite their strong potential to contribute to national energy targets, remain marginalized. These smaller players often have good solutions but are not considered bankable by traditional financial institutions.
Therefore, an innovative financing approach is urgently needed to broaden participation in the energy transition.
SuperESCO as a Global Solution
To address such challenges, the Energy Services Company (ESCO) developed a new model in the 1990s. The Super ESCO is a government-supported financing approach aimed at serving the public sector in energy efficiency projects. The model is based on Energy Performance Contracting (EPC), which allows energy efficiency projects to proceed even without upfront funding.
With government backing, super ESCOs are able to connect project developers with financial institutions. India has successfully implemented this model through Energy Efficiency Services Limited (EESL), enabling small actors to access project financing with zero upfront costs. Furthermore, other countries such as Mexico, France and regions in Africa are also actively developing performance-based green finance structures.
What all these models have in common is strong state involvement in advancing inclusive and long-term financing mechanisms.
The Unutilized Potential in Türkiye
Unfortunately, the Super ESCO model has not yet been developed in Türkiye. Although the government has launched public sector energy efficiency programs and partnered with international institutions, there is still no national institution functioning as an aggregator of clean energy projects using alternative financing schemes.
As an energy-transitioning country, Türkiye holds significant potential to adopt this approach—particularly to support small businesses and private sector actors who want to contribute to the net-zero target. By developing financing models that can reach small and medium-scale projects, Türkiye would not only enhance the impact of sustainable development but also foster a more equitable business environment. This could become a strategic move to accelerate the national energy transition while opening opportunities for broader participation in the clean energy economy.
Building a Financial Ecosystem in Türkiye
Rather than copying the Super ESCO model directly, Türkiye could begin by building a broader and more integrated clean energy financial ecosystem. This would include:
Developing green guarantee funds to back small projects
Establishing performance-based financing infrastructure
Additionally, efforts should be made to create innovative financing regulations that are friendly to non-conventional actors and that help stimulate a dynamic market.
The development of a digital platform for clean energy project offerings could also be a promising step. Such a platform would facilitate transparency and connect project developers with investors. Through this system, investors would benefit from being able to select projects to fund—backed by government endorsement and oversight.
By promoting synergy among the government, financial institutions, and clean energy developers, Türkiye can establish a financing system that is not only responsive to current needs but also adaptive to future challenges.
Closing the Financial Gap for a Cleaner Energy
To truly achieve its national climate targets, Türkiye cannot rely solely on policy reinforcement. A financing ecosystem that empowers all actors, including those currently marginalized is essential. Learning from global practices, building a structured and sustainable financing system will be the key to transforming fragmented projects into bankable, and impactful initiatives.
