LAW BULLETIN ABOUT

ENERGY EFFICIENCY IMPROVEMENT PROJECTS

BULLETIN DATE: 22/05/2020

What is Energy Efficiency Improvement Project?

Energy efficiency plays a high role in Turkey’s energy policies as we tried to highlight in our law bulletin about “State Sponsored Voluntary Agreements in Energy Efficiency”[1]. Another incentive by the government is EEIP which will be tried to be evaluated generally here in this bulletin. To use the energy efficiently; to prevent energy waste; to minimize losses and to maximize energy recovery therefore to decrease the energy costs on the economy, the government has been motivating the companies to implement projects and use new technologies. The idea behind implementing Energy Efficiency Improvement Project (“EEIP”) program is to support projects and investments for increasing energy efficiency in industry.
EEIP is prepared on the basis of components, in accordance with the implementation procedures and principles prepared by the Ministry and refers to the project which includes solutions for issues such as recovery of wasted energy and preventing or minimizing unnecessary energy usage, energy losses and leakages by means of energy efficient equipment and system use, insulation, rehabilitation and process regulation[2].

What is the legal frame?

Law on Energy Efficiency was published in the Official Gazette numbered 26510 and dated 02/05/2007 and entered into force on the same date. Based on this Law, Regulation Regarding Increasing Efficiency in the Usage of Energy and Energy Resources (“Regulation”) was published in the Official Gazette numbered 28097 and dated 27/10/2011. An amendment was made in the Regulation and published in the Official Gazette numbered 31019 and dated 25/01/2020.

Application and criteria, preliminary examination and evaluation, practising the support and other provisions regarding EEIPs are stated in Articles 15, 16 and 17 of the Regulation.

What are the criteria to apply?

The criteria that the applicants shall meet to receive EEIP support are as follows:

a) The industrial enterprise shall be registered before ENVER (Energy Efficiency Portal) portal as of the application date. 

b) A certificate issued by the conformity assessment organizations accredited by the Turkish Accreditation Agency or accredited by the institutions accepted by the Turkish Accreditation Agency according to the TS EN ISO 50001 Energy Management System Standard in force that constitutes the basis for certification shall be possessed, or a document showing that an application for certification has been made and issued by the institution or organization before which the application for certification is made shall be submitted.

b) To ensure energy management activities are carried out, the industrial enterprises with total energy consumption of 1000 TOE and above annually shall assign an energy manager possessing energy manager certificate among the employees in each industrial enterprise.

d) In accordance with the format determined by the Ministry, commercial and service buildings, enterprises, electricity generation facilities and organized industrial zones shall enter their notices in the ENVER portal by the end of March every year.

Who can apply?

EEIP support is not limited to the legal entities licensed for operating electricity generation. Enterprises with total energy consumption between 500 TOE and 1000 TOE annually, operating depending on the chamber of commerce and/or the chamber of industry and producing all kinds of goods, can also apply to receive EEIP support on the condition that they meet the criteria. However there is a limitation for the project number which shall not exceed 5 for the same industrial enterprise.

How to apply?

Although the Regulation states that EEIP support applications are not dependent on a term, it also grants the Ministry the power to determine application terms and declare it on its website.

Application form is available online at the website. Along with the information needs to be filled in the application form; purpose, scope and objectives of the project should be briefly explained and information regarding the company that prepares the project should be stated. The Ministry should be notified if there are any applications made in previous years to advantage from the project supports. Information regarding type and amount of the support should be included along with tables related to the project components. Any work and operations to be carried out within the scope of the project should be included in the implementation plan.

Preliminary Examination and Evaluation Process

The information required in the application documents shall be filled completely. Applications that any deficiency is not detected as a result of the preliminary examination or whose deficiencies are corrected as a result of the notification are evaluated by a commission established with the approval of the President of the Energy Efficiency and Environment Department. In accordance with the application procedures and principles, the Commission examines the projects on a component basis and submits the evaluated project components for the approval of the Minister. A notification is made to the applicant when the project is decided to be supported with the approval of the Minister and an announcement is made on the Ministry's website. This announcement date is considered as the start date of the project.

During the preliminary examination or commission evaluation phase, the applicant may be given time to complete the deficiencies or to correct the errors detected. If these deficiencies and errors are not eliminated at the application phase, the application is rejected; if not eliminated during commission evaluation phase, the project will not be evaluated.

Support Process

The project is implemented within two years, starting from the start date. The industrial enterprises that do not implement their projects or notify the Ministry about the implementation of the project in due of time cannot receive support payment. The basis for calculating the amount of support to be granted is the invoice information approved by a certified public accountant. The invoices that will be considered should be issued after the start date. If the realized project price (excluding VAT) is more than the accepted project price, support payment is made according to the calculations made over the project price which shall not exceed the amount of the accepted project price by more than 10%. The project price, excluding VAT, cannot go beyond TRY 5.000.000,00 under any circumstances. The priority in the support payments during current year are given to the projects completed in the previous years.

In case there arise a situation that can be accepted as force majeure during support process, the Ministry may decide to stop, continue or cancel the support process until the end of force majeure situation.

Result

Projects that have successfully completed the application and evaluation phases and whose total investment value excluding VAT does not exceed TRY 5.000.000,00 are supported with a maximum of 30% of the project price. A company can apply and receive grants for the EEIP implementation and the voluntary agreements at the same time. Including the projects which have received support decision and whose implementation continues, the applications are limited to 5 projects for the same industrial enterprise. However, the projects whose implementations have been completed and about whose completion the Ministry has been notified are not included in this number.

Best Regards

Forensis Attorney Partnership

Note: The explanations in our bulletin have been prepared in a general manner to address the issue within the framework of the relevant legislation. We recommend you to contact a law firm for detailed information.