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Inception Report

Consultancy Services on Policy Gap Analysis and Energy Efficiency Program Evaluation Page iii

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Inception Report

Consultancy Services on Policy Gap Analysis and Energy Efficiency Program Evaluation Page ii March 2015

Inception Report

Consultancy Services on Policy Gap Analysis and Energy Efficiency Program Evaluation

ID: GEF TF014579

March 2015 This report has been produced by MWH Mühendislik ve Müşavirlik Ltd. Şti (MWH) and Wuppertal Institute Institut fuer Klima, Umwelt, Energie GmbH (WUPPERTAL) Joint Venture (JV) for the Ministry of Energy and Natural Resources (MENR) with the financial assistance of the Global Environment Fund (GEF) and is based strictly upon the scope agreed between the JV and the MENR. Therefore this report may have limitations, assumptions or reliances on data or requests that are not categorically stated in the document itself. Reliance should not be made upon this report without consultation with the JV. Any interpretations and recommendations given in this report represent the opinions of the JV in accordance with a specific brief and as such do not necessarily address all aspects that the subject area may include. JV’s liability for this report is limited to its agreement with the MENR. Any use of this report by any other person is done so entirely at their own risk. No liability is accepted by the JV with respect to use of this report by any other person. The views expressed herein are those of the JV and can therefore in no way be taken to reflect the official opinion of the MENR and GEF.

Policy Gap Analysis and Energy Efficiency Program Evaluation

Report Name:

Inception Report

Controlled Copy

Rev. N.

Date Description

Amendment Edited by Reviewed by Approved by

00 March 2015 Draft

Rod Janssen

Jose Guerra Roman

Özlem Yakut

Hakkı Buyruk

Stefan Thomas

M. Sarioglu M. Sarioglu

01 March 2015 Final

Rod Janssen

Jose Guerra Roman

Özlem Yakut

Hakkı Buyruk

Stefan Thomas

M. Sarioglu M. Sarioglu

Inception Report

Consultancy Services on Policy Gap Analysis and Energy Efficiency Program Evaluation Page iii

March 2015

CONTENTS

Executive summary ....................................................................... 1 1

Introduction .................................................................................... 2 2

Team Composition and Contacts .................................................. 3 3

Status of activities underway ......................................................... 4 4 Inception Phase ................................................................................................ 4 4.1

Activity 1 - Review of existing and planned EE policies and programs ............. 6 4.2

Activity 2 - Policy Gap Analysis ......................................................................... 8 4.3

Activity 3 - Program Evaluation ....................................................................... 10 4.4

Activity 4 - Recommendations ......................................................................... 12 4.5

Challenges and risks related to project implementation .............. 12 5

Deliverables ................................................................................. 13 6

Comments on TOR ...................................................................... 14 7

Final Comments ........................................................................... 14 8

Annexes ....................................................................................... 15 9

Annex 1 Minutes from Kick-Off Meeting .............................................. 15

Annex 2 Meetings held with Stakeholders .......................................... 21

Annex 3 Legal Framework in Turkey .................................................. 22

Annex 4 Program Information Monitoring ........................................... 24

Annex 5 Program Information Monitoring ........................................... 27

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Executive summary 1This “gap analysis” project is designed to provide technical assistance to MENR to evaluate the policies and programs in energy efficiency in order to strengthen the policies and activities particularly related to SMEs.

This project is an element of the World Bank’s “Small and Medium Enterprises (SMEs) Energy Efficiency Project” that was developed with an aim to increase the efficient use of energy by SMEs through increasing access to commercial bank credits. The project is financed through a loan of USD 201 million by the International Bank for Reconstruction and Development distributed among three public banks and through a grant of USD 3.64 million by Global Environment Facility (GEF).

MWH Turkey together with its partner, the Wuppertal Institute, began this project with the kick-off meeting on January 30th, 2015. The kick-off meeting agreed on the following issues:

Project objectives Results to be achieved at the end of project Relative stakeholders from MENR and other units described before in Section 3.1. Work plan and schedule for reporting.

This Inception Report is designed to outline the activities underway, provide an overview of the EE programs to undergo a due diligence assessment, review the status of the four activities, assess the challenges and risks relevant to project implementation, outline the program evaluation approach, update the work plan for the four activities and explain what changes, if any, to the TOR are recommended.

This report provides the status of the project to date. The main point is that the project has started well. Following the initial meetings with main GDEU and GDRE staff as well as with key stakeholders, the level of co-operation is excellent. There is good understanding and agreement on the broad objectives and a strong appreciation that a better understanding of the policy gap and the impact of existing measures is fundamental for the further development of Turkey’s energy efficiency strategy. The report builds on the agreements achieved at the Kick-Off meeting held on January 30th.

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Introduction 2Turkey is in the midst of building upon its legislative and policy foundation to more fully develop its energy efficiency strategy in order to achieve more of the cost-effective energy efficiency potential. At the same time, Turkey is also planning to integrate the full range of EU energy efficiency directives as part of the pre-accession process. Currently, energy efficiency activities cover all end-use sectors.

MWH Turkey together with its partner, the Wuppertal Institute of Germany, have been contracted to undertake a series activities that lead to two main results:

Result 1: Energy Efficiency (EE) Policy Gap Analysis and Recommendation

Result 2: Energy Efficiency (EE) Program Evaluation and Recommendation.

Specifically, the TOR calls for the project to:

Conduct a policy gap analysis with respect to EE and develop actions and institutional shortcomings for improvement

Review existing government EE informational and incentives programs for energy efficiency in SMEs

Undertake process evaluations and recommend actions for their impact.

While the project will consider the full range of energy efficiency activities, the focus is on small and medium-sized enterprises. SMEs play a very important role in the Turkish economy and the country has, according to KOSGEB, more than 3,470,000 SMEs not including those in the agriculture sector1. These companies are essential for manufacturing products that are traded internationally, in creating employment and in providing vital services to the economy. For example, SMEs (micro, small and medium) have about 77% of all employment in Turkey’s enterprises.2

While SMEs are important to the economy, and it is important to maintain or increase their competitiveness, they have not always received the attention they deserve in policy areas such as energy efficiency. In part, this is understandable, given that large energy-intensive industries need a high priority. Nevertheless, there is growing understanding and awareness that the benefits to improving the energy performance of SMEs cannot be dismissed.

Thus, this project provides technical assistance to the Ministry of Energy and Natural Resources (MENR) to evaluate the policies and programs in energy efficiency in order to strengthen the policies and activities particularly related to SMEs.

As required the project started with a kick-off meeting on January 30th at the GDRE office in Ankara with wide attendance from the key people in GDEU and GDRE. The meeting provided an opportunity to introduce the project team, the basic methodology that would be used and to clarify some outstanding issues from the TOR. The purpose of the kick-off meeting was to agree on the following issues:

Project objectives

1 http://www.tosyov.org.tr/index.php?option=com_content&view=article&id=546:10kobi-zirvesi&catid=3:son-haberler&Itemid=129 2 http://www.tuik.gov.tr/PreHaberBultenleri.do?id=18646

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Results to be achieved at the end of project Relative stakeholders from MENR and other units described before in Section 3.1. Work plan and schedule for reporting.

Primarily, the kick-off meeting ensured that the focus would be on SMEs, that it was understood that the project would not duplicate and overlap related projects underway (for example, the preparation of the National Energy Efficiency Action Plan (NEEAP) which is, in effect, undertaking a gap analysis or the legislative review that is being conducted as part of the acquis process) and that it would give more emphasis to the program evaluation. Moreover, the NEEAP project is also looking into market assessment and future demands and needs of the energy efficiency landscape in Turkey in order to translate them into an action plan.

The draft minutes that describe the points agreed upon at the kick-off meeting are included Annex I. It has still not been signed by all officials.

Team Composition and Contacts 3The current functional management organization and reporting relationships of the project is shown in the figure given below:

Figure 1. Organization Chart

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Status of activities underway 4

Inception Phase 4.1Following some initial desk work to better understand the energy efficiency context in Turkey, the Team Leader (TL), Rod Janssen, spent the week of February 16th in Ankara, based out of the office at GDRE provided for the team during the execution of this project. The TL undertook a series of meetings with officials at GDEU, GDRE and other relevant ministries and instititions. He was accompanied by the overall Project Coordinator, Burçin Pamuksuz and Bilal Düzgün of GDRE. Many of the meetings were arranged by Süheda Gümüsderelioğlu of GDRE. The project’s normal contact officer with GDRE, Ersoy Metin, was away from Ankara during that week.

It should be emphasized that the level of co-operation was excellent and this bodes well for the full execution of the assignment.

Meetings during Inception Phase

The meetings can be divided into three categories:

1. Senior management of GDEU and GDRE, 2. Program officers of GDRE, 3. External meetings with other ministries and institutions (including the EU Delegation

and the World Bank).

Between the three categories, the purpose of the meetings was different.

With senior management of GDEU (Mr. Murat Becerikli) and GDRE (Mr. Erdal Çalıkoğlu and Mr. Halil Ibrahim Gündoğan), the purpose was to explain the activities to date, to update on the progress of the meetings and to ensure that there was no misunderstanding of the execution of the assignment and that all parties were aligned for the same outcome of the project.

With GDRE officers, the purpose was to explain the overall project, to meet who was involved in the specific programs, to get background on the government programs to be reviewed (for example, the mandate, when the program started, what results were available) and to explain that project team members would be coming to see them for a much more detailed review of their program. Following the meetings a contact list is being prepared to facilitate direct contact during the execution of the assignment.

The external meetings were primarily introductory, to explain the overall project, to better understand what they were doing related to energy efficiency. In some cases, the meeting was to see if there was a program that should be included in the project for review (particularly in Activity 1 or 2) and thus to see what information they had that would be useful. In other cases, it was to discuss their involvement to discuss findings and recommendations (particularly for the final round table meeting towards the end of the project).

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The meeting with the EU Delegation was to better understand the process underway for Turkey to meet the acquis. The EU is mainly undertaking technical assistance through the World Bank. The meeting with the World Bank was to simply discuss the progress to date (since by then most of the week’s meetings had been held). It was also to receive the institutional study that had been prepared by the World Bank and that had been promised at the kick-off meeting.

The only important meeting that unfortunately did not take place was with KOSGEB (the Small and Medium Sized Enterprises Development Organization). However, the TL has met with senior officials there before and has a good overview of the situation. Also, KOSGEB has recently gone through a significant restructuring and it was felt best to wait until later to see them. The Ministry of Industry, however, stressed that we must meet KOSGEB. Furthermore, the Ministry of Transport was also not visited. That will happen in a subsequent mission.

There is an annex of the meetings held the week of February 16th.

From the meetings, it was concluded that the following programs of GDRE need to have a due diligence assessment (see Activity 1) as well as possibly for a full program evaluation under Activity 3.

Table 1. List of Programs by Sector and Type

Program Sector Type Initial Contact With Staff Made

Data Availability

GDRE

VAP Industry Financial Incentives Yes Yes

Voluntary Agreements

Industry Financial Incentives Yes Yes

Awareness Program All Information Yes Some

Web Portal All GDRE Information No n.a.

Certification of Energy Managers

Industry, Buildings

Regulatory Yes Yes

Energy Audit Program

Industry, Buildings

Regulatory Yes Yes

Licensing of Energy Efficiency Consultancy Companies, Universities, and Chamber of Engineers

Industry, Buildings

Regulatory Yes Yes

Exemptions for Licensing for micro-cogeneration and waste heat recover systems

Industry, Power Plants

Regulatory Yes Yes

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Mandatory data reporting

Industry Regulatory No Yes

Mandatory data reporting for central government buildings and commercial and service buildings

Buildings Regulatory Yes Yes

Ministry of Science, Industry and Technology

Ecodesign standards Domestic, industry

Regulatory Yes Yes

Energy labels of domestic appliances

Domestic Regulatory Yes Yes

Ministry of Economy

Investment incentives program for energy efficiency

Manufacturing Industry

Financial Incentives Yes No, new program

KOSGEB

Promotional programs

SMEs Information, Financial incentives

No Not sure

Ministry of Environment and Urbanisation

Energy Performance of Buildings Directive

Buildings Regulatory Yes Some information

Energy Performance Certificates

Buildings Regulatory, Information

Yes Some information

Central Heating Sytems Regulation (No. 26847)

Buildings Regulatory, Information

No To be determined

Activity 1 - Review of existing and planned EE policies and 4.2programs

According to the proposal, Activity 1, the “review of existing and planned EE policies and programs will be based on a desktop research of the current legislative and other official documents, studies etc. (MENR itself will be an important source of information here). The results of the review will be categorized by the following sectors: industrial, commercial, public, residential, agriculture, transport, as well as overarching governance framework. Data on the individual policies and measures will be collected in a standardized template that covers, for example, the following issues: sector addressed, technology/EE action addressed, type of policy, implementation status, official document, responsible actors, budget available/used, energy savings targeted, savings achieved. In the review report, each policy will then be presented in a standardized table in the chapter of the respective sector. There will also be sectorial overview tables that only include policy names and types.

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The relevant energy efficiency legislation under review is provided in Annex 3.

The importance of Activity 1 is that it will determine what data are available, what is the capacity to implement the program (organization of the program team, quality of the team, whether it has a monitoring and evaluation process integrated), how the program is marketed to target audiences, what is the program’s mandate, any awareness issues, whether the program has penetrated well into the energy efficiency market…etc. (e.g. from 2007 energy efficiency law). A project file will be created for each program. Annex 4 gives the table that will be used for overall monitoring of the programs. This basic information will be used for the due diligence described below and for the full program evaluation in Activity 3.

The due diligence will be based on the desktop analysis and interviews. The due diligence will include an analysis of the strengths of the policy or program, their weaknesses, the threats and opportunities (SWOT analysis). This activity will help the team to develop the methodology for the Policy Gap Analysis (Activity 2) and the EE program evaluation (Activity 3). The results will be summarized in “standardized templates” (see Annex 5) according to the type of instrument and it will include a brief identification of the existing market barriers that are being addressed by the policy instrument and the general findings of the SWOT analysis that would include whether those barriers are sufficiently addressed. There would be an overall assessment that includes whether there is adequate data for a comprehensive program evaluation (Activity 3).

It was stressed at the kick-off meeting and during meetings the week of February 16th, that the legislative and policy review should not duplicate the work currently being undertaken for the National Energy Efficiency Action Plan (NEEAP) but build upon its results. For that purpose the Team will also meet the NEEAP team for collaboration and avoid overlapping of activities. Hopefully the NEEAP will be completed during the summer (before the Interim Report is due). The project review, unlike the NEEAP, however, will emphasize SMEs. At YEGM there are also three UN-supported projects for products (Ecodesign and energy labeling), energy efficiency in buildings and industrial energy efficiency. While those are projects with a specific life span, it will be important to meet with project officials to determine the expected (or realized) impact and whether it is expected that there will be on-going programs developed from the results.

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Table 2. Schedule for Activity 1

Activity 2 - Policy Gap Analysis 4.3The policy gap analysis will be performed in all end-use sectors. As agreed at the kick-off meeting, this Activity will benefit from the work undertaken for the NEEAP and for the gap analysis as part of the EU acquis (that work will start soon). The methodology outlined in the Proposal will largely be followed, however, all seven activities under Activity 2 will be addressed.

There is still much that can be undertaken, particularly as the focus is on SMEs. For each of the major energy end-use sectors (industrial, commercial, public, residential, agriculture, transport), the Team will assess whether or not comprehensive sectorial policy packages have been previously established.

The starting point is outlining the existing policy package that is being implemented in Turkey. Most of that work was undertaken as part of Activity 1. Then, considering best practice in Europe and globally, appropriate policy packages will be considered. There are two major considerations: how appropriate are the current policies in promoting greater energy efficiency in SMEs and are the policies likely to achieve the current energy efficiency targets for 2023 (from the 2012 Energy Efficiency Strategy).

Results could be presented in tables such as the example below for buildings:

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Table 3. Sample Results Reporting Table for Buildings

1 2 3 4 5 6

Prototypepolicypackagefor

energyefficiencyinresidential,commercialand

industrialbuildings

Gapanalysisvs.Prototypepolicypackage

EUrequirementsGapanalysisvs.requirementstomeet2023nationalEEtarget

Whichoftheseinstrumentsareimplementedorplannedin

Turkey(nameofpolicy)?

Isthereagap?

(yes/no/which?)

WhatareEUrequirementsforthesetypesofpolicies?

Whichoftheseinstrumentsareimplementedorplannedin

Turkey(nameofpolicy)?

Isthereagap?

(yes/no/which?)

MinimumEnergyPerformanceStandards(MEPS)andotherregulations

GrantsandTaxIncentives

FinancingInstruments

EnergyPerformanceCertificatesandEnergyLabels

EnergyAdviceandAudits

InformationforInvestorsandEnd‐Users

DemonstrationProjects

EducationandTrainingforProfessionals

Promotionandsupportforenergyservices

The main outcome of this activity, the Policy Gap Report, will then discuss the identified policy gaps, key barriers and areas for improvement with a view to providing policy recommendations.

The policy gap analysis will benefit from the analysis of the NEEAP study since it should estimate the gap, if it follows the approach taken in the EU. There was also a similar gap analysis undertaken for the Ministry of Environment and Urbanisation a few years ago (and is considered to still be relevant) and this project from benefit that analysis.

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In addition to the sectorial policies and measures, our analysis will also examine whether the existing overarching institutional setup for energy efficiency (so-called energy efficiency governance framework) is effective or not. This is directly related to providing a framework that enables smooth implementation of the targeted sectorial policies and generally facilitates investments in energy efficiency improvements by end-users. This work will benefit from the institutional study prepared by the World Bank.

As shown in the following table, the gap analysis activities will start in mid-May and continue until the end of July. It will be affected by Ramadan, but only to a limited extent.


Activity 3 - Program Evaluation 4.4To fully understand how EE policies and programs will evolve in Turkey, it is fundamental that the full effectiveness of the existing programs be undertaken. This Activity builds on the foundation provided in Activity 1, as described above.

The importance is in knowing why a program evaluation should take place. First, an evaluation provides feedback to management in order to improve the program. Second, an evaluation analyses the impact of the program to see if it is meeting quantitative and qualitative objectives. Third, the evaluation gives insight how to the program can be made more ambitious if so needed. The gap analysis of Activity 2 will give some indication of how the ambition needs to be expanded. This is done through a combination of new policies and increasing the impact of existing programs (often by scaling up).

While some of the program managers may be reluctant to undertake an evaluation, the entire program evaluation process has to be seen in a positive light because it gives everyone a clearer indication of the total impact and what that means for moving forward.

There are several steps involved in the program evaluation process:

Step 1: Identification of current EE programs in MENR to be evaluated

As stated above, this will be determined in Activity 1. The program types are financial incentives, regulatory measures (, licensing, energy management program, energy audit program, license exemption for high efficient co-generation, micro co-generation and renewable energy),, information services (awareness, training, web portal, capacity building), and transitional impacts.

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Step 2: Conducting meetings with each program’s staff

The aim of this activity will be to build on the initial contacts with GDRE staff members to document the data captured at all points of the program process. It will also benefit from any previous monitoring or evaluation activities that could have taken place to date. This will build on the data and information gathered under Activity 1. Care will be taken not to disrupt the program delivery but the GDRE staff is well aware that the program evaluation team will be getting into as much detail as possible.

Step 3: Evaluation framework for each program to be evaluated

Based on MWH knowledge and experience in current on-going programs and Wuppertal’s experience in Evaluation and Monitoring for the EU Directive on energy end-use efficiency and energy services (EMEEES) project3, our consortium aims to follow the approach given below for the evaluation of each program:

o Collection of available data and determine the quality of the data This may require some surveys of program recipients to determine the

full impact and results of the intervention (for example, were recommendations actually implemented? Where participants satisfied with the program process? Did recipients monitor results to determine whether expected results actually occurred? Etc.)

o Establishing a baseline that can be used to compare results in future evaluations. This will be most important when further NEEAPs are prepared.

o Choice of bottom-up or top-down evaluation method for each program depending on the data and information availability

o Inclusion of GDEU and GDRE program staff to participate in all aspects of the evaluation process.

Step 4: Impact Evaluation

This step depends on the information and data available and whether there has been any monitoring and evaluation process undertaken. This step will require:

o Follow-up meetings with program staff, as required o Focus group interviews with SMEs and Banks o Assessment of targeted Key Performance Indicators for each program such

as CO2 and primary energy savings, capacity built and other transitional impacts as appropriate.

Step 5: Evaluation of the Outcomes

As much as possible there will be a set of harmonized input data and benchmarks for these evaluation methods. The evaluations will be grouped by category: financial incentives, regulation and information/awareness.

There will be program evaluation reports developed for each program evaluated. The results will build on the SWOT analysis from Activity 1 and will detail the full set of impacts.

Timing and Deliverable

The detailed work on the program evaluation will start at the end of August and continue until early November. At the end of this Activity a report will be prepared as one of the expected deliverables. It is due November 2nd.

3 Wuppertal Institute on behalf of EMEEES Consortium, Evaluation and Monitoring for the EU Directive on Energy End-Use Efficiency and Energy Services (EMEEES), June 2009.

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Activity 4 - Recommendations 4.5There are four sub- activities in this activity. There are no changes from the JV proposal. While the activity is to be completed by the end of January, it will be discussed with GDEU and GDRE, but it is recommended that the final roundtable discussion take place in January 2016. December will be affected by the UNFCCC climate change conference in Paris.

It is necessary to prepare recommendations for the improvement of existing policies and programs as well as for the development of future on-going programs administered by the various ministries and institutions of the government. These recommendations will help the government revise its energy efficiency strategy and provide input into the next five year development plan in order to better address achieving the 2023 energy efficiency targets.

The recommendations would be discussed at a roundtable workshop towards the end of the overall project. The attendees would include the relevant ministries and government institutions, related organizations (such as the EU delegation and UN country offices), and selected industry organizations recommended by the project steering committee. The results of the roundtable would be prepared in the form of a “chairman’s conclusions” that could be widely distributed throughout the relevant ministries and organisations.


Challenges and risks related to project implementation 5The project is quite straightforward. From the meetings during the Inception Phase, the level of co-operation has started very well and there is every indication it will continue in that way. The challenges concern the other related projects underway. There is the NEEAP preparation that is being undertaken by Deloitte Spain and the German Energy Agency, (DENA). That study is, in effect, a form of gap analysis. At the kick-off meeting it was agreed that the project would not duplicate that work and in order to avoid this the JV will also meet with the NEEAP team.

In March, there will be another gap analysis study undertaken to determine the gap in the legislation for the acquis. This project is only related to energy efficiency legislation to see what further steps Turkey must make in order to adopt the full set of EU framework

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directives related to energy efficiency. The contract team will work closely with the EU Delegation. This should cause no problems and if there are results before the end of the project, they can be integrated into our final report.

There are risks with data availability and data quality. This will become apparent in Activity 1 as the Project Team gets into the details of each individual program. The team sees a risk that if the quality of the data is not good or in a way not reliable it will have an impact on the subsequent activities. The quality of data will affect Activity 3. Therefore, if we detect difficulties and struggle to get the required information we will notify GDEU and GDRE immediately to discuss potential remedial actions. However, data and information quality will reveal insights about the effectiveness of the programs so that there will be some analysis of effectiveness and impact.

Deliverables 6There are no major changes to the original proposal.

The main reports have the following deadlines:

The Inception Report is due March 2, 2015

The Interim Report is due August 3, 2015

The Final Report is due before January 2, 2016. The Final Report could be delayed until just after the Final Roundtable discussion, depending on the timing of that meeting.

As agreed at the Kick-Off meeting, the review of the legislation would be included in the Interim Report.

The following table has been updated to reflect the starting date.

Table 8. Schedule for Deliverables

Deliverable Deadline

Methodology for program evaluation By May 4, 2015

Policy Gap Analysis By August 3, 2015

Impact and process evaluation By November 2, 2015

Draft recommendations By December 2, 2015

Stakeholders roundtable During final month

All reports will be submitted to the MENR in English and Turkish .

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Comments on TOR 7At the kick-off meeting, clarification was requested on several issues.

1. Is the project to address all Government EE programs or EE programs directly under MENR?

This project will include other ministry roles for EE viewpoint with MENR with Energy Efficiency Coordination Board. For Activity 3, most of the activity would center on GDRE programs. Because of the budget constraints that everyone recognized, the program priorities would be set by the budget. This would regularly be discussed with GDEU and GDRE management as necessary.

2. Level of emphasis on SMEs

It was agreed that the main focus is industrial SMEs. It was agreed that the agriculture sector would not be included. The new World Bank financing facility focuses on SMEs and this current project is to complement and support that financing facility. The gap analysis would primarily relate to SMEs. The focus would probably be on the more energy-intensive SMEs.

3. How Turkey is Addressing EU acquis related to energy efficiency

It was not sure how Turkey is addressing the acquis since all other pre-accession countries are doing it through the Energy Community Treaty. It was stated that Turkey has a relationship directly with DG Energy of the European Commission. During the Inception Phase meetings, it was clarified that there will be another project that will determine the gap between current Turkish legislation and that of the European Union. Hopefully this project would be able to benefit from the findings of the other one.

4. Level of cooperation with project currently underway to prepare National Energy Efficiency Action Plan (NEEAP) (using EU template)

The preparation for the NEEAP essentially is a gap analysis to determine how Turkey is meeting its long-term objectives. This is a gap analysis. The Gap Analysis project is to not duplicate the NEEAP analysis and integrate the results into the project as appropriate.

Final Comments 8The Project Team looks forward to the smooth execution of this assignment. The TL will maintain close contact with GDEU and GDRE to ensure that all issues and expectations are addressed with the full corporate support of the JV and its support team.

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Annexes 9

Annex 1 Minutes from Kick-Off Meeting

M E E T I N G R E C O R D

Meeting with: MENR-GDRE

Place: GDRE Meeting Room

Date 30.01.2015

Project:Policy Gap Analysis and EE Program Evaluation Ref/File:

Subject: Kick-Off Meeting Distribution: MWH Turkey

Present

Kazım Karabekir Buyukunal

Fatma Soysal

A.Murat Becerikli

H.Ibrahim Gündoğan

Süheda Gmüşdereoğlu

Yasemin Örücü

Saniye Keser

Burcin Pamuksuz

Akife Yılmaz

Erol Yalcın

Ersoy Metin

Bilal Düzgün

Burhan Guldibi

Dr.Murat Sarioglu

Cenk Gümüskaya

Ozlem Yakut

Ahmet Celik

Rod Janssen

GDRE(Mechanical Engineer)

P.Ministry Undersecretariat of Treasury(Treasury Expert)

GDEU (Head of Department)

GDRE(Head of Energy Efficiency Department)

GDRE(Chemical Engineer)

WB (Energy Specialist)

GDEU(Associate Energy and Natural Resources Expert)

GEF (Project Coordinator)

GDRE(Electrical and Electronics Engineer)

GDRE (Industrial Engineer)

GDRE (Mining Engineer)

GDRE(Associate Energy and Natural Resources Expert)

GDRE (Mechanical Engineer)

MWH(Project Coordinator)

MWH(Project Manager)

MWH(Economic Financial Expert)

MWH(Energy Engineer)

MWH(Team Leader Policy Expert)

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1 Acquaintance & Presentation Beginning

Murat Sarioglu gave briefly information about MWH Global and MWH Turkey current projects (TuRSEFF&MidSEFF&TuREEFF).

2 Presentation Contents from Rod & MWH Approach

This meeting has two keys content; First one is ToR conditions and second one is issues for clarification.

The financial element is of great importance for this project because it sets the foundation for the financing facility that is to follow. Ozlem Yakut emphasized the fact that ease of access to funds, bureaucracy are crucial for distribution of such funds hence project shall also focus on such issues not only on program evaluation. GDRE acknowledged this statement.

The experience of Rod Janssen in the on-going UN-funded industrial energy efficiency project in Turkey will provide many benefits to this project. It was also discussed that this project will be beneficial for the climate conference to be held by December 2015 in Paris.

Mr. Janssen described MWH understanding and approach on the scope of works in the presentation with below highlights:

2.1 .Activity 1

Activity 1.1: Reviewing the Overall Policy Framework in Turkey related to EE

Activity 1.2: Reviewing EU EE Directives and its transposition to Turkey

Activity 1.3: Providing a SWOT analysis on existing Turkish legislation and identifying articles, acts, regulations, communiqués that have an effect upon EE

Activity 1.4: SWOT analysis on existing EE programs being implemented by MENR

Activity 1 will start 2nd March,2015 with inception report and it will continue to middle of April 2015.

2.2 Activity 2

Activity 2 is the most interesting part which includes: what were do and what will do.

The policy package would be a suitable exact to Turkey.

Activity 2.1: Mapping out a prototype policy package for each of the sectors

Activity 2.2: Identification of Best Practices from Other Countries

Activity 2.3: Establishment of Comprehensive Sectorial Policy Packages

Activity 2.4: Comparing Prototype policy packages with the actual energy efficiency policies

Activity 2.5: Outline of Policy Gap Analysis (both existing and planned programs/policies)

Activity 2.6: Adapt the prototype policy packages and the results of the gap analysis to Turkey

Activity 2.7: Development of Policy Gap Analysis

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Institutional capacity report prepared by WB presents various options for re-organizing energy efficiency activities in Turkey. It is currently being discussed at high levels of government. This report will be shared by WB.

Mr. Becerikli also stated that due to limited budget of this Contract and a similar EBRD contract in place with another consultant, MWH should concentrate more on program evaluation rather than gap analysis. It was also agreed that for gap analysis MWH should focus on SMEs –particularly industrial SMEs- for the purpose of this Contract.

2.3 Activity 3

Activity 3.1: Identification of current EE programs in MENR

Activity 3.2: Conducting meetings with each program staff

Activity 3.3: Evaluation of each program

Activity 3.4: Impact Evaluation

Activity 3.5: Evaluation of the Outcomes

Much of the work on Activity 3 will be led by experts from the Wuppertal Institute. It is globally recognized for its expertise in program evaluation.

For the inception report MWH will present the methodology for program evaluation and how this Activity will be implemented. Mr. Janssen emphasized that there are certain program evaluation techniques in place however each and every country has its own properties and these techniques should be adapted according to requirements. Hence, the program evaluation methodology to be proposed will be unique for Turkey and MWH will require feedback from all parties on the program evaluation methodology to be adapted. It is upmost importance to have mutual agreement on program evaluation methodology. All Parties acknowledged and confirmed this statement.

As stated above, program evaluation is considered more important than the gap analysis for this project.

Mr Janssen also emphasized that within this Contract, MWH will also investigate the success of implemented programs by evaluating certain SMEs previously made use of these programs. In addition to quantifying energy savings, other potential aspects including use and development of new technologies, job opportunities, etc. will also be evaluated as much as possible. There are concerns about data available that could affect program evaluation.

Activity 4

Activity 4.1: Develop recommendations for EE Policy Activity

Actvitiy 4.2: Develop recommendations for EE Programs

Activity 4.3: A road map suggestion to improve efficiency of the programs

Activity 4.4: Roundtable discussion on draft recommendations

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Question: Program Evaluation Methodology is exist or not for Turkey?

Turkish officials were trained in a bilateral program by the Netherlands. Nevertheless, the evaluation methodology will be determined according to the data and information available in Turkey. There are various methodologies depending on the material available. For this reason, it is important that the project team have direct access to the program managers at GDRE and other ministries/agencies as appropriate.

3.Project Team

Mr. Janssen introduced the project team.

4.Initial Deliverables

Inception Report – March 2nd, 2015

Interim Report(Inc. Gap Analysis) – August 2nd , 2015 (Tentative)

All Parties acknowledged that considering 6 months period defined in ToR, earlier delivery of interim report is actually technically possible.

Feedback should be provided for evaluation and implementation.

Because there is a wide range of legislation about EE that will take time to analyse, it was agreed that the legislation framework from Activity 1 will be included in interim report and not in the Inception Report.

The legislative review also includes analysing the institutional structures. The World Bank volunteered that it has undertaken an Energy Efficiency Institutional Review and this will be made available to the Project team..

5.Inception Phase Activities and Report Outline

Program evaluation method and current situation on this project will be described in inception report.

Revised work plan and personnel schedule will be presented in inception report.

• The Main Components are:

1. Overview of Energy Efficiency Legal Framework in Turkey and how it has evolved

• Overview of EE programs implemented by MENR, with particular emphasis on SMEs

2. Status of Activities Underway • Status of tasks and deliverables • Status of activities involving MENR staff • Status of activities involving other stakeholders

3. Challenges and Risks Related to Project Implementation 4. Program Evaluation Approaches for Activities 1.4 and Activity 3 5. Revised Project Implementation Work Plan

6.Recommendation for Amendment of the TOR (if any)

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As mentioned above under point 5, Section 1 on the Overview of the Legal Framework will be included in the Interim Report and not the Inception report.

6.Issues for Clarification

1. All Government EE Programs or EE Programs Directly Under MENR?

This project will consider all programs related to EE in all Govermental Organisations as necessary, since they are under the Energy Efficiency Coordination Board that is managed by GDRE. Due to the limited budget, however, Mr. Gundogan and Mr. Becerikli confirmed that there will be a selection of programs to be evaluated, prioritizing ones with common interest of several authorities/organisations. MWH will define such available programs and prioritize together with GDRE. This will allow GDRE to have a tool and methodology for program evaluation which can be adapted for other programs in the future as necessary.

2. Level of Emphasis on SMEs

There was some confusion over priority for SMEs. The ToR objective emphasised SMEs whereas no specific reference was made in scope of works section of ToR.

Mr. Gundogan and Mr. Becerikli confirmed that the main emphasis must be on SMEs but large industry and other sectors should not be dismissed. The main focus shall be on industrial SMEs.

3. Need for Access to All Documents

GDRE and DİAB confirmed full cooperation as necessary, where Mr. Ersoy Metin and Mr. Bilal Duzgun from GDRE will be the main contact for implementation. Mr. Murat Becerikli will be contact person from DIAB for contractual issues and coordination with World Bank and other third parties as necessary.

4. How Turkey is Addressing EU Acquis – through Energy Community Treaty (Turkey is now an Observer) or Directly with DG Energy

This will be determined during the legislative review and possibly even by the NEEAP Project.

5. Level of Cooperation with Current Project to Prepare National Energy Efficiency Action Plan

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There is a parallel Project underway to develop a National Energy Efficiency Action Plan and it was agreed that there should not be duplication of effort. This Gap analysis Project should use the results of the NEEAP Project. Mr. Becerikli stated that the NEEAP will cover all energy efficiency and not just SMEs. The need to avoid duplication also included the analysis of the legislative framework. As discussed above MWH shall focus on SMEs in this contract and output of this Contract shall be supplementary to the ongoing NEEAP project not duplication. GDRE and DIAB intend to use output of these contracts as input to future consultancy services.

6. Need for List of All GDRE Program Managers since They Must be Individually Contacted for Activity 3

It was agreed that MWH project team would have full access.

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SMEs Energy Efficiency Project

MENR-CS-02 Policy Gap Analysis and Program Evaluation

MEETING SCHEDULE

February 16-20, 2015

February 16, 2015

Mtg with Halil İbrahim Gündoğan, GDRE

Mtg with GDRE team responsible for Buildings Team

Mtg with GDRE team responsible for Cogeneration

Mtg with Mtg with GDRE team responsible for VAP and Voluntary

February 17, 2015

Ministry of Environment and Urbanization

EU Delegation in Ankara

Mtg with GDRE team responsible for authorization and licensing of EVDs

Mtg. With Erdal Çalıkoğlu, GDRE

February 18, 2015

Ministry of Economy

Ministry of Science, Industry and Technology (General Directorate of Industry)

Turkish Standards Institute

Mtg. with Murat Becerikli, GDRE

February 19, 2015

OSBÜK – organization overseeing the 288 Organized Industrial Zones throughout Turkey

Mtg with GDRE awareness team

February 20, 2015

Ministry of Development (General Directorate of Economic Sectors and Coordination)

Annex 2 Meetings held with Stakeholders

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The following represent the legal framework in EE at the national level:

Energy Efficiency Law (No: 5627, year 2007), objective of which is “to set out the principles and procedures applicable to increasing efficiency in the use of energy resources and energy for ensuring efficient use of energy, avoiding the extravagance of energy, alleviating the burden of energy costs on the economy and protecting the environment”. This law comprises the organization, principals and procedures for increasing energy efficiency in industry, electrical power plants, transmission and distribution systems, building, service and transport sectors. It sets the rules for energy management in industry and in big buildings, project supports, energy efficiency consultancy companies, voluntary agreements and so on.

The “Energy efficiency strategy paper 2012-2023” was officially published on the official Gazette on 25th February, 2012, no 28215. This document shows the road map Turkey has adopted to establish relevant entities and NGOs and define targets and responsibilities aimed at achieving the overall target of reducing the amount of energy consumed per unit of GDP in Turkey by at least 20% by the year 2023 (energy intensity).

10th Development Plan (2014-2018)

Draft SME Strategy and Action Plan (2015-2018)

Energy Performance for Buildings Directive (Ministry of Environment and Urbanisation, year 2008). The objective of this by-law, published in the Official Journal in 2008, is to lay down the principles and the essential requirements for effective and efficient use of energy and energy sources in buildings, the prevention of energy wastage and the protection of the environment.

Ecodesign Directive (Ministry of Science, Industry and Technology) for minimum energy performance standards

Energy Labelling of Domestic Appliances (Ministry of Science, Industry and Technology)

TS825 Thermal insulation requirements for buildings (latest revision in 2013), defines the building insulation requirements and calculation methodology.

The Renovation of Areas under Threat of Disaster Law (No: 6306, year 2012). The objective of the law is to determine the risky areas for natural disasters and renovate any structure on it. As practical approach, the law foresees the renewal/restoration of all buildings built before 1999 that do not comply with new safety criteria.

The Turkish Condominium Law was passed on the 23rd of June 1965 and has been amended several times in recent decades. The most recent amendment was made on the 28th of November 2008. The Condominium Law establishes independent ownership and construction servitude rights and obligations.

Law on Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy (No. 5346, year 2005). The law aims to expand the use of renewable energy sources for generating electrical energy by establishing the necessary legal and regulatory framework while ensuring increase in the use of renewable energy sources without disturbing free market

Annex 3 Legal Framework in Turkey

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conditions. The electricity generated from the renewable energy resources in the scope of this Law will be purchased by the legal entities holding retail sale license on the basis of bilateral agreements.

By-Law on Amending of Regulation of Publicity and Guiding Manual on Implementation Principles by the Ministry of Science, Industry and Technology (Official Gazette: 8 October 2007,no 26667)

By-Law on Sharing of Heating and Domestic Hot Water Expense in Central Heating and Hot Water Systems in Buildings by the Ministry of Environment and Urbanization (Official Gazette: 14 April 2008, no 26847)

By-Law on the Supporting Energy Efficiency of SME’s Including Training, Audit and Consultancy Services by the Ministry of Science, Industry and Technology (Official Gazette: 18 October 2008, no 27028),

KOSGEB Supports Regulation (Official Gazette: 15 June 2010, no 27612),

By-Law on Appointment of Energy Managers in Schools by Ministry of National Education (Official Gazette: 17 April 2009, no 27203)

By-Law on Improving Energy Efficiency for the Utilization of Energy and Energy Resources by the Ministry of Energy and Natural Resources (Official Gazette: 27 October 2011, no 28097).

Regulation on procedures and principles for increasing energy efficiency in transportation (Official Gazette: 09 June 2008, no 26901).

Decree of Council of Ministers for Energy Efficiency Investments (Official Gazette: 18 May 2014, no 28995).

Communique on the implementation of the Decision on the State Incentives for Investments (Official Gazette: 28 September 2014, no 29130).

Communique on procedures and principles for calculation of efficiency of cogeneration and micro-cogeneration facilities (Official Gazette: 18 September 2014, no 29123).

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Please refer to page 6-7 (Table for List of Programs by Sector and Type) and make necessary modifications accordingly.

Program Target Group Mandate Objective (quantified or qualitative)

Data Availability

Available Results (e.g. energy savings (actual or expected), CO2 reduction, cost savings,

Verification (Estimates & surveys, modelling, direct monitoring, previous evaluations)

Team Contact

GDRE

VAP


Awareness Program

Web Portal


Licensing of Energy Audit Companies


Mandatory data

Annex 4 Program Information Monitoring

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Data Availability



Team Contact

reporting

Mandatory data reporting for central government buildings

Mandatory energy audits for large energy-intensive companies


Ecodesign standards


Ministry of Economy


KOSGEB


Ministry of

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Data Availability



Team Contact

Environment and Urbanisation



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Program Barriers Addressed

SWOT Analysis Summary Overall Assessment

GDRE

VAP


Awareness Program

Web Portal


Licensing of Energy Audit Companies


Mandatory data reporting

Mandatory data reporting for central government buildings


Ecodesign standards


Ministry of Economy


Annex 5 Program Information Monitoring

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Program Barriers Addressed

SWOT Analysis Summary Overall Assessment

KOSGEB


Ministry of Environment and Urbanisation



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MWH Mühendislik ve Müşavirlik Ltd. Asmadalı Sokak No. 27, Koşuyolu 34718 Kadıköy, Istanbul- Türkiye Tel: +90 216 545 3228 Fax: +90 216 546 0477 www.mwhglobal.com

Wuppertal Institut fuer Klima, Umwelt, Energie GmbH Doeppersberg 19, 42103 Wuppertal, Germany Tel: +49 202 2492 0 Fax: +49 202 2492 108 www.wupperinst.org