The definition of Energy Performance Contracts has been made clearly in the Law No. 5627. This law is the law of energy efficiency.

This contract guarantees energy savings after implementation. Expenses incurred are also paid out of this savings according to this contract. Based on this principle and this purpose, the contract is formed by guaranteeing the law.

About Energy Performance Contracts

Derived from the Turkish word  energy service company, energy performance contracts design energy saving projects in order to use energy much more efficiently.

In this way, energy savings will be guaranteed. After the project is designed, it is put into practice. Of course, this implementation requires some financing. The contract also provides financial support through savings.

It also provides the supply of energy when necessary. The energy mentioned here is about making the energy used in businesses efficient.

In line with these agreements, company also carries out all of its energy efficiency services with its wide portfolio and knowledge.

Information Regarding the Financial Support of the Energy Performance Agreement

The issue here is the financing of the projects created to ensure energy efficiency. In various countries, financing evaluation methods, which we will explain below, are included.

This is where ESCO comes into play. ESCO is an energy service company. Businesses provide the necessary financing for the projects they will create in line with the measurements determined by this company from their own internal funds. Then, the energy service company compares it with the amount of energy savings guaranteed by energy performance contracts.

Another method is to obtain the financing of the energy efficiency project directly from the capital of the energy service company. There are some examples in Turkey where this method is used.

Another method of providing financing is to meet the financing required for the realization of the project through debt or credit method. The main thing here is the debt, that is, which party will take the loan.

This debt and credit are formed in two ways. The first is the shared savings agreement and the second is the guarantee savings agreement. As a result, energy efficiency projects are financed in a way.

What Type of Financing Should Turkey Use in Energy Performance Contracts?

The type in question in Turkey is the borrowing or loan taken to finance the project as a shared savings contract. Here, ESCO, the energy service company, receives the shared savings agreement loan.

In this case, the loan repayment of the contract or all other risks belong to the responsibility of the energy service company. Naturally, shared savings is the most preferred type in energy performance contracts. Because the project owner company has no risk in terms of financing.

However, there may be a contract in which savings are guaranteed. This contract, on the contrary, means that the project owner company undertakes all the financial risk. In this type, of course, there is no definition of an energy service company.