At a recent pan-European energy efficiency conference in Paris, representatives of a large energy service company shared the well-kept secret of how they source energy-efficient heating technology to install in Europe: They get it from Turkey.

Even though Turkey may not come to mind as a global leader in energy efficiency, energy efficiency has been on the country’s agenda for a long time.

Turkey’s National Energy Efficiency Action Plan aims for a 14% reduction in total primary energy demand by 2023, compared to 2017 levels. The plan covers the energy sector’s entire value chain, from improving supply-side efficiency to reducing transmission and distribution grid losses and demand-side reductions.

But we know that setting targets is only the first step – meeting them is another. To make Turkey’s energy efficiency action plan a reality, we will need a whole range of new business models and market instruments that, in turn, can provide insight into their energy-saving impacts across the entire value chain of the energy sector, allowing for even more innovation.

This process will provide keen insight to Turkey for compiling an effective plan for what happens after 2023.

Such market innovation is an important step for tapping the country’s large potential for energy efficiency investments and can build on the long history of knowledge that Turkey has developed on energy efficiency technology. Turkey is currently exporting energy efficiency technologies with a value of around 20 billion euros per annum.

Where are the savings to be found?

So how large is the energy-saving opportunity in Turkey? A recent study by the SHURA Energy Transition Center shows there is an additional 10% cost-effective electricity saving potential across the economy, compared to a baseline that follows the Turkish government’s demand projections for 2030.

The absolute savings amount to nearly 49 terawatt-hours of annual electricity demand. This equals the current electricity consumption of 90% of the country’s households – that is, the usage of 18 million families.

The estimated savings are shared across two main end-use sectors: The manufacturing industry accounts for 45% and buildings represent 32%. The remaining 23% comes from other sources, such as reducing losses in the distribution system.

Avoiding such losses is particularly important for Turkey because of the scale of inefficiency in the grid: The country-wide average for distribution system losses is 10% of all electricity distributed, which is substantially more than most European countries.

Much of the total savings potential in Turkey’s power system is centred around a few key technologies that are well proven: electrified heating and cooling, and efficient lighting (including street lighting), household and office appliances, and industrial motor systems.

There are also emerging and innovative options, such as smart homes where electricity demand and supply is efficiently managed with new automation and control systems.

SHURA’s technology assessment identifies a portfolio of around 100 options that can be deployed in the coming decade and, what’s most important is that nearly all of these options can be delivered at a cost lower than the cost of the energy they displace.

In other words, for all 100 options, saving electricity is cheaper than supplying electricity.

Overall, SHURA’s report concludes that for each U.S. dollar spent on energy efficiency, there are net benefits of €1.00-€1.24, with all of the positive economic impact this brings.

Further efficiency through decentralised renewables

In a supporting study jointly undertaken with SHURA, RAP shows what is needed to utilise Turkey’s potential of around 10 gigawatts of rooftop solar PV systems, and then to use the benefits of that potential resource to reduce distribution grid losses.

Turkey currently uses a monthly remuneration system widely known as net metering, where consumers sell the excess electricity their rooftop solar systems produce to the grid to create revenues based on the grid tariff.

This is indeed a crucial step to create an initial market for distributed energy resources. Beyond net metering, there will be the need to implement new models to increase consumer participation in the market, thereby making rooftop solar PV systems more cost effective.

Moreover, increasing market predictability will help utility and distribution system operators to develop new business models, such as flexibility services, to better utilise the benefits from these systems.

The study suggests several strategies for creating a dynamic distributed energy market that is integrated along the power system’s entire value chain.

These strategies include smart electricity tariffs, new business models for distribution system operators and prosumers on the grid, market integration of distributed energy resources, and increased cooperation between the transmission and distribution system operators.

All of these approaches are already practiced elsewhere across the globe. Distributed energy resource markets have already been active for several years in California, Australia and several countries in the European Union.

Turkey’s policymakers need to start planning today for innovative regulation to create new opportunities for the deployment and integration of distributed energy resources.

As the example of the energy service company sourcing its technology from Turkey shows, there are significant export opportunities creating jobs in the clean technology sector.

With the increasing demand for energy efficiency technologies around the world, Turkey has a unique opportunity to become a leader in energy efficiency and the integration of small-scale renewables.

A version of this article originally appeared on Euractiv.

Değer Saygın is the director of the SHURA Energy Transition Center. Dr. Jan Rosenow is the European programme director and a principal at RAP.

Photo Hans Braxmeier via Pixabay.