Can distributed solar power light up Türkiye’s clean energy transition?

The rise of distributed renewable energy (DRE) technologies, like solar panels on rooftops and small solar farms, is creating new opportunities that weren't possible ten years ago. These small-scale, flexible energy systems complement traditional large power plants, making power systems stronger and energy costs lower for everyone.

This global trend is particularly promising for countries like Türkiye and regions such as Europe and Central Asia, as they seek ways to make their energy systems more reliable and resilient to climate change.

Over the past decade, Türkiye has more than tripled its renewable energy production, has announced an ambitious objective of adding an additional 60GW of wind and solar by 2035, aligned with Türkiye’s pledge to become carbon neutral by 2053. This ambitious goal is part of an effort to reduce reliance on fossil fuels, maximize self-sufficiency, reduce long-term costs, and maintain high economic growth.

Distributed solar is a key part of the solution.  The government aims to significantly increase the country’s distributed solar energy capacity to 7.5 GW in the coming years.

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However, in Türkiye as elsewhere, industrial and commercial consumers often face financial and capacity constraints that prevent them from seizing these opportunities, despite regulations and institutions being in place to support the expansion of distributed renewable energy.

Expanding market for distributed energy

A new program supported by the World Bank is assisting the government in removing these constraints, enabling Türkiye to build a distributed solar market at scale. The Accelerating the Market Transition for Distributed Energy Program aims to produce close to 1 GW of distributed solar power, reducing the country’s greenhouse gas emissions by an estimated 14 million metric tons of CO2. To put that in perspective, that's like avoiding the emissions from 56 billion kilometers of car travel.

This market for decentralized renewable energy will support greening the booming industrial and commercial sectors, which anticipate a 5.5% annual growth in electricity demand from 2020 to 2035. Establishing a distributed solar market can attract job-creating private investment, strengthen economic competitiveness, promote innovation and efficiency, and ultimately reduce consumers’ electricity bills.

Moving in phases, with a focus on country systems and results

The program will be implemented in two phases through two Turkish banks—the state-owned Development and Investment Bank of Türkiye and the privately owned Industrial Development Bank of Türkiye. In phase one, these banks will provide loans directly to commercial and industrial firms for distributed solar investments. Phase two will see the banks setting industry standards in green finance and supporting local financiers—commercial banks, leasing companies, and others —to offer loans to solar developers. This support will include training on financing and on-lending terms consistent with credit market conditions.

In this innovative, results-based financing program, funds will be disbursed as pre-agreed targets are achieved, ensuring accountability and success.

The program aims to mobilize about $260 million from the private sector through investments. It also leverages concessional financing from the Climate Investment Fund’s Clean Technology Fund, allowing developers to test innovative battery storage technologies, and a grant from the Energy Sector Management Assistance Program  (ESMAP) to build the capacity of financial institutions operating in the distributed solar market. Crucially, the innovative program aligns with national priorities and leverages country systems, thereby strengthening institutional capacity and overcoming local barriers.

A trailblazer in Europe and Central Asia

The Türkiye initiative is the inaugural component of the World Bank’s Europe and Central Asia Renewable Energy Scale-up Program, a $2 billion, 10-year initiative to generate knowledge and establish best practices that can be replicated and scaled up across the region.

For Türkiye, a new distributed solar energy market will boost economic growth, strengthen energy independence, and reduce environmental impacts. As the market matures, it is expected to pave the way for a growing household solar market, reducing energy costs for households. By mobilizing investment into distributed solar, Türkiye can lead the way in the region’s transition to renewable energy.

As the world continues to grapple with the urgent need for sustainable energy solutions, Türkiye's bold steps in distributed renewable energy offers a beacon of hope. The successful implementation of these programs will not only transform Türkiye's energy landscape but also serve as a powerful example for other emerging economies striving for a cleaner, more resilient future.