Promoting private investment in renewable energy in Tunisia

Context

Tunisia has considerable potential to generate electricity from renewable sources. Solar power can be generated there more cheaply than in most other African countries. The Tunisian Government is committed to develop renewable energy, with a national expansion objective of 30 per cent of electricity generated from photovoltaic and wind power plants.

Given the difficult economic situation and high public sector debt, the private sector would need to supply about two-thirds of the required capacity expansion in renewables (3.5 gigawatts). However, private companies are currently held back by administrative obstacles. In addition, the integration of photovoltaic and wind power plants poses technical and regulatory challenges for the national electricity producer and grid operator, the Tunisian Company of Electricity and Gas (STEG).

Objective

Solar and wind parks financed by the private sector speed up the Tunisian energy transition.

Approach

The project is working jointly with the Tunisian Ministry of Industry, Mines and Energy (MIME), STEG and the private sector. It is based on three key components:

• Supporting tender procedures for renewable energies: The project supports the MIME in the preparation and implementation of international tenders (concessions) for large solar and wind parks. As part of this, the project advises the IPPs and the Ministry of Industry, Mines and Energy on legal, regulatory and financial issues.
• Strengthening the national grid: The project increases STEG's technical expertise in connecting large solar and wind power plants to the grid. One priority area is to modernise the grid design in order to predict and compensate for the fluctuating availability of renewable electricity.
• Promoting digitalisation: Innovative approaches to digitalisation in the electricity market will help all partners in speeding up administrative processes, modelling the Tunisian energy system on international standards and achieving targeted improvements to the electricity grid.

The project is based on compliance with environmental and social standards, support for the planned reforms in the energy sector, a forward-thinking land use planning strategy, and a socially equitable energy transition (Just Transition).

Last update: February 2023