Construction of Solar Photovoltaic Plants
Construction of Solar Photovoltaic Plants
Business Model Description
Build large-scale solar power plants and increase the share of renewable energies in the energy mix
Expected Impact
Solar PV investments will increase the share of renewable resources in the domestic energy portfolio while reducing energy-related CO2 emissions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Tunisia: Centre-East
- Tunisia: South East
- Tunisia: South-West
Sector Classification
Renewable Resources and Alternative Energy
Development need
Tunisia's domestic energy requirements are nearly completely met by fossil fuels. Tunisia imports the majority of its energy, despite its modest natural gas and oil reserves (1). Renewable energy accounts for 3% of the overall electricity production (2). Financing needs for renewable energies are estimated at USD 4.4 billion, 42% of which specifically for solar energy (19).
Policy priority
Tunisia is dedicated to a massive green energy production program with the goal of increasing energy efficiency and increasing the proportion of renewable energy to 30% by 2030 (3) with a 30/30 goal of reducing primary energy consumption by 30% by 2030 (2).
Gender inequalities and marginalization issues
According to an ANME-GIZ study published in 2019, the low percentage of women in the energy and climate change sectors is due to five factors: insufficient family support, stereotypes about women's ability to lead, a sector still in its infancy, and limited access to financing due to a lack of property, which stifles female entrepreneurship (4).
Investment opportunities introduction
Renewable energy has significant potential in the country, and the government's goal for 2030 is achievable if present efforts continue. (8) The goals are primarily focused on (i) Tunisia's solar plan; (ii) a project to promote solar water heaters; and (iii) wind energy development (3).
Key bottlenecks introduction
Renewable energy's proportion in power generation was less than 4% in 2020, far below the goal set (12%) (5). Private sector involvement in renewable energy has been restricted, owing in part to the weight of Tunisian Company of Electricity and Gas (STEG), limited political will to open the industry, and a lack of financing (6).
Alternative Energy
Development need
Energy balance is increasingly in deficit in Tunisia. Tunisia is also exposed to high levels of air pollution due to extensive use of fossil fuels in industrial, transport and urban activities.
Policy priority
Tunisia's Solar Plan provides the main operational strategy to carry out the objective to increase the share of renewable resources in the electricity generation mix (2). Photovoltaic solar energy is one of the most developed renewable energy sources in Tunisia, with 1,000 MW of projects now under construction (7). PV has an estimated yearly output capacity of 1650 kWh/kWc (8).
Gender inequalities and marginalization issues
Solar farms have the potential to exacerbate inequality. Similarly, the impoverished communities that generate solar energy may be denied access to power. A large solar project planned for Tunisia was dubbed "neocolonialist" due to the fact that it would have connected directly to Europe through underwater cables (9).
Investment opportunities introduction
By 2030, the government intends to issue tenders for about 3.5 gigawatts of renewable energy, valued at approximately 3.5 billion USD, or approximately 350 MW per year for the following decade. Wind farms will account for one-third of the projects, while solar photovoltaics will account for two-thirds (10).
Key bottlenecks introduction
This sector faces strategic challenges associated with the need to secure and diversify its supply chains; economic challenges associated with the high cost of energy subsidies and the growing reliance of Tunisia's industrial sector on imported natural gas; and finally, social and environmental challenges (11).
Solar Technology and Project Developers
Pipeline Opportunity
Construction of Solar Photovoltaic Plants
Build large-scale solar power plants and increase the share of renewable energies in the energy mix
Business Case
Market Size and Environment
> USD 1 billion
20% - 25%
89 MW installed solar capacity as of 2020 (18)
The Government of Tunisia plans to launch tenders for about 3.5 GW of renewable energy, worth roughly USD 3.5 billion, by 2030, two thirds of which will be for solar PV (10).
Indicative Return
15% - 20%
A medium voltage photovoltaic project offers a rate of return between 15 and 20% from the 6th or 7th year (12).
Investment Timeframe
Medium Term (5–10 years)
On average, the amortization period of a solar project is estimated at 7 years on the basis of a 7-year loan with a rate of 6.75% (12).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Energy industry in Tunisia stay highly dependent to Fossil fuel market (99%), meanwhile gas and oil production has declined while electricity consumption has increased. This situation led to transform the country into an energy importer, leading among others factors to a trade deficit (13).
Among other negative factors tarification became subject to prices rising because of its correlation with natural gas importation (2).
Tunisia's solar potential remains underutilized. The share of renewable energies is low, 3%, while demands is still increasing. Electricity consumption increased from 10 355 GWh in 2005 to 15 671 GHh in 2018 with the industrial sector as the largest consumer of electricity (2).
In line with the Paris climate agreement in 2015, Tunisia is determined to reduce its greenhouse gas emissions, especially in the field of energy (14). Nevertheless, these commitments must be accompanied by financial credits, estimated at USD 19.3 billion for the Tunisian Solar Plan (15).
Gender & Marginalisation
The use of fossil fuels for electricity leads to price fluctuations based on the price of oil and gas, which can impact poor and rural areas that cannot afford the increased prices.
While women are mainly present in administration position, they are in minority in the energy sector, and even more at managerial positions where men occupy 94% (4).
Expected Development Outcome
The development of solar energy aims to diversify the energy mix by increasing the share of renewable energy to 30% in the production of electricity. This will be combined with a strengthening of energy efficiency through a reduction of primary energy demand by 30% (5).
In line with the commitments made by Tunisia regarding climate change, particularly during the COP21 and COP 22, Tunisia wishes to reduce its carbon intensity by 46% by 2030 (5).
Solar PV investments will allow the reinforcement of the network and the production capacity to reach a capacity of 3815 MW by 2030 as the Tunisian Solar plan planned to.
Gender & Marginalisation
Rural and poor areas could benefit from lower electricity cost
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)
7.1.1 Proportion of population with access to electricity
7.1.2 Proportion of population with primary reliance on clean fuels and technology
0.118868 (17)
31,869 (17)
99.8% (17)
99.1% (17)
30% by 2030 (17)
N/A
1 (17)
1 (17)
13.2.2 Total greenhouse gas emissions per year
2.65 tCO2/capita (17)
0 (17)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Outcome Risks
As solar panels are mostly imported, there is a risk to increase dependency on foreign manufacturing.
Impact Risks
Solar power generation depends on various external factors including weather conditions and amount of sunshine, which may risk the delivery of impact.
Inefficiencies and execution issues throughout solar plants' construction and operation may limit the resulting impact.
Impact Classification
What
Provide a sustainable energy and reduce carbon footprint
Risk
While PV solar plant model is proven, external factors such as weather conditions and the amount of sunshine, and potential issues during plant construction and operation require consideration.
Impact Thesis
Solar PV investments will increase the share of renewable resources in the domestic energy portfolio while reducing energy-related CO2 emissions.
Enabling Environment
Policy Environment
National Sustainable Development Strategy 2015-2020: Willingness to establish sustainable consumption and production integrating the concept of green economy.
Economic Recovery Plan 2019-2020: This plan aim to increase the share of reneweable energies in electricity production to 30% in 2030 (wind, solar photovoltaic, and thermal)
Renewable energy project in Tunisia: Ministry of Industry and Small and Medium Companies / ANME / Deutsche Zusammenarbeit: This ambitious program aims to further develop renewable energy production facilities for a capacity of 3,815 MW including 1,510 MW for solar PV.
The COVID-19 pandemic that appeared at the beginning of 2020 has highlighted the need to rely on renewable energies with energy efficiency as an objective (2).
Financial Environment
Financial incentives: Law n2016-71 of September 30, 2016 on the Investment Law and Government Decree n2007-389 of March 9, 2017: Investments in the renewable energy sector shall benefit from bonuses: Prime of the increase of the added value and competitiveness: 15% of the approved investment cost with a ceiling of 1 Million Dinars
Prime of sustainable development: First group of regional development zone should benefit of 15% of the approved investment costs with a ceiling of 1 Million TND (350,000 USD) and Second group of regional development zones: 30% of the approved investment cost with a ceiling of 3 million TND (1 million USD)"
Energy Transition Fund (FTE): Bonuses for non-material interventions, not exceeding 70% of the cost with a ceiling that varies between 30 and 200 million dinars depending on the operation, bonuses for material interventions at rates that vary between 20% and 30% with a ceiling between 3 and 200 million dinars depending on the operation
"Fiscal incentives: Law No. 2007-8 of February 14, 2017 on the revision of the tax benefits system: Investments made in the renewable energy sector benefit from deductions from the base of personal income tax, corporate tax, income or profits from investments: 1st group of regional development zones: for 5 years 2nd group of regional development zones: for 10 years"
May 2019: Amendment of the law to promote the production of electricity from renewable sources and to improve the investment climate (Law No. 2019-47)
Regulatory Environment
Law 2004-72 of August 2, 2004 on energy management as amended and supplemented by Law 2009-7 of February 9, 2009: All actions implemented for the rational use of energy, the promotion of renewable energy and energy substitution
Law n85-48 of April 25, 1985, encouraging research, production and marketing of renewable energy
Law n12 of May 11, 2015 on the production of electricity from renewable energy.
Decree-Law n85-8 of September 14, 1985,This law implements measures to encourage energy conservation
February 2020: Adoption of a governmental decree setting the conditions and modalities of realization of projects of production and sale of electricity from renewable energies (Decree n° 2020-105)
Marketplace Participants
Private Sector
Carthage Power Company, Qair, Nur Energie, TBEA Xinjiang Sunoasis, Amea Power, Nareva Renouvelables, Engie, Scatec Solar
Government
Carthage Power Company, Qair, Nur Energie, TBEA Xinjiang Sunoasis, Amea Power, Nareva Renouvelables, Engie, Scatec Solar
Multilaterals
UNDP, EU, African Development Bank, GCF, UNEP, IFC, GIZ, AfD, Islamic Development Bank
Public-Private Partnership
Tunisian Electricity and Gas Company (STEG)-ER
Target Locations
Tunisia: Centre-East
Tunisia: South East
Tunisia: South-West
References
- (1) Regional Center for Renewable Energy and Energy Efficiency. Tunisia. https://www.rcreee.org/member-states/tunisia/4054
- (2) IRENA, 2021. The Republic of Tunisia Renewables Readiness Assessment. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2021/Jun/IRENA_RRA_Tunisia-2021.pdf
- (3) The Republic of Tunisia, 2019. Voluntary National Review 2019. https://sustainabledevelopment.un.org/index.php?page=view&type=111&nr=23372&menu=35
- (4) MED ENER, 2019. ANME HIGHLIGHTS SMALL PERCENTAGE OF WOMEN IN TUNISIA’S ENERGY MANAGEMENT SECTOR. https://www.medener.org/en/anme-highlights-small-percentage-of-women-in-tunisias-energy-management-sector/
- (5) The Republic of Tunisia, 2021. Voluntary National Review 2021. https://sustainabledevelopment.un.org/content/documents/279442021_VNR_Report_Tunisia.pdf
- (6) EBRD, 2018. Tunisia Country Strategy 2018-2023. http://www.ebrd.com/documents/strategy-and-policy-coordination/tunisia-country-strategy.pdf
- (7) All Africa, 2021. Tunisia: Solar Power - Projects Underway to Tap Into Huge Potential Within Reach. https://allafrica.com/stories/202105270297.html
- (8) Ministère de l’Industrie et des Petites et Moyennes Entreprises (MIPME) and Agence Nationale pour la Maitrise de l’Energie (ANME), 2019. Projets d'énergie renouvelable en Tunisie - Guide détaillé. http://www.tunisieindustrie.gov.tn/upload/ENR/Guide_detaille_ENR_tunisie_mai2019.pdf
- (9) New Security Beat, 2018. The Dark Side of the Sun: Avoiding Conflict Over Solar Energy’s Land and Water Demands. https://www.newsecuritybeat.org/2018/10/dark-side-sun-avoiding-conflict-solar-energys-land-water-demands/
- (10) International Trade Administration, 2021. Tunisia Country Commercial Guide: Electrical Power Systems and Renewable Energy. https://www.trade.gov/country-commercial-guides/tunisia
- (11) IPEMED, 2017. La Tunisie face à ses défis énergétiques. http://www.ipemed.coop/fr/point-de-vue-r19/point-de-vue-c58/la-tunisie-face-a-ses-defis-energetiques--a3139.html
- (19) Republic of Tunisia, October 2021. Contribution Determinee au niveau National (CDN) actualisee. https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Tunisia%20First/Tunisia%20Update%20NDC-french.pdf
- (12) ANME and GIZ, 2015. Modes de Financement des Projets d’Energie Solaire en Tunisie. https://energypedia.info/images/archive/8/85/20160224093734%21Modes_de_Financement_des_Projets_d%E2%80%99Energie_Solaire_en_Tunisie.pdf
- (13) Solar Power Europe/Tunisia, 2020. Solar Investment Opportunities- Emerging Markets taks force report. https://www.solarpowereurope.org/wp-content/uploads/2020/02/SolarPower-Europe_Tunisia-Solar-Investment-Opportunities.pdf
- (14) Projets d'énergie renouvelable en Tunisie, ANME/GIZ, 2019
- (15) aa.com.tr, "La Tunisie a besoin de 19,3 milliards de dollars pour mettre en œuvre ses engagements climatiques", Yosra Ouanes, 23.09.2021
- (16) REPUBLIQUE TUNISIENNE MINISTERE DES AFFAIRES LOCALES ET DE L’ENVIRONNEMENT. http://www.environnement.gov.tn/images/fichiers/Rapports/rapport_energie_durable.pdf
- (17) Sustainable Development Solutions Network (SDSN) and the Bertelsmann Stiftung, 2021. Sustainable Development Report 2021. Tunisia Profile. https://dashboards.sdgindex.org/profiles/tunisia
- (18) International Trade Administration, 2021. Electrical Power Systems and Renewable Energy. https://www.trade.gov/country-commercial-guides/tunisia-electrical-power-systems-and-renewable-energy