Enhanced Financial Instruments Needed to Accelerate Renewables Deployment in Tunisia

IRENA outlines recommendations to help country achieve its 30% renewables goal while boosting growth and development.

Abu Dhabi, United Arab Emirates, 2 June 2021 — Measures to reform the renewable energy sector’s financial instruments and encourage greater involvement from national financial institutions are critical to the achievement of Tunisia’s energy transformation goals, according to a new report published today by the International Renewable Energy Agency (IRENA).

Tunisia aims to source 30 per cent of its electricity from renewables and reduce an increasing dependence on fossil fuels by 2030. In 2019, renewables accounted for just three per cent of the country’s power generation. The report finds that Tunisia’s Energy Transition Fund requires new streams of capital allowing it to extend credit facilities to the industry, and that capacity building among local banks is critical to improving local investment conditions.

IRENA’s Renewables Readiness Assessment Report: Tunisia, developed in consultation with the Tunisian Ministry of Industry, Energy and Mines, and the National Agency for Energy Conservation (Agence Nationale pour la Maîtrise de l’Energie, ANME), also recommends the establishment of a national electricity regulator and the simplification of procurement and permitting processes.

“Tunisia is determined to accelerate its energy transition over the next decade with a view to achieve energy security through a diversified energy mix and to improve the country’s economic competitiveness.” said H.E. Mr. Mohamed Boussaîd, Minister of Industry, Energy and Mines of Tunisia. “I would like to thank IRENA for this assessment report which provides a detailed analysis on the status of renewable energy in the country and identifies short to medium term actions needed to develop enabling frameworks conducive to increased renewable energy investments.”

The report provides recommendations designed to strengthen Tunisia’s readiness for renewable energy deployment and increase the role of the private sector in achieving national energy goals following the introduction of the National Energy Transition Strategy.

“This report complements the country’s national energy transition strategy by offering recommendations to create a robust energy system, support growth, create new jobs, and enhance human health and welfare,” said Francesco La Camera, Director-General of IRENA. “Central to those recommendations is the need to stimulate the flow of low-carbon capital within the country through measures focused on capacity building, simplifying the regulatory environment and broadening the mandate of the national energy transition fund.”

Tunisia is taking bold measures to diversify its energy mix through increased energy efficiency and accelerated renewable energy development. The report identifies best practices, policies, and enabling financial regulations that will support the achievement of these ambitions.

The assessment found that the new legal framework and the various measures adopted by the government over the past two years have been effective in promoting renewable energy in the country. However, it revealed various barriers to renewable energy deployment and provided eight key actions to overcome them. The key actions include:

• Create a long-term energy plan to address system constraints and enable VRE integration.
• Improve renewables resource assessment, as more detailed data will be essential to identify cost-effective zones with high renewable energy potential.
• Simplify procurement procedures for power grid development to ensure alignment between renewable generation development and grid infrastructure reinforcement.
• Clarify the roles of associated institutions and strengthen their human resources by creating a consolidated platform for all renewable energy stakeholders in the country.
• Establish an independent electric power authority to help ensure compliance of regulations and promote a transparent and fair competitive environment for private producers.
• Operationalise the Energy Transition Fund by mobilising funds from the public and private sectors, and international finance institutions.
• Create a dedicated financing mechanism for solar water pumping and encourage farmers to use it as a replacement for diesel pumps.
• Improve access to finance for farmers and SME enterprises by involving local banks in the development of renewable energy applications.

The report also identifies actors who could support these actions and highlights the need for bilateral and multilateral engagement to carry out the actions identified for deployment of renewables.

Read the full report Renewables Readiness Assessment: Tunisia here.