Power policy

Tunisia aims to move toward a cleaner power matrix, jumping from 3% of renewables generation in 2016 to 12% in 2020, and eventually rising to 30% by 2030. Two separate auction regimes (authorization for smaller projects and concession for larger projects) are the main instruments to achieve the objectives. Under the authorization regime, the government contracted 64 megawatts of solar capacity in 2017, 70 megawatts in 2018, and a further 70 megawatts in 2020. Under the concession regime, Tunisia announced in 2018 that it will contract another 500 megawatts of wind plants and contracted 500 megawatts of solar in 2019. Project deadlines vary between the first half of 2021 and end-2022 and the winners will secure a 20-year power purchase agreement with state-owned utility Tunisia Company of Electricity and Gas (STEG). In addition, retail electricity consumers in Tunisia that have renewable energy facilities can connect and deliver surplus generation to the grid, in return for payment from STEG.

Power prices and costs

Due to the high level of subsidies, Tunisia’s average residential electricity prices were among the 10 lowest in Africa at $52.50/MWh in 2017. Industrial and commercial prices – at $76/MWh and $87/MWh, respectively – are significantly higher than the residential tariff but still more than 50% below the regional average. In 2019, Tunisia signed a tariff of $24.40/MWh for 200MW of PV – a record low for Africa.

Power market

Over 91% of Tunisia’s 6.3 gigawatts of installed capacity and more than 96% of the power produced in 2019 came from gas-fired plants. As of end-2020, only 309 megawatts of wind plants, 61 megawatts of PV plants, and around 180 megawatts of small-scale PV were commissioned. However, the power mix is due to become more diversified over the next few years as auctions are due to increase the clean energy capacity. STEG controls over 80% of power generation and has a monopoly over transmission and distribution of electricity and natural gas. Independent power producers (IPPs) are allowed in the market under the concession and authorization programs and can rely on a 20-year standardized power purchase agreement with STEG. According to law 2015-12 that regulates renewable energy generation, STEG is mandated to buy all power produced by clean energy plants.

Doing business and barriers

The country is slowly recovering from an economic crisis. Growth in GDP fell to 1% in 2019 from 2.6% in 2018, and 2% in 2017. The economy was forecast to continue its growth trajectory in 2020 before the global pandemic hit. Peak power demand continues to outpace the economy, growing at 5% in recent years up to 4,400 megawatts in 2020. Air-conditioner use is a significant factor in this growth, with Tunisia experiencing its first-ever brownouts in 2020 during a heat wave. It is one of few countries in Africa with nearly 100% electrification rates.

Recent political instability and a relatively recent law (2015) that allowed IPPs in the market are the main barriers for international investors. This indicates that support from development organizations in the form of concessional finance might be required to change the market risk perception. Tunisia has a 0% import tax for wind and solar products from the EU and 30% for products from outside the EU. The country also imposes a 19% sales tax on wind turbines, towers, blades and PV panels, and 7% for inverters.

EV market

As of 2021, only one electric vehicle (EV) model has been granted an import quota.

EV policy

The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.

Buildings market

Due to the climate, air-conditioning use dominates with little heating required. Through a series of government programs Tunisia has developed a successful domestic industry for solar hot water heating. These programs have contributed to more than 1 million square meters of these systems installed by 2016.

Buildings policy

The Tunisian government intends to improve energy efficiency by 30% by 2030.