Hichem Ben Hmida and Hela Gharbi, Ernst and Young
December 30, 2011 | 0 Comments
Developers, manufacturers, investors and other renewable energy industry stakeholders need to know where the next big market is going to be so that they can adjust their business decisions accordingly.
Since 2003, global consultancy Ernst & Young has released its Country Attractiveness Indices, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.
Here is the firm’s assessment of Tunisia.
Reliance on fossil-fuel reserves and a lack of political support has meant that, historically, development of renewable energy has not been a high priority for Tunisia’s leaders. However, the rapid expansion of the global renewables market, recognition of the country’s significant RES potential and a number of major international solar initiatives has resulted in a strong commitment to diversify the country’s power generation portfolio, in particular through investment in wind and solar power capacity. The share of electricity generated by RES is around 1%; however, government targets aim to increase this to 11% by 2016, and 25% by 2030.
Despite the relatively low levels of current installed RES capacity, it could be argued that Tunisia has in fact spent the last 20 years preparing for the transformation of its energy sector that is currently taking place. Since 1985, Tunisia has pursued a “Rational Use of Energy” policy and has sought to establish an appropriate institutional and legal framework and financial environment conducive to energy conservation and management, including the development of the National Fund for Energy Conservation (FNME) in 2005. Among the MENA countries, Tunisia is acknowledged as a “pioneer” in the initiation of energy efficiency and renewable energy policy.
It is acknowledged that political turmoil in North Africa in recent months is likely to have an impact on the socio economic direction of the region in the short term. However, the three-to-five-year outlook of the CAI means that these events are not anticipated to adversely impact Tunisia’s medium-to-long-term RES attractiveness.
Tunisia does not currently offer a specific incentive system for renewable energy comparable to a FIT or REC scheme, but rather uses direct financial and tax incentives to promote green energy. Capital subsidies, grants and rebates (one-off payments by the Government or utility) are available, mainly for the purpose of energy audits and implementation of energy efficiency measures. At present, direct financial incentives are mainly aimed at water heating and small-scale energy substitution rather than large-scale renewables. However, various tax incentives do exist for renewable energy, such as the reduction of customs duty and VAT exemption on the import and local manufacture of raw materials and equipment used for renewable energy generation.
Expansion and investment will be required to increase grid capacity and ensure suitable infrastructure to receive and distribute power from emerging large-scale renewables projects. The Government has also enacted legislation allowing surplus electricity produced by plants attempting to be selfsufficient to be sold on to the Tunisian Electricity and Gas Company (STEG) (up to 30% of total production) at a rate of TND92/MWh (€47/MWh) plus a flat network fee of TND5.0/MWh (€2.6/MWh) for transporting the output to the place of consumption. To address grid-related issues, interconnections of the country’s power grid to those of Algeria and Libya and European countries are planned, including a 1GW inter-connection with Italy expected to be operational by 2016.
Tunisia has a significant solar potential, boasting irradiation rates of around 1,700-2,200kWh/m2per annum. As such, the country is able to support CSP generation on a large scale. It is expected the PV market will also continue to develop given the significant resource, although the intense desert heat does make PV panels less efficient. However, the Government hasintroduced subsidies to lower the cost of solar panels by around 30% to encourage commercial and residential installations.
To date, there are no CSP plants operational in the country; however, a strong project pipeline exists as a result of the various national and international investment programs set out below. Nur Energie, for example, has announced that it plans to construct CSP tower projects totaling 2 GW, with the first plants ready for construction in 2012-13. Another CSP project in the pipeline is El Borma, which will total 150 MW.
In the northern regions of Tunisia, wind measurements revealed wind speeds of 7-10 m/s, indicating strong potential for wind power development. Current energy output from wind farms is around 114 MW and total potential is estimated to be around 1 GW. Therefore, while potential is not unlimited, it does provide a strong platform for growth over the coming years, with a forecast for additional capacity of 692 MW through to 2016.
National and international investment programs
In 2009, the Government launched the Tunisian Solar Plan, a €2b PPP spanning 2010-16 which aims to fund around 40 separate renewable energy projects, specifically targeting solar and wind. Around 70% of this funding is expected to come from the private sector which will lead 29 of the projects, and approximately 40% of the resources will be devoted to the development of energy export infrastructure.
Tunisia is also involved in the early stages of the Mediterranean Solar Plan, a separate EU-backed scheme that envisions investment of around €38 billion to create 20 GW of new solar generation and other RES around the Mediterranean Sea. The output of these projects would be exported to Europe to help the EU meet its target of 20% of electricity from RES by 2020.
Given its key strategic location Tunisia has also committed to be part of the DESERTEC “super-grid” connecting various African and European countries in a bid harness and distribute power from the region’s vast solar resource. By 2050, the project will have invested around €400 billion in solar plants and transmission lines to meet a considerable proportion of the electricity demand of both MENA and continental Europe.
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