Tunisia Energy Situation

Tunisian Republic Location Tunisia.png Capital Tunis (36°50′N 10°9′E) Official language(s) Arabic Government Presidential Republic President (privisionary) Mohamed Moncef Marzouki Prime Minister Ali Larayedh Total area 163,610 km2 Population 10,673,186 (2011) GDP $46.43 billion (2011) GDP Per capita (PPP) $8,850 (2011) Currency Tunisian dinar (TND) Time zone CET (UTC+1) Calling code +216

Overview

Tunisia is located in Northern Africa bordering Algeria and Libya. Tunisia’s coast to the Mediterranean Sea represents its northern and most of the eastern border. Consequently, in the northern part and along the eastern coast Mediterranean climate is prevalent. In the interior, the climate becomes more Saharan-continental as precipitation significantly declines. The Atlas Mountains are present in the northern part of the country and range from south-west to north-east. To the south of the Atlas the climate is arid throughout the year. Blowing from the desert towards the Mediterranean, the Scirocco wind is very common in spring and autumn and usually reaches the greatest wind speeds in March and in November with a maximum of 100 km / h.

The official language in Tunisia is Arabic with French as the second language. The form of government of Tunisia is a presidential republic. Backed up by a constantly growing economy in recent years, the Tunisian government was considered to be comparably stable characterized by political pluralism. Military did not interfere with politics. Tunisia's foreign policy was oriented towards the West. However, on 14 January 2011, a sudden but nevertheless (domestically) long expected and speculated uprise and a proper revolution changed everything, commenced the Arab Spring and gave inspiration to many other Arab nations and their people. After a transitional and thus provisory government, the first free and democratic election of Tunisia took place on 23 October 2011. Votes were carried out without major incidents or signs of fraud. Results of the votes announce the Islamic party Ennahda to be the winning party with about 41% of votes which constitute 90 seats out of a total of 217. Having said that, the results were more extreme than expected.<span id="fck_dom_range_temp_1319790928557_575" /> Ennahda and its major party member and leading politician Rachid al-Ghannouchi had thus more than the triple amount of votes than the second most popular party Congrès pour la République (CPR). Protests against the rather islamic orientated party Ennahda have occured immediately after the announcement. Future political structures are yet to be discussed and the National Constituent Assembly of Tunisia began debating about the constitution in February 2012 which is still under way. The Assembly also prepares presidential and parliamentary elections that are planned for 2014. Neither the relationship between the parties and the respective coalitions, nor the eventual democratic system have been fully established.

In politics more than 20 % of women are present, fundamentalist Islam is being rejected. Tunisia is a middle income country with about 80 % of the population benefitting form health- and social insurance. Since 1996 Tunisia runs a program of economic liberalization and structural adjustment supported by the International Monetary Fund (IMF), the World Bank and the European Union (EU). Tunisia is member of the IMF, World Bank and WTO. The EU represents the first trading partner of Tunisia. In 2011, the main export parters were France (29.5%), Italy (19.3%), Germany (10.3%) and Libya (6.6%). The main import partners were France (21.1%), Italy (17.6%), Germany (8.9%), Spain (5%), China (4.7%) and Russia (4.5%). As one of the European Union’s most established trading partners in the Mediterranean region, Tunisia has signed an Association Agreement and entered a free trade area with the EU. Acoording to the World Bank, the inflation rate was 3.6 % in 2011. In 2006, 4.2 % of the Tunisian population lived in poverty.

Energy Market

Overview Energy Market

The Tunisian primary energy supply has increased roughly linear in the past and was around 80 PJ in 1970. The share of coal and peat has always been minimal and by now reached zero, whereas the share of oil, including crude oil and petroleum products, has always been the largest. However, the absolute amount has not increased significantly in the last decades reaching 382.81 PJ in 2009. The strongest growth can be observed in the gas sector which has reached 46 % of the primary energy supply by 2009. The amount of biofuel and waste has increased slightly to the value of 54 PJ in 2009, representing 14 % of the primary energy supply. Demand for energy in Tunisia is rising as a result of the growing economy. The 2009 shares can be seen in the following figure.

Total Primary Energy Supply 2009
Energy Source	in PJ	in %
Crude Oil	76	20
Oil Products	76	20
Gas	176	46
Hydro	0.30	0.07
Geothermal, Solar etc.	0.34	0.09
Biofuel and Waste	54	14
Electricity	0.17	0,04
TOTAL	382.81

Compared to its neighbouring countries, domestic fossil energy sources in Tunisia are limited. Yet, increasing effort in oil and gas production resulted in 86,210 barrels per day in 2007 compared to 76,900 barrels per day in 2005. Nevertheless the oil production decreased afterwards and has reached 70.480 in 2011. Further, Tunisia receives natural gas from a pipeline between Algeria and Italy that runs across Tunisian territory. Jointly, in 2007 this led to an even energy balance for the first time in recent years. Thus, the effects of rising world prices for energy were largely mitigated. In Tunisia the industrial sector is the largest energy consumer which is illustrated in table Electricity consumption of individual sectors.

In 2011, Tunisia’s production of energy in relation to its import /export-balance is shown in the table below:

Tunisia's energy production, consumption and import/export balance in 2011
	Petroleum (thousand barrels per day)	Natural Gas (billion cubic feet)	Coal	Total Primary Energy (Quadrillion Btu)
Total Production	70.82	68.16	0	0.258 (2010)
Consumption	93.00	131.02	0	0.309 (2010)
Net Exports/ Imports	-22.18	-62.86	0
Proved reserves	(billion barrels) 0.43	(trillion cubic feet) 2.30	-

The Electricity Grid

The transmission grid of Tunisia, run by the Société Tunisienne d’Electricité et du Gaz (STEG), has been extended constantly throughout recent years. In 2011 the low voltage grid is being operated at 90 kV and sums up to a total of 1,249 km. The medium voltage transmission lines at 150 kV amount to 1,883 km length and the high voltage lines at 225 kV sum up to a total of 2,821 km. In sum, the transmission grid accounted for 5,953 km at the end of 2011 In comparision to previous years the 90 kV lines amounted to 1,071 km, 150 kV lines to 1,728 km and the 225 kV grid consisted of 2,532 km in 2005. The transmission grid is connected to the European grid via the grids in Algeria and Morocco. To the east, the Tunisian power grid is linked with Libya. The aim is to establish a North African interconnected grid that would extend through Egypt and Jordan as far as Syria. Further, a 400 kV high voltage sea cable to Italy with a capacity of 1,000 MW is planned.

Grid losses are primarily due to maintenance or other incidents. Along with the prolonging of the transmission grid, the amount of total losses has risen as displayed in the table below. The growing economy of Tunisia and rising living standards led to a significant increase of electricity consumption resulting in the saturation of the grid. In addition, some power plants and facilities are no longer appropriate to the actual load of the network. As a consequence, overload, losses and high voltage drops occur on a frequent basis. To address these issues, the »Electricity Distribution Network Rehabilitation and Restructuring Project« has been launched. In September 2009 the African Development Bank (AfDB) approved a loan of 87.83 million Tunisian dinars (TND) (48.31 million €), to support financing of the »rehabilitation and restructuring« of the national grid of Tunisia. The total project cost is estimated at TND 111.66 million (61.41 million €). The project is focusing particularly on upgrading low voltage underground and overhead lines and medium voltage and low voltage transformers. It aims at improving the reliability and safety of the electricity distribution grid and is still ongoing.

Causes for grid losses (in GWh)
	Incidents	Maintenance	Total
2006	2,159	3,345	5,504
2007	2,330	3,770	6,100
2008	2,129	4,189	6,318
2009	2,363	3,589	5,952
2010	1,994	3,820	5,841

Installed Capacity

The installed capacity in Tunisia totalled roughly 4,024 MW in 2011. Of this, approx. 3,900 MW (97 %) were provided by thermal power stations, 62 MW (1.5 %) by hydroelectric power and 53 MW (1.3 %) by wind generating plants (see table below). For electricity generation from combustible fossil fuels, 93 % is natural gas and 7 % heavy fuel. In general, the state-owned power utility STEG has primarily relied on gas-fired power plants for generating electricity, fuelled by natural gas from the country’s own reserves and by imports from Algeria. 19.6 % of the installed capacity comprises combined-cycle gas turbine (CCGT) power plants. Independent Power Producers (IPPs) feeding electricity into the public grid account for approximately 500 MW (12 %) of the nationally available capacity. In 2009, the peak load in public supply was 2,660 MW representing an increase of 193 MW or 7.8% compared to 2008. It was supposed that the total power generating capacity would be expanded to 4,400 MW by 2011 in order to meet the growing demand for electricity. But this aim could not have been achieved. As well as adding new thermal power plants, the government envisages renewable energies to provide a minor share (4 %) of the added production capacity.

Installed power plant capacity in MW, Tunisia

Type of Power Plant	2007	2008	2009	2010	2011
Thermal (steam) power plant	1.090	1.090	1.090	1.090	1.090
Combined-cycle gas turbine	364	364	364	364	789
Gas turbine	1.280	1.280	1.406	1.532	1.532
Hydropower	62	62	62	62	62
Wind power	19	19	53	53	53
STEG total	2.815	2.815	2.975	3.101	3.526
IPPs	498	498	498	498	498
Total capacity, national	3.313	3.313	3.473	3.599	4.024

Electricity consumption of individual sectors in 2009
	GWh	%
Industry	5.186	39
Transport	280	2
Residential	3.596	27
Commercial/ public services	3.322	25
Agriculture/ Forestry	737	5
Total	13.137

Electricity Generation

Electrical energy production fed into the power grid (by STEG and IPPs) increased by 2.6% in 2011 (15.263 GWh) in comparison to 14.870 GWh in 2010. In 2009 the electrical energy producation was 14.149 GWh and in 2008 it accounted for 13.757 GWh.

In 2009 Tunisia’s the import/export-balance of electricity was as follows:

Import/ Export Balance of Electricity Balance in 2009
Import	122 GWh
Exports	-81 GWh
Net Exports	-203 GWh

Renewable Energies

Currently, renewable energies play an insignificant role in total energy supply. Apart from centralised electricity generation from hydropower, the use of renewable energies to produce electricity is still at an early stage of development in Tunisia. Regarding grid-connected power plants, the focus lies currently on wind energy, although utilisation of solar energy for thermal purposes is also gaining importance. In 2011, 62 MW of hydro power and 53 MW of wind power were installed according to the national utility company STEG. According to RCREEE in 2012 the total installed capacity of renewable energy was 244 MW of which 154 MW accounted for wind energy, 66 MW for Hydro and 4 MW for PV. With regard to those figures renewable energy amounts to 6% of the total amount of all energy. Considering the production 54 GWh (2010: 10 GWh) were produced by hydro power and 109 GWh (2010: 139 GWh) by wind energy in 2011 as figures of STEG show. The market share of hydro power accounted 5% in 2011 while the market share of wind energy was 9%. Regarding the off-grid use of renewable energies, 11 000 decentralised PV systems have been installed for rural electrification. An uptake of renewable energies can be expected with law 2009-7, described in more detail under "Framework Conditions for Renewable Energies".

Electricity Prices

By regional standards, electricity prices in Tunisia are at medium level. In November 2008 they ranged between a minimum of 0.059 and a maximum of 0.113 € per kWh. The Tunisian Government manages to keep electricity prices low by subsidising the price of natural gas to the tune of twenty per cent. For a number of years now the cost of this state subsidy has risen sharply along with global market prices for crude oil, and is an increasing burden on the Tunisian budget.

Liberalisation

Until 1996 the monopoly on electricity generation and marketing was held by STEG. Since then, liberalization of the energy market took place and the market was opened for Independent Power Producers (IPPs). However, with a market share of about 85 % (2011), STEG still is the biggest player in the power market. Since 1999, it has also been permitted for gas extraction companies to operate gas-fired power plants without a preceding bidding procedure and to sell the generated electricity to STEG.
Next to STEG, Large Energy Consuming Industries (IGCElec.) were encouraged to produce power for their own needs (see "Legal Conditions and Support Schemes for Renewable Energies"). The surplus they produce is fed into the national grid. Installed capacity is contributed by the following IGCElec. Companies:

• Cimenterie d’Oum Klil
• Cimenterie de Bizerte
• Cimenterie de Jbel Ouest
• Ciments Blancs (SOTACIB)
• Cimenterie de Gabes
• El Fouledh

Two IPPs generate electricity for feed in as IPPs:

• Carthage Power Company CPC (471 MW in 2008) is an independent power project formed by PSEG Global and Marubeni Corporation. It owns and operates a generation facility located in the city of Radès in northeastern Tunisia. The power plant, which meets about one-quarter of the country’s electricity needs, is a combined-cycle cogeneration facility that uses natural gas as the primary fuel, with diesel fuel as backup. Gas for the plant is sourced from Algeria and BG Tunisia’s Miskar concession. State-owned gas and power company Société Tunisienne de l’Electricité et du Gaz buys all the output under a 20-year power purchase agreement. PSEG sold its stake in the company in May 2004 to BTU Power Company, a regional energy investment group.«
• Société d’Electricité d’El Bibane SEEB (27 MW in 2005, 40 expected in 2010) »is the second power plant in Tunisia to be constructed under legislation allowing independent power operations to utilize natural gas as fuel. Electricity generated from the plant is sold to the Tunisian national power company Société Tunisienne de l’Electricité et du Gaz under a long term power purchase contract.« Fundamental to the current development was also Law No. 96-27 of 1996, which enabled private-sector involvement in the electricity sector. The state-owned power utility STEG was demonopolized in the field of electricity generation and private companies were allowed to participate in a bidding process to generate electricity which they sell to STEG as the sole buyer. The detailed terms and procedures for the granting of concessions to private generating companies were laid down in ordinance no. 9661125 of 20 June 1996.

Rural Electrification

According to estimates by the state-owned utility company STEG, the degree of electrification for Tunisia as a whole was 99.5 % in 2012. In rural areas the electrification accounted for 98.9%. Grid coverage is poorest in the southeast of the country. The high connection rate is the result of constant efforts by the government over the past 30 years. In the 1970s, only 6 % of the rural population were connected to the power grid, while around 1990 the figure was still only about 50 %. As a complementary measure along with the expansion of the grid, the installation of more than 11,000 decentralised PV systems has also played a part in the high electrification rates.

Market Actors

• Ministry of Industry and Energy (Ministère de l’Industrie, de l’Energie et des Petites et Moyennes Entreprises; TMIE); CSPIE and CIPIE
• National Agency for Energy Management (Agence Nationale pour la Maîtrise del’Énergie - ANME)
• Tunisian Company of Electricity and Gas (Société Tunisienne d’Electricité et du Gaz – STEG)
• Tunis International Centre for Environmental Technologies (Centre International des Technologies de l’Environment - CITET)
• Mediterranean Renewable Energy Centre (MEDREC)

Political Framework Conditions in the Energy Sector

The documentation of energy policy is dominated by energy efficiency and renewable energies over the last decades. Efficiency and renewables are the dominant topics in all major publications. Therefore the following chapter on the political framework conditions for energy focuses on these topics. Law No. 2004-72 on the rational use of energy defines the sensible use of energy as a national priority and as the most important element of a sustainable development policy. It states three principal goals: energy saving, the promotion of renewable energy and the substitution of forms of energy previously used, wherever this offers technical, economic and ecological benefits. Since 2005 with the adoption of above mentioned law and the creation of a national energy fund (subject of Law N° 2005-106) Tunisia set the political framework to increase energy efficiency and develop renewable energy sources. Decarbonisation of the energy sector and a decoupling of economic growth and GHG emissions occurred. Moderated primary energy demand growth of 2.8 % per year and the increase of the renewable share towards 4 % of the consumption until 2011 were the key measures to reduce GHG emissions in the energy sector. In 2009 the ANME described the energy policy in the context of the international efforts to reduce GHG emissions in a detailed development guide. ANME aims at the production of energy from natural gas to reduce energy sector emissions. Between 2008 and 2010 contract based programs in the industrial sector, roll-out of fluorescent energy saving lamps in the residential sector, the certification of electric appliances, cogeneration, thermal insulation of buildings, solar water heating and wind power generation are politically set priorities for the energy sector development. Combined information allows the conclusion that the energy policy framework in Tunisia forms a positive environment to increase energy efficiency and the share of renewable energies. The reduction of fossil energy consumption in large energy consuming industries is an important element of the national strategy, as much as the encouragement of IGCELec to install wind parks in order to produce electricity.

In February 2009, Tunisia adopted two support programs as a response to the world financial crisis targeted at increasing the competitiveness of companies (250 mio. €) and supporting the improvement of infrastructure (270 mio. €). To what extent the programs will influence the energy and power policies and market is unknown as of today. Support mechanisms include a net-metering policy for small-scale grid connected renewable energy projects which allows feeding excess electricity to the grid. The excess electricity is postponed to the next electricity bill if the balance of the producer is positive (production more than consumption). Even though support policies have been established there are no public competive bidding for the development of large-scale private RE projects, no long-term power purchase agreements and no feed-in tariffs for RE.

Framework Conditions for Renewable Energies

Strategies and Objectives for Renewable Energies

National targets published in 2009 intend to reach a 10 % (4 % excluding biomass) renewable energy share in the primary energy consumption by 2010. Expert studies state that in 2030, a 6.5 % share (excluding biomass) will be achieved. Tunisia has signed the statute of the International Renewable Energy Agency (IRENA) in April 2009. Energy policy also in regard to renewable energies and energy efficiency is drafted mainly in the »Four Year Programme for Energy Management 2008 – 2011«. Expected consequences of this strategy are: a reduction of the subsidies granted by the State to the energy sector (in 2007, Egypt and Tunisia announced a plan to phase out energy subsidies), a reduction of CO2 emissions and future profits from the Clean Development Mechanisms.

In 2008, Tunisia’s National Agency for Energy Conservation released the Renewable Energy and Energy Efficiency Plan. Besides contributing to the above mentioned 10 % target, this program is expected to result in a 20 % reduction of energy demand by 2011. The main renewable capacity developments are expected to be 180 MW of wind energy installed by 2011.The government further aims to increase the installed PV energy capacity to 740.000 m² in 2008. Currently, about 300.000 m² of PV panels have been installed. RE are given a prominent role in Tunisian energy policy. Large wind projects are currently developed or in the application process. Energy efficiency is recognized as important and is being addressed in energy policies. Public interventions via financial support from the state budget and the mobilization of international financial resources have been decisive in the development of energy conservation in Tunisia.

Legal Conditions and Support Schemes for Renewable Energies

The legal conditions are based on Law No. 2004-72 and its modification in 2009: Law No. 2009-7. Law No. 2004-72 on the rational use of energy defines the sensible use of energy as a national priority and as the most important element of a sustainable development policy. It states three principal goals: energy saving, the promotion of renewable energy and the substitution of forms of energy previously used, wherever this offers technical, economic and ecological benefits. Article 14 lists four areas in the field of renewable energy which are to be treated as priority areas of a national promotion program:

1. Expansion of wind power for electricity generation
2. Introduction of incentives for the use of solar thermal energy
3. Use of solar energy for further electrification of rural areas, irrigation and seawater desalination
4. Encouragement of the greater use of production residuesn for energy generation and of geothermal sources and small-scale hydropower plants.

Law No. 2009-7 modified the legal conditions designed in 2004 in several aspects. Autoproducers in the industrial or tertiary sector who install cogeneration facilities for their own use may now use STEG’s grid in order to transport their electricity from the site of supply to the site of consumption. Excess electricity can be sold to STEG.
Autoproducers in the industrial, tertiary or agricultural sector, who use renewable energies, have the same rights of installation, transport and excess sales. The same regulation applies to all autoproducers from renewable energy sources who feed into the low voltage grid. The exact conditions for the transport, the selling of excess energy and the respective upper limits are to be fixed in decree 2009-362. Furthermore, investments that are realized within the framework of ANME’s responsibility, which includes renewable energies, can also benefit from special, favourable conditions if they conclude a contract with ANME in which all technical, economic and financial aspects are fixed. Decree 2009-362 fixes the special conditions which apply to investments that are made within the field of action of ANME, thus including the use of renewable energies.
Support schemes to promote the implementation of renewable energies and energy efficiency measures available in Tunisia consists of two groups of instruments: direct financial incentives and tax incentives. Capital subsidies, grants, or rebates (once-off payments by the government or utility) are available for the energy and power market. The support is available for energy audits and implementation of EE measures. In addition, the direct financial incentives are aimed at the installation of car engine checkup stations; water heating by solar energy in the residential sector and in private enterprises; energy substitution of natural gas by renewable energies in the industrial and residential sector. The support for solar water heating includes allowances amounting to 20 % of the cost of the solar collectors, with a maximum of one hundred (100) TND (=55 €) for each square metre, directly disbursed to the supplier after installation of the equipments concerned. Further financial schemes applicable to the energy and power market are the National Fund for EE and RE of 2005 and the PROMO-ISOL program financed by the National Fund for Energy Conservation (FNME). However, according to sources in the country, currently PROMO-ISOL is still at the planning stage. Finally, the »National Fund for Energy Conservation« (FNME), subject of Law N° 2005-106, dated 19 December 2005 offers financial resources for supporting energy conservation and renewable energy investments in Tunisia based on the granting of allowances. Furthermore, tax incentives are in place for energy conservation and renewable energy projects.

The tax incentives are:

• Reduction of customs duties to the minimum rate of 10 % (from a general rate of 18 %) and exemption from VAT for imported equipment used in the field of energy conservation or of renewable energies, for which no similar equipment is manufactured locally;
• Reduction of customs duties and exemption from VAT for imported raw materials and semi-finished products entering in the production of equipment used in the field of energy conservation or of renewable energies;
• Exemption from VAT for locally manufactured raw materials and semi-finished products entering in the production of equipment used in the field of energy conservation or of renewable energies;
• Exemption from VAT for equipments manufactured locally and used in the field of energy conservation or of renewable energies.

Financial incentives have been significantly expanded with Décret 2009-362, mainly RE in agriculture, PV systems, biogas plants, etc. Policies of renewable portfolios (obligations or quota policies regarding renewable generation), public competitive bidding for fixed renewable capacity, investment tax credits, production tax credits, net metering, tradable renewable energy certificates are currently not applied in Tunisia.

Currently the following financial incentives are available for RE projects:

• 30% Of investment with a maximum of 150TND/m² PV: 40% Of investment with a maximum of 20000TND/project for the agricultural sector and rural uses (lighting and water pumping for irrigation). Solar roofs: 30% Of investment with a maximum amount of 15000 DT/project.
• Biogas (agricultural sector): 40% Of investment with a maximum of 20000TND/project for biogas production only. 20% Of investment with a maximum of 100000TND/project for biogas production intended to electricity production. 20% Of investment with a maximum of 100000TND/project for biogas production intended to electricity production.
• Projects realized by RE auto-producers: 20% Of investment costs with a maximum that depends on the annual energy consumption level (100 kDT- 200 kDT or 250 kDT).

Clean Development Mechanism

Tunisia has ratified the Kyoto Protocol in 2003. The Tunisian DNA is located at the Directorate General for the Environment and Quality of Life of the Ministry of Environment and Sustainable Development. But although the institutional framework for CDM projects in Tunisia is generally in place now, personnel capacity, competency and expertise at the involved actors still need to be improved in some cases. No specific legislation has been adopted for CDM projects. Another barrier for the use of CDM is that no legal and fiscal framework for the transfer of Certified Emission Reductions (CERs) has been established so far. In addition, public institutions or state-owned enterprises have been the main project developers so far; the private sector has hardly been engaged, mainly due to a lack of information on the advantages of the CDM. In order to overcome these problems, the Ministry for Industry, Energy and SME together with ANME published a guide on CDM in the energy sector in 2009, providing background information on the Kyoto Protocol, the CDM in general and on energy related CDM projects in particular. Relatively few consultants exist in Tunisia who are able to support CDM project developers, however, training measures are conducted by several institutions. A list of consultants can be found in GTAI’s publications. In 2006, Tunisia announced ambitious plans to host CDM projects; as of today, actual project development lags far behind. So far, Tunisia hosts only two CDM projects with Italy as the partner country. Both projects were registered in 2006 and are landfill gas recovery and flaring projects. However, there is one CDM project activity currently under validation in the field of renewable energies. In this case, not a single project is developed but a programme of activities (PoA) that bundles the installations of solar water heaters in Tunisian households under the PROSOL programme. The above mentioned guide on CDM contains a list of projects with an approved Project Idea Note (PIN). Altogether, these 76 projects account for emission reductions of 107 600 kt CO2 of which 7 445 are attributed to wind projects and 13 714 to renewable energy projects in general. The wind projects, listed in table 9, together represent the installation of 198 MW.

International Donor Activities

The UNDP runs several projects in the field of energy and environment. The project »Renforcement des capacités des Task Forces (IGCE et cogénération) pour la mise en oeuvre de la stratégie de maîtrise de l’énergie en Tunisie« with a total budget of 786,976 US$ (2005 – 2008) in cooperation with ANME and GTZ with significant influence on the energy sector development. The African Development Bank Group realized two major projects in the Tunisian Energy sector. The »Projet d’assainissement, de restructuration, et développement des réseaux de distribution« to support distribution and electrification plans stated in 2002. In 2003 the bank launched a second project »Assainissement des réseaux de distribution d’électricité« with similar goals. The Global Environment Facility (GEF) a public private alliance providing grant for environmental projects is active in Tunisia in the field of renewable energies and especially wind energy. In 2001, the project »Promotion of increased use of wind energy in Tunisia« (both on- and off-grid wind energy) has been started with a budget of 1.1 mio €. In May 2009, another project was signed on »Private Sector Led Development of On-Grid Wind Power in Tunisia«. Since 1975, GTZ has been active in Tunisia on behalf of the German Government. The two priority areas for GTZ in Tunisia are economic promotion and environmental protection. The latter includes a programme on the promotion of renewable energies and energy efficiency. This programme aims at strengthening ANME´s role in the energy sector, promoting private sector involvement inter alia via Public-Private Partnerships (PPP) and developing instruments to promote and finance renewable energy and energy efficiency projects. In November 2003, UNDP decided to implement a project with GEF assistance under the title »Development of On-Grid Wind Electricity in Tunisia for the 10th Plan«, which was designed to run for eight years. The project began in 2004 and is being executed in cooperation with GTZ. Within the framework of this project, which targets the large-scale exploitation of wind energy, it is planned that private investment of more than US$ 100 million should be funneled into the wind sector. The funds provided by GEF amount to US$ 10.25 million. The share of assistance contributed by GTZ within the project as a whole consists of site analysis, consultancy services to the Tunisian Government on matters relating to grid integration, tariff structuring and preparation of and backup support for the bidding procedure. In addition, GTZ aims at ensuring that a high quota of local value generation is achieved by providing technical assistance to domestic manufacturers. Spanish, French and Japanese development agencies show interest or have invested in the Tunisian energy sector. The French Development Agency (AFD) is contributing financially to the PME program (quatrième programme de mise à niveau des entreprises – PME, see section 1.5). Another example is the co-funding of the Tunisian Wind Atlas by the Spanish development agency.

Business Climate

Currently the state-owned STEG operates and manages the only existing wind farm in Tunisia (Sidi Daoud). For further wind power development, the government is aiming at the private sector, particularly international investors. Foreign investments can be made without national holdings requirements. Private investment, however, is not permitted in all areas, or may require authorization. The banking system is described as weak, investment propensity in the private sector as low. The legal system is characterized as being in need of reform. Trading between Tunisia and the EU has been facilitated by the Euro-Mediterranean customs union which came into force in January 2008 between Tunisia and the EU. An association treaty has been signed by Tunisia and the EU as a first step towards a Euro-Mediterranean free trade zone planned for 2010. Apart from that, Tunisia is conducting negotiations with the USA concerning a bilateral free trade area. For the yield of Tunisia’s wind energy this means Europe will become energy export destination (e.g. through the planned 400 kV offshore cable linking Tunesia with Italy). To improve the investment climate in 1996, the Tunisian government has launched the »Programme de Mise à Niveau«(PMN). This program includes subsidies for investments and tax reductions for industry and international cooperation projects (e. g. of the European Commission, AFD, GTZ, KFW) to enhance their competitiveness. Decentralized projects are mentioned to be of special interest, which seems to suit wind farm developments. The access to further information on support structures eligible to wind energy developments can be through the »Agence Promotion de l´Industrie«, under the Ministry of Industry, Energy and PME. Prerequisites for an application are: presence in Tunisia for at least two years, potential for growth and sound pattern of finance. If approved by the »Bureau de Mise à Niveau« enterprises are supported by investment incentives of up to 25 % of their project investments and up to 15 years of exemption from taxation. Further, the government is implementing a banking reform by establishing a new Investment Code. The main focus is the promotion of direct investments from abroad. Additionally, the government seeks to reduce bureaucratic hurdles in this context. Improved investment conditions and lower bureaucratic hurdles will increase the chance of further investments form Europe and elsewhere to harvest and trade the proven wind energy potentials. Education in the sector of renewable energy takes place in Tunisian institutes such as the Tunis International Centre for Environmental Technologies (CITET) and the Research and Technology Center of energy (CRTEn). The CITET was founded in 1996 to promote environmental technologies. It is answerable to the Tunisian Ministry of the Environment. In addition to providing a range of advisory and training services it also offers laboratory and development capacity. A library and an extensive online presence serve the purpose of documenting and disseminating information relating to environmental matters. The CITET is involved in numerous cooperation projects, including international projects. Together with the CITET and two other German partners, the GTZ is running the IHK / GTZ Company Pool on Environmental Technology in Tunis, which supports small and medium-sized European companies from the environmental technology sector in gaining access to the market in Tunisia and other Maghreb countries. The CRTEn was founded in 2005. It is part of the Borj-Cédria Technopole representing its energy department. At the CRTEn research, innovation and training activities are conducted in the field of energy technologies, including renewable energy. Currently there is no wind energy industry in Tunisia. However, the Canadian consulting company Hélimax compiled an economic study on possibilities of establishing such an industry in Tunisia, which also includes a training manual on wind energy and a baseline study for a CDM project in the wind sector.