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National Grid Roadmap including Intermittent Renewable Energy

Challenges to investment 

In June 2022, the Government of Tunisia (GoT) set a target for renewable energy (RE) to represent 35% of total power generation by 2030. The target translated to an annual investment of TND 900 million (about $300 million) through 2030. That investment would finance an additional 4 GW of RE capacity, rapidly expanding the existing 472 MW of installed capacity as of March 2022. Before setting the RE generation target, Tunisia already committed to strengthening and reinforcing the transmission network, as well as to improving energy efficiency. At that time, transmission, distribution, and generation in Tunisia were the responsibility of the state-owned monopolistic electricity company, Société Tunisienne de l’Electricité et du Gaz (STEG). However, STEG’s poor commercial performance – net profits had been negative since 2010 – and inadequate transmission system had dampened investors’ trust in STEG as a credible off-taker of privately-produced RE. 

 

Approach 

To effectively integrate the planned RE capacity, the existing transmission grid required expansion and upgrading. To achieve that objective, the GoT in collaboration with STEG, formulated three projects: the Energy Sector Improvement Project (ESIP), the Project to Develop and Equip the Power Transmission Grid (PAERTE), and the Smart Grid Project (SGP). 

The Energy Sector Improvement Project (ESIP) was approved on 24 June 2019, with the goal of both (i) strengthening the electric transmission system and (ii) advancing STEG’s commercial performance and financial viability. The ESIP focused on financing investments in transmission capacity that are critical to integrating private RE generation. Key targets included increasing the transmission capacity along the South-North corridor by 3,090 MW and constructing 384 km of transmission lines by 30 June 2024. The project’s total funding amounts to $151 million, with $131 million allocated to the transmission network and $20 million to enhance STEG’s commercial performance, supported by the World Bank (WB). 

Another important project was the Transmission Network Development and Equipment Project (PAERTE), which was designed to enhance transmission and improve electricity supply in the governorates of Bizerte, Ben Arous, Sousse, Sfax, and Gabes. Like the ESIP, the PAERTE aimed to expand and strengthen the national grid to accommodate the planned RE capacity, with a goal of constructing 246 km of new transmission lines and improving the transmission system processing power targeting 66,766 Megavolt-ampere (MVA) in 2022. This project, funded by multiple donors, amounted €290 million. The African Development Bank loaned €108 million, the Africa Growing Together Fund provided €30 million as a loan, the Islamic Development Bank contributed €121 million, and the implementing agency, STEG, contributed €31 million. At its outset, the project was set to be implemented between 2020 and 2023, but the planned completion date was rescheduled to 31 December 2024. 

Finally, the French Development Agency (Agence Française de Développement, AFD) financed the Smart Grid Project (SGP) with €120 million. This project focused on three components: (i) improving infrastructure assets, (ii) rolling out smart grids to balance power supply with demand, and (iii) enhancing financial payment flows by adopting a modern billing system. The program will consist of two phases: During the first phase (2022-2025), the project has begun to deploy the smart grid network in a pilot region covering Sfax city and Kerkennah, Sousse city and Sidi Bouzid, and Le Kram and Beja. This phase involves developing control and communication stations and improving infrastructure by installing 430,000 smart meters. The second phase (2026-2030) will extend the smart grid network to Tunisia's most populous areas, including the capital city, Tunis. 

 

Key Enabling Conditions 

The anticipated success of the three transmission projects relied on experience, reputation, and coordination with partners. The WB’s global expertise in these areas, coupled with its tailored energy programs, facilitated a comprehensive solution for Tunisia’s grid infrastructure. Its experience in power sector reforms in low- and middle-income countries enhanced credibility and improved private investors’ perceptions of risk. Finally, close partnerships within the Tunisian government supported a collaborative approach to implementation.  


Impact / Outcomes

By 14 June 2023, the ESIP project increased transmission capacity along the South-North corridor by 721 km but did not construct any new transmission lines. The PAERTE project focused on improving the transmission system's processing power, achieving 64,746 MegaVolt-Amperes (MVA) of apparent power in 2023 versus the target of 66,766 MVA. Despite expanded power, overall energy losses in the transmission and distribution system rose, with actual losses in 2023 falling 2% above the target of 16%. 

Note: The STEG project aimed for completion by 30 September 2026, while the PAERTE project is expected to finish by 31 December 2024. The first phase of the SMP project continues as of this writing. 


Additional Sources

Locations
Middle East & North Africa, Tunisia
Year published
01 January 2019
Policy type
Energy policy
Policy lever
Power market governance
Risk category
Political risk, Policy and regulatory risk, Counterparty risk, Currency/macroeconomic risk, Permits risk, Grid/transmission risk, Power market risk

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