500 MW solar projects get go-ahead in Tunisia

From the newsletter

Tunisia has approved four utility-scale solar projects for construction, totalling 500 MW. The plants are expected to be operational by 2027 and will generate 1,100 GWh of annual power, equivalent to 5% of national electricity production. It is expected to save the country $125 million yearly in gas imports.

• The solar projects were awarded for $0.032/kWh, which is 1.6 times cheaper than what Algeria charges for gas. However, it is 1.7 times higher than in South Africa and 2.4 times higher than prices outside Africa.

• Tunisia relies heavily on natural gas, which powers over 90% of its electricity generation, much of it imported from Algeria. Only 7% of its power is from renewable energy sources, but it aims to generate 35% of its electricity from renewables by 2030.

More details

• The projects will be developed by three different companies, including two French developers. Qair International will build 300 MW, and Voltalia will construct 100 MW. A consortium of Norway’s Scatec and Japan’s Aeolus will develop 100 MW.

• Tunisia is planning to install 1,700 MW of renewable power over the 2023-2025 period. The plan features eight 100 MW solar projects, eight 75 MW wind projects and two solar projects in Hecha and Khobna with unspecified capacity and requiring $1.6 billion in investments

• The 500 MW solar once operational will help reduce 250,000 tons of natural gas consumption, translating to substantial cost savings, which is critical for a nation that spends 15% of its GDP on energy subsidies. However, solar still covers just 7% of Tunisia’s 7,200 GWh annual demand.

• Tunisia has been making strides in renewable energy capacity. It added 217 MW in renewables capacity in 2024, which is 30% of what it installed in the last nine years. There is increased demand for renewables, and the latest expected additions will significantly boost the country's solar capacity.

• The partnerships between European and Asian firms, like Scatec and Aeolus, highlight global interest in Tunisia’s renewable energy potential. The country’s strategy aligns with Africa’s push for energy sovereignty. However, its reliance on foreign firms contrasts with Egypt’s localised solar manufacturing hubs, a model Tunisia could explore to deepen economic benefits.

• Moreover, Tunisia’s transmission network, built for centralised gas plants, lacks smart inverters and storage to manage solar’s daily variability. Without upgrades, risks could erase potential project revenues.

• Tunisia’s solar projects depend mostly on imported parts, with only a handful made locally. Unlike a country like Morocco, which requires solar companies to use local materials and hire local workers, Tunisia isn’t tapping into this strategy to tackle its high youth joblessness. A wasted chance to turn clean energy growth into jobs.

Our take

• Tunisia’s solar increase is a smart escape from gas imports, but betting on foreign tech without local manufacturing locks in a new kind of dependency. If Tunisia keeps importing solar parts, it simply trades gas reliance for technology reliance, missing out on jobs and industrial growth.

• Doubling solar capacity to 1,084 MW in 2024 is progress, but hitting 35% renewables needs more than foreign deals. Tunisia must build local muscle fast. Outsourcing the energy transition won’t deliver true resilience. Homegrown skills, supply chains, and local capital must step up.

• Record-low solar prices scream investor confidence, but if Tunisia can’t turn this into jobs, it’s just cheap power fueling foreign profits. Without local hiring or manufacturing mandates, Tunisia risks watching the energy transition pass by while youth unemployment stays sky-high.