Greening Energy Mix: Investments focus on increasing renewables in Tunisia

Tunisia is following a new approach towards solving its long-standing energy deficit crisis and is seeking to sustain the power sector through investments in strengthening the transmission infrastructure to integrate more renewable energy sources. The country has witnessed growing deficits for over a decade owing to increased energy consumption coupled with the decline of hydrocarbon production. Approximately 97 per cent of Tunisia’s electricity is generated from fossil fuels, mainly natural gas. In 2021, nearly 45 per cent of Tunisia’s natural gas needs were met through imports (mainly from Algeria). This strong dependence on natural gas has serious implications for Tunisia’s energy security. All of this has resulted in a steady rise in electricity prices for consumers.

To meet the increasing demand for electricity, enhance energy security and promote the use of cleaner energy resources to reduce carbon emissions over the next decade, the Tunisian government, in June 2022, raised its 2030 renewable energy target to 35 per cent from 30 per cent of power generation. The previous target was included in the renewable energy law of 2015. The new target translates to a renewable capacity addition of 4 GW during the 2022-30 period, a tenfold jump from the installed capacity of 472 MW as of March 2022. This requires an annual capacity addition of at least 500 MW, involving an investment of TND900 million per year up to 2030.

Electricity demand in Tunisia is forecast to grow at a compound annual growth rate (CAGR) of 3.7 per cent between 2022 and 2030 with a peak demand of 6,000 MW in 2030. To meet this, the country aims to almost double its existing capacity by adding over 5 GW of new generation capacity by 2030, with a significant share from the private sector.

Aligned with these targets, Tunisia’s state-owned utility—Société Tunisienne de l’Electricité et du Gaz (STEG)—is strengthening and reinforcing the Tunisian transmission network to integrate the upcoming capacity and at the same time improve energy efficiency. Some of the key projects include Energy Sector Improvement Project (ESIP), Projet d’Aménagement et d’Équipement du Réseau de Transport d’Électricité (PAERTE) and a smart grid project. These projects are expected to cumulatively add around 730 km of transmission lines, up to 18 new substations and expand various existing substations between 90 kV to 400 kV over the next four to five years.

STEG is also executing various cross-border interconnection projects with neighbouring African and European countries for power trade as well as to enhance energy security. Particularly, the interconnector with Italy known as the ELMED project, which is being implemented by ELMED Etudes Sarl, a joint venture between Italian transmission system operator (TSO) Terna and STEG, will facilitate better renewable energy integration and has been included in the European Union’s (EU) fifth list of projects of common interest (PCIs) in 2022. The country has been receiving financial support from various multilateral funding agencies to execute its power sector-related projects.

Existing power infrastructure 

As of 2021, the electricity sector had an installed capacity of about 6 GW, of which thermal-based generation accounted for 95 per cent that is 5.6 GW, and renewable wind, solar and hydro accounted for the remaining 5 per cent.

As of 2021, Tunisia’s transmission network comprised about 5,657 km of transmission lines and 11,071 MVA of transformer capacity between the 150 kV to 400 kV voltage levels.

Future plans and investment


The country is stepping up renewable energy capacity—particularly, its plans to tap the significant potential for wind and solar power generation, with favorable wind conditions along the northern coast and in the central and southern regions, and high levels of annual solar radiation, primarily in the southern regions. The Tunisian Ministry of Energy is awarding renewable projects through tendering. In January 2023, it initiated a renewable tender offering projects to generate 1,700 MW over the 2023-25 period. The tender includes eight 100 MW solar projects, eight 75 MW wind projects and two solar projects in Hecha and Khobna with unspecified capacity, together requiring a total investment of TND5 billion. Overall, by 2030, the country plans to reach an installed capacity of over 11 GW, out of which 35 per cent would be derived from renewable energy.


In the transmission segment, Tunisia has planned several key initiatives to further expand and upgrade the grid. This includes the construction of new transmission lines to connect renewable energy projects coming up in the south of the country to the grid and upgrading existing transmission infrastructure to handle increased power flows and to improve the overall reliability and efficiency of the grid. It is also deploying new technologies and systems to improve the management and control of the power grid, such as the implementation of smart grid technologies to better manage the integration of renewable energy resources and to increase the penetration of clean energy sources. Notably, the country is also promoting private sector investment in the transmission sector with new independent private players such as TuNur Limited developing renewable projects and the associated international transmission grid. Tunisia is also developing energy storage systems to balance the power grid and to improve the integration of renewable energy sources.

STEG has been able to raise funds to finance its transmission plans. Recently, the European Investment Bank (EIB) provided funding worth EUR65 million to help STEG strengthen its transmission network and rehabilitate the distribution networks to improve the reliability and efficiency of the power system and to better meet the growing demand for electricity in the country. The loan is part of EIB’s broader efforts to support the development of the energy sector in Tunisia, and to help the country achieve its goals of increasing the use of renewable energy sources, reducing dependence on fossil fuels, and improving access to reliable and affordable electricity.

To integrate the planned renewable capacity, the Tunisian government, in collaboration with STEG, formulated the USD151 billion ESIP, which is supported by the World Bank.

The Transmission Network Development and Equipment Project, also known as the PAERTE, is an ongoing key project in Tunisia that aims to improve the transmission network and electricity supply, particularly in the Bizerte, Ben Arous, Sousse, Sfax and Gabes governorates of the country. The project also shares the goal with the ESIP of expanding and reinforcing the national grid to accommodate upcoming renewable energy capacity. The project is multi-donor funded, with a total cost of EUR290 million, and will be implemented from 2020 to 2023. The project includes adding 246 km of lines at the 90 kV, 150 kV and 225 kV levels, building six new 225 kV air-insulated switchgear substations, one new 150 kV air-insulated switchgear substation, five new 225-150/33 kV mobile stations, and five new 225 kV gas-insulated switchgear substations. It also involves installing 1,920 MVA, including three autotransformers aggregating 600 MVA, and reinforcing and refurbishing various high voltage and medium voltage substations across the country.

STEG also plans to develop a smart grid network to provide reliable electricity supply across the country. In June 2022, STEG signed contracts for the first phase of the smart grid project funded by a EUR120 million loan from the Agence Française de Développement (AFD). The contract has been awarded to Siemens, E.Fluid, Sagemcom Energy and Telecom SAS. This phase involves the development of control and communication stations and the improvement of infrastructure through the installation of 4,30,000 intelligent meters over three years in the Sfax governorate in southern Tunisia. The second phase of the project will extend the programme to the rest of the country.

With the planned addition of renewable capacity, the country is likely to have surplus power for export.  Hence, STEG plans to develop new interconnections with Italy, Algeria and Libya to create new power corridors to support industrial development and improve energy security.

The way forward

Although Tunisia continues to advance towards achieving renewable targets, there are several bottlenecks that have slowed down progress, and the country was able to add only about 100 MW of new renewable capacity between 2016 and 2021. Various challenges including initial investment cost constraints, lack of technical knowledge, lengthy public procurement procedures and delays in bidding procedures have discouraged extensive private sector participation in renewable energy projects. Private-sector developers have faced difficulties understanding the procedures to obtain authorisation for projects, given the considerable number of ministries and public institutions involved in renewable energy projects.

Going forward, to meet the ambitious renewable targets and ensure a robust power sector in the country, the government needs to adopt adequate measures to promote a transparent and fair competitive environment for private producers. Further, STEG must achieve all its planned targets in a timely manner, particularly those relating to establishing a robust grid network to evacuate power from the planned generation as well as interconnections with Mediterranean and European countries. The recent funding support from international donor agencies augur well for the sector.