Tunisia to receive US $48M boost for energy transition and decarbonisation

Tunisia is set to receive a sum of US $45M to boost in its energy transition and decarbonisation. The funding will be issued by the European Bank for Reconstruction and Development (EBRD) to Société Tunisienne de l’Electricité et du Gaz (STEG). 

The funds will be used to contribute to the construction of the ELMED project, a major infrastructure initiative consisting of a 600 MW high-voltage direct-current (HVDC) submarine interconnection cable that will span 200 km, connecting the electricity grids of Tunisia and Italy by 2028.

The ELMED project has a total estimated cost of US $985M and is bolstered by a US $329M investment grant from the European Union’s (EU) Connecting Europe Facility (CEF). The EBRD’s contribution is part of a larger US $134M loan package that is co-financed by the European Investment Bank (EIB) and Kreditanstalt für Wiederaufbau (KfW). Additionally, the World Bank is financing the converter station and associated transmission infrastructure in Tunisia.

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ELMED project

Implemented jointly by STEG and TERNA, the Italian transmission system operator, the ELMED project aims to integrate the electricity networks of Europe and North Africa, facilitating the development of renewable energy in Tunisia. The EBRD’s financing includes an accompanying US $5M grant from the EU Neighbourhood Investment Platform, which will support a technical cooperation package for policy dialogue.

This package is designed to assist with the regulatory framework necessary to operationalize and commercialize the ELMED interconnector. It will also aid in developing a decarbonization roadmap for Tunisia’s energy sector, ensuring alignment with the Paris Agreement and establishing a guarantee-of-origin scheme to meet decarbonization targets.

STEG, established in 1962, is Tunisia’s state-owned national electricity and gas utility, responsible for the production and distribution of electricity and natural gas. It also acts as the sole off-taker of private renewable energy in the country. Since 2012, the EBRD has invested over US $2.4bn in 73 projects in Tunisia and supported around 2,000 small and medium-sized local enterprises through EU-funded technical assistance.