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The African Development Bank (AfDB)'s Board of Directors has approved a US$27 million and €10 million loan package to finance the construction of a 100-megawatt solar power plant in Tunisia. The funding includes US$17 million in concessional financing from the Sustainable Energy Fund for Africa (SEFA), a multi-donor fund managed by the AfDB. 

The total cost of the project is estimated to be about US$100 million. In addition to the funding provided by AfDB, the project will also be financed by the Clean Technology Fund (CTF) and the International Finance Corporation (IFC) of the World Bank Group.

The scope of work on the project includes the design, construction, and operation of a 100-megawatt greenfield solar photovoltaic (PV) plant in El Metbassta, Kairouan North region, about 150 kilometres south of Tunis, the capital. The project scope also includes an on-site substation and the construction of an 8-kilometre 225kV interconnection to be built by the state utility company - Société Tunisienne de l'Electricité et de Gaz (‘STEG’). 

The Kairouan solar photovoltaic plant project was awarded to Dubai-based AMEA Power in consortium with Chinese company Xinjiang New Energy by the Tunisian government in December 2019 through a tender process. It is one of five renewable energy projects awarded in 2019 by the government. 

The project will be managed through a special purpose vehicle, Société Kairouan Solar Plant SARL, and is expected to reach commercial operation in the first half of 2024. It is being implemented under a Build, Own, and Operate (BOO) arrangement. Electricity produced from the solar plant will be sold to the national electricity utility, STEG.

Tunisia Awards UAE's AMEA Power $100 Million Agreement to Build Solar Power Plant in Kairouan#UAE #UAE #AmeaPower @AmeaPower pic.twitter.com/OwNJNep60v

— UAE Forsan (@UAE_Forsan) March 4, 2022

AMEA Power has several power projects under construction including a 52-megawatt wind project and a 50-megawatt solar PV project in Jordan. In addition, the company has nine wind and solar projects under development in various African countries, including Burkina Faso, Chad, Kenya, Mali, Niger, Sierra Leone, Uganda and Zambia.

“The 100-megawatt Kairouan Solar PV Project will not only be a pioneer for other grid-based solar and wind-independent power projects currently under development in Tunisia but also a benchmark for bankability of renewable energy projects in the country as it is underpinned by robust and sustainable agreements negotiated over the last three years under extremely onerous market conditions,” said Dr. Kevin Kariuki, Vice President of Power, Energy, Climate and Green Growth at the African Development Bank.

“We are delighted to support the first solar Independent Power Producer [IPP] project in Tunisia. The success of the transaction, which has reached the highest bankability standards following months of negotiations with the Tunisian authorities, provides a useful template for future projects that will help move the country closer towards achieving the government’s 35% clean energy target,” said Wale Shonibare, Director of Energy Financial Solutions, Policy and Regulation at the African Development Bank.

Dr. Daniel Schroth, the bank’s Director of Renewable Energy and Energy Efficiency, in charge of SEFA, said the Fund’s concessional terms under the program would most likely absorb the Covid-19-related project cost increase and help maintain project economics at acceptable levels to help achieve financial close. 

“The Kairouan solar project epitomizes the catalytic effect of SEFA in support of developers to deliver sustainable renewable projects that aid Africa’s energy transition,” he said.

The project aligns with Tunisia’s Nationally Determined Contribution (NDC) and carbon emission reduction goal by slowly transitioning to renewable energy sources. It is also in line with the African Development Bank’s New Deal on Energy for Africa and the “Light up and Power Africa” High-5 strategic priority.

Top Photo: Solar Plant under development in Burkina Faso by AMEA Power (ameapower.com)