Tozeur and Sidi Bouzid Solar Plants

Project description  

On July 29, 2024, the Multilateral Investment Guarantee Agency (MIGA), part of World Bank Group Guarantees, has issued a guarantee of €18.45 million to AEOLUS SAS (France), joint venture between CFAO SAS (France) and Eurus Energy Holdings Corporation (Japan), each fully owned subsidiary of Toyota Tsusho Corporation (Japan) for their investments in Scatec Sidi Bouzid Mezzouna PV Power and Scatec Tozuer PV Power in Tunisia, one of the first batch solar IPPs in the country.    

The guarantee covers the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract for 20 years. In addition to its own resources, MIGA is utilizing the Renewable Energy Catalyst Trust Fund to provide a first-loss layer to support first grid-connected renewable independent power producers in the country. These projects contribute to the country’s efforts to achieve energy self-sufficiency by utilizing its domestic renewable resources and are expected to reduce GHG emissions of 108,000 tons of CO2 equivalent per year.  

The guarantee will enable the development, financing, construction, operation, and maintenance of two 50-MW grid-connected solar power plants and associated interconnection facilities, including overhead transmission lines in Sidi Bouzid and Tozeur governorate, Tunisia. The projects are being developed jointly with SCATEC (Norway) and financed by the European Bank for Reconstruction and Development (EBRD) and Proparco (France). The two projects support the government of Tunisia’s goal of promoting energy efficiency and reducing reliance on imported energy through the development of renewable energy. Electricity generated from the projects will be sold to a state-owned enterprise, Société Tunisienne de l’Electricité et du Gaz, under 20-year power purchase agreements.   

Tunisia aims to increase renewable energy production to 35 percent by 2030. Currently, about 94 percent of the country’s power generation comes from gas-fired power plants, with gas imported from Algeria. The projects are expected to reduce Tunisia’s exposure to gas price volatility and exchange rate fluctuations, easing the fiscal burden on the government and helping to preserve its foreign reserves while helping meet Tunisia’s growing energy demand.   

 Environmental Categorization

The Projects are Category B under MIGA’s Policy on Environmental and Social Sustainability (2013). Click here to view the Environmental and Social Review Summary. 

 Development Impact  

The Projects are expected to yield high development impact in Tunisia with main benefits expected to be: (i) improved sustainability of energy sector through decreasing Tunisia’s average cost of electricity generation; (ii) reducing the dependency of Tunisia energy sector on the imported gas and reduce its vulnerability to the volatile gas prices, while diversifying its energy mix; (iii) climate mitigation benefits through GHG emissions avoidance; and (iv) demonstrating the viability of the IPP model in Tunisia’s energy sector.