In 2022, only 3% of Tunisia’s electricity is generated from renewables, including hydroelectric, solar, and wind energy. While STEG continues to resist private investment in the sector, Parliament’s 2015 energy law encourages IPPs in renewable energy technologies.
Three key drivers will dictate Tunisia's energy transition: energy security, given Tunisia's growing energy balance deficit; economics, given the relative decrease in the price of renewables; and environment, given the Country's commitment to reduce domestic greenhouse gas emissions.
One third of the projects will be for wind farms and two thirds for solar photovoltaics. Tunisia’s national grid is connected to those of Algeria and Libya which together helped supply about 12% of Tunisia’s power consumption in the first half of 2023.
The sector also offers opportunities for possible Build-Own-Operate (BOO) or Build-Operate-Transfer (BOT) projects. Much of Tunisia’s electricity production comes from gas turbines. Major players in this sector include General Electric (USA), Mitsubishi (Japan), Ansaldo (Italy), and Siemens (Germany).
In 2020, natural gas made up 86% of Tunisia's installed capacity and 95% of power generation, while renewable energy made up 13% of installed capacity and 5% of power generation. Fossil fuels represent the majority of Tunisia's electricity generation mix (approximately 97%), with natural gas being the primary fuel source.
The highly anticipated Nawara gas field, which finally started production in early 2020, is expected to help reduce the overall energy deficit by 20% and gas imports by 30% once it reaches peak production. In addition to local gas production, Tunisia receives natural gas as a royalty on the Algerian Transmed gas pipeline crossing Tunisia to Italy.