African Development Bank to Fund 100 MW Tunisian Solar Project

The African Development Bank is playing a critical role in the development of renewable sources of energy in Africa to ensure that the resource-starved region can have access to power while sustaining the natural environment. In a recent development, the African Development Bank Group has approved a $27 million and €10 million loan package to co-finance the construction of the 100 MW Kairouan solar power plant in Tunisia.

The new financial aid covers $10 million and another €10 million from the Bank, and $17 million concessional financing from the Sustainable Energy Fund for Africa (SEFA), which is also managed by the African Development Bank. It said that additional financing will come from the International Finance Corporation (IFC) of the World Bank Group and the Clean Technology Fund (CTF).

The Kairouan solar power plant is one of the five renewable projects awarded in 2019 by the Tunisian government. The Bank said that the 100 MW solar project entails the design, construction, and operation of a greenfield solar PV plant under the Build, Own and Operate (BOO) scheme.

Dr. Kevin Kariuki, VP, African Development Bank, said, “The 100 megawatts 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.”

Wale Shonibare, Director of Energy Financial Solutions, Policy and Regulation at the African Development Bank, added, “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.”

Dr. Daniel Schroth from SEFA, noted that the concessional terms under the program will likely absorb the COVID-19-related project cost increase and maintain the project economics to acceptable levels to achieve financial close.

African Development Bank also said that the Kairouan Solar project is consistent with the New Deal on Energy for Africa of African Development Bank and the ‘Light up and Power Africa’ High-5 strategic priority.

In May, the Energy Minister of Tunisia had announced they will launch international tenders seeking bids to build 2,000 MW of renewable power capacity. Tunisia aims to produce 30% of electricity from renewables by the end of this decade. The government is also looking to reduce its carbon intensity by 41% by 2030.