Nur Energie’s ambitious TuNur solar project in Tunisia could help Europe meet its needs for low-carbon power. Success will hinge on taking account of domestic concerns and appropriately planning against regional instability and commercial risks.
- The TuNur solar power project in Tunisia is one of the largest and most ambitious renewable energy projects in the world. TuNur will use concentrated solar power (CSP), spread over a surface area of more than 10,000ha in the Saharan desert in Southwest Tunisia. It plans to provide over 9,000GWh per annum of low-carbon power to European consumers via submarine cables. The project is 50%-owned by UK-based Nur Energie and 50%-owned by investors from Tunisia and Malta. It aims to reach financial close and begin construction for the first phase by the end of 2019.
- The project has received widespread support in light of its potential contribution to decarbonisation. However, it faces several risks: not only is it the first utility-scale solar export project between Tunisia and Europe, but it would also operate in a politically unstable and conflict-prone region. Other ambitious renewable projects, such as DESERTEC, have collapsed due to the complexity of relations between the governments involved and lack of perceived benefits to the North African states. TuNur will have to put in place a robust strategy to manage these geopolitical and stakeholder risks as it moves forward.
- If it goes ahead, the TuNur project demonstrates the potential for renewable energy to meet the needs for low-carbon power in Tunisia as well as in North Africa and Europe. The project enjoys support from the Tunisian government, which has long tried to increase its renewable energy production. Tunisia was the third country in the world to embed climate protection into its constitution in 2014, and has enacted an ambitious renewable energy law to attract investment in the sector. Most recently, in April 2018, the government announced an international tender for the procurement of 1,000MW of wind and solar power, estimated to be worth just over $1 billion. The TuNur project fits well within these plans. It is also aligned with a broader global trend towards decarbonisation, which has already seen supermajors including Shell, BP, and Total scale up their investment in renewables.
- Global enthusiasm towards renewable energy, however, does not protect the project from major political risks. Other renewable projects, such as the ambitious €400 billion DESERTEC solar initiative, which aimed to export “desert power” to the European market, have previously stalled for a number of reasons. One of these – the “credit crunch” of 2007/2008 – is now more of a historic issue. However, other challenges such as political instability due to the war in Libya and recent terrorist attacks in Tunisia persist. DESERTEC also suffered from a lack of collaboration between countries in the region which were unaccustomed to working multilaterally. This makes the establishment of region-wide infrastructure extremely challenging.
- The TuNur project could also be threatened by instability at the national level. While plans for TuNur survived the Arab Spring uprisings and Tunisia has made a fragile transition towards democracy, its government has struggled both economically and politically to restart the economy. Youth unemployment is high and there are huge wealth disparities between the coastal and interior regions. This has fuelled discontent among many Tunisians, potentially giving rise to opposition against the project if it is not perceived to benefit the country. Some media outlets have already linked TuNur to ‘energy colonialism’ and ‘land-grabbing’. These criticisms may be exacerbated by Tunisia’s dependence on Algeria for its energy supply and frequent power shortages, which may push the government to prioritise local needs over exports.
- TuNur has taken steps to address some of these issues. Sensitive to the concerns of local communities around land use and drought, Nur Energie has leased infertile land from a local tribe and plans to use waste water to clean and cool its solar panels. The company has also publicly stated that it will procure locally and establish domestic supply chains, and has promised up to 20,000 direct and indirect jobs to benefit the interior regions of Tunisia, which are the most underdeveloped. Going forward, the company should be prepared to transparently engage with a wide range of national stakeholders, and make clear commitments around local content and how it will help Tunisia meet its domestic power demands.
- Finally, it is important to bear in mind that large-scale renewable energy projects in emerging markets are a recent phenomenon and are likely to face a number of commercial barriers. Despite a 1996 law to end its monopoly on electricity production, Tunisia’s state utility company is still the sole purchaser of renewable energy for the domestic market. Nur Energie had to lobby hard to get provisions for exports included in the clean energy legislation, which has already delayed the start of the project. In addition to other potential regulatory burdens, investors should carefully consider the technical and economic feasibility of the project, as it will require linking Tunisia to Europe with three submarine cables. Although infrastructure costs of high-voltage direct current cable routes have decreased and have already proven economically viable in China and India, they remain capital intensive. Some analysts have expressed doubts over the company’s credibility and ability to leverage finance as it has only managed two small solar projects in the past.
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