EBRD supports Italy to Tunisia interconnector with €45m package

The European Bank for Reconstruction and Development (EBRD) is providing a €45 million financing package to Société Tunisienne de l’Electricité et du Gaz (STEG), Tunisia’s state-owned national electricity and gas utility company, for an interconnection with Italy.

The package will assist STEG in financing the construction by 2028 of ELMED, a 600MW HVDC submarine interconnection cable of 200km, connecting the two country’s electricity transmission networks.

The financing will also help to integrate the European and North African electricity grids and accelerate the development of renewable energy in Tunisia.

The project will be implemented jointly by STEG and TERNA, the Italian transmission system operator.

With a total cost of €920 million, the project benefits from an investment grant of €307.6 million from the European Union’s (EU) Connecting Europe Facility (CEF).

The EBRD’s financing is dedicated to the construction of ELMED on the Tunisian side and is part of a €125 million loan package co-financed by the European Investment Bank (EIB) and Kreditanstalt für Wiederaufbau (KfW). In addition, the World Bank is financing the converter station and associated transmission infrastructure in Tunisia.

With a €5 million grant from the EU Neighbourhood Investment Platform, the EBRD financing will be accompanied by a comprehensive technical cooperation package for policy dialogue, to support the regulatory setup to operationalise and commercialise the ELMED interconnector.

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It will also promote the development of a decarbonisation roadmap for Tunisia’s energy sector, ensuring its alignment with the Paris Agreement.

In addition, the roadmap will aim to develop a guarantee-of-origin scheme in Tunisia that will be key to achieving decarbonisation targets, by building a renewable energy framework in line with the EU regulations.

Commenting in a release was Marcus Cornaro, head of the EU Delegation in Tunisia: “Tunisia’s solar energy potential is enormous. Tunisia’s energy independence also goes through renewable energies. ELMED will enable stabilise the power grid on both sides of the Mediterranean and export electricity when possible. This is a real transition opportunity for Tunisia, in terms of economy, employment and emissions reduction.”

Added EBRD managing director for the Southern and Eastern Mediterranean region, Dr. Heike Harmgart: “We are proud to be part of the ELMED financing group, alongside European partners contributing to the energy transition of Tunisia.

“As a first electricity interconnector between Tunisia and Italy, we hope that this landmark project will open the way for further connections between North Africa and Europe, which would enhance the energy security and promote a sustainable energy transition on both shores of the Mediterranean.”

As of 2028, trade in electricity between Tunisia and the EU will be possible.

The project is one of the flagship projects of the EU Global Gateway initiative, which supports geopolitically important projects and partner countries.

Said KfW member of the management committee Dr. Andrea Hauser: “The ELMED project represents a mutually beneficial collaboration between Tunisia and the EU. It will enhance energy security for both parties and facilitate the expansion of renewable energy markets on both sides of the Mediterranean.

“KfW is proud to continue its long-standing partnership with Tunisia in supporting the country’s transition to renewable energies. We are honoured to be co-financing this historic project with our European partners on behalf of the German government.”