Tunisia-Italy Power Interconnector Project - Environmental and Social Impact Assessment (ESIA)
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Electricity can be generated in two main ways: by harnessing the heat from burning fuels or nuclear reactions in the form of steam (thermal power) or by capturing the energy of natural forces such as the sun, wind or moving water.
Electricity production tends to closely match demand, which in turn is driven by economic and population growth and changes to the structure of the economy.
Unlike other energy commodities such as coal, oil and natural gas, electricity trade between countries is relatively limited as it is more technically complex and requires a direct cross-border interconnection. Such connections can help to balance out supply and demand across regions, which will be increasingly important as variable renewables like solar and wind make up a larger share of electricity generation.
Power generation, which includes electricity and heat, is one of the largest sources of CO2 emissions globally, primarily from the burning of fossil fuels like coal and natural gas in thermal power plants.
Growth in electricity demand has slowed down or even reversed in many advanced economies due to energy efficiency efforts and the shift towards less energy-intensive forms of economic activity, such as services. But it is still growing rapidly in many emerging market and developing countries, especially those where a significant fraction of the population still lacks access to electricity.
Electricity is primarily used for heating, cooling, lighting, cooking and to power devices, appliances and industrial equipment. Further electrification of end-uses, especially transportation, in conjunction with the decarbonisation of electricity generation, is an important pillar of clean energy transitions.
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In 2022, 98.1% of Tunisia''s electricity was derived from natural gas, two-thirds of which was imported from Algeria, making Tunisia especially vulnerable to the volatility of international oil and gas price shocks. Given an annual 4%-5% growth in power consumption, natural gas price spikes, and mounting pressure on the dinar, the energy subsidy scheme has become progressively costly to maintain, creating budgeting challenges and hindering Tunisia''s clean energy transition.
Starting in 2026, the EU intends to apply the Carbon Border Adjustment Mechanism (CBAM) on Tunisian firms exporting to the EU unless they meet certain environmental requirements. As such, it is critical now more than ever for the private sector to invest in clean energy and demand reduction solutions. Doing so will enable private companies to reduce and save on energy bills, improve competitiveness and profitability, and comply with new international green regulations.
Responding to these challenges, USAID Power Tunisia''s Private Sector Support team will help accelerate the adoption of renewable energy and energy efficiency solutions by Tunisian firms while building the capacity of key sector stakeholders to better prepare for, implement, and manage the clean energy transition. Through its work, the Power Tunisia program seeks to contribute to the following high-level objectives planned for Tunisia''s energy sector:
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A Private Sector Program for Energy Transition in Tunisia
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