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ContentsCopy goes here
TUNISIA: Derisking Renewable Energy Investment
Book Title
c
DEFINITIONS
Nam ipsum mauris
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Aliquam sit amet pelitu lentesque nunc. Sed eut mauris tellus, et eleifend urna. Fusce ultricies trey vehicula mauris pulvinar ullamcorper.
TUNISIA: Derisking Renewable Energy Investment
Selecting Public Instruments to Promote Renewable Energy Investment for the Tunisian Solar Plan NAMA
Ministère de l'IndustrieAgence Nationale pour la Maîtrise de l'Energie
Sensitivity Analyses
ContentsCopy goes here
TUNISIA: Derisking Renewable Energy Investment
Book Title
B
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FVivamu nisi mi felis, tincidun non blandit
vestibu luma.
UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. On the ground in 177 countries and territories, we offer global perspective and local insight to help empower lives and build resilient nations. www.undp.org
The GEF unites 182 countries in partnership with international institutions, non-governmental organisations (NGOs) and the private sector to address global environmental issues while supporting national sustainable development initiatives. Today, the GEF is the largest public funder of projects to improve the global environment. An independently operating financial organisation, the GEF provides grants for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer and persistent organic pollutants. Since 1991, the GEF has achieved a strong track record with developing countries and countries with economies in transition, providing $9.2 billion in grants and leveraging $40 billion in co-financing for over 2,700 projects in over 168 countries. www.thegef.org
The National Agency for Energy Conservation (ANME) of Tunisia is a public institution under the supervision of the Ministry of Industry. It was established in 1985 to ensure the implementation of a national policy in the field of energy management, including the promotion of energy efficiency and renewable energy. www.anme.nat.tn
Authors: Oliver Waissbein (UNDP), Sanju Deenapanray (consultant) and Robert Kelly (UNDP).
Reviewers and contributors: Nejib Osman (ANME), Afef Jaafar (ANME), Rim Sahli (ANME), Marcel Alers (UNDP), Jihene Touil (UNDP), Dipti Nehra (UNDP intern), Devraj Banerjee (UNDP intern), Tobias Schmidt (ETH Zurich) and Houssem Belhaouane (consultant).
Acknowledgments: This report has been financed by the Global Environment Facility. UNDP would like to ex-press its gratitude to ANME for providing invaluable support and inputs for this report. The authors would also like to thank the wind energy and solar photovoltaic energy investors, development specialists and stakeholders in Tunisia who participated in structured interviews for the modelling. Finally, the authors are grateful to all the reviewers and contributors for their valuable comments and inputs. Any errors and oversights in this report are the sole responsibility of the authors.
This publication builds on a series of prior research papers. This includes the original Derisking Renewable Energy Investment (Waissbein et al., 2013) report, which sets out the methodology used in this publication, as well as Transforming On-Grid Renewable Energy Markets, (Glemarec et al., 2012), which synthesises UNDP’s experiences with renewable energy markets.
This report should be referenced as: UNDP (2014). Tunisia: Derisking Renewable Energy Investment. New York, NY: United Nations Development Programme.
Design: Camilo J. Salomón ([email protected], www.cjsalomon.com)
December 2014, New York and Tunis.
DEFINITIONS
Nam ipsum mauris
Dapibus et tristique ac, consectetur ac nunc. Fusce pulvinar eros in libero eleif end sodales fringilla risus lobor ryul tis. Duis ullamcorper laoreet sapien faucibus tincidunt.
Aliquam sit amet pelitu lentesque nunc. Sed eut mauris tellus, et eleifend urna. Fusce ultricies trey vehicula mauris pulvinar ullamcorper.
1
Figures 3
1. Wind Energy Sensitivity Analyses 6
1.1 Sensitivity to Wind Energy Investment Costs 7
1.2 Sensitivity to Wind Energy Capacity Factor 8
1.3 Sensitivity to Gas Fuel Costs 9
1.4 Sensitivity to Balancing Costs 11
1.5 Sensitivity to Policy Derisking Instruments Only 12
1.6 Sensitivity to Financial Derisking Instruments Only 14
1.7 Sensitivity to Higher Financing Costs 16
2. Solar PV Sensitivity Analyses 21
2.1 Sensitivity to Solar PV Investment Costs 21
2.2 Sensitivity to Gas Fuel Costs 22
2.3 Sensitivity to Balancing Costs 24
2.4 Sensitivity to Policy Derisking Instruments Only 25
2.5 Sensitivity to Financial Derisking Instruments Only 27
2.6 Sensitivity to Higher Financing Costs 29
Table of Contents
TUNISIA: Derisking Renewable Energy Investment
2 TUNISIA: Derisking Renewable Energy Investment
This document is an accompaniment to the full report. The full report contains the findings of the base case scenarios for wind energy and solar PV, as well as an executive summary, an overview of the approach taken, and full details on the methodology and data used.
2 TUNISIA: Derisking Renewable Energy Investment
TUNISIA: Derisking Renewable Energy Investment 3
Figures
Figures
SECTION 1: WIND ENERGY SENSITIVITY ANALYSESFigure 1: Wind energy sensitivity to investment costs: LCOE outputs
Figure 2: Wind energy sensitivity to investment costs: performance metric outputs
Figure 3: Wind energy sensitivity to capacity factor: LCOE outputs
Figure 4: Wind energy sensitivity to capacity factor: performance metric outputs
Figure 5: Wind energy sensitivity to 20% higher gas prices: LCOE outputs
Figure 6: Wind energy sensitivity to 20% higher gas prices: performance metric outputs
Figure 7: Wind energy sensitivity to 20% lower gas prices: LCOE outputs
Figure 8: Wind energy sensitivity to 20% lower gas prices: performance metric outputs
Figure 9: Wind energy sensitivity to balancing costs: LCOE outputs
Figure 10: Wind energy sensitivity to balancing costs: performance metric outputs
Figure 11: Wind energy sensitivity with policy derisking instruments only: post-derisking financing cost waterfalls
Figure 12: Wind energy sensitivity with policy derisking instruments only: LCOE outputs
Figure 13: Wind energy sensitivity with policy derisking instruments only: performance metric outputs
Figure 14: Wind energy sensitivity with financial derisking instruments only: post-derisking financing cost waterfalls
Figure 15: Wind energy sensitivity with financial derisking instruments only: LCOE outputs
Figure 16: Wind energy sensitivity with financial derisking instruments only: performance metric outputs
Figure 17: Wind energy sensitivity to higher financing costs: business-as-usual financing cost waterfalls
Figure 18: Wind energy sensitivity to higher financing costs: post-derisking financing cost waterfalls
TUNISIA: Derisking Renewable Energy Investment4 TUNISIA: Derisking Renewable Energy Investment
Figures
Figure 19: Wind energy sensitivity to higher financing costs: LCOE outputs
Figure 20: Wind energy sensitivity to higher financing costs: performance metric outputs
Figure 21: Wind energy sensitivity to lower financing costs: business-as-usual financing cost waterfalls
Figure 22: Wind energy sensitivity to lower financing costs: post-derisking financing cost waterfalls
Figure 23: Wind energy sensitivity to lower financing costs: LCOE outputs
Figure 24: Wind energy sensitivity to lower financing costs: performance metric outputs
SECTION 2: SOLAR PV SENSITIVITY ANALYSESFigure 25: Solar PV sensitivity to investment costs: LCOE outputs
Figure 26: Solar PV sensitivity to investment costs: performance metric outputs
Figure 27: Solar PV sensitivity to 20% higher gas prices: LCOE outputs
Figure 28: Solar PV sensitivity to 20% higher gas prices: performance metric outputs
Figure 29: Solar PV sensitivity to 20% lower gas prices: LCOE outputs
Figure 30: Solar PV sensitivity to 20% lower gas prices: performance metric outputs
Figure 31: Solar PV sensitivity to balancing costs: LCOE outputs
Figure 32: Solar PV sensitivity to balancing costs: performance metric outputs
Figure 33: Solar PV sensitivity with policy derisking instruments only: post-derisking financing cost waterfalls
Figure 34: Solar PV sensitivity with policy derisking instruments only: LCOE outputs
Figure 35: Solar PV sensitivity with policy derisking instruments only: performance metric outputs
Figure 36: Solar PV sensitivity with financial derisking instruments only: post-derisking financing cost waterfalls
Figure 37: Solar PV sensitivity with financial derisking instruments only: LCOE outputs
Figure 38: Solar PV sensitivity with financial derisking instruments only: performance metric outputs
Figure 39: Solar PV sensitivity to higher financing costs: business-as-usual financing cost waterfalls
TUNISIA: Derisking Renewable Energy Investment 5
Figures
Figure 40: Solar PV sensitivity to higher financing costs: post-derisking financing cost waterfalls
Figure 41: Solar PV sensitivity to higher financing costs: LCOE outputs
Figure 42: Solar PV sensitivity to higher financing costs: performance metric outputs
Figure 43: Solar PV sensitivity to lower financing costs: business-as-usual financing cost waterfalls
Figure 44: Solar PV sensitivity to lower financing costs: post-derisking financing cost waterfalls
Figure 45: Solar PV sensitivity to lower financing costs: LCOE outputs
Figure 46: Solar PV sensitivity to lower financing costs: performance metric outputs
6 TUNISIA: Derisking Renewable Energy Investment
1. Wind Energy Sensitivity Analysis
TUNISIA: Derisking Renewable Energy Investment 7
1.1 SENSITIVITY TO WIND ENERGY INVESTMENT COSTSThis sensitivity provides an indication of the impacts of continuing falls in technology costs.
●● The model base case scenario uses 2014 technology costs for wind energy at EUR 1.240 million/MW.
●● This sensitivity uses 20221 technology costs for wind energy at EUR 1.116 million/MW.
Wind Energy Sensitivity Analysis
1. Wind Energy Sensitivity Analysis
1 2022 is the mid-point between 2014-2030, the modelling period, and, as such, an estimate of 2022 costs acts as a proxy for average investment costs over the 2014-2030 period.
1Figure 1: Wind energy sensitivity to investment costs: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
4.8 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,680
Cost of Post-Derisking
Instruments
279Cost of BAU Instruments
642
6.4 x
8287 644
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-23%
EUR
cent
s/kW
h
5.26.0
6.00.86.8
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.5 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
645
Incremental Costs –
BAU
Savings
345
Cost of Post-Derisking
Instruments
253-300
261 8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-111%
EUR/
tCO
2e
-1.1710.49
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 2: Wind energy sensitivity to investment costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 14.45. Post-derisking 0.26, EUR 7.65 and EUR -9.07 respectively.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
5.26.86.0LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment8
1. Wind Energy Sensitivity Analysis
1.2 SENSITIVITY TO WIND ENERGY CAPACITY FACTOR This sensitivity provides an indication of the impacts of a higher capacity factor for wind energy.
●● The modelling uses a capacity factor for wind energy estimated at 30%.
●● This sensitivity uses a capacity factor for wind energy estimated at 35%.
Figure 3: Wind energy sensitivity to capacity factor: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
9.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
5.06.46.0LCO
E
(EU
R C
ENTS
/kW
h)
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.04, financial derisking instruments
EUR 0.00, price premium EUR 5.77. Post-derisking, EUR 0.22, EUR 7.00 and EUR -12.69 respectively.
8.3 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
270Cost of BAU Instruments
222
6.7 x
8278 224
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-23%
EUR
cent
s/kW
h
5.06.0
6.00.4 6.4
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.6 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
712
Incremental Costs –
BAU
Savings
222
Cost of Post-Derisking
Instruments
270-489
278 8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-194%
EUR/
tCO
2e
-5.485.81
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 4: Wind energy sensitivity to capacity factor: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment 9
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
5.87.56.8LCO
E
(EU
R C
ENTS
/kW
h)
1. Wind Energy Sensitivity Analysis
1.3 SENSITIVITY TO GAS FUEL COSTS This sensitivity provides an indication of the impacts of higher or lower gas prices on baseline energy costs.
●● The modelling uses STEG’s current 2014 gas prices for IPPs, and then projects these going forward using the trend from the IEA World Economic Outlook (2013) projections.
●● This sensitivity looks at two scenarios:
The first scenario raises the IEA gas price projections by 20% each year.
The second scenario lowers the IEA gas price projections by 20% each year.
1.3.1 Sensitivity to 20% Higher Gas Prices
Figure 5: Wind energy sensitivity to 20% higher gas prices: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 7.99. Post-derisking, EUR 0.26, EUR 8.44 and EUR -13.55 respectively.
7.0 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
279Cost of BAU Instruments
264
6.5 x
8287 266
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-23%
EUR
cent
s/kW
h
5.86.8
6.80.77.5
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.5 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
712
Incremental Costs –
BAU
Savings
264
Cost of Post-Derisking
Instruments
279-448
287 8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-161%
EUR/
tCO
2e
-4.868.03
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 6: Wind energy sensitivity to 20% higher gas prices: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment10
1. Wind Energy Sensitivity Analysis
1.3.2 Sensitivity to 20% Lower Gas Prices
Figure 7: Wind energy sensitivity to 20% lower gas prices: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
5.87.55.1LCO
E
(EU
R C
ENTS
/kW
h)
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 30.87. Post-derisking, EUR 0.26, EUR 8.44 and EUR 9.33 respectively.
1.8 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
308Cost of BAU Instruments
1,021
3.1 x
8279596
1,023
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-23%
EUR
cent
s/kW
h
5.1
0.7 5.8
5.1
5.12.57.5
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.5 xM
ILLI
ON
S EU
R
Incremental Costs –
Post-Derisking
712
Incremental Costs –
BAU
Savings
1,021
Cost of Post-Derisking
Instruments
279 308287
8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-42%
EUR/
tCO
2e
6.5819.48
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 8: Wind energy sensitivity to 20% lower gas prices: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment 11
1. Wind Energy Sensitivity Analysis
1.4 SENSITIVITY TO BALANCING COSTS This sensitivity provides an indication of the impact of including balancing costs for wind energy.
●● The model base case does not include balancing costs.
●● This sensitivity includes balancing costs.
Balancing costs reflect the cost to the Tunisian power system as a whole of managing the variability of renewable energy. This includes the both the capital costs of reserve gas (CCGT) plants and their lower efficiencies when utilised.
Figure 9: Wind energy sensitivity to balancing costs: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
Figure 10: Wind energy sensitivity to balancing costs: performance metric outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 39.03. Post-derisking, EUR 0.26, EUR 9.13 and EUR 17.49 respectively.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
Balancing cost component of LCOE
5.87.5
5.81.8
1.5 7.39.0
6.0LCO
E
(EU
R C
ENTS
/kW
h)
1.4 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
578302
Cost of BAU Instruments
1,290
2.1 x
8889
1,292
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12-19%
EUR
cent
s/kW
h
6.0
1.37.3
6.0
6.03.0
9.0
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.3 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
712
Incremental Costs –
BAU
Savings
1,290
Cost of Post-Derisking
Instruments
302 578310
8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-31%
EUR/
tCO
2e
26.8839.08
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 10: Wind energy sensitivity to balancing costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment12
1. Wind Energy Sensitivity Analysis
1.5 SENSITIVITY TO POLICY DERISKING INSTRUMENTS ONLY This sensitivity provides an indication of the impacts of an instrument package focused solely on policy derisking measures:
●● The model base case includes both policy derisking (EUR 8.5 million) and financial derisking instruments (EUR 279.0 million).
●● This sensitivity uses only policy derisking instruments (EUR 8.5 million). The list of policy derisking instruments can be found in Table 7 of the full report.
Figure 11: Wind energy sensitivity with policy derisking instruments only: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 8.0%
0.0% N/A 0.1% 0.2% 0.3% 0.5% 0.1% 0.0% 0.1%
15.0%
Cost
of E
quity
Post
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
Reso
urce
and
Tech
nol.
Risk
-1.3 x
Cost of Debt (EUR)
Cost
of D
ebt
P ost
-Der
iski
ng
6.0%
Curr
ency
/M
acro
econ
.Ri
sk
0.0% NA
Polit
ical
Risk
0.1% 0.1%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.2%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
6.5%
-0.5 x
POST-DERISKING FINANCING COSTS
Figure 12: Wind energy sensitivity with policy derisking instruments only: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
7.07.56.0
LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment 13
1. Wind Energy Sensitivity Analysis
2.9 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
459
Cost of BAU Instruments
642
4.0 x
8467
644
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-6%
EUR
cent
s/kW
h
6.0
1.07.0
6.0
6.01.5
7.5
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
21.5 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
183
Incremental Costs –
BAU
Savings
642
Cost of Post-Derisking
Instruments
4598
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-27%
EUR/
tCO
2e
14.1519.48
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 13: Wind energy sensitivity with policy derisking instruments only: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 19.43. Post-derisking, EUR 0.26, EUR 0.00 and EUR 13.89 respectively.
TUNISIA: Derisking Renewable Energy Investment14
1. Wind Energy Sensitivity Analysis
1.6 SENSITIVITY TO FINANCIAL DERISKING INSTRUMENTS ONLY This sensitivity provides an indication of the impacts of an instrument package focused solely on financial derisking measures:
●● The model base case includes both policy derisking (EUR 8.5 million) and financial derisking instruments (EUR 279.0 million).
●● This sensitivity uses only financial derisking instruments (EUR 279.0 million). The list of financial derisking instruments can be found in Table 7 of the full report.
Figure 14: Wind energy sensitivity with financial derisking instruments only: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 14.0%
0.5% N/A 0.0% 0.2% 0.3% 0.0% 0.0% 0.0% 0.0%
15.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
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ctor
Ris
k
Coun
terp
arty
Risk
Perm
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sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
R eso
urce
and
Tech
nol.
Risk
-1.0 x
Cost of Debt (EUR)
Cost
of D
ebt
P ost
-Der
iski
ng
6.1%
Curr
ency
/M
acro
econ
.Ri
sk
0.2% NA
Polit
ical
Risk
0.1% 0.1%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.0%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
6.5%
-0.4 x
POST-DERISKING FINANCING COSTS
Figure 15: Wind energy sensitivity with financial derisking instruments only: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
6.37.56.0
LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment 15
1. Wind Energy Sensitivity Analysis
2.9 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
459
Cost of BAU Instruments
642
4.0 x
8467
644
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-16%
EUR
cent
s/kW
h
6.36.0
6.01.5
7.5
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
1.8 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
493
Incremental Costs –
BAU
Savings
642
Cost of Post-Derisking
Instruments
280149
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-47%
EUR/
tCO
2e
12.9719.48
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 16: Wind energy sensitivity with financial derisking instruments only: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 19.43. Post-derisking, EUR 0.26, EUR 0.00 and EUR 13.89 respectively.
TUNISIA: Derisking Renewable Energy Investment16
1. Wind Energy Sensitivity Analysis
1.7 SENSITIVITY TO FINANCING COSTS This sensitivity provides an indication of the impacts of higher or lower financing costs.
●● The model base case assumes a 15.0% cost of equity (EUR) and a 6.5% cost of debt (EUR) in Tunisia.
●● This sensitivity looks at two scenarios:
A scenario in which the financing costs are increased by 1% (100 basis points). The cost of equity is 16.0% (EUR) and the cost of debt is 7.5% (EUR).
A scenario in which the financing costs are reduced by 1% (100 basis points). The cost of equity is 14.0% (EUR) and the cost of debt is 5.5% (EUR).
1.7.1 Sensitivity to +1% Financing Costs
Figure 17: Wind energy sensitivity to higher financing costs: business-as-usual financing cost waterfalls
Figure 18: Wind energy sensitivity to higher financing costs: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; best-in-class country is assumed to be Germany; see Annex C for details of assumptions and methodology.
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 16.0%
1.1% 1.2%
0.8% 1.1%
1.2%
1.6%
0.3% 0.4% 0.4%
8.0%
Cost
of E
quity
BAU
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alA c
cept
ance
Ris
k
Cost
of E
quity
Best
-in-C
lass
Coun
try
Grid
/Tra
nsm
issio
nRi
sk
R eso
urce
and
Tech
nol.
Risk
Cost of Equity (EUR) 13.4%
0.5% N/A 0.1% 0.5% 0.6% 0.5% 0.1% 0.1% 0.1%
16.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
Reso
urce
and
Tech
nol.
Risk
-2.6 x
Cost of Debt (EUR)
Cost
of D
ebt
BAU
7.5%
Curr
ency
/M
acro
econ
.Ri
sk
0.6% 0.6%
Polit
ical
Risk
0.6% 0.6%
Coun
terp
arty
Risk
0.1%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
Best
-in-C
lass
Coun
try
0.2% 0.6%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
4.0%
Cost of Debt (EUR)
Cost
of D
ebt
P ost
-Der
iski
ng
6.3%
Curr
ency
/M
acro
econ
.Ri
sk
0.3% NA
Polit
ical
Risk
0.3% 0.3%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.2%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
7.5%
-1.2 x
BUSINESS-AS-USUAL FINANCING COSTS
POST-DERISKING FINANCING COSTS
TUNISIA: Derisking Renewable Energy Investment 17
1. Wind Energy Sensitivity Analysis
2.2 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
281
Cost of BAU Instruments
831
6.1 x
14
8304
833
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-24%
EUR
cent
s/kW
h
6.0
1.7
6.0
6.01.9
7.9
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.8 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
818
Incremental Costs –
BAU
Savings
831
Cost of Post-Derisking
Instruments
281 13289
8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-64%
EUR/
tCO
2e
9.2025.20
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 20: Wind energy sensitivity to higher financing costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 25.15. Post-derisking, EUR 0.26, EUR 8.53 and EUR 0.41 respectively.
Figure 19: Wind energy sensitivity to higher financing costs: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
6.07.96.0
LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment18
1. Wind Energy Sensitivity Analysis
1.7.2 Sensitivity to -1% Financing Costs
Figure 21: Wind energy sensitivity to lower financing costs: business-as-usual financing cost waterfalls
Figure 22: Wind energy sensitivity to lower financing costs: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; best-in-class country is assumed to be Germany; see Annex C for details of assumptions and methodology.
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 14.0%
0.8% 0.9%
0.6% 0.8%
0.9%
1.2%
0.2% 0.3% 0.3%
8.0%
Cost
of E
quity
BAU
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alA c
cept
ance
Ris
k
Cost
of E
quity
Best
-in-C
lass
Coun
try
Grid
/Tra
nsm
issio
nRi
sk
R eso
urce
and
Tech
nol.
Risk
Cost of Equity (EUR) 12.1%
0.5% N/A 0.1% 0.4% 0.4% 0.4% 0.0% 0.0% 0.1%
14.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
Reso
urce
and
Tech
nol.
Risk
-1.9 x
Cost of Debt (EUR)
Cost
of D
ebt
BAU
5.5%
Curr
ency
/M
acro
econ
.Ri
sk
0.2% 0.3%
Polit
ical
Risk
0.2% 0.3%
Coun
terp
arty
Risk
0.1%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
Best
-in-C
lass
Coun
try
0.1% 0.3%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
4.0%
Cost of Debt (EUR)
Cost
of D
ebt
P ost
-Der
iski
ng
5.0% Cu
rren
cy/
Mac
roec
on.
Risk
0.1% NA
Polit
ical
Risk
0.1% 0.1%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.1%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
5.5%
-0.5 x
BUSINESS-AS-USUAL FINANCING COSTS
POST-DERISKING FINANCING COSTS
TUNISIA: Derisking Renewable Energy Investment 19
1. Wind Energy Sensitivity Analysis
4.1 x*
MIL
LIO
NS
EUR
Wind EnergyInvestments
1,855
Cost of Post-Derisking
Instruments
276
Cost of BAU Instruments
456
6.5 x
8284
458
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
2
0
3
6
9
12
-20%
EUR
cent
s/kW
h
5.66.0
6.01.07.0
Wind Energy LCOE BAU
Wind Energy LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.1 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
608
Incremental Costs –
BAU
Savings
456
Cost of Post-Derisking
Instruments
276-152
285 8
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-71%
EUR/
tCO
2e
4.0013.83
Wind EnergyBAU
Wind EnergyPost-Derisking
33 Mt CO2e (20 years)
Figure 24: Wind energy sensitivity to lower financing costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.05, financial derisking instruments
EUR 0.00, price premium EUR 13.78. Post-derisking, EUR 0.26, EUR 8.35 and EUR -4.61 respectively.
Figure 23: Wind energy sensitivity to lower financing costs: LCOE outputs
Source: modelling; see Table 7 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Wind Investment Post-Derisking
Wind Investment BAU
Baseline Investment
5.67.06.0
LCO
E
(EU
R C
ENTS
/kW
h)
20 TUNISIA: Derisking Renewable Energy Investment
2. Solar PV Sensitivity Analysis
TUNISIA: Derisking Renewable Energy Investment 21
2.1 SENSITIVITY TO SOLAR PV INVESTMENT COSTSThis sensitivity provides an indication of the impacts of continuing falls in technology costs.
●● The model’s base case uses 2014 technology costs for solar PV at EUR 1.189 million/MW.
●● This sensitivity uses 20222 technology costs for solar PV at EUR 1.011 million/MW.
Solar PV Sensitivity Analysis
2. Solar PV Sensitivity Analysis
2 2022 is the mid-point between2014-2030, the modelling period, and, as such, an estimate of 2022 costs acts as a proxy for average investment costs over the 2014-2030 period.
2Figure 25: Solar PV sensitivity to investment costs: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 32.60. Post-derisking, EUR 0.35, EUR 9.60 and EUR 8.09 respectively.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
6.68.56.0LCO
E
(EU
R C
ENTS
/kW
h)
2.0 x*
MIL
LIO
NS
EUR
Solar PVInvestments
803
Cost of Post-Derisking
Instruments
102120
Cost of BAU Instruments
410
3.5 x
4227 411
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12-23%
EUR
cent
s/kW
h
6.0
6.60.6
6.0
6.02.58.5
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.5 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
308
Incremental Costs –
BAU
Savings
410
Cost of Post-Derisking
Instruments
120102124
4
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-45%
EUR/
tCO
2e
18.0432.66
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 26: Solar PV sensitivity to investment costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment22
2. Solar PV Sensitivity Analysis
2.2 SENSITIVITY TO GAS FUEL COSTS This sensitivity provides an indication of the impacts of higher or lower gas prices on baseline energy costs.
●● The model uses STEG’s current 2014 gas prices for IPPs, and then projects these going forward using the trend from the IEA World Economic Outlook (2013) projections.
●● This sensitivity looks at two scenarios:
The first scenario raises the IEA gas price projections by 20% each year.
The second scenario lowers the IEA gas price projections by 20% each year.
2.2.1 Sensitivity to 20% Higher Gas Prices
Figure 27: Solar PV sensitivity to 20% higher gas prices: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
7.79.96.8LCO
E
(EU
R C
ENTS
/kW
h)
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 38.98. Post-derisking, EUR 0.35, EUR 11.17 and EUR 10.46 respectively.
1.9 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
132141
Cost of BAU Instruments
490
3.4 x
4277
491
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12 -23%
EUR
cent
s/kW
h
6.8
0.97.7
6.8
6.83.1
9.9
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.5 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
359
Incremental Costs –
BAU
Savings
490
Cost of Post-Derisking
Instruments
141131145
4
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-44%
EUR/
tCO
2e
21.9839.04
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 28: Solar PV sensitivity to 20% higher gas prices: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment 23
2. Solar PV Sensitivity Analysis
2.2.2 Sensitivity to 20% Lower Gas Prices
Figure 29: Solar PV sensitivity to 20% lower gas prices: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.* In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 61.86. Post-derisking, EUR 0.35, EUR 11.17 and EUR 33.34 respectively.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
7.79.95.1LCO
E
(EU
R C
ENTS
/kW
h)
1.2 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
420
Cost of BAU Instruments
778
1.7 x
4141 565
779
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12 -23%
EUR
cent
s/kW
h
5.1
2.6
7.7
5.1
5.14.8
9.9
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.5 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
358
Incremental Costs –
BAU
Savings
778
Cost of Post-Derisking
Instruments
141 420145 4
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-28%
EUR/
tCO
2e
44.8661.93
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 30: Solar PV sensitivity to 20% lower gas prices: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment24
2. Solar PV Sensitivity Analysis
2.3 SENSITIVITY TO BALANCING COSTS This sensitivity provides an indication of the impacts of including balancing costs for solar PV.
●● The model’s base case does not include balancing costs.
●● This sensitivity includes balancing costs.
Balancing costs reflect the cost to the Tunisian power system as a whole of managing the variability of renewable energy. This includes the both the capital costs of reserve gas (CCGT) plants and their lower efficiencies when utilised.
1.3.1 Sensitivity to 20% Higher Gas Prices
Figure 31: Solar PV sensitivity to balancing costs: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.* In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 61.27. Post-derisking, EUR 0.35, EUR 11.56 and EUR 32.75 respectively.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
Balancing cost component of LCOE
7.79.9
5.80.8
0.8 8.510.7
6.0LCO
E
(EU
R C
ENTS
/kW
h)
1.2 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
412
Cost of BAU Instruments
771
1.7 x
4145 561
772
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12
EUR
cent
s/kW
h
6.0
2.58.5
6.0
4.7
10.7
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
6.0
-21%
2.4 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
359
Incremental Costs –
BAU
Savings
771
Cost of Post-Derisking
Instruments
145 412149 4
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-27%
EUR/
tCO
2e
44.6561.33
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 32: Solar PV sensitivity to balancing costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
TUNISIA: Derisking Renewable Energy Investment 25
2. Solar PV Sensitivity Analysis
2.4 SENSITIVITY TO POLICY DERISKING INSTRUMENTS ONLY This sensitivity provides an indication of the impacts of an instrument package focused solely on policy derisking measures:
●● The model’s base case includes both policy derisking (EUR 4.4 million) and financial derisking instruments (EUR 140.6 million).
●● This sensitivity uses only policy derisking instruments (EUR 4.4 million). The list of policy derisking instruments is presented in Table 8 in the full report.
Figure 33: Solar PV sensitivity with policy derisking instruments only: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 13.7%
0.0% N/A 0.1% 0.2% 0.3% 0.5% 0.1% 0.0% 0.1%
16.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
R eso
urce
and
Tech
nol.
Risk
-1.3 x
Cost of Debt (EUR)
Cost
of D
ebt
Post
-Der
iski
ng
6.0%
Curr
ency
/M
acro
econ
.Ri
sk
0.0% NA
Polit
ical
Risk
0.1% 0.1%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.2% Re
sour
ce a
nd Te
chno
l. Ris
k
Grid
/Tra
nsm
issio
nRi
sk
6.5%
-0.5x
POST-DERISKING FINANCING COSTS
Figure 34: Solar PV sensitivity with policy derisking instruments only: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
9.39.96.0
LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment26
2. Solar PV Sensitivity Analysis
1.5 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
542
Cost of BAU Instruments
634
1.7 x
4546
634
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12 -6%
EUR
cent
s/kW
h
6.0
3.3
9.3
6.0
6.03.9
9.9
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
21.0 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
92
Incremental Costs –
BAU
Savings
634
Cost of Post-Derisking
Instruments
5424
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-14%EU
R/tC
O2e
43.4450.49
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 35: Solar PV sensitivity with policy derisking instruments only: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 50.42. Post-derisking, EUR 0.35, EUR 0.00 and EUR 43.09 respectively.
TUNISIA: Derisking Renewable Energy Investment 27
2. Solar PV Sensitivity Analysis
2.5 SENSITIVITY TO FINANCIAL DERISKING INSTRUMENTS ONLY This sensitivity provides an indication of the impacts of an instrument package focusing solely on financial derisking measures:
●● The model’s base case includes both policy derisking (EUR 4.4 million) and financial derisking instruments (EUR 140.6 million).
●● This sensitivity uses only financial derisking instruments (EUR 140.6 million). The list of financial derisking instruments is presented in Table 8 of the full report.
Figure 36: Solar PV sensitivity with financial derisking instruments only: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 13.7%
0.5% N/A 0.0% 0.2% 0.3% 0.0% 0.0% 0.0% 0.0%
15.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
Reso
urce
and
T ech
nol.
Risk
-1.0 x
Cost of Debt (EUR)
Cost
of D
ebt
Post
-Der
iski
ng
6.1%
Curr
ency
/M
acro
econ
.Ri
sk
0.2% NA
Polit
ical
Risk
0.1% 0.1%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.0% Re
sour
ce a
nd Te
chno
l. Ris
k
Grid
/Tra
nsm
issio
nRi
sk
6.5%
-0.4 x
POST-DERISKING FINANCING COSTS
Figure 37: Solar PV sensitivity with financial derisking instruments only: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
8.39.96.0
LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment28
2. Solar PV Sensitivity Analysis
1.5 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
276
141
Cost of BAU Instruments
634
1.8 x
527 635
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12 -16%
EUR
cent
s/kW
h
6.0
2.3
6.0
6.0
6.03.9
9.9
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
1.8 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
249
Incremental Costs –
BAU
Savings
634
Cost of Post-Derisking
Instruments
141 386
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-17%EU
R/tC
O2e
41.8850.49
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 38: Solar PV sensitivity with financial derisking instruments only: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology. * In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 50.42. Post-derisking, EUR 0.00, EUR 11.22 and EUR 30.66 respectively.
TUNISIA: Derisking Renewable Energy Investment 29
2. Solar PV Sensitivity Analysis
2.6 SENSITIVITY TO FINANCING COSTS This sensitivity provides an indication of the impacts of higher or lower financing costs.
●● The model’s base case assumes a 15.0% cost of equity (EUR) and a 6.5% cost of debt (EUR) in Tunisia.
●● This sensitivity looks at two scenarios:
A scenario in which the financing costs are increased by 1% (100 basis points). The cost of equity is 16.0% (EUR) and the cost of debt is 7.5% (EUR).
A scenario in which the financing costs are reduced by 1% (100 basis points). The cost of equity is 14.0% (EUR) and the cost of debt is 5.5% (EUR).
2.6.1 Sensitivity to +1% Financing Costs
Figure 39: Solar PV sensitivity to higher financing costs: business-as-usual financing cost waterfalls
Figure 40: Solar PV sensitivity to higher financing costs: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; best-in-class country is assumed to be Germany; see Annex C for details of assumptions and methodology
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 16.0%
1.1% 1.2% 0.8%
1.1% 1.2%
1.6%
0.3% 0.4% 0.4%
8.0%
Cost
of E
quity
BAU
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alA c
cept
ance
Ris
k
Cost
of E
quity
Best
-in-C
lass
Coun
try
Grid
/Tra
nsm
issio
nRi
sk
R eso
urce
and
Tech
nol.
Risk
Cost of Equity (EUR) 13.4%
0.5% N/A 0.1% 0.5% 0.6% 0.6% 0.1% 0.1% 0.1%
16.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
Reso
urce
and
Tech
nol.
Risk
-2.6 x
Cost of Debt (EUR)
Cost
of D
ebt
BAU
7.5% Cu
rren
cy/
Mac
roec
on.
Risk
0.6% 0.6% Po
litic
alRi
sk0.6% 0.6%
Coun
terp
arty
Risk
0.1%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
Best
-in-C
lass
Coun
try
0.2% 0.8%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
4.0%
Cost of Debt (EUR)
Cost
of D
ebt
P ost
-Der
iski
ng
6.3%
Curr
ency
/M
acro
econ
.Ri
sk
0.3% NA
Polit
ical
Risk
0.3% 0.3%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.3%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
7.5%
-1.2 x
BUSINESS-AS-USUAL FINANCING COSTS
POST-DERISKING FINANCING COSTS
TUNISIA: Derisking Renewable Energy Investment30
2. Solar PV Sensitivity Analysis
1.3 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
318
142
Cost of BAU Instruments
730
2.0 x
4464
731
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12 -24%
EUR
cent
s/kW
h
6.0
1.9
6.0
6.04.5
7.9
10.5
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.8 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
412
Incremental Costs –
BAU
Savings
730
Cost of Post-Derisking
Instruments
142 318146
4
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-37%
EUR/
tCO
2e
36.8958.07
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 42: Solar PV sensitivity to higher financing costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.* In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 58.01. Post-derisking, EUR 0.35, EUR 11.29 and EUR 25.25 respectively.
Figure 41: Solar PV sensitivity to higher financing costs: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
7.910.56.0
LCO
E
(EU
R C
ENTS
/kW
h)
TUNISIA: Derisking Renewable Energy Investment 31
2. Solar PV Sensitivity Analysis
2.6.2 Sensitivity to -1% Financing Costs
Figure 43: Solar PV sensitivity to lower financing costs: business-as-usual financing cost waterfalls
Figure 44: Solar PV sensitivity to lower financing costs: post-derisking financing cost waterfalls
Source: interviews with wind energy and solar PV investors and developers; modelling; best-in-class country is assumed to be Germany; see Annex C for details of assumptions and methodology.
Source: interviews with wind energy and solar PV investors and developers; modelling; see Annex C for details of assumptions and methodology. Note: the impacts shown are average impacts over the 2014-2030 modelling period, assuming linear timing effects.
Cost of Equity (EUR) 14.0%
0.8% 0.9% 0.6%
0.8% 0.9%
1.2% 0.2% 0.3% 0.3%
8.0%
Cost
of E
quity
BAU
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alA c
cept
ance
Ris
k
Cost
of E
quity
Best
-in-C
lass
Coun
try
Grid
/Tra
nsm
issio
nRi
sk
R eso
urce
and
Tech
nol.
Risk
Cost of Equity (EUR) 12.1%
0.4% N/A 0.1% 0.4% 0.4% 0.4% 0.0% 0.0% 0.1%
14.0%
Cost
of E
quity
P ost
-Der
iski
ng
Curr
ency
/M
acro
econ
. Ris
k
Polit
ical
Risk
Fina
ncia
lSe
ctor
Ris
k
Coun
terp
arty
Risk
Perm
itsRi
sk
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Ris
k
Cost
of E
quity
BAU
Grid
/Tra
nsm
issio
nRi
sk
Reso
urce
and
Tech
nol.
Risk
-1.9 x
Cost of Debt (EUR)
Cost
of D
ebt
BAU
5.5%
Curr
ency
/M
acro
econ
.Ri
sk
0.2% 0.3%
Polit
ical
Risk
0.2% 0.3%
Coun
terp
arty
Risk
0.1%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
Best
-in-C
lass
Coun
try
0.1% 0.3%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
4.0%
Cost of Debt (EUR)
Cost
of D
ebt
P ost
-Der
iski
ng
5.0%
Curr
ency
/M
acro
econ
.Ri
sk
0.3% NA
Polit
ical
Risk
0.1% 0.1%
Coun
terp
arty
Risk
0.0%
Pow
er M
arke
tRi
sk
Soci
alAc
cept
ance
Risk
Cost
of D
ebt
BAU
0.0% 0.2%
Reso
urce
and
Tech
nol. R
isk
Grid
/Tra
nsm
issio
nRi
sk
5.5%
-0.5 x
BUSINESS-AS-USUAL FINANCING COSTS
POST-DERISKING FINANCING COSTS
TUNISIA: Derisking Renewable Energy Investment32
2. Solar PV Sensitivity Analysis
1.7 x*
MIL
LIO
NS
EUR
Solar PVInvestments
935
Cost of Post-Derisking
Instruments
234
139
Cost of BAU Instruments
540
2.5 x
4377
541
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments Price premium (FIT, PPA)
1
0
3
6
9
12
-20%
EUR
cent
s/kW
h
6.0
7.41.4
6.0
6.03.3
9.3
Solar PV LCOE BAU
Solar PV LCOEPost-Derisking
Price premium (FIT, PPA) Marginal baseline LCOE
2.1 x
MIL
LIO
NS
EUR
Incremental Costs –
Post-Derisking
306
Incremental Costs –
BAU
Savings
540
Cost of Post-Derisking
Instruments
139 234143
4
Policy derisking instruments Present value of costs over 20 years
Financial derisking instruments
-30%
EUR/
tCO
2e
30.0043.01
Solar PVBAU
Solar PVPost-Derisking
12.6 Mt CO2e (20 years)
Figure 46: Solar PV sensitivity to lower financing costs: performance metric outputs
INVESTMENT LEVERAGE RATIO
AFFORDABILITY
SAVINGS RATIO
CARBON ABATEMENT**
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.* In the BAU scenario, the full 2030 investment target may not be met.** Carbon abatement figure components: Business-as-usual, policy derisking instruments EUR 0.06, financial derisking instruments
EUR 0.00, price premium EUR 0.06. Post-derisking, EUR 0.35, EUR 11.06 and EUR 18.60 respectively.
Figure 45: Solar PV sensitivity to lower financing costs: LCOE outputs
Source: modelling; see Table 8 and Annex A in the full report for details of assumptions and methodology.
8.99.67.4
Solar Investment Post-Derisking
Solar Investment BAU
Baseline Investment
7.49.36.0LC
OE
(E
UR
CEN
TS/k
Wh)
ContentsCopy goes here
TUNISIA: Derisking Renewable Energy Investment
Book Title
b
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egestas sit amet quis consectetur ac nunc.
FVivamu nisi mi felis, tincidun non blandit
vestibu luma.
United Nations Development Programme Bureau for Development Policy Environment and Energy Group 304 East 45th Street, 9th Floor New York, NY 10017 USA
www.undp.org
December 2014, New York and Tunis
Agence Nationale pour la Maîtrise de l’Energie Direction des Energies Renouvelables Cité Administrative Montplaisir Avenue du Japon Tunis, BP. 213, Tunisie
www.anme.nat.tn