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TUNISIA: Derisking Renewable Energy Investment

Book Title

c

DEFINITIONS

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Aliquam sit amet pelitu lentesque nunc. Sed eut mauris tellus, et eleifend urna. Fusce ultricies trey vehicula mauris pulvinar ullamcorper.


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



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


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.


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


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


1. Wind Energy Sensitivity Analysis


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 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


BAU

Savings

345


Instruments

253-300

261 8


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


1.2 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


9.67.4


Wind Investment BAU

Baseline Investment

5.06.46.0LCO

E

(EU

R C

ENTS

/kW

h)


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


1,855


Instruments


222

6.7 x

8278 224



2

0

3

6

9

12

-23%

EUR

cent

s/kW

h

5.06.0

6.00.4 6.4




2.6 x

MIL

LIO

NS

EUR


Post-Derisking

712


BAU

Savings

222


Instruments

270-489

278 8



-194%

EUR/

tCO

2e

-5.485.81

Wind EnergyBAU



Figure 4: Wind energy sensitivity to capacity factor: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**


8.99.67.4


Wind Investment BAU

Baseline Investment

5.87.56.8LCO

E

(EU

R C

ENTS

/kW

h)


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




7.0 x*

MIL

LIO

NS

EUR


1,855


Instruments


264

6.5 x

8287 266



2

0

3

6

9

12

-23%

EUR

cent

s/kW

h

5.86.8

6.80.77.5




2.5 x

MIL

LIO

NS

EUR


Post-Derisking

712


BAU

Savings

264


Instruments

279-448

287 8



-161%

EUR/

tCO

2e

-4.868.03

Wind EnergyBAU



Figure 6: Wind energy sensitivity to 20% higher gas prices: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



1.3.2 Sensitivity to 20% Lower Gas Prices

Figure 7: Wind energy sensitivity to 20% lower gas prices: LCOE outputs


8.99.67.4


Wind Investment BAU

Baseline Investment

5.87.55.1LCO

E

(EU

R C

ENTS

/kW

h)


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


1,855


Instruments


1,021

3.1 x

8279596

1,023



2

0

3

6

9

12

-23%

EUR

cent

s/kW

h

5.1

0.7 5.8

5.1

5.12.57.5




2.5 xM

ILLI

ON

S EU

R


Post-Derisking

712


BAU

Savings

1,021


Instruments

279 308287

8



-42%

EUR/

tCO

2e

6.5819.48

Wind EnergyBAU



Figure 8: Wind energy sensitivity to 20% lower gas prices: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



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





8.99.67.4


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


1,855


Instruments

578302

Cost of BAU Instruments

1,290

2.1 x

8889

1,292



2

0

3

6

9

12-19%

EUR

cent

s/kW

h

6.0

1.37.3

6.0

6.03.0

9.0




2.3 x

MIL

LIO

NS

EUR


Post-Derisking

712


BAU

Savings

1,290


Instruments

302 578310

8



-31%

EUR/

tCO

2e

26.8839.08

Wind EnergyBAU





AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



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

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Risk

Fina

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Ris

k

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Pow

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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


8.99.67.4


Wind Investment BAU

Baseline Investment

7.07.56.0

LCO

E

(EU

R C

ENTS

/kW

h)



2.9 x*

MIL

LIO

NS

EUR


1,855


Instruments

459


642

4.0 x

8467

644



2

0

3

6

9

12

-6%

EUR

cent

s/kW

h

6.0

1.07.0

6.0

6.01.5

7.5




21.5 x

MIL

LIO

NS

EUR


Post-Derisking

183


BAU

Savings

642


Instruments

4598



-27%

EUR/

tCO

2e

14.1519.48

Wind EnergyBAU



Figure 13: Wind energy sensitivity with policy derisking instruments only: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**





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



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

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Ris

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Risk

Perm

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sk

Pow

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arke

tRi

sk

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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


Figure 15: Wind energy sensitivity with financial derisking instruments only: LCOE outputs


8.99.67.4


Wind Investment BAU

Baseline Investment

6.37.56.0

LCO

E

(EU

R C

ENTS

/kW

h)



2.9 x*

MIL

LIO

NS

EUR


1,855


Instruments

459


642

4.0 x

8467

644



2

0

3

6

9

12

-16%

EUR

cent

s/kW

h

6.36.0

6.01.5

7.5




1.8 x

MIL

LIO

NS

EUR


Post-Derisking

493


BAU

Savings

642


Instruments

280149



-47%

EUR/

tCO

2e

12.9719.48

Wind EnergyBAU



Figure 16: Wind energy sensitivity with financial derisking instruments only: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**





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.


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.



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

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. Ris

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Polit

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Risk

Fina

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Cost

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Best

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Coun

try

Grid

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nsm

issio

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sk

R eso

urce

and

Tech

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Risk


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

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. Ris

k

Polit

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Risk

Fina

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Perm

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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

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arke

tRi

sk

Soci

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cept

ance

Risk

Cost

of D

ebt

Best

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Coun

try

0.2% 0.6%

Reso

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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

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Risk

0.3% 0.3%

Coun

terp

arty

Risk

0.0%

Pow

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arke

tRi

sk

Soci

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cept

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Risk

Cost

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BAU

0.0% 0.2%

Reso

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and

Tech

nol. R

isk

Grid

/Tra

nsm

issio

nRi

sk

7.5%

-1.2 x

BUSINESS-AS-USUAL FINANCING COSTS




2.2 x*

MIL

LIO

NS

EUR


1,855


Instruments

281


831

6.1 x

14

8304

833



2

0

3

6

9

12

-24%

EUR

cent

s/kW

h

6.0

1.7

6.0

6.01.9

7.9




2.8 x

MIL

LIO

NS

EUR


Post-Derisking

818


BAU

Savings

831


Instruments

281 13289

8



-64%

EUR/

tCO

2e

9.2025.20

Wind EnergyBAU



Figure 20: Wind energy sensitivity to higher financing costs: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



Figure 19: Wind energy sensitivity to higher financing costs: LCOE outputs


8.99.67.4


Wind Investment BAU

Baseline Investment

6.07.96.0

LCO

E

(EU

R C

ENTS

/kW

h)



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




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


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





4.1 x*

MIL

LIO

NS

EUR


1,855


Instruments

276


456

6.5 x

8284

458



2

0

3

6

9

12

-20%

EUR

cent

s/kW

h

5.66.0

6.01.07.0




2.1 x

MIL

LIO

NS

EUR


Post-Derisking

608


BAU

Savings

456


Instruments

276-152

285 8



-71%

EUR/

tCO

2e

4.0013.83

Wind EnergyBAU



Figure 24: Wind energy sensitivity to lower financing costs: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



Figure 23: Wind energy sensitivity to lower financing costs: LCOE outputs


8.99.67.4


Wind Investment BAU

Baseline Investment

5.67.06.0

LCO

E

(EU

R C

ENTS

/kW

h)


2. Solar PV Sensitivity Analysis


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 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




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


Instruments

102120


410

3.5 x

4227 411



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


2.5 x

MIL

LIO

NS

EUR


Post-Derisking

308


BAU

Savings

410


Instruments

120102124

4



-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


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



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.


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.


Figure 27: Solar PV sensitivity to 20% higher gas prices: LCOE outputs


8.99.67.4



Baseline Investment

7.79.96.8LCO

E

(EU

R C

ENTS

/kW

h)



1.9 x*

MIL

LIO

NS

EUR

Solar PVInvestments

935


Instruments

132141


490

3.4 x

4277

491



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



2.5 x

MIL

LIO

NS

EUR


Post-Derisking

359


BAU

Savings

490


Instruments

141131145

4



-44%

EUR/

tCO

2e

21.9839.04

Solar PVBAU



Figure 28: Solar PV sensitivity to 20% higher gas prices: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



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.* 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


8.99.67.4



Baseline Investment

7.79.95.1LCO

E

(EU

R C

ENTS

/kW

h)

1.2 x*

MIL

LIO

NS

EUR

Solar PVInvestments

935


Instruments

420


778

1.7 x

4141 565

779



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



2.5 x

MIL

LIO

NS

EUR


Post-Derisking

358


BAU

Savings

778


Instruments

141 420145 4



-28%

EUR/

tCO

2e

44.8661.93

Solar PVBAU



Figure 30: Solar PV sensitivity to 20% lower gas prices: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



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.


Figure 31: Solar PV sensitivity to balancing costs: LCOE outputs




8.99.67.4



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


Instruments

412


771

1.7 x

4145 561

772



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



6.0

-21%

2.4 x

MIL

LIO

NS

EUR


Post-Derisking

359


BAU

Savings

771


Instruments

145 412149 4



-27%

EUR/

tCO

2e

44.6561.33

Solar PVBAU



Figure 32: Solar PV sensitivity to balancing costs: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



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



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

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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


Figure 34: Solar PV sensitivity with policy derisking instruments only: LCOE outputs


8.99.67.4



Baseline Investment

9.39.96.0

LCO

E

(EU

R C

ENTS

/kW

h)



1.5 x*

MIL

LIO

NS

EUR

Solar PVInvestments

935


Instruments

542


634

1.7 x

4546

634



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



21.0 x

MIL

LIO

NS

EUR


Post-Derisking

92


BAU

Savings

634


Instruments

5424



-14%EU

R/tC

O2e

43.4450.49

Solar PVBAU



Figure 35: Solar PV sensitivity with policy derisking instruments only: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**





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



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


Figure 37: Solar PV sensitivity with financial derisking instruments only: LCOE outputs


8.99.67.4



Baseline Investment

8.39.96.0

LCO

E

(EU

R C

ENTS

/kW

h)



1.5 x*

MIL

LIO

NS

EUR

Solar PVInvestments

935


Instruments

276

141


634

1.8 x

527 635



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



1.8 x

MIL

LIO

NS

EUR


Post-Derisking

249


BAU

Savings

634


Instruments

141 386



-17%EU

R/tC

O2e

41.8850.49

Solar PVBAU



Figure 38: Solar PV sensitivity with financial derisking instruments only: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**





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.


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



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


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

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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

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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





1.3 x*

MIL

LIO

NS

EUR

Solar PVInvestments

935


Instruments

318

142


730

2.0 x

4464

731



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



2.8 x

MIL

LIO

NS

EUR


Post-Derisking

412


BAU

Savings

730


Instruments

142 318146

4



-37%

EUR/

tCO

2e

36.8958.07

Solar PVBAU



Figure 42: Solar PV sensitivity to higher financing costs: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



Figure 41: Solar PV sensitivity to higher financing costs: LCOE outputs


8.99.67.4



Baseline Investment

7.910.56.0

LCO

E

(EU

R C

ENTS

/kW

h)



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




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

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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


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





1.7 x*

MIL

LIO

NS

EUR

Solar PVInvestments

935


Instruments

234

139


540

2.5 x

4377

541



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



2.1 x

MIL

LIO

NS

EUR


Post-Derisking

306


BAU

Savings

540


Instruments

139 234143

4



-30%

EUR/

tCO

2e

30.0043.01

Solar PVBAU



Figure 46: Solar PV sensitivity to lower financing costs: performance metric outputs


AFFORDABILITY

SAVINGS RATIO

CARBON ABATEMENT**



Figure 45: Solar PV sensitivity to lower financing costs: LCOE outputs


8.99.67.4



Baseline Investment

7.49.36.0LC

OE

(E

UR

CEN

TS/k

Wh)



Book Title

b

Nulla ut nisl etly neque lobortis islu

egestas sit amet quis consectetur ac nunc.

FVivamu nisi mi felis, tincidun non blandit

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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

contents...contents copy goes here tunisia: derisking renewable energy investment book title b nulla...

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