Renewable energy solutions company Scatec has signed a 25-year power purchase agreement (PPA) with Tunisian State utility Société Tunisienne de l'Electricité et du Gaz for an additional 120 MW solar power plant, Sidi Bouzid II.

The PPA was awarded in December last year through a government tender to support Tunisia’s renewable-energy targets and to enhance the country's energy security. 

Scatec has further signed a joint development agreement with Aeolus, which is part of Japanese conglomerate Toyota Tsusho Group, for the project. The agreement enhances the partners’ collaboration in Tunisia, building on the success of the 60 MW Sidi Bouzid I and 60 MW Tozeur solar projects currently under construction.

Scatec will own 50% of the Sidi Bouzid II project, while Aeolus will own the other 50%.

The estimated total capital expenditure (capex) for the project is €87-million and Scatec will be the designated engineering, procurement and construction (EPC) provider with an EPC share of about 85% of capital expenditure.

Scatec is currently in dialogue with selected financial institutions for debt financing for the project and the total financing structure will be communicated at financial close, which is expected in the second half of the year. 

“This agreement marks a significant milestone for Scatec in Tunisia, reinforcing our collaboration with Aeolus and our commitment to driving the renewable-energy transition in the region. Tunisia depends significantly on gas imports, making projects like this essential for diversifying the energy mix and achieving the country’s ambitious renewable-energy goals,” Scatec CEO Terje Pilskog said on March 25.

Tunisia is committed to reaching 30% renewable energy by 2030 to reduce emissions, cut costs, and increase energy security. With 97% of electricity production currently derived from gas, of which about half is imported, Tunisia has a need for additional renewable-energy generation.

To meet this demand, Tunisian authorities are planning further solar and wind auctions in the years to come. Scatec will continue to explore Tunisia's renewables market through the upcoming auctions, leveraging its partnership with Aeolus and the integrated business model.