Adaptation
Building resilience
to climate change
 
Mitigation
Moving towards
low carbon societies
 
REDD+
Reducing Emissions
from Deforestation
and forest Degradation
Finance
New finance models
for the green economy
 
 
 

Solar Water Heating Loan Facility in Tunisia (MEDREP Finance PROSOL)

The Solar Water Heating Loan Facility

The Tunisian Solar Water Heating (SWH) loan facility is a joint initiative of the United Nations Environment Programme, the Tunisian National Agency for Energy Conservation and the Société Tunisienne de l'Electricité et de Gaz (STEG).

PROSOL - What it is

This SWH loan facility is a financial support mechanism:

  • To create credit facilities using STEG as a channel for recovering the monthly loan payments;
  • To help local banks build loan portfolios in the Renewable Energy area;
  • To provide an interest rate subsidy to the potentialcustomers;
  • To provide to the end user a capital subsidy to make SWH cost competitive with LPG (Tunisian government has passed a new law to provide a 20% subsidy on a SWH capital cost)

Project Highlights

  • 24000 m² installed
  • 5.7 millions USD financed by local banks
  • 3 banks involved
  • 5 solar vendors qualified
  • 7700 SWH systems installed

PROSOL - How it works

UNEP and ANME establish a 2 US$ million Facility:

  • To provide to the end user an interest rate subsidy that will significantly lower the financing cost for a SWH loan;
  • To provide to the end user a capital cost subsidy;
  • STEG will promote the use of SWH by channeling loan repayments through STEG customer's utility bill;
  • The monthly loan repayments are structured to match current monthly spending on other forms of energy;
  • The facility will phase out over a period of 12-18 months, leading to 30,000 SWH installations financed.

PROSOL - What it does

  • Encourage increased lending by local banks by reducing the risk in entering a new market segment;
  • Support the development of partnerships between banks and SWH suppliers;
  • Lower substantially by 7-8 points the interest rates charged for SWH financing;
  • Help to shift the market from a cash market to a credit based market;
  • Promote a competitive market for SWH by strengthening the demand side;
  • Address the " high up-front cost " issue of the SWH, which is a barrier for the customer.

PROSOL - What it may achieve

  • Ensure long-term viability of the entire sector;
  • Leverage the US$ 2 million funds by 10 to 12 times in bank financing;
  • Build confidence among the banks and expand lending to the Renewable Energy sector;
  • Assist the Tunisian Government in developing its SWH policies.