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New finance models
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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.